Document:

EXHIBIT 10.4 - Construction and Term Loan Supplement

Loan No. RI0457T01

CONSTRUCTION AND TERM LOAN SUPPLEMENT

          THIS
SUPPLEMENT to the Master
Loan Agreement dated January 30, 2007, (the “MLA”), is entered into as of January 30, 2007, between FARM CREDIT SERVICES
OF AMERICA, FLCA (“Farm Credit”) and EAST FORK BIODIESEL, LLC, Algona, Iowa (the “Company”).

          SECTION 1.   The Construction and Term Loan Commitment. On the terms
and conditions set forth in the MLA and this
Supplement, Farm Credit agrees to make construction loans to the Company from time to time during the period set forth
below in an aggregate principal amount not to exceed, at any one time outstanding, $24,500,000.00 (the
“Commitment”). Under the Commitment, amounts borrowed and later repaid
may not be reborrowed. No advance shall be made until evidence has been
provided to the Agent (as that term is
defined in the MLA) as required in Section 7(A)(vi) of the MLA that all requisite equity funds have been received by the
Company and that such funds shall have been utilized for the construction of
the Improvements (as defined herein).

          SECTION 2.  Purpose. The purpose of the Commitment is to partially
finance the Company’s construction of a 60 million gallon (annual capacity)
biodiesel plant (the “Improvements”) identified in the plans and specifications provided to and approved by Agent pursuant
to Section 7(A)(v) of the MLA (as the same may be amended pursuant to Section
12(A) herein, the “Plans”), on real property owned by the Company near Algona,
Iowa (the “Property”), and the Company agrees to utilize the proceeds of the Commitment for this purpose only.

          SECTION
3.   Term. The term of the
Commitment shall be from the date hereof, up to and including November 30, 2007, or such later date
as Agent may, in its sole discretion, authorize in writing.

          SECTION
4.   Disbursements of Proceeds. 

                    (A)          Disbursement
Procedures.

                                    (1)          Limits
on Advances. Agent shall not be required to advance funds: (i) for any category or line item of acquisition
or construction cost an amount greater than the amount specified therefor in the Project Budget (as
defined in Section 7(A)(v) of the MLA); or (ii) for any services not yet performed or for materials or
goods not yet incorporated into the Improvements or delivered to and properly
stored on the Property. No advance hereunder shall exceed 100% of the aggregate
costs actually paid or currently due and payable and represented by invoices
accompanying a Request for Construction Loan
Advance submitted pursuant to Section 9(B)(1) herein less the amount of retainage (“Retainage”) set out in the construction
contract dated October 10, 2006, between the Company and REG Construction Services, LLC, and other construction
contracts of the Company for the Improvements.

                                    (2)          Advance
of Retainage. The Retainage (but in no case greater than the
unused balance of the Commitment allocated
for construction) will be advanced by Agent to the Company pursuant to the conditions set forth in
such construction contracts, upon written request by the Company certifying the satisfaction of such
conditions precedent for payment of Retainage. 

	
 

	
 

	
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                    (B)          Payments
to Third Parties. At its
option and without further authorization from the Company, Agent is authorized to make advances under the Commitment
by paying, directly or jointly with the Company, any person to whom
Agent in good faith determines payment is due and any such advance shall be deemed made as of the date on
which Agent makes such payment and shall be secured under the deed of
trust/mortgage securing the Commitment and any other loan documents securing
the Commitment as fully as if made
directly to the Company.

          SECTION
5.   Interest and Fees.

                    (A)          Interest.
The Company agrees to pay
interest on the unpaid principal balance of the loans in accordance with one or
more of the following interest rate options, as selected by the Company, provided, however, that prior to plant
start-up, only the Agent Base Rate option shall be available:

                                    (1)          Agent
Base Rate. At a rate per annum equal at all times to 3/4 of 1% above
the rate of interest established by Agent from time to time as its Agent Base
Rate, which Rate is intended by Agent to be
a reference rate and not its lowest rate. The Agent Base Rate will change on
the date established by Agent as the effective date of any change
therein and Agent agrees to notify the Company
of any such change. 

                                    (2)          Quoted
Rate. At a fixed rate per annum to be quoted by Agent
in its sole discretion in each
instance. Under this option, rates may be fixed on such balances and for such periods, as may be agreeable to Agent in its sole
discretion in each instance, provided that: (1) the minimum fixed period
shall be 180 days; (2) amounts may be fixed in increments of $500,000.00 or multiples thereof; and (3) the maximum number of
fixes in place at any one time shall be 10. 

                                    (3)          LIBOR.
At a fixed rate per annum equal to “LIBOR” (as
hereinafter defined) plus 3.25%.
Under this option: (1) rates may be fixed for “Interest Periods” (as
hereinafter defined) of 1, 2, 3, 6, 9
or 12 months as selected by the Company; (2) amounts may be fixed in increments of $500,000.00 or multiples thereof;
(3) the maximum number of fixes in place at any one time shall be 10; and (4) rates may only be fixed
on a “Banking Day” (as hereinafter defined) on 3 Banking Days’ prior written notice. For purposes hereof: (a)
“LIBOR”
shall mean the rate (rounded upward to the nearest sixteenth and
adjusted for reserves required on “Eurocurrency Liabilities” (as hereinafter defined) for banks subject to ‘FRB
Regulation D” (as herein defined) or required by any other federal law or regulation) quoted by the British
Bankers Association (the “BBA”) at 11:00 a.m. London time 2 Banking Days
before the commencement of the Interest Period for the offering of U.S. dollar deposits in the London interbank market for the
Interest Period designated by the Company; as published by Bloomberg or another major information vendor
listed on BBA’s official website; (b) “Banking Day” shall mean a day on which
Agent is open for business, dealings in U.S. dollar deposits are being carried out in the London interbank market, and banks are
open for business in New York City and London, England; (c) “Interest Period” shall mean a period commencing on the
date this option is to take effect and
ending on the numerically corresponding day in the month that is 2, 3, 6, 9 or
12 months thereafter, as the case may
be; provided, however, that: (i) in the event such ending day is not a Banking
Day, such period shall be extended
to the next Banking Day unless such next Banking Day falls in the next calendar
month, in which case it shall end on
the preceding Banking Day; and (ii) if there is no numerically corresponding
day in the month, then such period shall end on the last Banking Day in the
relevant month; (d) “Eurocurrency
Liabilities” shall have meaning as set forth in “FRB Regulation D”; and (e) 

	
 

	
 

	
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“FRB
Regulation D” shall mean Regulation D as promulgated by the Board of Governors
of the Federal Reserve System, 12 CFR Part 204, as amended.

The
Company shall select the applicable rate option at the time it requests a loan
hereunder and may, subject to the limitations set forth above, elect to convert
balances bearing interest at the variable rate option to one of the fixed rate
options. Upon the expiration of any fixed rate period, interest shall automatically accrue at
the variable rate option unless the amount fixed is repaid or fixed for an
additional period
in accordance with the terms hereof. Notwithstanding the foregoing, rates may
not be fixed in such a manner as to cause the Company to have to break any
fixed rate balance in order to pay any installment of principal. All elections provided
for herein shall be made electronically (if applicable), telephonically or in
writing and must be received by Agent not later than 12:00 Noon Company’s local
time in order to be considered to have been received on that day; provided,
however, that in the case of LIBOR rate loans, all such elections must be confirmed in
writing upon Agent’s request. Interest shall be calculated on the actual number of days each loan
is outstanding on the basis of a year consisting of 360 days and shall be
payable monthly in arrears by the 20th day of the following month or on such
other day
in such month as Agent shall require in a written notice to the Company;
provided, however, in the event the Company elects to fix all or a portion of the
indebtedness outstanding under the LIBOR interest rate option above, at
Agent’s option upon written notice to the Company, interest shall be payable at
the maturity of the Interest Period and if the LIBOR interest rate fix is for a
period longer than 3 months, interest on that portion of the indebtedness outstanding
shall be payable quarterly in arrears on each three-month anniversary of the
commencement date of such Interest Period, and at maturity.

                    (B)          Arrangement
Fee. In consideration of the Commitment, the Company agrees to pay to Agent an
arrangement fee in the amount of $183,750.00 (less all payments already
received by Agent)
upon the execution hereof.

          SECTION
6.   Promissory Note. The Company promises to repay the loans as follows: (i) in
26 equal,
consecutive quarterly installments of $912,500.00 with the first such
installment due on May 20, 2008, and the last such installment due on August 20, 2014; and
(ii) followed by a final installment in an amount equal to the remaining unpaid
principal balance of the loans on November 20, 2014.

In
addition, for each fiscal year end, beginning with the fiscal year ending 2007,
and ending with the fiscal year ending 2012 the Company shall also, within
ninety (90) days after the end of such fiscal year, make a special payment of
an amount equal to 75% of the “Free Cash Flow” (as defined below) of the Company, not to exceed
$2,000,000.00 per fiscal year; and provided, however, that: (i) if such payment
would
result in a covenant default, the amount of the payment shall be reduced to an
amount which would not result in a covenant default; (ii) if such payment would result in a
breakage of a fixed interest rate, then applicable broken funding surcharges
would still apply; and (iii) the aggregate of such Free Cash Flow payments shall not
exceed $7,000,000.00. The term “Free Cash Flow” is defined as the Company’s
annual profit net of taxes, plus the respective fiscal year’s
depreciation and amortization, minus allowed capitalized expenditures
for fixed assets, allowed distributions to owners, and scheduled term loan
payments to Agent and other long-term debt creditors. This special payment
shall be applied to the principal installments in the inverse order of their
maturity. Additionally, the definition of free cash flow applies to the fiscal
years ending in 2008, 2009, 2010, 2011 and 2012; while for the fiscal year
ending in 2007
such definition is modified to delete the reference to “allowed capitalized
expenditures for fixed assets”. If this term loan is paid in full prior to
receipt of aggregate total received payments of

	
 

	
 

	
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$7,000,000.00 within the
applicable fiscal years identified, any remaining portion of required payments will be applied to the term revolver loan and the
term revolver commitment reduced accordingly.

If any installment due date is not a day on which
Agent is open for business, then such installment shall be due and payable on
the next day on which Agent is open for business. In addition to the above, the
Company promises to pay interest on the
unpaid principal balance hereof at the times and in accordance with the provisions set forth in Section 5
hereof.

          SECTION
7.  Prepayment. Subject to the broken funding surcharge
provision of the MLA, the Company may on one Business Day’s prior written
notice prepay all or any portion of the loan(s). Unless otherwise agreed, all prepayments will be applied to principal
installments in the inverse order of their
maturity. However, in addition to the foregoing, prepayment of any Loan balance
due to refinancing, or refinancing of any unadvanced Commitment with
another lender, up to and including December
16, 2009, will result in a 2% prepayment charge in addition to any broken
funding surcharges which may be applicable, based on the amounts prepaid and on
the total amount of the Commitments in effect
at such time.

          SECTION
8.   Security. Security is
set forth in the MLA.

          SECTION 9.
  Additional Conditions
Precedent.

                    (A)          Initial
Advance. Agent’s obligation to make the initial advance is subject
to the satisfaction of each of the following
additional conditions precedent on or before the date of such advance:

                                    (1)          List
of Permits. Receipt by Agent of a detailed list of all permits
required for both the construction of the improvements and the operation of the
facility setting forth for each listed
permit whether such permit is required for commencement of construction or
required for commencement of operation, and identifying to Agent’s satisfaction
whether such permits have been issued
or can reasonably be expected to be issued.

                                    (2)          Construction
Permits. Receipt by Agent of evidence of issuance of all permits that are required to be obtained prior to
the commencement of construction of the improvements.

                                    (3)          Engineer’s
Certificate. Receipt by Agent of a report of Agent’s
retained engineer (pursuant to the provisions of Section 14(D)) indicating that
the current plans and specifications of the
Improvements and the related contracts establish that the finished project will
have adequate natural gas, electricity, water and waste water treatment
to service the requirements of the project.

                    (B)          Each
Advance. Agent’s obligation to make each advance hereunder,
including the initial advance, is subject to
the satisfaction of each of the following additional conditions precedent on or before the date of such advance:

                                    (1)          Request
for Construction Loan Advance. That Agent receives an executed request for construction loan
advance from the Company in the form of Exhibit A attached hereto (the “Request for Construction Loan
Advance”), together with all items called for therein.

	
 

	
 

	
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                                    (2)          Construction
Certificate. If an independent
inspector has been employed by Agent pursuant to Section 14(D), a certificate
or report of such inspector to the effect that the construction of the Improvements to the date thereof has been
performed in a good and workmanlike manner and in accordance with the
Plans, stating the estimated total cost of construction of the Improvements, stating the percentage of in-place
construction of the Improvements, and stating that the remaining non-disbursed
portion of the Commitment is adequate to complete the construction of the Improvements. 

          SECTION
10. Representations and Warranties. In addition to the representations and warranties contained in the MLA, the Company
represents and warrants as
follows:

                    (A)          Project
Approvals; Consents; Compliance. The Company has obtained all Project Approvals relating to the construction and
operation of the Improvements, except those the Company has disclosed to Agent in writing. All such Project Approvals
heretofore obtained remain in full
force and effect and the Company has no reason to believe that any such Project
Approval not heretofore obtained will not be obtained by the Company in
the ordinary course during or following completion
of the construction of the Improvements. No such Project Approval will
terminate, or become void or voidable
or terminable, upon any sale, transfer or other disposition of the Property or
the Improvements, including any transfer pursuant to foreclosure sale
under the Mortgage. No consent, permission,
authorization, order, or license of any governmental authority is necessary in
connection with the execution, delivery, performance, or enforcement of
the loan documents to which the Company is a party, except such as have been
obtained and are in full force and effect. The Company is in compliance in all material respects with all Project
Approvals having application to the Property or the Improvements except as the Company has disclosed to Agent in
writing. Without limiting the foregoing, there are no unpaid or outstanding real estate or other taxes
or assessments on or against the Property or the Improvements or any
part thereof (except only real estate taxes not yet due and payable). The
Company has received no notice nor has any
knowledge of any pending or contemplated assessments against the Property or the Improvements which have not been
disclosed to Agent in writing.

                    (B)          Environmental
Compliance. Without limiting the provisions of the MLA, all property owned or leased by the Company,
including, without limitation, the Property and the Improvements, and all operations conducted by it
are in compliance in all material respects with all Laws and all Project Approvals relating to
environmental protection, the failure to comply with which could have a material adverse effect on the condition,
financial or otherwise, operations, properties, or business of the
Company, or on the ability of the Company to perform its obligations under the
loan documents, except as the Company has
disclosed to Agent in writing.

                    (C)          Feasibility.
Each of the Project Budget, the Project Schedule
and the Disbursement Schedule is realistic and feasible.

          SECTION
11. Affirmative Covenants. In
addition to the affirmative covenants contained in the MLA, the Company agrees to:

                    (A)          Reports
and Notices. Furnish to Agent:

                                    (1)          Regulatory
and Other Notices. Promptly
after receipt thereof, copies of any
notices or other communications received from any governmental authority with
respect to the Property, the
Improvements, or any matter or proceeding the effect of which could have a
material

	
 

	
 

	
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adverse effect on the condition,
financial or otherwise, operations, properties, or business of the Company, or the ability of the Company to perform
its obligations under the loan documents.

                                    (2)          Notice
of Nonpayment. Promptly after the filing or receipt thereof, a description
of or a copy of any lien filed by or any notice, whether oral or written, from
any laborer, contractor, subcontractor or materialman to the effect that such
laborer, contractor, subcontractor or materialman has not been paid when due
for any labor or materials furnished in connection with the construction of the Improvements. 

                                    (3)          Notice
of Suspension of Work. Prompt notice of any suspension in the construction of the Improvements, regardless of
the cause thereof, in excess of ten (10) days and a description of the cause for such suspension.

                    (B)          Construction
Liens. Pay or cause to be removed, within fifteen (15) days after notice from Agent, any lien on the Improvements or
Property, provided, however, that Company shall have the right to contest in good faith and with reasonable diligence
the validity of any such lien or claim upon furnishing to the appropriate title
insurance company such security or indemnity as it may require to induce said
title insurance company to issue its title insurance commitment or its mortgage
title insurance policy insuring
against all such claims or liens, and provided further that Agent will not be
required to make any further advances
of the proceeds of the Commitment until any mechanic’s lien claims shown by the
title insurance company or interim binder have been so insured against by the
title insurance company.

                    (C)          Identity
of Contractors, etc. Furnish to Agent from time to time on request
by Agent, in a form acceptable to Agent,
correct lists of all contractors, subcontractors and suppliers of labor and
material supplied in connection with construction of the Improvements and true
and correct copies of all executed
contracts, subcontracts and supply contracts. Agent may contact any contractor,
subcontractor or supplier to verify
any facts disclosed in the lists and contracts. All contracts and subcontracts relating to construction of the
Improvements must contain provisions authorizing Company to supply to Agent the listed information and
copies of contracts.

                    (D)          Lien
Waivers. Furnish to Agent, at any time and from time to
time upon the request of Agent, lien waivers bearing a then current date
and prepared on a form satisfactory to Agent from
such contractor, subcontractor, or supplier as Agent shall designate.

                    (E)          Operating
Permits. Furnish to Agent, unless as otherwise consented to
in writing by Agent, as soon as
possible but prior to the commencement of operation of the constructed facility, evidence of the issuance of all
necessary permits for such operation.

          SECTION
12. Negative Covenants. In
addition to the negative covenants contained in the MLA, the Company will not:

                    (A)          Change
Orders. Allow any substantial
deviation, addition, extra, or change order to the Plans, Project Budget
or Project Schedule, the cost of which in the aggregate exceeds $100,000.00, without Agent’s prior written
approval. All requests for substantial changes shall be made using a
Change Order Request in the form of Exhibit B attached hereto. Agent will have
a reasonable time to evaluate any requests
for its approval of any changes referred to in this covenant, and will not be required
to consider approving any changes unless all other approvals that may be
required have been obtained. Agent may
approve or disapprove changes in its discretion. All contracts and subcontracts 

	
 

	
 

	
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relating
to the construction of the Improvements must contain provisions satisfactory to
Agent implementing the above provisions of this covenant. Company shall
promptly provide to Agent copies of all change orders that, pursuant to the above
described procedures, did not require Agent’s prior written approval.

                    (B)         
 Materials. Purchase or install any materials, equipment, fixtures or articles of personal property for the Improvements if such
shall be covered under any security agreement or other agreement where the seller reserves or purports to
reserve title or the right of removal or repossession, or the right to consider
them personal property after their incorporation in the Improvements.

          SECTION
13. Casualties.

                    (A)           Right
To Elect To Apply
Proceeds. In case of material loss or damage to the Property or to the
Improvements by fire, by a taking by condemnation for public use or the action
of any governmental authority
or agency, or the transfer by private sale in lieu thereof, either temporarily
or permanently, or otherwise, if in the
sole judgment of Agent there is reasonable doubt as to Company’s ability to complete construction of the
Improvements on or before December 16, 2007, by reason of such loss or damage or because of delays in making
settlements with governmental agencies or authorities or with insurers, Agent may terminate its obligations
to make advances hereunder and elect to collect, retain and apply to the Commitment all proceeds of the
taking or insurance after deduction of all expense of collection and settlement, including attorneys’
and adjusters’ fees and charges. In the event such proceeds are insufficient to pay the Commitment in full,
Agent may declare the balance remaining unpaid on the Commitment to be due and payable forthwith and
avail itself on any of the remedies afforded thereby as in any case of default.

                    (B)
          Election Not To Apply Proceeds. In case Agent does
not elect to apply such proceeds to the Commitment, Company will:

                                     (1)          Settle.
Proceed with
diligence to make settlement with the governmental agencies or authorities or
the insurers and cause the proceeds of insurance to be paid to Company.

                                     (2)          Resume
Construction. Promptly proceed with
the resumption of construction of the Improvements, including the repair of all damage
resulting from such fire or other cause and restoration to its former condition.

                    (C)
          Use of Proceeds. All such proceeds
shall be fully used before the disbursement of any further proceeds of the Commitment.

          SECTION
14. Other Rights of Agent.

                    (A)          
Right To
Inspect. Agent or its agent may enter on the Property at any time and inspect
the Improvements. If the construction of the Improvements is not reasonably
satisfactory to Agent, Agent may reasonably and in good faith stop the construction and
order its replacement or the correction
thereof or additions thereto, whether or not said unsatisfactory construction
has been incorporated in the Improvements,
and withhold all advances hereunder until such construction is satisfactory to Agent. Such construction shall
promptly be made satisfactory to Agent.

	
 

	
 

	
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                    (B)           Obligation
of Agent. Neither Agent nor any
inspector hired pursuant to Subsection (D) below is obligated to construct or
supervise construction of the Improvements. Inspection by Agent or such
inspector thereof is for the sole purpose of protecting Agent’s security and is
not to be construed
as a representation that there will be compliance on anyone’s part with the
Plans or that the construction will be free from faulty material or workmanship. Neither
Agent nor such inspector shall be liable to the Company or any other person
concerning the quality of construction of the Improvements or the absence therefrom
of defects. The Company will make or cause to be made such other independent inspections as it may
desire for its own protection.

                    (C)          
Right To Complete Upon Event of
Default.
Upon any Event of Default hereunder, Agent may complete construction of the Improvements, subject
to Agent’s right at any time to discontinue any work without liability, and apply
the proceeds of the Commitment to such completion, and may demand such
additional sums from the Company as may be necessary to complete construction, which sums the Company shall promptly pay
to Agent. In connection with any construction of the Improvements undertaken by Agent pursuant to this Subsection, Agent may
(i) enter upon the Property; (ii)
employ existing contractors, architects, engineers and subcontractors or
terminate them and employ others;
(iii) make such addition, changes and corrections in the Plans as shall, in the
judgment of Agent, be necessary or
desirable; (iv) take over and use any personal property, materials, fixtures,
machinery, or equipment of the Company
to be incorporated into or used in connection with the construction or operation of the Improvements; (v) pay, settle, or
compromise all existing or future bills and claims which are or may be liens against the Property or the
Improvements; and (vi) take such other action, as Agent may in its sole
discretion determine, to complete the construction of the Improvements. The
Company shall be liable to Agent for
all costs paid or incurred for construction of the Improvements, and all payments made hereunder shall be deemed advances
by Agent, shall be evidenced by the Note and shall be secured by the
Mortgage and any other loan document securing the Commitment (including any amounts in excess of the Commitment).

                    (D)          
Right To Employ
Independent Engineer. Agent reserves the right to employ an independent construction engineer, among other things, to review the
Project Budget, the Project Schedule and the
Plans, inspect all construction of the Improvements and the periodic progress
of the same, and review all Draw
Requests and change orders, the cost therefor to be the sole responsibility of the Company and shall be paid by the Company upon
demand by Agent.

                    (E)
          Indemnification and Hold
Harmless. The Company shall indemnify and hold Farm Credit and Agent harmless from and
against all liability, cost or damage arising out of this Agreement or any other
loan document or the transactions contemplated hereby and thereby, including, without limitation, (i) any alleged or
actual violation of any Law or Project Approval relating to the Property or the Improvements and (ii) any
condition of the Property or the Improvements whether relating to the quality of construction or otherwise and
whether Agent elects to complete construction upon an Event of Default
or discontinues or suspends construction pursuant to this Section 14. Agent
may commence, appear in or defend any such
action or proceeding or any other action or proceeding purporting to affect the rights, duties or
liabilities of the parties hereunder, or the Improvements, or the Property, or the payment of the Commitment, and
the Company agrees to pay all of Agent’s costs and expenses, including its reasonable attorneys’
fees, in any such actions. The obligations of the Company under this Subsection 14(E) shall survive the
termination of this Agreement. As to any action or inaction taken by Agent hereunder, Agent shall not be
liable for any error of judgment or mistake of fact or law, absent gross negligence or willful misconduct on
its part. The Company’s obligation to indemnify and

	
 

	
 

	
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hold
Agent harmless hereunder will exclude any liability, cost, or damage related to
Agent’s breach of this Agreement or for Agent’s gross negligence or willful misconduct.

          SECTION 15.
Notice of
Completion. Company irrevocably appoints Agent as Company’s agent to file of
record any notice of completion, cessation of labor or any other notice that
Agent deems necessary to file to protect any of the interests of Agent. Agent,
however, shall have no duty to make such filing.

          SECTION 16. Signs
and Publicity. At Farm Credit’s and
Agent’s request, Company will allow Farm Credit and Agent to post signs on the
Property at the construction site for the purpose of identifying Farm Credit and Agent
as the “Construction Lenders”. At the request of Farm Credit and Agent, Company will use its best efforts to
identify Farm Credit and Agent as the construction lenders in publicity
concerning the project. 

          SECTION 17.
Cooperation. Company will
cooperate at all times with Agent in bringing about the timely completion
of the Improvements, and Company will resolve all disputes arising during the work of construction
in a manner which will allow work to proceed expeditiously.

          SECTION 18.
Events of Default. In addition to the
events of default set forth in the MLA, each of the following shall constitute an
“Event of Default” hereunder:

                    (A)          Cessation
of
Construction. Any cessation at any time in the construction of the Improvements
for more than thirty (30) consecutive days, except for strikes, acts of God, or
other causes beyond the Company’s control, or any cessation at any time in
construction of the Improvements for more than thirty (30) consecutive days,
regardless of the cause. 

                    (B)
          Insufficiency of Loan Proceeds. Agent, in
its sole discretion shall determine that the remaining undisbursed portion of
the Commitment is or will be insufficient to fully complete the Improvements in
accordance with the Plans. 

          SECTION 19.
Remedies Upon
Default. In addition to the remedies set forth in the MLA, upon the occurrence of and
during the continuance of each and every Event of Default:

                    Construction.
Agent may (but shall
not be obligated to) take over and complete construction of the Improvements in
accordance with plans and specifications approved by Agent with such changes as
Agent may, in its sole discretion, deem appropriate, all at the risk, cost, and
expense of the
Company. Agent may assume or reject any contracts entered into by the Company
in connection with the Improvements, and may enter into additional or different contracts
for services, labor, and materials required, in the judgment of Agent, to complete
the construction of the Improvements and may pay, compromise, and settle all
claims in connection with the construction of the Improvements. All sums, including reasonable
attorneys’ fees, charges, or fees for supervision and inspection of the
construction, and for any other necessary purpose in the discretion of Agent,
expended by Agent in completing the construction of the Improvements (whether
aggregating more or less than the amount of this Commitment) shall be deemed advances made by
Agent to the Company under this Commitment, and the Company shall be
liable to Agent for the repayment of such sums, together with interest on such
amounts from
the date of their expenditure at the default rate specified above. Agent may,
in its sole discretion, at any time, abandon work on the construction of the
Improvements after having commenced such work, and may recommence such work at any time,
it being understood that nothing in this Section shall impose

	
 

	
 

	
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any
obligation on Agent to either complete or not to complete the construction of
the Improvements. For the purposes of carrying out the provisions of this
Section, the Company irrevocably appoints Agent, its attorney-in-fact, with
full power of substitution, to execute and deliver all such documents, pay and
receive such funds, and take such action as may be necessary, in the judgment
of Agent, to complete the construction of the Improvements.

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

	
 

	
 

	
 

	
 

	
EAST FORK
 BIODIESEL, LLC

	
 

	
 

	
 

	
 

	
By:

	

	
 

	
 

	

	
 

	
 

	
 

	
 

	
Title:

	
PresidentEXHIBIT 10.5 -
Management and Operational Services Agreement

MANAGEMENT AND OPERATIONAL SERVICES AGREEMENT

          This
Management and Operational Services Agreement (“Agreement”) is made and entered
into as of the 26th day of September,
2006, by and between Renewable Energy Group, Inc., a corporation organized and
existing under the laws of the state of Delaware, with offices at Ralston, Iowa
(“REG”), and East Fork Biodiesel, LLC, a limited liability company, organized
and existing under the laws of the state of Iowa, with offices at 105 North
Hall Street, Algona, Iowa 50511 (“East Fork Biodiesel”). 

          RECITALS:
East Fork Biodiesel and Renewable Energy Group, LLC (“REG, LLC”) have entered
into a Letter of Intent concerning an engineering agreement with respect to a
biodiesel production facility to be built for East Fork Biodiesel in Algona,
Iowa (“Biodiesel Facility”). As a new entity without staff, East Fork Biodiesel
has recognized the importance of drawing upon the experience of REG in the initial
operation of the Biodiesel Facility. East Fork Biodiesel and REG have discussed
the general terms and conditions under which REG would provide start-up
management and operational services to East Fork Biodiesel with respect to the
Biodiesel Facility, which the parties wish to reduce to this writing.

          IT
IS THEREFORE AGREED by and between the parties as follows:

	
 

	
 

	
 

	
 

	
1.

	
General Scope. Subject to the terms of this
 Agreement, and in consideration of the fee for such services to be paid by
 East Fork Biodiesel as set out herein, REG will provide for the overall
 management of the Biodiesel Facility, place a general manager and an
 operations manager at the Biodiesel Facility, acquire feed stocks and the
 basic chemicals necessary for the operation of the Biodiesel Facility, and
 perform the administrative, sales and marketing functions for the Biodiesel
 Facility. In fulfilling its duties and obligations hereunder, REG shall
 cooperate with East Fork Biodiesel and act in a manner to maximize the
 long-term success and profitability of East Fork Biodiesel.

	
 

	
 

	
 

	
 

	
2.

	
Responsibilities of REG. Under this
 Agreement, REG agrees to provide the following:

	
 

	
 

	
 

	
 

	
 

	
A.

	
General Manager. REG will provide a General
 Manager to implement and oversee the business plan for the Biodiesel
 Facility, and direct, promote and coordinate the staff, personnel and plant
 operations. The General Manager will be an employee of REG, but will be
 assigned to carry out the responsibilities of General Manager at the
 Biodiesel Facility. Included among the specific duties to be accomplished by
 the General Manager are:

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
To utilize their ongoing best efforts to successfully and profitably
 manage the Biodiesel Facility in East Fork Biodiesel’s best interests;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Development of an annual budget for presentation to and approval
 of East Fork Biodiesel’s Board of Directors (or other board of governance
 (“Board”);

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Attend meetings of the Board and provide information upon its
 request;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Insure that all raw product costs are minimized and that all finished
 product revenues are maximized;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Work with East Fork Biodiesel’s Board to formulate East Fork Biodiesel’s mission
 and goals;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Work
 towards achievement of such mission and goals;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Assist
 with regulatory affairs monitoring and compliance;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Hire,
 terminate and replace Biodiesel Facility personnel as necessary;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Management
 of governmental relations, including USDA’s biodiesel programs;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Cooperate
 fully with East Fork Biodiesel, its attorneys and accountants in making
 reasonable disclosures required by the Securities Exchange Act of 1933 or
 other securities laws; and

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Such
 other duties as may be agreed between REG and East Fork Biodiesel,

	
 

	
 

	
 

	
 

	
 

	
 

	
while
 acting in compliance with East Fork’s operating agreement and other governing
 documents provided to the General Manager by the Board.

	
 

	
 

	
 

	
 

	
 

	
 

	
The
 General Manager will report to such officer of REG as REG shall from time to
 time designate. All employee compensation and employee benefits associated
 with the position of General Manager will be paid by REG.

	
 

	
 

	
 

	
 

	
 

	
B.

	
Operations
 Manager. REG will
 provide an Operations Manager to oversee the operation of the Biodiesel
 Facility. The Operations Manager will be an employee of REG, but will be
 assigned to carry out the responsibilities of Operations Manager at the
 Biodiesel Facility. Included among the specific duties to be accomplished by
 the Operations Manager are:

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Planning
 and scheduling biodiesel production to meet customer needs and marketing
 goals;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Monitor
 and improve quality control;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Oversee
 facility and equipment maintenance;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Assist
 with budgeting and the monitoring of labor and other expenses in the
 operation;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Implement
 processing changes and new technologies as they evolve, and plan for new
 projects relating to biodiesel production; and

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Such
 other duties as may be agreed to between REG and East Fork Biodiesel.

	
 

	
 

	
 

	
 

	
 

	
 

	
The
 Operations Manager will report to the General Manager. All employee
 compensation and employee benefits associated with the position of Operations
 Manager will be paid by REG.

	
 

	
 

	
 

	
 

	
 

	
C.

	
Feed
 Stocks Procurement.
 REG will use its best efforts to arrange the purchase of soybean oil,
 together with other feed stocks as may be needed in the future. REG will use
 its best efforts to:

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Procure
 all feed stocks necessary for production at the Biodiesel Facility;

2

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Provide
 analysis and audit of feed stock suppliers;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Purchase
 feed stocks at competitive prices meeting specifications and in adequate
 quantities to fill the production schedule of the Biodiesel Facility (with
 East Fork Biodiesel having the right to reject any feed stocks not
 meeting specifications);

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Negotiate
 for discounts where obtainable on feed stocks;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Arrange
 for transportation, logistics, and scheduling of feed stock deliveries; and

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Provide
 analysis and audit of bulk transportation providers.

	
 

	
 

	
 

	
 

	
 

	
D.

	
Chemical
 Inputs Procurement.
 REG will use its best efforts to purchase methanol, sodium methylate,
 hydrochloric acid, and caustic soda, together with such other chemical inputs
 as may be needed in the future. REG will use its best efforts to:

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Procure
 all basic chemical inputs necessary for production at the Biodiesel Facility;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Perform
 due diligence requirements for investigation of suppliers of the chemical
 inputs;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Provide
 analysis and audit of chemical suppliers;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Purchase
 chemical inputs at competitive prices meeting specifications for use in the
 Biodiesel Facility (with East Fork Biodiesel having the right to reject any
 chemical inputs not meeting specifications);

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Negotiate
 for discounts where obtainable on chemicals;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Procure
 adequate chemical inputs to meet production schedules for the Biodiesel
 Facility;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Provide
 analysis and audit of bulk transportation suppliers; and

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Arrange
 for transportation, logistics, and scheduling services for chemical input
 deliveries by suppliers.

	
 

	
 

	
 

	
 

	
 

	
E.

	
Administrative
 Services. REG shall
 provide administrative services to support the operation of the Biodiesel
 Facility, agreeing to provide assistance within the following areas as more
 fully described on Exhibit A hereto (and at REG’s expense except for those
 materials and items noted on such Exhibit A):

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Accounting

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Human
 Resources

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Information
 Technology

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Insurance
 Administration

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Payroll

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Communications

	
 

	
 

	
 

	
 

	
 

	
F.

	
Sales
 and Marketing. REG will
 utilize its best efforts as East Fork Biodiesel’s sale representative to
 market all biodiesel, glycerin and fatty acids produced at the Biodiesel
 Facility (“Products”) at the Product Prices (as defined below). With respect
 to such services, REG agrees to provide:

3

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Market
 analysis of biodiesel supply and demand, utilizing non-proprietary, public
 information;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Opportunities
 for participation in a trade association to access additional historical data
 regarding prices, costs, and other analysis, contributed and disseminated to
 members on an aggregated basis;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Enhanced
 access to biodiesel markets with REG’s established distribution channels and
 transportation at pass through costs;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Analysis
 and audit of biodiesel customers desiring to purchase East Fork Biodiesel
 Product, including credit analysis;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Marketing
 specialists to serve as East Fork Biodiesel’s representatives to identify
 potential customers and attain and establish sales opportunities for the
 Products at the prices and terms as established by East Fork Biodiesel;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Arrangements
 for transportation, logistics, and scheduling of biodiesel shipments;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Where advantageous, arrange for leased tankers for rail shipments;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Analyze
 and audit bulk transportation providers;

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Oversee
 reconciliation of shipments, invoicing and payments on a weekly basis; and

	
 

	
 

	
 

	
 

	
 

	
 

	
•

	
Provide
 invoicing and accounts receivable management for biodiesel shipments.

	
 

	
 

	
 

	
 

	
 

	
G.

	
Additional
 Services Described.
 A further description of services to be provided is attached hereto as Exhibit
 B.

	
 

	
 

	
 

	
 

	
3.

	
Compensation
 for Services. In
 consideration of the services to be rendered during the term of this
 Agreement:

	
 

	
 

	
 

	
 

	
 

	
A.

	
Monthly
 Fees. East Fork
 Biodiesel shall initially pay to REG, on a monthly basis:

	
 

	
 

	
 

	
 

	
 

	
 

	
(i)

	
During
 the initial period of production, a flat fee of $112,500.00 to be paid
 regardless of the gallons of biodiesel produced from the Biodiesel Facility
 (“Flat Fee”) (the first month prorated for the fraction of the month during
 which Product is being produced for sale), with the Flat Fee increasing to
 $172,500.00 (as may be modified by adjustment for cost of living as set out
 hereafter) for the balance of the term after the initial period of production
 (for purposes of this section 3(A) the initial period of production shall
 commence upon the sale of biodiesel produced from the Biodiesel Facility, and
 continue for a period of six (6) months after the end of the month in which
 such sales commence); and

	
 

	
 

	
 

	
 

	
 

	
 

	
(ii)

	
A
 fee equal to 1.75¢ per gallon of biodiesel produced from the Biodiesel
 Facility during the month for which the fee is computed (the rate per gallon
 herein the “Fee Rate”). For purposes of this Agreement, determination of the
 biodiesel produced from the Biodiesel Facility for a month shall be based
 upon a compilation of the daily production reports

4

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
for the Biodiesel Facility
 for such month, and references to a “gallon” shall be to the U.S. liquid
 measure of capacity, 231 cubic inches, corrected to 60 degrees Fahrenheit.

	
 

	
 

	
 

	
 

	
 

	
 

	
The Flat Fee and the
 payment amount resulting from the computation utilizing the Fee Rate and the
 gallons of biodiesel produced in a month are referred to herein collectively
 as the “Monthly Fee.”

	
 

	
 

	
 

	
 

	
 

	
 

	
The
 Flat Fee and the Fee Rate shall be adjusted for the month following the first
 anniversary of the Biodiesel Facility first producing Product for sale
 (“First Production Month”), and annually for such month thereafter, according
 to the movement in the Consumer Price Index for all-urban consumers, U.S.
 City Average, All Items published by the Department of Labor (the “CPI”) in
 the following manner. The CPI for the First Production Month shall be used as
 the denominator and the CPI for the month preceding the month for which the
 adjusted Flat Fee and the Fee Rate are being computed shall be used as the
 numerator. This fraction shall first be multiplied by $172,500.00, with the
 resulting amount being the new Flat Fee. Such fraction shall then be used to
 multiply times the initial Fee Rate, resulting in the new Fee Rate. The new
 Flat Rate and new Fee Rate shall then be used to compute the Monthly Fee for
 twelve months beginning with the month for which the adjusted Flat Fee and
 Fee Rate were computed, except that in no event shall the adjusted Flat Fee
 and the Fee Rate be less than the $172,500.00 Flat Fee and the Fee Rate as
 set out above. The Flat Fee and the Fee Rate for each subsequent year of the
 term shall be adjusted in a similar manner, with the CPI for the First
 Production Month being used as the denominator and the CPI for the month
 preceding the month for which the adjusted Flat Fee and Fee Rate are being
 computed being used as the numerator, and such fraction being multiplied by
 the respective $172,500.00 Flat Rate and the initial Fee Rate, such adjusted
 Flat Fee and Fee Rate in no event to be less than the $172,500.00 Flat Fee
 and the Fee Rate as set out above. If CPI information is not yet available
 when payment of the Monthly Fee is due, the Monthly Fee shall be paid based
 upon the Flat Rate and the Fee Rate in effect prior to adjustment, the
 parties agreeing upon receipt of the CPI information and calculation of the
 adjusted Flat Rate and Fee Rate to make any necessary adjustment in payment
 so that the correct Monthly Fees have been paid. If the Department of Labor’s
 method of computing the CPI is substantially modified or ceases, the parties
 agree to adopt another measure of the cost of living for these purposes.

	
 

	
 

	
 

	
 

	
 

	
B.

	
Net Income Bonus. As an incentive to REG, and as additional
 compensation for the services being rendered, East Fork Biodiesel agrees to
 pay a bonus to REG on a yearly basis equal to six percent (6%) of the Net
 Income of East Fork Biodiesel’s Biodiesel Facility (“Net Income Bonus), as
 determined hereafter. For purposes of this Agreement, East Fork Biodiesel’s
 “Net Income” shall be the net income for its fiscal year before any deduction
 or allowance for federal or state income taxes, determined in accordance with
 generally accepted accounting principles applied on a consistent basis by the
 independent CPA firm engaged by

5

	
 

	
 

	
 

	
 

	
 

	
 

	
East Fork Biodiesel, and
 then adjusted as necessary to: (i) include the receipt of government payments
 such as under the federal excise tax credit program or similar federal or
 state payments; (ii) exclude any gains or losses realized on the sale or
 disposition of capital assets; (iii) adjust depreciation to utilize Internal
 Revenue Service Class lives depreciated on a straight line, mid-month basis
 (with no bonus depreciation, Section 179 expense (election to expense certain
 depreciable assets) or any other method of accelerated depreciation, first
 year write-off or expensing to be taken), and (iv) exclude any reduction for
 the Net Income Bonus paid or accrued to REG as a result of this subsection.
 For any partial fiscal year for East Fork Biodiesel occurring during the term
 of this Agreement, REG shall receive a Net Income Bonus, if any, computed for
 that period of the fiscal year in which REG provides services hereunder.

	
 

	
 

	
 

	
 

	
 

	
C.

	
Payment. The Monthly Fee shall be due on the tenth
 (10th) of the month following the month for which such fees are computed and
 payable. The Net Income Bonus shall be paid within ten (10) days after East
 Fork Biodiesel’s Board accepts the audit report for the fiscal year for which
 such Net Income Bonus is computed, except that if the Net Income Bonus is not
 paid within three (3) months of the close of East Fork Biodiesel’s fiscal
 year because the audit has not been received (or within three (3) months of
 the end of the term of this Agreement in the event of the computation of an
 Income Bonus for a partial fiscal year), East Fork Biodiesel shall compute
 and pay an estimated Net Income Bonus (if any is due) based on its internal
 figures on or before the end of such three (3) month period, the parties
 agreeing upon receipt of the audited figures to make any necessary adjustment
 in such estimated payment so that the correct Net Income Bonus has been paid.

	
 

	
 

	
 

	
 

	
4.

	
Responsibilities
 of East Fork Biodiesel.
 Concurrent with performance of the obligations of REG as previously set out
 in this Agreement, East Fork Biodiesel understands and recognizes that upon
 completion of the Biodiesel Facility by REG, it shall be the obligation
 of East Fork Biodiesel to:

	
 

	
 

	
 

	
 

	
 

	
A.

	
Establish
 a Board of Directors or similar group to provide governance of East Fork
 Biodiesel, and input and guidance to the General Manager regarding the
 Biodiesel Facility, and to take action upon recommendations of the General
 Manager.

	
 

	
 

	
 

	
 

	
 

	
B.

	
Establish
 on a monthly basis (or more often as needed), the price for which REG, as
 East Fork Biodiesel’s sales representative, is to sell East Fork Biodiesel’s
 Product, and review and determine production levels to be maintained at the
 Biodiesel Facility.

	
 

	
 

	
 

	
 

	
 

	
C.

	
Provide
 the names of several persons who would be authorized on East Fork Biodiesel’s
 behalf to establish Product Prices, approve special prices, agree to the
 handling of off-grade Product, and approve the write off of accounts
 receivable, and further to notify REG of any changes in such designees (such

6

	
 

	
 

	
 

	
 

	
 

	
 

	
designees to be reasonably
 available for contact by REG, and able to respond in a timely fashion).

	
 

	
 

	
 

	
 

	
 

	
D.

	
Provide funds for:

	
 

	
 

	
 

	
 

	
 

	
 

	
(i)

	
Purchase, installation and
 maintenance of software, hardware, and related equipment, together with
 utilities and related charges, in order to accomplish the necessary
 communication of voice and data between the parties, and conduct East Fork
 Biodiesel’s business at and operate the Biodiesel Facility.

	
 

	
 

	
 

	
 

	
 

	
 

	
(ii)

	
The cost of acquisition
 and implementation of newly evolving technologies (and including those
 developed by REG or its affiliates) at the Biodiesel Facility, which have
 been approved by the Board.

	
 

	
 

	
 

	
 

	
 

	
 

	
(iii)

	
Offices, computers, cell
 phones, and other facilities, services and support for the personnel needed
 to operate the Biodiesel Facility (and including the General Manager and
 Operations Manager) and appropriate for the performance of their duties for
 East Fork Biodiesel.

	
 

	
 

	
 

	
 

	
 

	
 

	
(iv)

	
Payment or reimbursement
 for reasonable travel and other similar out of pocket expenses incurred in
 furtherance of the business of East Fork Biodiesel and in fulfillment of the
 duties of the personnel needed to operate the Biodiesel Facility (and
 including the General Manager and Operations Manager), upon submission and
 substantiation of such expenses as may be required for tax or auditing
 purposes.

	
 

	
 

	
 

	
 

	
 

	
 

	
(v)

	
Payment of the costs of
 legal counsel and outside auditors as may be determined necessary by the Board,
 and including for the examination of financial records, preparation of income
 tax returns for East Fork Biodiesel and related reports to its owners and
 third parties, securities filings, and similar reports.

	
 

	
 

	
 

	
 

	
 

	
 

	
(vi)

	
In general, the purchase
 and delivery of all feed stocks, chemical and other inputs, all staff and
 personnel costs (other than those of the General Manager and Operations
 Manager) necessary to operate the Biodiesel Facility, and all other expenses
 of doing business at the Biodiesel Facility not specifically being assumed by
 REG as a part of the furnishing of services hereunder, as well as all
 required capital expenditures to maintain the Biodiesel Facility in a
 condition capable of producing Product acceptable to the market place.

	
 

	
 

	
 

	
 

	
 

	
E.

	
Perform such other tasks
 and duties as have been separately set out hereunder and agreed to by East
 Fork Biodiesel.

	
 

	
 

	
 

	
 

	
5.

	
Other Operational
 Understandings & Agreements:

7

	
 

	
 

	
 

	
 

	
A.

	
Risk Management Program. East Fork Biodiesel agrees to consider adoption
 of the risk management program used by REG which supports the procurement of feed stocks and chemical inputs hereunder (“Risk
 Management Program”). The objective
 of the program is to manage the commodity price risk resulting from fluctuating prices of feedstock (oils and fats),
 chemical inputs (methanol and catalysts), and the finished Products
 (biodiesel and glycerin) due to changing market conditions. Under the Risk Management Program, REG will utilize
 the Chicago Board of Trade, New
 York Mercantile Exchange, and other exchanges as warranted to establish an account or accounts in East Fork
 Biodiesel’s name, and acquire
 instruments as necessary to implement risk management strategies. Such account(s) and instruments would be funded
 by East Fork Biodiesel, with all
 resulting gains and losses from the purchase and sale transactions of any futures contracts, options, and cash instruments
 associated with the Risk Management
 Program to flow to the benefit of or be borne by East Fork Biodiesel.
 If approved, East Fork Biodiesel agrees to adopt such resolutions and execute such agreements as are reasonably
 necessary to implement the Risk Management
 Program, and pay transactional costs incurred to carry out such program.

	
 

	
 

	
 

	
 

	
B.

	
Plant Information Program. In its management of the Biodiesel Facility,
 REG shall utilize a software
 program (“PI System”) interfacing with the computer control system running the Biodiesel Facility,
 making available production data for operations, engineering, sales,
 marketing, logistics and management to better make informed decisions with respect to production processes. During
 the term of this Agreement, the PI
 System will also allow for REG’s remote access to information on the operation of the Biodiesel
 Facility to provide for data collection,
 monitoring, benchmarking and trouble shooting, all to better aid performance for East Fork Biodiesel.

	
 

	
 

	
 

	
 

	
C.

	
Product Pricing. On at least a monthly basis (or more often as
 needed), REG shall identify and provide publicly available marketing
 information to East Fork Biodiesel with
 respect to Products. East Fork Biodiesel will establish the Product prices for REG to use in selling
 Products (“Product Prices”), based upon market place conditions. Any change in Product Prices shall be
 effective for Product sales made beginning the seventh (7th) calendar
 day after REG’s receipt of notice of new
 Product Prices, except for quotations still open and extended prior to the change in the Product Prices, or
 unless otherwise agreed to by the parties
 (East Fork Biodiesel and REG to honor all pre-existing contracts and agreements with respect to price). All Product
 sales by REG as East Fork Biodiesel’s
 sales agent shall be at or above the Product Prices then in effect, unless written consent is received from East
 Fork Biodiesel for special prices due to volume commitments, East Fork Biodiesel storage constraints, or
 other reasons approved by East Fork Biodiesel. REG specifically states
 that it will not sell the Product at
 prices less than the Product Prices without East Fork Biodiesel’s prior written approval, and that if
 REG is able to sell Products at prices
 above the Product Prices, East Fork Biodiesel would nonetheless receive all
 proceeds of any such sales. REG will in any event use its best efforts, as
 East

8

	
 

	
 

	
 

	
 

	
 

	
Fork Biodiesel’s sales agent, to
 maximize the sales revenues received by East Fork Biodiesel.

	
 

	
 

	
 

	
 

	
D.

	
Off Site Storage. In order to maximize profit potential, and
 including taking advantage of
 regional marketing opportunities, there will be times in the marketing of
 Product that REG will recommend the storage of East Fork Biodiesel’s Product in third party locations. In
 such case, East Fork Biodiesel agrees
 that it will be responsible for transportation costs for its Product to the storage
 facility, in and out charges, such Product’s prorated share of storage, and
 other related expense, so long as approved by East Fork Biodiesel prior to
 use of off-site storage.

	
 

	
 

	
 

	
 

	
E.

	
Product Sales, Handling of Proceeds.
 It is expected that sales of Products will be made in REG’s name. REG shall take title to the Product when loaded
 for delivery FOB the Biodiesel
 Facility, unless otherwise agreed. REG will carry Property in Transit insurance for all Product in
 shipment. If while Product is in transit a claim were to occur the
 proceeds from settlement would be due the title holder at the time of the
 loss event. REG will pay over to East Fork Biodiesel all Product proceeds received from sales of East Fork
 Biodiesel Products. REG shall remit
 by electronic transfer to East Fork Biodiesel by the close of business each Wednesday all such proceeds received
 during the previous seven (7) days.

	
 

	
 

	
 

	
 

	
F.

	
Off-Grade Product. In the event off-grade Product is produced at
 the Biodiesel Facility that is not
 marketable at the Product Prices then in effect, REG will nonetheless
 use its best efforts to sell such Product for East Fork Biodiesel at the
 highest prices reasonably obtainable. With respect to biodiesel, and for
 purposes of this Agreement, off-grade
 Product shall include biodiesel which fails to meet the specifications
 contained in ASTM D6751 as it may be amended or modified (or such other standards for Biodiesel as may in
 the future develop in the biodiesel
 industry) or if for any other reason a customer reasonably rejects biodiesel. With respect to Products other than
 biodiesel, for purposes of this Agreement,
 off-grade Product shall include Product which fails to meet specifications mutually agreed upon by the
 parties, or if for any other reason a customer reasonably rejects such
 Product. In the event off-grade Product is sold, REG shall work to minimize any loss to East Fork Biodiesel for
 returned Product, cost of cover, and
 related expenses. REG shall advise East Fork Biodiesel of Product
 complaints, and shall not accept the return of, or make any allowance with respect to any Product, without
 East Fork Biodiesel’s prior written approval. REG and East Fork
 Biodiesel shall work together to determine the
 resolution of customer complaints and off-grade Product sales. East Fork Biodiesel shall pay for any costs associated
 with resolution of customer complaints
 or returned Product, including freight costs, cover, and related expenses, unless such Product deficiencies were
 caused by the negligence or willful misconduct of REG, in which event REG
 will be responsible for such costs.
 Except where caused by REG’s negligence or willful misconduct, East Fork Biodiesel agrees to indemnify REG from any
 loss, claim or damage

9

	
 

	
 

	
 

	
 

	
 

	
(including reasonable attorney
 fees) incurred as a result of the sale of off-grade Product.

	
 

	
 

	
 

	
 

	
G.

	
Credit Risk. REG agrees to manage the accounts receivable
 and work to minimize bad debt
 losses. REG shall pursue all reasonable efforts at collecting accounts, East
 Fork biodiesel agreeing to pay for third party collection costs including attorney fees (Collection Costs”)
 except as may be subsequently shared as
 set out hereafter. The write off of accounts receivable shall be as mutually agreed by the parties. East Fork biodiesel
 understands that losses on accounts receivable due to bad debt up to one-half
 per cent of Product sales will be borne entirely by East Fork
 biodiesel as a cost of doing business. REG agrees to share losses equally with East Fork Biodiesel with
 respect to accounts receivable for Product sales (including Collection Costs)
 to the extent that the total of such losses
 (not previously shared by the parties) incurred from the commencement of the
 term of this Agreement to the date of computation of such losses exceed one half of one percent of East Fork Biodiesel’s
 total sales made under this Agreement
 for the same period. Should East Fork Biodiesel desire REG to sell Product
 to buyers not approved by REG, REG shall make such sale in East Fork Biodiesel’s name, and provide normal invoicing
 and billing services. However, any
 risk of receipt or collection of such sale shall remain with East Fork Biodiesel,
 and shall not be included in the total of losses which might be shared by the parties as set out above.

	
 

	
 

	
 

	
 

	
H.

	
Employees. East Fork Biodiesel has elected to directly
 employ personnel to fulfill the
 operational needs at the Biodiesel Facility (other than the General Manager and Operations Manager). REG agrees to
 assist East Fork Biodiesel in hiring
 and training such personnel (“East Fork Biodiesel Employees”), and to continue
 to provide associated human resource and payroll handling assistance. However, East Fork Biodiesel understands and
 agrees that East Fork Biodiesel has the sole responsibility for determining
 the rate of pay, hours, benefits, and other terms and conditions of employment of the East Fork Biodiesel
 Employees. East Fork Biodiesel would
 be responsible for all staff and personnel costs associated with East
 Fork Biodiesel Employees, including paying compensation, selecting and paying for benefits and benefit
 plans for the East Fork Biodiesel Employees, paying for vacation and
 paid time off as required by state and federal law, providing statutory insurance for the East Fork Biodiesel
 Employees, for FICA, unemployment,
 and workers’ compensation in accordance with applicable statutory
 requirements and limits, and withholding and remitting related taxes.

	
 

	
 

	
 

	
 

	
I.

	
Software to Operate Plant
 Equipment. Upon
 termination of this Agreement, REG agrees
 to transfer REG’s operational rights to East Fork Biodiesel in the necessary software (or assist East Fork Biodiesel in
 obtaining any necessary licensing arrangements
 for software from third parties) to operate the equipment in the Biodiesel Facility. East Fork Biodiesel
 understands this shall not include the PI System, or administrative or accounting software developed or
 utilized by REG.

10

	
 

	
 

	
 

	
 

	
J.

	
Access to Biodiesel Facility. East Fork Biodiesel agrees during the term
of
 this Agreement to provide access to
 the Biodiesel Facility by REG for purposes of training employees regarding the operation of biodiesel plants and
 equipment, and to provide for tours
 by prospective customers of REG, subject to reasonable advance notice to allow for appropriate
 scheduling and to minimize disruption to the Biodiesel Facility’s
 production.

	
 

	
 

	
 

	
 

	
K.

	
Employment of General Manager
 and Operations Manager at End of Term. East Fork
 Biodiesel may desire to hire as its own employees the General Manager and/or
 the Operations Manager at the end of the term of this Agreement. REG will have noncompete agreements in place with the
 General Manager and Operations
 Manager which would otherwise prevent such employment. REG agrees that
 if at such time East Fork Biodiesel has fully performed its obligations under this Agreement, and is not otherwise in
 breach of its provisions, that REG would allow East Fork Biodiesel to solicit
 for employment the General Manager and
 Operations Manager serving East Fork Biodiesel at such time upon the following
 terms and conditions. If East Fork Biodiesel is successful in employing either or both such individuals within a period
 of twelve (12) months after the termination of this Agreement, East Fork
 Biodiesel agrees to pay to REG at the time of such employment an
 amount equal to one (1) year’s base salary computed at the rate at which REG had been paying such employee or employees
 prior to the termination of this
 Agreement. Upon receipt of such payment(s), REG agrees to release such
 employee or employees from their noncompete provisions solely for the purpose of allowing East Fork
 Biodiesel’s employment of such individual(s),
 but REG agrees to grant no further release nor for any other reason (without limiting the generality thereof, East
 Fork Biodiesel specifically understands
 that no release shall be given with respect to provisions regarding confidentiality or ownership of business ideas,
 opportunities, inventions or intellectual
 properties belonging to REG, and including those which may have been developed by such individuals).

	
 

	
 

	
 

	
6.

	
Term of Agreement. This Agreement is effective as of the date of
 its execution by the parties (with
 services to commence by REG hereunder at such time or times as appropriate
 based upon construction progress of the Biodiesel Facility), and shall remain
 in force for three (3) years after the end of the first month in which the
 Biodiesel Facility is producing Product
 for sale (subject to early termination due to default as set out hereafter).
 This Agreement shall continue after the initial term unless and until one
 party gives written notice of termination
 to the other of a proposed termination date at least twelve (12) months in advance of a proposed
 termination date. The initial term or any subsequent term may also be modified upon the mutual written consent
 of the parties.

	
 

	
 

	
 

	
7.

	
Confidentiality. East Fork Biodiesel agrees that in the
 performance of this Agreement, East Fork Biodiesel may receive or otherwise
 learn of certain items of information that are non-public, proprietary, or confidential to REG or to parties with
 whom REG has entered into
 contractual relationships (herein “Confidential Information” with respect to REG), to include but not be limited to
 information concerning REG’s operations, processes, methods and accumulated experience incidental to the
 processing, sale and

11

	
 

	
 

	
 

	
distribution of Products, and
 including supplier and customer lists, the disclosure of which to third
 parties would be injurious to REG or to parties with whom REG has entered into contractual relationships. REG
 agrees that in the performance of this Agreement, REG will receive financial information including the
 results of East Fork Biodiesel’s operations, and may otherwise learn of
 certain items of information that are non-public, proprietary, or secret to East Fork Biodiesel or to parties
 with whom East Fork Biodiesel has
 entered into contractual relationships (herein “Confidential Information”
 with respect to East Fork Biodiesel), the disclosure of which to third
 parties would be injurious to East Fork
 Biodiesel or to parties with whom East Fork Biodiesel has entered into contractual relationships. Each
 party as recipient (the “Recipient”) agrees not to use the
 Confidential Information of the other party (the “Provider”) for any purpose other than as required to perform this
 Agreement. Recipient agrees to disclose the Confidential Information of the Provider only to such directors,
 officers, employees, affiliates,
 consultants, agents, and third parties (“Representatives”) as are required to
 allow Recipient to perform under
 this Agreement, who are first informed of the restrictions upon use of the Confidential Information and who agree to
 keep such information confidential and who agree to be bound by the
 terms of these confidentiality provisions to the same extent as if they were
 parties hereto. Recipient will be responsible for any breach of these confidentiality provisions by any of its
 Representatives and agrees to take
 all reasonable measures to restrain its Representatives from prohibited or unauthorized
 disclosure or use of the Confidential Information. Recipient agrees that the
 actual or threatened disclosure of the Confidential Information would cause
 the Provider immediate and irreparable
 harm, which may not be adequately compensated by money damages. Accordingly,
 in the event of a breach of these confidentiality provisions by Recipient or
 its Representatives, the Recipient specifically agrees, that in addition to
 all other remedies available at law
 or in equity, the Provider shall be entitled to equitable relief, including an injunction to limit or
 prevent such actual or threatened disclosure, together with recovery of costs of litigation from Recipient as a
 result of breach, including reasonable attorney fees. These
 obligations of confidentiality shall not apply to any information which: (a) was known to Recipient or was in the public
 domain prior to disclosure
 hereunder; or (b) becomes known to the public from a source other than
 Recipient; or (c) is disclosed to Recipient by a third party having a legal
 right to make such disclosure.

	
 

	
 

	
 

	
In the management and operation
 of the Biodiesel Facility, REG will direct the General Manager and Operations Manager to hold
 competitively sensitive information of East Fork Biodiesel confidential and
 not disclose such information to REG and its other employees without the consent of East Fork
 Biodiesel.

	
 

	
 

	
 

	
The parties acknowledge that in
 order to comply with certain statutory or regulatory requirements, this Agreement may need to be
 disclosed to the Securities Exchange Commission, the Iowa Securities Bureau
 or other regulators, and agree to allow such disclosure upon receipt of appropriate request.

	
 

	
 

	
8.

	
Intellectual Property Rights. East Fork Biodiesel shall have no right
under
 the Agreement to make use of any brand names trademarked by REG, nor any of
 the intellectual properties or
 know-how developed by REG in conjunction with the operation of plants

12

	
 

	
 

	
 

	
 

	
similar to the Biodiesel Facility, or to use any of
 REG’s intellectual properties and know-how
 other than pursuant to such separate licensing arrangements as may be entered
 into by the parties (if any), but
 the parties expressly agree that no such rights are being conveyed by
 virtue of the execution or performance of this Agreement.

	
 

	
 

	
 

	
 

	
REG shall have no right under
 the Agreement to make use of any brand names trademarked by East Fork Biodiesel, nor any intellectual properties or
 know-how developed separately by East Fork Biodiesel, other than pursuant to
 such separate licensing arrangements
 as may be entered into by the parties (if any), but the parties expressly
 agree that no such rights are being conveyed by virtue of the execution or performance
 of this Agreement.

	
 

	
 

	
 

	
9.

	
Indemnification. The parties shall have the following
 indemnification/hold harmless rights and obligations hereunder:

	
 

	
 

	
 

	
 

	
A.

	
Except as to matters for which
 REG is required to defend, indemnify and hold harmless East Fork Biodiesel under Section 9(B) below, and provided
 that REG and its directors, officers and employees, have otherwise
 satisfied and performed their duties and
 obligations in accordance with this Agreement, East Fork Biodiesel shall defend, indemnify and hold REG,
 and its directors, officers and employees, harmless from and against
 any and all claims, suits, losses, liabilities, costs, damages and expenses, including reasonable attorneys’ fees and
 court costs, suffered or incurred by
 any such party in defending any legal action or claim arising out of
 this Agreement, or REG’s actions or inactions taken hereunder.

	
 

	
 

	
 

	
 

	
B.

	
REG shall defend, indemnify and
 hold East Fork Biodiesel, and its directors, officers and employees, harmless from and against any and all claims,
 suits, losses, liabilities, costs,
 damages and expenses, including reasonable attorneys’ fees and court costs,
 suffered or incurred by any such party arising from or as a result of: (i)
 breach by REG or any representative, agent, officer or employee of REG, of any warranty, representation, term,
 covenant or condition of this Agreement;
 or (ii) negligence, fraud or willful misconduct by REG or any representative,
 agent, officer or employee of REG.

	
 

	
 

	
 

	
10.

	
Access to Books and Records. This Agreement provides for the payment by
 East Fork Biodiesel to REG of a sum
 dependent upon the amount of production of biodiesel at the Biodiesel Facility, and the Net Income of East
 Fork Biodiesel’s Biodiesel Facility. For that reason East Fork Biodiesel agrees to make available its books and
 records for inspection and copying which are reasonably necessary for
 purposes of providing information
 with respect to biodiesel production, and verifying the computation of the Net Income Bonus, to the extent not already
 available to REG in performance of its duties hereunder. REG agrees to treat information received under such
 access rights as Confidential
 Information with respect to East Fork Biodiesel.

	
 

	
 

	
 

	
 

	
This Agreement provides for reimbursement by East
 Fork Biodiesel of various expenses of REG,
 as well as the procurement of inputs for the Biodiesel Facility, sale by REG
 of East Fork Biodiesel’s Product and
 potential sharing of losses with respect to accounts

13

	
 

	
 

	
 

	
receivable. For that reason REG agrees to make
 available those portions of its books and records
 for inspection and copying which are reasonably necessary for purposes of verifying appropriate amounts of reimbursement,
 and REG’s compliance with its obligations
 set forth hereunder. East Fork Biodiesel agrees to treat information received
 under such access rights as Confidential Information with respect to
 REG.

	
 

	
 

	
 

	
Notwithstanding the foregoing,
 a party desiring inspection or audit (“Inspecting Party”) shall not be
 entitled to review any information in the possession of the other party which
 is covered by a confidentiality
 agreement. With respect to such information the Inspecting Party shall have the right, subject
 to the terms of this section, to engage an independent auditor to perform such inspection that is otherwise
 permitted hereunder. Alternatively,
 at the Inspecting Party’s option, the Inspecting Party may seek the verification and certification of compliance
 contemplated above from the independent auditors of the party whose
 books and records are to be inspected or audited.

	
 

	
 

	
 

	
The expense of any such
 inspection or audit shall be borne by the Inspecting Party, unless the need for a material correction to payment is
 revealed, in which case the reasonable expense of such inspection or audit
 shall be borne by the party whose books and records are being audited. If any such inspection or
 audit shall reveal a need for a material correction resulting in payment owing by one party to the other, the
 party determined to owe additional payment shall immediately pay the amount
 owed, together with interest from the date that such payment should
 have been made at the prime rate in effect on the date of the underpayment as
 reported in the Wall Street Journal.

	
 

	
 

	
11.

	
Force Majeure. Neither party hereto shall be liable for any
 delay arising from circumstances
 beyond its control including (but not limited to) acts of God, riot or civil commotion,
 industrial dispute, fire, flood, drought, shortage of material or labor or
 act of government, terrorist acts, war,
 or sabotage, provided that the party seeking to be excused shall make every reasonable effort to minimize
 the delay resulting therefrom, and shall give prompt written notice of the force majeure event to the other
 party. The obligations of the party giving notice, so far as they are
 affected by the force majeure event, will be suspended during, but not longer than, the continuance of the force
 majeure event. The affected party must act with commercially reasonable
 diligence to resume performance and
 notify the other party that the force majeure event no longer affects its
 ability to perform under the
 Agreement.

	
 

	
 

	
12.

	
Arbitration. Should any controversy, claim, dispute or
 difference arise between the parties
 hereunder, out of or relating to this Agreement, including, without
 limitation, its formation,
 validity, binding effect, interpretation, performance, breach or termination,
 then each and every such
 controversy, claim, dispute or difference shall be submitted and settled
 by arbitration in accordance with the Commercial Arbitration Rules then in
 effect of the American Arbitration Association,
 and shall be conducted in Des Moines, Iowa. Judgment upon the award
 rendered by the arbitrator or arbitrators may be entered in any court of competent jurisdiction.

	
 

	
 

	
13.

	
Independent Status. Subject to the
 terms and conditions of this Agreement, REG is authorized to perform services for East Fork Biodiesel as set out in
 the Agreement as an

14

	
 

	
 

	
 

	
 

	
independent contractor and as an agent with such
 authority as is necessary to carry out the services herein provided. Nothing
 in this Agreement or in the course of dealing by the parties shall be construed to constitute East Fork Biodiesel and
 REG as partners, joint venturors,
 or as guarantors for one another or as authorizing either party to obligate
 the other in any manner except as is necessary for REG to fulfill the
 services provided for hereunder.

	
 

	
 

	
14.

	
Early Termination. Notwithstanding
 the provisions of Section 6 hereof, this Agreement may be terminated in
 accordance with the following provisions:

	
 

	
 

	
 

	
A.

	
A party hereto may (but is not required to)
 terminate this Agreement if the other party breaches any provision of this
 Agreement and fails to remedy such breach within
 thirty (30) days after delivery of written notice from the non-breaching
 party describing the alleged breach and the proposed remedy. However, if the breach is non-payment by East Fork Biodiesel
 under Section 3, or REG of proceeds
 of sale under Section 5(E), the cure period shall be ten (10) days after delivery of written notice by the non-breaching
 party.

	
 

	
 

	
 

	
 

	
B.

	
Either party hereto may
 terminate this Agreement effective immediately upon delivery of written notice to the other party,
 if the other party (i) is unable to pay its debts as they mature or
 admits in writing its inability to pay its debts as they mature, (ii) makes a
 general assignment for the benefit of its creditors, (iii) files a voluntary petition for bankruptcy, or (iv)
 applies for the appointment of a receiver or trustee for all or substantially
 all of its assets or permits the appointment of any such receiver or
 trustee who is not discharged within a period of sixty (60) days after such appointment.

	
 

	
 

	
 

	
 

	
C.

	
East Fork Biodiesel may
 terminate this Agreement effective immediately upon delivery of written
 notice to REG, if REG has defaulted under the construction contract as
 defined and referred to in section 19 (“Construction Contract”) with regard to the Biodiesel Facility, and fails to
 remedy such default within the cure period
 provided under such Construction Contract.

	
 

	
 

	
 

	
 

	
D.

	
REG may terminate this Agreement
 effective immediately upon delivery of written notice to East Fork Biodiesel, if East Fork Biodiesel has defaulted
 under the Construction Contract with
 regard to the Biodiesel Facility, and failed to remedy such default within the cure period
 provided under such Construction Contract.

	
 

	
 

	
 

	
 

	
E.

	
Notwithstanding any termination
 of this Agreement, the obligations and rights of the parties which have accrued as of the time
 of such termination shall survive.

	
 

	
 

	
 

	
 

	
F.

	
Without limiting the
 generality thereof, if termination is due to a breach by a party (the
 “Breaching Party”), then the Breaching Party shall indemnify the other party (the “Non-Breaching Party”) against
any loss,
 claim or damages (including reasonable
 attorney fees) resulting from such breach or termination, and shall pay the
 costs of satisfying any obligations arranged by the Non-Breaching Party on

15

	
 

	
 

	
 

	
 

	
 

	
behalf of the Breaching Party
 prior to such termination, including commitments for raw materials, transportation, sales, and
 hedging transactions; provided, however,
 if an act or omission of the Non-Breaching Party or one or more employees,
 agents, or affiliates of the Non-Breaching Party in the performance of their obligations pursuant to this Agreement
 caused the breach of the Agreement by the Breaching Party, that the
 Non-Breaching Party will waive and release the Breaching Party from any and all claims resulting from such act or
 omission of the Non-Breaching Party or its employees, agents or
 affiliates.

	
 

	
 

	
 

	
15.

	
Remedies in the Event of Default.
 Where the Breaching Party commits a material breach of this Agreement (or of the Construction Contract as set out under
 subsections 14(C) or (D)), and: (a)
 if except as set out herein such material breach continues beyond the allowable cure period after the receipt of
 written demand for cure of such breach by the Non-Breaching Party as set out
 in Section 14 hereof (or the allowable cure period under the Construction Contract); or (b) if such
 material breach cannot be cured within such period and the Breaching Party does not within such cure period start
 to cure the breach and thereafter
 proceed diligently with the cure thereof, then the Non-Breaching Party may terminate this Agreement and may recover its
 money damages caused by such material
 breach (including arbitration fees, court costs, litigation expenses, and reasonable attorney fees) on written notice and
 demand to the Breaching Party for payment.
 Such payment shall be without prejudice to any other right or remedy that the
 Non-Breaching Party may have against the Breaching Party under this
 Agreement, at law or in equity, including injunctive relief and rights of
 specific performance.

	
 

	
 

	
 

	
16.

	
Representations and Warranties. As
 a material inducement to the other party to enter into this Agreement and with the understanding that
 the other party shall be relying thereon in consummating the
 transaction contemplated hereunder, each party hereby represents and warrants to the other party as follows:

	
 

	
 

	
 

	
 

	
A.

	
Authorization. The execution of this Agreement has been duly
 authorized by the appropriate owners and board of governance as may be
 required for such party to proceed.

	
 

	
 

	
 

	
 

	
B.

	
Standing. Such party is duly organized, validly existing
 and in good standing under the laws
 of the state of formation and such other states as may be required for this
 transaction, and has all requisite power and authority to consummate the transactions contemplated hereunder.

	
 

	
 

	
 

	
 

	
C.

	
Consents. No approval or consent is needed from any third
 party with respect to the
 performance of obligations hereunder by such party.

	
 

	
 

	
 

	
 

	
D.

	
Breaches. The execution, delivery and performance of this
 Agreement and the consummation of
 the transactions contemplated hereby do not and shall not result in any material breach of any terms or
 conditions of any mortgage, agreement or contract or obligation entered in to by such party (or in the case of
 East Fork Biodiesel by which the
 Biodiesel Facility is bound), nor, to the best of such party’s
 knowledge, shall they violate any statute, regulation, judgment or decree

16

	
 

	
 

	
 

	
 

	
 

	
of any court in which such party
 may be bound (or in the case of East Fork Biodiesel by which the Biodiesel Facility may be subject).

	
 

	
 

	
 

	
 

	
E.

	
Litigation. There is no action,
 suit or proceeding pending, or to the best of such party’s knowledge, threatened against such party which might prevent
 or delay such party’s performance of its obligations hereunder.

	
 

	
 

	
 

	
 

	
F.

	
Ownership and Operation. East Fork Biodiesel (by its duly authorized
representative signing below) further represents
 and warrants that it will be the owner of the Biodiesel Facility upon
 completion of its construction.

	
 

	
 

	
 

	
17.

	
Notices. All notices required or desired to be given
 under this Agreement must be given in
 writing, and shall be sent by registered or certified mail, return receipt
 requested, or by courier service,
 addressed to the parties at their addresses set forth below, or such other addresses as may subsequently be designated in
 writing by such party:

	
 

	
 

	
 

	
 

	
 

	
 

	
To East Fork Biodiesel:

	
 

	
East Fork Biodiesel, LLC 

	
 

	
 

	
 

	
105 North Hall Street 

	
 

	
 

	
 

	
Algona, IA 50511 

	
 

	
 

	
 

	
Attention:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
With copy to:

	
 

	
(Law Firm)

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	
,

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Attention:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
To REG:

	
 

	
Renewable Energy Group, Inc. 

	
 

	
 

	
 

	
406 1st Street, PO Box 125 

	
 

	
 

	
 

	
Ralston, IA 51459 

	
 

	
 

	
 

	
Attention: Nile Ramsbottom

	
 

	
 

	
 

	
 

	
 

	
With copy to:

	
 

	
Wilcox, Polking, Gerken, Schwarzkopf & Copeland, P.C. 

	
 

	
 

	
 

	
115 East Lincolnway, Suite 200
 

	
 

	
 

	
 

	
Jefferson, IA 50129 

	
 

	
 

	
 

	
Attn:    John A. Gerken

	
 

	
 

	
 

	
 

	
Any notice or other communications made shall be
 deemed to have been given when received or
 refused. A party may change its address for notice by giving notice of such address as provided in this Section.

	
 

	
 

	
 

	
18.

	
Annual Review of Agreement. This Agreement will be reviewed annually by
the
 parties, as they determine the best procedures for accomplishing such
 services, define their roles, and react to changes in the industry. Any
 changes to the Agreement shall require the mutual written consent of East
 Fork Biodiesel and REG.

17

	
 

	
 

	
19.

	
Condition Precedent to REG’s Performance.
 REG’s obligations and performance under the Agreement are expressly conditioned
 upon East Fork Biodiesel entering into a Design – Build Agreement with REG for
 construction of the Biodiesel Facility.

	
 

	
 

	
20.

	
Miscellaneous.

	
 

	
 

	
 

	
 

	
A.

	
Benefits. This Agreement shall bind
 and benefit the parties and their permitted successors and assigns.

	
 

	
 

	
 

	
 

	
B.

	
Assignment. Neither party may assign
 any of its rights in or delegate any of its duties under this Agreement without
 the prior written consent of the other party. Notwithstanding the foregoing, a
 party (“Assignor”) may without the need for consent from the other party assign
 any or all of its rights, duties and obligations under this Agreement to another
 entity, or to such party’s affiliate or successor (collectively herein “Assignee”),
 if such Assignee expressly assumes all obligations not otherwise remaining with
 Assignor hereunder, and Assignor nonetheless remains responsible hereunder.

	
 

	
 

	
 

	
 

	
C.

	
Governing Law. Iowa law shall govern
 the construction and enforcement of this Agreement.

	
 

	
 

	
 

	
 

	
D.

	
Entire Agreement; Amendment. This Agreement
 contains the entire agreement of the parties with respect to the subject matter
 and supersedes all prior oral or written agreements and understandings. This Agreement
 may not be amended or modified except in writing signed by both parties.

	
 

	
 

	
 

	
 

	
E.

	
Execution and Delivery. This Agreement
 may be executed in counterparts and delivered by facsimile, which, taken together,
 shall be considered one instrument and deemed an original.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
F.

	
No Inference from Drafting. The parties
 both acknowledge that they have been represented by counsel, and that this Agreement
 has resulted from extended negotiations between the parties. No inference in favor
 of or against any party shall be drawn from the fact that such party has drafted
 any portion of this Agreement.

	
 

	
 

	
 

	
 

	
G.

	
Waiver. The waiver by either party
 of a breach of any provision of this Agreement will not constitute or be construed
 as a waiver of any future breach of any provision of this Agreement.

	
 

	
 

	
 

	
 

	
H.

	
Survival. The provisions of Sections
 7, 8, 9, 10 and 12 of this Agreement shall indefinitely survive the expiration
 and termination of this Agreement.

	
 

	
 

	
 

	
 

	
I.

	
Covenant of Further Cooperation. Each
 of the parties agrees to execute and deliver such further documents and to cooperate
 in such manner as may be necessary to implement and give effect to the provisions
 contained herein.

18

	
 

	
 

	
 

	
 

	
J.

	
Enforcement and Interpretation. It
 is the desire and intent of the parties hereto that this Agreement be enforced
 to the fullest extent possible under the laws and public policies of the state
 of Iowa. Accordingly, if any particular provision of this Agreement is adjudicated
 to be invalid or unenforceable, such portion shall be deleted, and such deletion
 shall apply only to such provision with the remainder of the Agreement remaining
 valid and enforceable, to be construed in conformity with the parties’ initial
 intent. Further, to the extent any provision hereof is deemed unenforceable by
 virtue of its scope or terms with respect to geographical area or length of time,
 but may be enforceable by limitations thereon, the parties agree that this Agreement
 shall remain enforceable to the fullest extent possible after the application
 of such limitations.

	
 

	
 

	
 

	
 

	
 

	
RENEWABLE ENERGY GROUP, INC.

	
 

	
 

	
 

	
 

	
By

	

	
 

	
 

	

	
 

	
 

	
Nile Ramsbottom, President

	
 

	
 

	
 

	
 

	
EAST FORK BIODIESEL, LLC

	
 

	
 

	
 

	
 

	
By

	

	
 

	
 

	

	
 

	
 

	
President

	
(Title) 

19

Exhibit
A to
 Management and Operational Services
Agreement (“Agreement”) 

REG and East Fork Biodiesel

Listing
of Administrative Services to be Provided

          Pursuant
to the Agreement to which this is attached, and as a part of the services it
will perform thereunder, REG will provide to East Fork Biodiesel the
administrative services as set out hereafter. Such services will be included at
no additional cost to East Fork Biodiesel other than the compensation
set out under Section 3 of the Agreement, unless otherwise noted hereafter or separately
in the Agreement.

	
 

	
 

	
 

	
           Accounting
 Systems to provide:

	
 

	
 

	
$

	
Financial
 Statements

	
 

	
 

	
 

	
 

	
$

	
General Ledger Maintenance
 

	
 

	
 

	
 

	
 

	
$

	
Cash
 Management 

	
 

	
 

	
 

	
 

	
$

	
Customer
 Statements 

	
 

	
 

	
 

	
 

	
$

	
Accounts
 Receivable 

	
 

	
 

	
 

	
 

	
$

	
Accounts
 Payable 

	
 

	
 

	
 

	
 

	
$

	
Bank
 Reconciliation 

	
 

	
 

	
 

	
 

	
$

	
Depreciation
 

	
 

	
 

	
 

	
 

	
$

	
Audit
 Preparation

	
 

	
 

	
 

	
 

	
$

	
External
 Audit (providing assistance to external auditors, the expense of the external auditor to be paid by East
 Fork Biodiesel)

	
 

	
 

	
 

	
          Human Resources
 assistance, as requested, in:

	
 

	
 

	
$

	
Hiring

	
 

	
 

	
 

	
 

	
$

	
Training,
 Job Descriptions, Government Reporting with respect to personnel

	
 

	
 

	
 

	
 

	
$

	
Employee
 hand book, policies/procedures

	
 

	
 

	
 

	
 

	
$

	
Workers
 Comp

	
 

	
 

	
 

	
          Information
 Technology:

	
 

	
 

	
$

	
AS400 Software/Application
 Maintenance (REG to be reimbursed by East Fork
 Biodiesel for REG’s costs (including employee expenses) for preparation of any special requested
 applications.)

	
 

	
 

	
 

	
 

	
$

	
Telephone/Network
 Services (East Fork Biodiesel to reimburse REG for the cost of all
 equipment required and utility expenses incurred.)

	
 

	
 

	
 

	
 

	
$

	
Backup
 for Network

	
 

	
 

	
 

	
 

	
$

	
Backup
 for AS400 Files

	
 

	
 

	
 

	
 

	
$

	
Web
 Site Hosting

	
 

	
 

	
 

	
          Insurance
 Administration assistance, as requested, to:

	
 

	
 

	
$

	
Compile Initial Insurance
 Specifications

	
 

	
 

	
 

	
 

	
$

	
Solicit
 Coverage Bids

	
 

	
 

	
 

	
 

	
$

	
Review Bids/Coverage
 Issues

	
 

	
 

	
 

	
 

	
$

	
Select
 Carriers to be Utilized (Cost of Coverage to be paid by East Fork Biodiesel)

	
 

	
 

	
 

	
 

	
$

	
Review Policies

	
 

	
 

	
 

	
 

	
$

	
Compile
 Insurance Summaries

	
 

	
 

	
 

	
 

	
$

	
COI
 setup dbase review

	
 

	
 

	
 

	
 

	
$

	
Certificate
 of Insurance Follow up

	
 

	
 

	
 

	
 

	
$

	
Claim
 Reporting Procedure

	
 

	
 

	
 

	
 

	
$

	
Claims
 Tracking

	
 

	
 

	
 

	
 

	
$

	
Claims Review

	
 

	
 

	
 

	
 

	
$

	
Claim
 reporting Follow up

	
 

	
 

	
 

	
 

	
$

	
Answer Coverage Questions

	
 

	
 

	
 

	
          Communications:

	
 

	
 

	
$

	
Press
 Releases

	
 

	
 

	
 

	
 

	
$

	
Writing
 for Website

	
 

	
 

	
 

	
 

	
$

	
Media
 Relations

	
 

	
 

	
 

	
 

	
$

	
Publicity
 for Annual Meeting

	
 

	
 

	
 

	
 

	
$

	
Newsletters (East Fork Biodiesel to reimburse REG
 for supply costs, postage if applicable,
 and any outside printing services utilized.)

Exhibit
B

Management and Operational Services
Agreement (“Agreement”)

REG and East Fork Biodiesel

Listing of Services to be Provided

          As
further description of the services to be provided under the Agreement to which
this is attached, REG sets out the following:

	
 

	
 

	
Management:

	
 

	
 

	
•

	
General
 Manager with total compensation and benefits paid by REG

	
 

	
 

	
•

	
Operations
 Manager with total compensation and benefits paid by REG

	
 

	
 

	
•

	
Safety
 training and inspection

	
 

	
 

	
•

	
BQ9000 training,
 accreditation and program maintenance support

	
 

	
 

	
•

	
Consulting services for
 quality control and laboratory support

	
 

	
 

	
•

	
Consulting
 services for technical process support

	
 

	
 

	
•

	
Installation of Plant
 Information software program

	
 

	
 

	
•

	
Offering
 of new technologies to East Fork Biodiesel as they become available

	
 

	
 

	
Procurement
 of Feed Stocks and Chemical Inputs, Risk Management:

	
 

	
 

	
•

	
Recommend,
 oversee and manage Risk Management Program on behalf of and for account of East Fork
 Biodiesel

	
 

	
 

	
•

	
Submit
 periodic review of procurement program upon request

	
 

	
 

	
•

	
Leverage
 volume buying whenever possible for discounts

	
 

	
 

	
•

	
Establish
 long term supply arrangements with major processors

	
 

	
 

	
•

	
Provide
 commodity and raw materials market intelligence and information

	
 

	
 

	
Sales
 and Marketing:

	
 

	
 

	
•

	
Sales and marketing of
 product through REG’s nationwide sales, distribution and off-site storage terminal channels

	
 

	
 

	
•

	
Invoicing and accounts
 receivable management

	
 

	
 

	
•

	
Customer
 servicing and arranging transportation, logistics and scheduling of shipments for account of East
 Fork Biodiesel

	
 

	
 

	
•

	
Monitoring
 of regulatory affairs affecting biodiesel industry

	
 

	
 

	
•

	
Attendance at regional and national shows and
 conventions to promote products

	
 

	
 

	
•

	
Utilization
 of viable advertising and promotion campaigns

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