Document:

Exhibit 10.4  

AGSTAR FINANCIAL SERVICES, ACA 
 
agstar.com 

June 7, 2007 

SoyEnergy, LLC 

Chuck Sand, Chairman 

222 N. Main 

Marcus, IA 51035 

RE:     Lending
Commitments 

Dear Chuck: 

AgStar Financial Services,
ACA is please to inform you that a credit request in the amount of $33,486,540
has been approved. This commitment consists of a $29,486,540 construction note
which converts to an amortized term facility of $24,486,540 and a revolving
term facility of $5,000,000 upon completion of the construction. A revolving
seasonal loan for cash management purposes in the amount of $4,000,000 will
also be provided. The approved funds will be used to construct and operate a 30
million gallon biodiesel plant to be located near Marcus, Iowa. 

This commitment is subject
to the terms and conditions outlined in the attached ‘Terms and Conditions’,
and as follows: 

	
 

	
 

	
 

	
 

	
1.

	
AgStar’s ability to
 successfully participate the balance of the ‘Total Loan Commitment’ (TLO)
 exceeding $5,000,000 on a ‘Best Efforts Basis’. 

	
 

	
 

	
 

	
 

	
2.

	
All other terms and
 conditions as required by lenders counsel and other participating lenders,
 yet to be determined. 

AgStar looks forward to
working with you on this project. 

Please call me at
952-997-4082 if you have any questions. 

Sincerely, 

/s/ Ron G. Monson 

Ron G. Monson 

Vice President 

	
 

	 

	
14800
 Galaxie Avenue, Suite 205, Apple Valley, MN 55124

	
 

	 

	
(877)
 622-7100 / Fax: (952) 997-4077

	
 

	
Equal Opportunity Employer

SoyEnergy, LLC 

Marcus, Iowa

TERMS AND CONDITIONS

June 5, 2007

AgStar Financial Services, ACA is pleased to commit $33,486,540 in
credit facilities for the biodiesel project to be located near Marcus, IA. This
commitment is subject to the summary terms and conditions, AgStar’s ability to
participate the balance of the credit facilities it will not hold and to review
of satisfactory legal documentation. 

SoyEnergy, LLC, Accepted by:  

	
 

	
 

	
       /s/ Charles Sand, Chairman 

	 

	
 

	
Dated: 

	
      June 7, 2007 

	
 

	 

	
 

	
 

	
 

	
 

	
Summary
  of Terms and Conditions

	
 

	
 

	
 

	
Borrower:

	
SoyEnergy,
  LLC

	
 

	
 

	
 

	
Purpose:

	
The purpose
  of these credit facilities is to build a 30 mm gallon per year biodiesel
  plant on a tract of ground in Cherokee County, Iowa, three miles east of
  Marcus town center. The 35-acre Greenfield site is located on the west side
  of G Avenue, 1⁄4 miles south of the intersection of G Avenue and480th
  Street.

	
 

	
 

	
 

	
Project Costs:

	
Based upon
  the ‘Sources and Uses’, provided by SoyEnergy, LLC, dated May 10, 2007 the
  estimated cost of the turn key project is $60,686,540 including start up
  costs and working capital.

	
 

	
 

	
 

	
Capital/Equity:

	
SoyEnergy
  has raised equity in the amount of $30,130,000 or 50% of the total project
  cost, as of May 10, 2007. SoyEnergy, LLC has the option to continue to raise
  equity through 12/1/2007 or until a maximum offering amount of $39,000,000 is
  raised unless the Board of Directors elects to close the offering prior to
  12/1/2007 or prior to raising $39,000,000.

	
 

	
 

	
 

	
EPC Contract:

	
A turn-key
  fixed price construction contract with an AgStar approved contractor will be
  required. The contract will include a guaranteed fixed price, or an approved
  base price tied to an approved index, performance 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(production
  rate, biodiesel yield, gas, electrical and water consumption) and schedules,
  with liquidated damages for late completion and performance shortfalls. The
  approved contractor will provide a performance bond, if required.

	
 

	
 

	
 

 	
 

	
 

	
Technology:

	
 

	
The
  SoyEnergy facility will employ production technologies of the Bratney Company,
  Westfalia Separator US, Cimbria-Sket and Baker Group and oil expeller
  technology from Krupps AG (Germany) or The Dupps Company, Germantown, Ohio;
  and the solid fuel combustion technology from RW Rice & Co.

	
 

	
 

	
 

 	
 

	
 

	
 

	
 

	
 

 	
 

	
 

	
Construction loan:

	
 

	
There will
  be a single construction loan for not more than 50% of the borrowers proposed
  project cost including start up costs and working capital. Based upon a total
  project cost of $60,686,540, per the projected sources and uses, it requires
  Soy Energy to contribute a minimum of $30,343,270 in equity.

	
 

	
 

	
 

 	
 

	
 

	
Term loan:

	
 

	
Upon
  completion of the construction, the total loan commitment may be segmented
  into two credit facilities with final amounts to be determined by the final
  equity raised and the final debt needed:

	
 

	
 

	
 

 	
 

	
 

	
 

	
 

	
 

	
  • 

	
$24,486,540
  term facility for five years. This loan will be amortized over ten years with
  even monthly principal payments plus interest. Interest payments will begin
  immediately, however principal payments will begin in the seventh month of
  the amortization and monthly thereafter.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 	
•   

	
$5,000,000
  revolving term facility for cash and inventory management. Interest will be
  paid monthly throughout the life of the loan.

	
 

	
 

	
 

	
 

	
 

	
Seasonal loan

	
 

	
There is be
  a seasonal revolving loan for $4,000,000 for the purpose of funding
  inventory, work in progress, accounts receivable and risk management costs.
  This is a 364 day renewable loan that is subject to a borrowing base per the
  loan covenants.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The
  inventory revolver will have the ability to be segmented into smaller loans
  to cover any letters of credit needs not to exceed an aggregate maximum of
  $1,000,000.

	
 

	
 

	
 

 	
 

	
 

	
 

	
 

	
There will
  be an unused commitment fee on all revolving loans of 25 bps. This fee will
  be calculated quarterly in arrears.

	
 

	
 

	
 

	
 

	
 

	
Maturity Date:

	
 

	
Maturity
  dates will be based on the closing date subject to the above terms. The term
  of the loan is five years with a ten year amortization with level principal
  payments plus interest.

	
 

	
 

	
 

	
 

	
 

	
Purpose:

	
 

	
The purpose
  of the loan is for the construction of a 30 million gallon biodiesel
  (methyl ester) and co-product production facility.

	
 

	
 

	
 

	
 

	
Availability Period:

	
 

	
The
  construction loan is available from the day of formal loan closing until 90
  days post construction, not to exceed 16 months. A third party engineer must
  certify confirmation of the end of the construction period.

	
 

	
 

	
 

	
 

	
Interest Rates:

	
 

	
Variable Rate: 

	
 

	
 

	
 

	
 

	
 

	
The
  construction loan facility is eligible for the variable base rate of
  the30-day LIBOR plus 340 basis points; the construction period is defined as
  12 months from loan closing.

	
 

	
 

	
 

	
 

	
 

	
 

	
The term
  loan facility is eligible for the variable base rate at 30-day LIBOR plus 340
  basis points. The term loan facilities are subject to variable rate incentive
  pricing as described below.

	
 

	
 

	
 

	
 

	
 

	
 

	
Fixed Rate:

	
 

	
 

	
 

	
 

	
 

	
The term
  facilities are eligible for term fixed rates at the time of the conversion of
  the construction loan to the term loan.

	
 

	
 

	
 

	
 

	
 

	
 

	
Fixed rate
  quotes will be matched to a known interest rate cost benchmark plus 340 basis
  points.

	
 

	
 

	
 

	
 

	
 

	
 

	
Variable interest rate incentive pricing:

	
 

	
 

	
 

	
 

	
 

	
Borrowers
  must be in compliance with all loan covenants to qualify for incentive
  pricing. Covenants will be measured according lenders underwriting methods
  using the annual certified audit.

	
 

	
 

	
 

	
 

	
 

	
 

	
When owner
  equity is <50% LIBOR + 340 bps

	
 

	
 

	
When owner
  equity is between 50% - 54.99%: LIBOR + 320 bps

	
 

	
 

	
When owner
  equity is between 55% - 59.99% LIBOR + 305 bps

	
 

	
 

	
When owner
  equity is >60%: LIBOR + 290 bps

	
 

	
 

	
 

	
 

	
 

	
 

	
Basis points
  will be added in the same increments if owner equity is reduced below 60%.

	
 

	
 

	
 

	
 

	
 

	
 

	
Incentive
  rate pricing is not available for fixed rates.

	
 

	
 

	
 

	
 

	
Interest Payments:

	
 

	
Interest
  shall be calculated on the actual number of days each loan is outstanding on
  the basis of a year consisting of 365 days. Accrued construction interest is
  due quarterly from the month of closing.

	
 

	
 

	
 

	
 

	
Fees:

	
 

	
There will
  be a $75,000 underwriting fee; $25,000 is due upon acceptance of the term
  sheet by the borrower and $50,000 is due at loan closing.

	
 

	
 

	
 

	
 

	
 

	
 

	
There will
  be a 75 basis point participation fee on the entire credit facility due at
  loan closing. Portions of this fee will be shared pro rata with the senior debt
  participants.

	
 

	
 

	
 

	
 

	
 

	
 

	
There will
  be an annual facility fee of $15,000 beginning at the conversion of the
  construction loan to the term facility and upon each anniversary for four
  years.

	
 

	
 

	
 

	
 

	
Costs:

	
 

	
All costs
  associated with this construction, including cost overruns and senior loan
  are the responsibility of the borrower. Some of these costs include but are
  not limited to: appraisal, title insurance, engineer oversight.

	
 

	
 

	
 

	
 

	
Principal 

  Payments:

	
 

	
All
  principal payments are due monthly along with interest as will be described
  in the term facilities.

	
 

	
 

	
 

	
 

	
Voluntary

  Prepayments:

	
 

	
There will
  be a penalty if any prepayment of the senior indebtedness if paid in its
  entirety according to the following schedule: Anytime during the construction
  process, at the completion of the construction process and within one year of
  the conversion of the construction loan to the term loan, 2 percent; if
  within 24 months of initial operation, 1 percent.

	
 

	
 

	
 

	
 

	
 

	
 

	
Partial
  prepayments of principal are allowed if they are part of any excess cash flow
  reduction formula in the loan covenants.

	
 

	
 

	
 

	
 

	
Security:

	
 

	
First
  security interest covering all real estate and personal property including
  but not limited to such things as accounts receivables, inventory, machinery,
  equipment and investments.

	
 

	
 

	
 

	
 

	
Documentation:

	
 

	
The Loans
  will be subject to the negotiation, execution and delivery of a definitive
  Master Loan Agreement (including schedules, exhibits and ancillary
  documentation) and all such other documentation (“Loan Documents”). The
  terms, conditions and definitions in this Term Sheet are set forth in
  relative detail not for the purpose of establishing precise terminology for
  the Loan Documents, but for the purpose of establishing the basic elements of
  the offered financing package.

	
 

	
 

	
 

	
 

	
Representations

  and Warranties,

  Conditions

  Precedent,

  Affirmative and

  Negative

  Covenants:

	
 

	
Documentation
  will contain representations, warranties, conditions precedent, affirmative
  (including, without limitation, the Financial Covenants) and negative
  covenants, reporting requirements that are reasonable and customary for Loans
  of this type.

This space left intentionally blank.

	
 

	
 

	
Conditions Precedent

	 

	
1.

	
Borrower to
  provide Lender signed copies of the management agreement, including a
  detailed risk management plan for feedstock, prior to closing and/or funding
  the proposed facilities. Supporting documentation is to detail risk
  management plans, market plans of the products produced and industry
  information regarding glycerin and fatty acids, input procurement and general
  management of Borrower.

	
 

	
 

	
2.

	
Borrower or
  a permitted assignee to provide Lender with copies of all agreements with
  third parties, including but not limited to, management agreements, marketing
  agreements, procurement agreements and other contracts used in the normal
  operations of Borrower.

	
 

	
 

	
3.

	
Assignments
  of all applicable contracts to be provided to Lender prior to closing (i.e.
  biodiesel marketing contract, design/engineering contract, construction
  contract, uniform market agreement, and others).

	
 

	
 

	
4.

	
Any debt
  other than to the primary Lender and its participants is to be subordinated
  to primary lender’s 1st priority position on principal payments
  and collateral including chattel and real estate. Any subordination needed is
  to be provided to lender prior to or at loan closing. The structure of the
  subordinated debt is to be acceptable to Lender prior to execution.

	
 

	
 

	
5.

	
Borrower to
  provide Lender with proof of insurance naming the primary lender as lender’s
  loss payable and/or mortgagee at or before participation closing.

	
 

	
 

	
6.

	
Independent
  construction inspections are to occur on a scheduled basis, with unscheduled
  inspections by Lender and/or Bank Group at their discretion.

	
 

	
 

	
7.

	
All equity
  funds must be committed prior to document closing and deposited prior to
  first loan disbursement.

	
 

	
 

	
8.

	
Lender will
  participate a portion of the senior debt with other lenders. Farm Credit
  system participants must not hold more than 50% of the gross dollar amount of
  the facilities due to similar entity status.

	
 

	
 

	
 

	
This
  commitment is predicated by the ability of AgStar Financial Services to find
  other lenders/financial institutions to fund the balance not committed by
  AgStar Financial Services on a ‘Best Efforts Basis’.

	
 

	
 

	
9.

	
Borrower
  will provide Lender with proof of total equity at loan document closing. Cash
  equity requirements will be not less than 50% of the project costs, including
  start up working capital requirements.

	
 

	
 

	
10.

	
Any purchase
  money security interest lien by suppliers (Ex. FC Stone/FGDI) must be
  resolved to AgStar’s satisfaction, including but not limited to subordinating
  to the senior bank debt or reflected in the monthly borrowing base report as
  an ineligible inventory amount.

	
 

	
 

	
 

	
 

	
Loan Covenants

	 

	
1.

	
To achieve
  and maintain a minimum working capital position at the end construction
  of $3,000,000 and $6,000,000 at the end of the first 12 months of operation
  and to be maintained continually at $6,000,000 thereafter.

	
 

	
 

	
 

	
Working
  capital will be measured according to GAAP except available commitment under
  the revolving term loan will be included in the working capital calculation.

	
 

	
 

	
2.

	
To achieve
  and maintain a minimum tangible net worth of at least $28,000,000 at the end
  of the construction period and thereafter. Tangible net worth may include
  subordinated debt (i.e. Tax Increment Financing, subordinated vendor debt,
  etc.), acceptable to Lender, and is reduced by any amortized start-up costs.
  Minimum total tangible net worth, measured annually, and shall step up on an
  annual basis in an amount equal to retained earnings or $500,000, whichever is
  smaller.

	
 

	
 

	
3.

	
Minimum
  Owner Equity Percentage of 55% by the end of second operating year (24 months
  of operation). Owner Equity is defined as tangible net worth, as defined by
  covenant number 2, divided by total assets based upon GAAP.

	
 

	
 

	
4.

	
To achieve
  and maintain a minimum fixed charge coverage ratio of at least 1.25 in the
  first year of operations. Fixed charge coverage is defined as EBITDA Cash
  Flow (as numerator) as a ratio to Debt Payments (Senior and Subordinated,
  including principal and interest) plus Dividends, Distributions and
  Maintenance Capital Expenditures made during the applicable reporting period
  (as denominator).

	
 

	
 

	
 

	
Initial
  measuring time is the end of the first full production year and will be
  measured thereafter upon each annual audit.

	
 

	
 

	
 

	
 

	
5.

	
Maximum
  distributions of 40% of previous year’s net income, including state and
  federal incentive payments. Dividends may be paid out annually or as
  negotiated with lender, based on a 12-month year to be determined by Lender
  and Borrower, after Lender has received annual audited financial statements
  and after all Lender covenants are met. This percentage may be reassessed on
  an annual basis.

	
 

	
 

	
6.

	
Maximum
  annual capital expenditures, other than construction of the plant per
  approved plans, of not greater than $750,000.

	
 

	
 

	
7.

	
No
  additional borrowings over $100,000 annually without Lender approval.

	
 

	
 

	
8.

	
Cash flow
  recapture of 75% of excess cash flow but not more than $2,500,000 per year
  and $10,000,000 in aggregate. Excess cash flow is defined as EBITDA cash flow
  less Debt payments (Senior and subordinated), Maintenance Capital
  Expenditures, and covenant allowed distributions.

	
 

	
 

	
 

	
This
  covenant will not apply above 70% owner equity but will be reinstated if the
  owner equity goes below 70% owner equity.

	
 

	
 

	
 

	
This payment
  is due within 120 days of fiscal year-end based on unqualified audited
  financial statements.

	
 

	
 

	
9.

	
Borrower
  will notify Lender of any changes in plant management or any decision to
  excuse management.

	
 

	
 

	
 

	
 

	
10.

	
To provide
  monthly interim compiled financial statements (balance sheet and income
  statement), prepared in accordance with GAAP along with calculations of
  financial covenants, within thirty (30) days of month-end.

	
 

	
 

	
11.

	
To provide
  accountant prepared unqualified audit of fiscal year-end financial statements
  within 120 days of fiscal year-end.

	
 

	
 

	
12.

	
To provide
  monthly production reports and a borrowing base certificate within thirty
  (30) days of month-end. The borrowing base is to be provided monthly and
  advance rates included in the borrowing base will be 75% of soybean oil
  inventory or other such feedstock for biodiesel production, 75% of finished
  goods – biodiesel inventory, 75% of current eligible sales accounts
  receivable (0 – 30 days), and 75% of current USDA CCC Bio-energy accounts
  receivable (0 – 120 days). Borrowing base assets will be valued at the lower
  of cost or market.Exhibit 10.5  

PEF PELLET SUPPLY CONTRACT

          COMES
NOW the undersigned parties and do hereby enter into the following contract and
agreement as set forth below and based on the following terms and conditions: 

	
 

	
 

	
 

	
 

	
1.

	
The parties
  to this contract are Soy Energy, LLC, PO Box 663, Marcus, Iowa 51035-0663
  (referred to as “Soy”) and the Cherokee County Solid Waste Commission, 1805
  Linden St., Cherokee, IA 51012 (referred to as “CCSWC”). 

	
 

	
 

	
 

	
 

	
2.

	
Soy is a
  limited liability company organized and operating in the State of Iowa. Its
  current Chairman is Charles Sand. CCSWC is a quasi-governmental entity
  operating under Chapter 28E (Iowa Code 2007). Its current Chairman is Ken
  Slater. For purposes of Notice, if ever required, the parties agree that such
  Notice shall be directed to the respective entity at the above indicated
  address, attention Chairman. The parties agree to update their addresses and
  the name of the current Chairman in the event either changes. 

	
 

	
 

	
 

	
 

	
3.

	
The parties
  entered into a Letter of Intent, preliminary to entering into this contract.
  The Letter was dated July 6, 2006 and it is the intent of this agreement to
  implement the Letter of Intent. 

	
 

	
 

	
 

	
 

	
4.

	
Soy has
  committed to building and operating a bio diesel fuel production plant in
  Marcus, Iowa. CCSWC currently owns and operates a landfill and recycling
  center in Cherokee, Iowa. For purposes of this contract, CCSWC is
  constructing and will operate a Process Engineered Fuel (PEF) processing
  addition to its separation and recycling facility. CCSWC will be in
  production of PEF pellets in late 2007. Upon start up of it’s operations, Soy
  will begin buying PEF pellets from CCSWC on or about 9-1-08. 

	
 

	
 

	
 

	
 

	
5.

	
Soy has
  substantial energy needs necessary for the production of bio diesel fuel.
  CCSWC intends to have the capacity and ability to produce 60 plus tons per
  day of PEF pellets that will be used towards the energy needs of Soy in
  producing bio diesel fuel. The parties agree and acknowledge that the
  production of PEF pellets by CCSWC for this purpose is a new and unique
  endeavor. The parties have done research and gathered information and made
  projections upon which the information in this contract is based. Both
  parties have acted in good faith in making these projections. The parties
  acknowledge that it is the goal of CCSWC to produce enough PEF pellets for 60
  tons per day of usage by Soy. The parties agree and acknowledge that should
  that goal not be met, that the tonnage may be supplemented with wood chips or
  alternate fuel that is consumable in the boiler system installed by Soy in
  their plant. Also, in this regard, the parties acknowledge, as set forth
  below, that Soy will have an alternate energy source available in the event
  of production shortage of PEF pellets or other available fuel sources. It is
  the intent of the agreement for CCSWC to provide Soy with 60 tons of material
  per day. Once this endeavor is put into practice, if the result is that 

1

	
 

	
 

	
 

	
 

	
 

	
performance
  of this contract is not feasible, then parties agree to use their best
  efforts to find a replacement energy supplier, and this agreement shall
  terminate upon that occurrence. 

	
 

	
 

	
 

	
 

	
6.

	
For that
  purpose, Soy will install a pellet fired boiler system to fuel its plant with
  a requirement of approximately 4900 pounds per hour of PEF pellets or alternate
  material to fuel the boiler system. CCSWC agrees to sell and deliver to Soy
  60 tons per day of PEF pellets or alternate fuel to meet the thermo
  requirements of the plant. CCSWC will have good and marketable title to all
  of the PEF pellets or alternate fuel sold to Soy under this contract, free
  and clear of all liens and encumbrances. Soy agrees to buy 60 tons per day of
  PEF pellets, or in the alternative woodchips or other alternate fuel
  acceptable to Soy. The cost of the woodchips or alternate fuel will be passed
  along from CCSWC to Soy without additional charge. Soy may reject delivery of
  the woodchips or alternate fuel, at its discretion, if the alternate fuel or
  woodchips do not adequately supply the plant with energy. The price for the
  PEF pellets is set forth below in Par. 9. The parties agree that they may
  contract for PEF pellets above or below the 60 ton per day figure. The
  parties have established the 60 ton per day figure as the best estimate of
  the daily needs of Soy for energy in producing the bio diesel fuel. The
  parties agree and understand that the actual usage may vary from the 60 ton
  per day figure either plus or minus. The CCSWC agrees to make its best
  efforts to produce PEF pellets needed to meet the energy needs for Soy as set
  forth above and Soy agrees to purchase all of the PEF pellets needed at the
  rate prescribed below during the term of this contract. 

	
 

	
 

	
 

	
 

	
7.

	
In addition
  to this boiler, Soy will also provide a backup system which would burn
  natural gas or some other fuel source chosen by Soy. The purpose of this back
  up system is to provide for the energy needs of Soy in the event that there
  is an interruption of service. It is contemplated that an interruption of
  service could be a breakdown at the Soy plant or the CCSWC facility or a
  temporary shortage of fuel materials. The parties agree that neither party
  shall be penalized for interruptions in supply or shortages and both parties
  shall make their best efforts to make necessary repairs or solve any problems
  that are causing such interruption or shortage. 

	
 

	
 

	
 

	
 

	
8.

	
The initial
  term of this contract shall be from September 1, 2008 to September 1, 2018.
  The effective date of September 1, 2008 is an estimate at this time and the
  parties agree that this start date for the 10 year period of this contract
  can be adjusted by written agreement between the parties, signed and approved
  by each party. In the event Soy’s plant does not become operational by June
  1, 2009, this contract shall terminate, without either party having any obligation
  or liability under this contract in the future. This contract may be
  terminated or amended by written agreement approved and signed by each party.
  Additionally, if a breach of this contract occurs then the non-breaching
  party may terminate at any time after giving the other party written notice
  and a 60 day opportunity to cure. The initial 10 year term of the contract
  may be renewed by written agreement, signed 

2

	
 

	
 

	
 

	
 

	
 

	
and approved
  by each party. This contract constitutes the entire agreement of the parties.
  Any oral discussions or representations between the parties are not binding
  unless in writing, signed and approved. 

	
 

	
 

	
 

	
 

	
9.

	
Soy will pay
  CCSWC a PEF pellet procurement and delivery fee of $3.00 per MMBTU (million
  British Thermal Unit) for PEF pellets delivered to the Soy plant. CCSWC shall
  bill monthly on or about the first of each month for PEF pellets purchased in
  the previous month. Payment shall be by the 10th of each month
  following billing. Accounts unpaid for more than 30 days shall be considered
  delinquent and bear interest at 10%. Any delinquency shall constitute a
  breach of this contract. For this price, CCSWC shall produce the PEF pellets
  and deliver them to the plant location in Marcus, Iowa. CCSWC will also
  remove the ash or remains of any PEF or alternate fuel burnings for land
  filling at no charge. The parties agree to cooperate and accommodate each
  other regarding the transfer of these materials. CCSWC shall provide an
  enclosed trailer which can be used to haul the ash or remains and to provide
  for a dust free disposal of the ash as required by IDNR. 

	
 

	
 

	
 

	
 

	
10.

	
Due to the
  substantial energy needs of Soy, the parties agree that it would be in their
  best interest to provide for some amount of stock piling of PEF pellets to
  minimize any interruption of supply. The pellets need to be stored in an
  enclosed dry area to maintain their integrity. CCSWC agrees to provide
  storage at CCSWC’s facilities for sufficient PEF pellets to operate the Soy
  energy plant for 7 days and Soy agrees to provide storage at its facilities
  for sufficient PEF pellets to operate the Soy energy plant for 3 days. Soy
  may not resell or distribute the PEF pellets to any other entity or for any
  other purpose without prior written consent from CCSWC. Title and risk of
  loss or damage to any PEF pellets or alternate fuel sold hereunder shall pass
  from CCSWC to Soy upon delivery to Soy’s plant.

	
 

	
 

	
 

	
 

	
11.

	
Because Soy
  and CCSWC have not done business in the past in the manner described in this
  contract, they have not yet attempted to develop detailed procedures relating
  to ordering and logistics of delivering PEF pellets. After this contract
  becomes effective, the parties agree to work together promptly and in good
  faith to develop effective and efficient policies and procedures to cover
  these matters, based on their mutual experiences working together under this
  contract.

	
 

	
 

	
 

	
 

	
12.

	
The parties
  intend that the PEF pellets delivered by CCSWC generally will have a maximum
  moisture content of 12% or less. The size of the PEF pellets will be
  approximately 13⁄4 inch in diameter by 2 inch in size, and have ash content of
  10% or less as fired. Furthermore, the parties intend that the PEF pellets
  will produce 7,000 BTUs/LB at nominal moisture content at 7,600 BTUs/LB for
  oven dry pellets. Soy Energy may accept or reject any PEF pellets not meeting
  the engineering requirements for the Plant’s operations but shall immediately
  provide Notice in writing to CCSWC of any claimed deficiencies in the pellets
  delivered,

3

	
 

	
 

	
 

	
 

	
 

	
if not
  accepted. During the first six months of Soy Energy’s plant operations, CCSWC
  agrees to regularly test PEF pellets for compliance with the above
  specifications and send copies of the tests monthly to Soy Energy. If the
  test results are consistently satisfactory, CCSWC agrees to test PEF pellets
  once every three months thereafter. 

	
 

	
 

	
 

	
 

	
13. 

	
The parties
  agree and understand that they are subject to the laws of the State of Iowa
  under which this contract is made, and to the administrative rules and
  procedures of the Iowa Department of Natural Resources (IDNR). The parties
  agree and understand that the IDNR may dictate or prescribe certain
  procedures or changes in procedures or equipment which must be complied with.
  The parties agree to cooperate in this regard and to remain in compliance
  under all applicable laws and rules. In addition, should either party receive
  any kind of citation or notice regarding non compliance with rules or laws
  that would affect the terms of this contract, such party shall immediately
  notify the other party in writing and provide a copy of such notice on
  citation. In the event the IDNR creates restrictions which make the
  performance of this contract no longer feasible, then both parties agree to
  work together in developing a solution.

	
 

	
 

	
 

	
 

	
14. 

	
In 2006 the
  Iowa Legislature passed allowable tax credits that the parties contemplate
  will apply to this contract and the sale of PEF pellets by CCSWC to Soy. The
  annual tax credit available equals $250,000. The parties agree that the tax
  credits shall be transferred from CCSWC to Soy in their entirety and in
  return Soy shall pay to CCSWC an annual payment of the tax credit, up to
  $250,000, on or before March 1 following the year in which the credits are
  disbursed, beginning on March 1, 2009 and shall continue for each year that
  the tax credits are available. These tax credits are transferable and may be
  used by Soy or passed along to Members. If CCSWC loses eligibility for the
  tax credit or the tax credit becomes nontransferable, then Soy shall have no
  further responsibility to make payments under this section.

	
 

	
 

	
 

	
 

	
15. 

	
Soy and
  CCSWC agree to cooperate with all necessary public and regulatory disclosures
  about the existence and the contents of this contract and the transaction
  between the parties.

	
 

	
 

	
 

	
 

	
16. 

	
CCSWC will
  purchase a semi tractor and at least two trailers for the transfer and
  delivery of pellets and the ash by product. Soy agrees to cooperate in
  providing access at all reasonable times for the delivering of PEF pellets
  and pickup of ash by products, including providing parking for a trailer at
  the plant facility on a regular basis.

	
 

	
 

	
 

	
 

	
17. 

	
Each party
  will maintain all buildings and equipment located on their own real estate.
  CCSWC shall own and maintain trucks and trailers used to transport materials.

4

	
 

	
 

	
 

	
 

	
18.

	
Each party
  shall insure their own interests. Specifically, Soy will provide insurance
  for their own facilities and CCSWC shall provide insurance for their
  facilities along with the vehicles used in the delivering of product and
  pickup of by product. Each party shall insure as follows: their own employees
  for workers compensation, premises and personal liability, environmental
  coverage and any other necessary coverage. 

	
 

	
 

	
 

	
 

	
19.

	
The parties
  specifically agree that they shall each retain their own legal remedies as
  allowed under Iowa law in the event of a breach of this contract. The parties
  agree that an interruption in the production of PEF pellets by CCSWC or the
  purchase of said pellets by Soy due to breakdown, mechanical failure weather
  related or disaster, uncontrollable actions by a third party or a production
  shortage, or some other legitimate reason, shall not constitute a breach of
  contract so long as the interruption does not exceed 30 days. No omission or
  delay by either party in enforcing any right or remedy hereunder or in
  requiring performance of any term, covenant or provision herein shall
  constitute a waiver of any such right or remedy, nor shall it in any way
  effect the right of either party to enforce such provisions. The remedies set
  forth in this contract are cumulative and in addition to all other remedies
  available under this contract, at law and in equity. 

	
 

	
 

	
 

	
 

	
20.

	
In the event
  there is an interruption in the flow of PEF pellets from CCSWC to Soy, for
  whatever reason, that exceeds 30 days, or for any other dispute between the
  parties, the parties agree, prior to commencing any action in the Iowa
  District Court or any other Court to submit this matter to arbitration. The
  matter shall be arbitrated by an arbitrator agreed to by the parties or if no
  agreement can be reached by each party selecting an arbitrator and the two
  arbitrators selected choosing a third arbitrator, with a 2/3 majority being
  determative. Should the matter of an alleged breach of this contract proceed
  to Iowa District Court, the parties agree and understand that the prevailing
  party may be entitled to an award of attorneys fees. 

	
 

	
 

	
 

	
 

	
21.

	
Each party
  hereto shall defend, indemnify and hold harmless the other party and such
  other party’s affiliates’ officers, directors, shareholders, employees and
  agents from and against any and all claims, suits, demands, losses,
  liabilities, costs, damages and expenses, including attorneys’ fees and court
  costs, suffered or incurred by any such party arising from or relating to:
  (i) the material breach of any warranty, representation, term, covenant or
  condition by the indemnifying party under this contract; and (ii) the
  indemnifying party’s fraud, gross negligence, willful misconduct, or knowing
  violation of the law in the performance of its obligations under this
  contract. 

	
 

	
 

	
 

	
 

	
22.

	
By signing
  this contract, the parties agree to extend the time period set forth in their
  Letter of Intent of July 6, 2006 for entering into a contract from December
  31, 2006 to this date. 

5

	
 

	
 

	
 

	
 

	
23.

	
This
  contract may be executed in counterparts, and facsimile signatures shall be
  binding. No waiver of any provision of this contract shall be effective
  unless agreed to in writing by the party against whom such waiver is sought to
  be enforced. All covenants, warranties, representations and indemnification
  obligations set forth in this contract shall survive the termination or
  expiration hereof. If any provision of this contract is held to be invalid,
  unenforceable or contrary to public policy, the remaining provisions shall
  not be affected. This contract is binding upon and shall inure to the benefit
  of the parties and their respective representatives, successors and permitted
  assigns, but this contract and any rights of a party under this contract may
  not be transferred or assigned without the prior written consent and approval
  of each party. 

Agreed to this
7th day of June, 2007 

	
 

	
 

	
 

	
  /s/ Ken L.
  Slater

	
 

	
  /s/
  Charles Sand

	 

	
 

	 

	
Ken Slater,
  Chairman

	
 

	
Charles
  Sand, Chairman

	
Cherokee
  County Solid Waste Comm.

	
 

	
Soy Energy,
  LLC

	
 

	
 

	
 

	
STATE OF
  IOWA

	
)

	
 

	
 

	
) ss

	
 

	
COUNTY OF
  CHEROKEE

	
)

	
 

          On
this 7th day of June, 2007 before me, the undersigned, a Notary
Public in and for said State, personally appeared Ken Slater to me personally known,
who being by me duly sworn did say that he is the Chairman of said Cherokee
County Solid Waste Commission that said instrument was signed on behalf of said
Commission by authority of its Commissioners and that the said Ken Slater as
such officer, acknowledge the execution of said instrument to the voluntary act
and deed of said corporation, by it and by them voluntarily executed. 

	
 

	
 

	
 

	
  signature
  illegible

	
 

	 

	
 

	
Notary
  Public

	
 

	
 

	
 

	
STATE OF
  IOWA

	
)

	
 

	
 

	
) ss

	
 

	
COUNTY OF
  CHEROKEE

	
)

	
 

6

          On
this 13th day of June, 2007 before me, the undersigned, a Notary Public in and
for said State, personally appeared Charles Sand to me personally known, who
being by me duly sworn did say that he is the Chairman of said Soy Energy, LLC
that said instrument was signed on behalf of said Board by authority of its
Board of Directors and that the said Charles Sand as such officer, acknowledge
the execution of said instrument to the voluntary act and deed of said
corporation, by it and by them voluntarily executed. 

	
 

	
 

	
 

	
 

	
 

	
  /s/
  Carol Reuter

	
 

	
 

	 

	
 

	
 

	
Notary
  Public

7

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