Document:

exv10w12

 

Exhibit 10.12

LICENSE AGREEMENT

THIS AGREEMENT, effective as of the 1st day of May, 2006 by and between VOGELBUSCH U.S.A.,
INC., a corporation duly organized and existing under the laws of the State of Texas, with its
principal place of business at 10810 Old Katy Road, Suite 107; Houston, Texas 77043, United States
of America (hereinafter referred to as LICENSOR) and AGASSIZ ENERGY LLC., a limited liability
corporation duly organized and existing under the laws of the State of MINNESOTA and having its
principal place of business at 510 County Road 71 Valley Technology
Park, Crookston, MN
56716 (hereinafter referred to as LICENSEE);

WITNESSETH

          WHEREAS, LICENSOR is duly authorized to act as commissioned agent for Vogelbusch GmbH, a
corporation duly organized under the laws of the Republic of Austria;

          WHEREAS, Vogelbusch GmbH has for a considerable number of years been actively engaged in
research and engineering services and, through the development, design and start-up of complete
yeast fermentation and distillation process plants, has acquired a substantial amount of
proprietary Technical Information, Know-How and experience concerning the engineering of batch and
continuous fermentation processes and equipment for fermentation, evaporation, distillation and
related operations, and;

          WHEREAS, LICENSOR desires, is willing and represents and warrants that it has the right and
power to grant a license to LICENSEE for the use of LICENSOR’S Technical Information, and LICENSEE
desires such license in connection with a fuel alcohol plant located in Erskine, Minnesota
(hereinafter referred to as the “Plant”);

          WHEREAS, LICENSEE desires LICENSOR to furnish certain basic engineering services as set forth
in Schedule B of this License Agreement in connection with said Plant and LICENSOR desires to do
so;

          WHEREAS, LICENSEE intends to perform or cause to have performed construction, engineering and
procurement services for the Plant; and

          WHEREAS, LICENSEE will operate the Plant;

          WHEREAS, LICENSOR has disclosed and/or will disclose certain Confidential Information relating
to the Licensed Process to LICENSEE;

          NOW, THEREFORE, in consideration of the mutual promises herein contained, it is agreed as
follows:

MAY 1, 2006

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ARTICLE 1 Definitions

               For the purposes of this Agreement, the following terms shall have the following meanings:

               (1.1) “Licensed Process” shall mean a LICENSOR
continuous alcohol fermentation process of a mash derived from dry
milling of corn and barley, thereby forming an ethanol containing mash
suitable for recovery of ethanol therefrom in a distillation process.
The “Licensed Process” will include the final concentration of soluble
residue in an evaporator to be designed by others. The recovery and
dehydration of alcohol from fermented mash will be achieved in a
molecular sieve dehydration unit to be designed and supplied by
LICENSOR under separate contract. Warranties furnished under the
contract for the supply of the molecular sieve equipment are not part
of the “Licensed Process.” Drying of DDG and evaporated stillage will
be designed and supplied by others.

               (1.2) “LICENSOR’S Technical Information” shall mean
such but only such, Technical Information and operating data relating

to the design and operation of the Plant for the practice of the
Licensed Process.

               (1.3) “Battery Limits” shall mean only the process
sections grain cooking, enzymatic hydrolysis and mash cooling (Area
1300), fermentation and fermentation air supply and carbon dioxide
scrubber (Area 1400), distillation (Area 1500) , dehydration (Area 1550)
and decanter centrifuges (Area 1700). The Battery limits for grain
cooking and enzyme hydrolysis (Area 1300) are defined as starting with
the equipment in which “fresh substrate charge” is received. Transfer
equipment and piping to and from the Battery Limits are not included.
Measuring devices for “fresh substrate charge” will be included in the
Battery Limits.

                    The Battery Limits for the decanter centrifuge (Area 1700) are defined as ending with the
“cake discharge conveyor.”

                    The evaporation section (Area 1600 & Area 1650)
will be integrated with the distillation (Area 1500) and the DDGS drier (Area 1800) to recover
waste heat and a system specification will be supplied. Detail design by others.

                    Utilities, as are required for the operation of the Licensed Process, are outside the Battery
Limits.

               (1.4) “Consulting Services” shall mean services which
LICENSOR may provide to LICENSEE for process areas outside the Battery
Limits of the Licensed Process. These Consulting Services are
additional services and are not part of the obligations of LICENSOR
under this Agreement.

               (1.5) “Liaison Services” shall mean services requested by LICENSEE at the expense and option of
the LICENSEE which are within the Battery Limits of the Licensed Process but outside the scope of
work as defined in Article 4 of this Agreement.

MAY 1, 2006

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ARTICLE 2 Grant of License, Patent Infringement

               (2.1)
LICENSOR hereby grants to LICENSEE a non-exclusive, non-transferable (except as may
otherwise be provided herein) License to use LICENSOR’S Technical Information furnished or to be
furnished hereunder in the design, construction and operation of the Plant. The license granted
hereunder is not limited to any quantity of alcohol produced or to any specific design
configuration as approved by LICENSOR or any other limit so long as the Licensed Process is
practiced in and about the Plant.

               (2.2) This Agreement shall remain in force through the operating life of the Plant, until
terminated by mutual agreement between LICENSEE and LICENSOR, or terminated under Article 11.
Except as provided in Article 11, in the event of termination, LICENSEE shall have the right to
continue using the Licensed Process and Technical Information in the Plant following termination,
and such termination shall not relieve LICENSEE of its obligations under Articles 5, 6 and 7
hereof.

               (2.3) LICENSOR warrants that it has the right to grant
this License and disclose the Technical Information.

               (2.4) LICENSOR will hold LICENSEE harmless from damages
or other sums that may be assessed or become payable under a final
decree or judgement by a Court of final jurisdiction for patent
infringement or violation of trade secrets based upon the use by
LICENSEE of the Licensed Process in accordance with LICENSOR’S
Technical Information.

               (2.5) LICENSEE will promptly advise LICENSOR in writing of any notice, claim, suit or action
regarding infringement of patents made or brought against LICENSEE
and based upon LICENSEE’s use
of the Licensed Process. If LICENSEE so elects, LICENSOR will defend
LICENSEE at LICENSOR’s
expense in any such suit or action to the extent that the alleged infringement is based upon the
use of the Licensed Process and LICENSOR shall have sole charge and direction of such defense.
LICENSEE will render all reasonable assistance that may be required by LICENSOR. Otherwise,
LICENSEE shall have the right to defend itself by counsel of its own selection at its own expense.

               (2.6) Neither LICENSOR nor LICENSEE shall settle or compromise any such suit or action
without the consent of the other, if the settlement or compromise obliges the other party to make
any payment or part with any property or assume any obligation or grant any license or other right
or subject either to any injunction or any other restriction.

ARTICLE 3 Know-How Fee

               (3.1) In consideration of the License granted under this
Agreement, LICENSEE shall pay to LICENSOR a Know-How Fee of Four
Hundred Sixty Five Thousand and no/100 Dollars ($465,000.00) payable as
specified in Schedule A herein.

               (3.2) The fee payable under this Article shall be net of
all taxes, except income taxes.

MAY 1, 2006

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ARTICLE 4 Process Design and Technical Information Package and Fee

               (4.1) LICENSOR shall provide the Technical Information to LICENSEE and Know-How in the form of
a process engineering package as defined in Schedule B, Paragraph 2.0. LICENSEE shall pay LICENSOR
for such engineering services pursuant to the rate schedule, attached in Schedule C.

               (4.2) LICENSEE agrees to pay LICENSOR for engineering
services provided to LICENSEE hereunder in addition to the Know-How Fee
set forth in Article 3, according to the rates in Schedule C.

               (4.3) LICENSOR warrants that the work and services
performed by it or for it under this Agreement shall be performed in
accordance with accepted engineering practices, and if LICENSOR fails
to provide such work or services in accordance with such accepted
practices, LICENSOR shall promptly re-perform such work or services at
no cost to LICENSEE.

ARTICLE 5 Improvements or Modifications

               (5.1) If LICENSEE should make any improvements and/or modifications to LICENSOR’S
Technical Information, LICENSEE upon request shall make such improvements and/or modifications
available to LICENSOR.

               (5.2) Improvements and/or modifications made by LICENSOR to LICENSOR’S Technical Information
shall be the property of LICENSOR. Upon request, LICENSOR shall make available to LICENSEE and
LICENSEE shall have the right to use in the Plant all such improvements and/or modifications to
the Licensed Process made by LICENSOR under the terms mutually satisfactory to the LICENSEE and
LICENSOR.

ARTICLE 6 Visitations

               LICENSOR may, at his risk and expense and upon reasonable prior notice to LICENSEE, visit the
Plant during normal business hours with potential clients, customers or other licensees of
LICENSOR who make use of or propose to make use of the Licensed Process. Such visits are subject
to any of LICENSEE’S restrictions on access to portions of the Plant which do not directly involve
the Licensed Process. Any such visitation shall be subject to (1) the prior permission of
LICENSEE, which permission shall not be unreasonably withheld, and (2) an assumption of any
obligation of confidentiality considered appropriate by LICENSEE.

ARTICLE 7 Confidentiality

               (7.1) LICENSOR has disclosed and/or will disclose to LICENSEE LICENSOR’S Technical Information
(hereinafter called “Confidential Information”). With respect to all Confidential Information,
LICENSEE agrees: (a) that it will not, without the prior written consent of LICENSOR, disclose any
such Confidential Information to any other person, firm or corporation or use any such Confidential
Information except in accordance with the terms of this Agreement.

MAY 1, 2006

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LICENSEE further agrees to require its employees and any others who, by necessity, have been
or shall be given access to, or have received or shall receive disclosure of, any said
Confidential Information, to maintain the same in confidence.

               (7.2) The provisions of (7.1) shall not apply to any such Technical Information which:

                    (7.2.1) is in the possession of the LICENSEE
prior to LICENSOR’S disclosure; or

                    (7.2.2) is in the public domain prior to LICENSEE’S receipt of said Information
from LICENSOR or which subsequently becomes a part of the public domain by
publication or otherwise, except by LICENSEE’S wrongful act.

               (7.3) All drawings, prints, data and other Information furnished by LICENSOR to LICENSEE shall
remain the property LICENSOR and shall be deemed as loaned to LICENSEE for the purpose of
designing, constructing, supplying, maintaining and operating the Plant for so long as the Plant
is operated under the License granted herein. Except as otherwise provided in this Agreement,
LICENSEE will not, without the prior written consent of LICENSOR, insofar as LICENSOR’S
Confidential Information is concerned, use, reproduce or permit the use, reproduction or copying
of any said drawings, prints, data and other Information by unauthorized third parties, except
that copies of Confidential Information may be maintained by government agencies. It is understood
that this paragraph shall not be interpreted to prevent such reasonable inspections of portions of
the Plant by persons engaged in the sale or repair of equipment, as are customarily necessary in
connection with the design, construction, supply, maintenance and operation of chemical plants.

               (7.4) The obligations of confidentiality in this Article 7 shall survive the termination of
this Agreement for a period of ten (10) years.

               (7.5) Both parties agree that the obligations set forth in this Article 7 shall also apply to
any and all Information regarding the Plant and its operation as it may be changed, modified or
corrected by LICENSOR.

ARTICLE 8 Assignment

               (8.1) This Agreement shall not be assignable by LICENSOR or LICENSEE subject, however, to the
following exceptions:

                    (8.1.1) With the prior expressed written
consent of the other party.

                    (8.1.2) To the General Contractor
(specifically the Biorenewable Group) for the purpose of designing, constructing and starting up of
the plant. Once the plant has been accepted by LICENSEE and is in operation the Agreement will be
automatically assigned back to LICENSEE.

                    (8.1.3) Upon the acquisition of all or
substantially all of the stock or assets of LICENSOR or LICENSEE, whether by merger, consolidation,
purchase or otherwise.

MAY 1, 2006

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               (8.2)
All assignees or successors of either party shall be bound by all the terms and
conditions of this Agreement.

               (8.3)
The Licensed Process only applies to the Plant set forth in this Agreement and cannot be
extended to any other Plant of LICENSEE by assignment or otherwise, without the expressed written
agreement of LICENSOR.

ARTICLE 9 Force Majeure

               Notwithstanding any other provisions to the contrary in this Agreement, neither party hereto
shall be responsible for a default in or breach of this Agreement which is the result of strike,
fire, war, earthquake, flood, pestilence, riot, act of God, act of government or other cause
beyond the control of the parties, unless performance is not promptly resumed upon termination of
such cause.

ARTICLE 10 Applicable Law

               This Agreement shall be construed under and governed by the laws of the State of Minnesota.

ARTICLE 11 Default

               (11.1) If either party:

(a) shall fail to comply with any substantial obligation imposed upon
it under this Agreement,

(b) shall make any general arrangement or assignment for the benefit of
creditors, files any type of bankruptcy proceedings, there is appointed
a Trustee or Receiver to take possession of substantially all of either
party’s assets, or such assets are attached or otherwise judicially
seized, such acts shall constitute a default under this Agreement, and
the other party may give notice in writing to the party in default
specifying the failure complained of and, in the event that such
failure is not made good within thirty (30) days after the service of
such notice, the party serving the notice may forthwith immediately
terminate this Agreement.

               (11.2) Notwithstanding Paragraph 11.1 of this
Article 11, it is expressly agreed that the failure by LICENSEE to make
any payment according to the terms and conditions, as set out in
Schedule A and Schedule C of this Agreement, shall constitute a
default, and LICENSOR may, at its sole discretion and without notice to
LICENSEE, terminate this Agreement and/or suspend all activities,
including but not limited to the transfer of Know-How, documents and
other services until LICENSEE has made full payment, as per Schedule A
and Schedule C. Any delays caused by default by LICENSEE shall suspend
all time limits imposed on LICENSOR by this Agreement, until such
default has been corrected. Further, upon such default in payment,
LICENSOR may require LICENSEE to make advance payments or acceptable
payment guarantees to LICENSOR before resuming further services under
this Agreement. In the event of termination by LICENSOR under this
Article 11.2, LICENSOR may serve notice to LICENSEE and withdraw all
Licenses granted under Article 2 of this Agreement.

MAY 1, 2006

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               (11.3) Upon default of any of the terms of this Agreement and after any notice required
above, the non-defaulting party may seek any remedies available to it at law or in equity and
shall have the right to recover its attorney’s fees from the defaulting party.

ARTICLE 12 Licensor’s Limitation of Liability

               LICENSOR’S AGGREGATE LIABILITY FOR ANY CAUSE OR CAUSES
UNDER THIS LICENSE AGREEMENT SHALL NOT EXCEED THE TOTAL AMOUNT OF THE “KNOW-HOW” FEE STIPULATED
UNDER SCHEDULE A AND LICENSEE RELEASES LICENSOR FROM ANY LIABILITY IN EXCESS THEREOF, EXCEPT TO
THE EXTENT SUCH LIABILITY IS INSURED.

ARTICLE 13 Trademarks

               LICENSEE agrees not to use any trademark or trade name owned or controlled by LICENSOR except
as may be specifically agreed to in writing by LICENSOR.

ARTICLE 14 Waiver of Default

               Waiver by either party of any default by the other under the terms of this Agreement shall
not be deemed to be a waiver by such party of any other default by the other, whether similar or
dissimilar in nature. No modifications or waiver of any of the provisions herein contained shall
be binding unless made in writing and signed by authorized representatives of the parties.

ARTICLE 15 Consequential Damages

               In no event shall LICENSOR be liable to LICENSEE for any incidental or consequential damages,
including but not limited to loss of use, loss of profit, loss of market, loss of client or
customer, or potential client or customer.

ARTICLE 16 Severability

               In the event that any term or provision of this Agreement is invalidated at any time by rule
of law or statutory provision, the remaining terms and provisions of this Agreement shall remain in
full force and effect and be binding upon both parties hereto.

ARTICLE 17 Notices

               All notices pertaining to this Agreement shall be in writing and shall be effective upon
receipt. Such notices whether to LICENSOR or LICENSEE shall be sufficient if transmitted by
facsimile, delivered in person, or sent by registered or certified mail. The parties designate the
following addresses for notice purposes:

MAY 1, 2006

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	 	Vogelbusch U.S.A., Inc.
	 

	 	10810 Old Katy Rd., Suite 107
	 

	 	Houston, Texas 77043
	 

	 	Facsimile: 713-461-7377
	 
	 	 
	 

	 	Agassiz Energy LLC
	 

	 	510 County Road 71
	 

	 	Valley Technology Park
	 

	 	Crookston, MN 56716
	 

	 	Facsimile: 218-281-8052

ARTICLE 18 Scope of Agreement

               This Agreement sets forth the entire agreement of the parties and supersedes any and all
previous agreements between the parties with respect hereto, and no written undertakings given
either previously to or simultaneously with the signing of this Agreement and not expressly made a
part hereof shall be admitted to vary or correct its terms.

ARTICLE 19 Attachments

               The following documents are incorporated herein by reference and made part hereof:

Schedule A, Know-How Fee

Schedule B, Process Design and Technical Information Package

Schedule C, Rate Schedule and Payment Terms

Process Guarantee Agreement with Schedules A,B,C&D

          IN WITNESS WHEREOF, the parties have agreed to the foregoing on this 1st day of May, 2006.

	 	 	 	 	 
	AGASSIZ ENERGY LLC

	 	 	 	VOGELBUSCH U.S.A., INC.
	 
	 	 	 	 
	/s/ Donald Sargeant

	 	 	 	/s/ Gunter B. Brodl
	 

	 	 	 	 
	By: Donald Sargeant

	 	 	 	By: Gunter B. Brodl
	 
	 	 	 	 
	Title: Chief Manager

	 	 	 	Title: President

MAY 1, 2006

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LICENSE AGREEMENT

SCHEDULE A

Know-How Fee

     In consideration of the License granted hereunder, LICENSEE agrees to pay to LICENSOR a lump
sum, one-time Know-How Fee in the amount of Four Hundred Sixty Five Thousand and no/100 Dollars
($465,000.00), payable as follows:

	 	A.	 	On transfer of the Engineering Documents as described in
Schedule B, Para. 2.0 or financial closing, whichever comes
later, LICENSEE agrees to pay to LICENSOR the sum of Two
Hundred Thirty Two Thousand Five Hundred and no/100 Dollars
($232,500.00) to be applied to the Know-How Fee herein described.
	 
	 	B.	 	The balance of Two Hundred Thirty Two Thousand Five Hundred
and no/100 Dollars ($232,500.00) is payable in full when the
Plant has been accepted by LICENSEE, as described in Article
3 of the Process Guarantee Agreement. It is expressly agreed
that the total Know-How Fee shall be due and payable by
LICENSEE regardless of whether LICENSEE elects to complete
the Agreement by continuing with the Start-Up Services and a
Performance Guarantee Test Run per Articles 5 and 6 of the
Process Guarantee Agreement.

MAY 1, 2006

 

 

LICENSE AGREEMENT

SCHEDULE B

PROCESS DESIGN AND

TECHNICAL INFORMATION PACKAGE

1.0 Design Basis

          The proposed alcohol plant to be located in Erskine, Minnesota. The nominal design capacity
will be 50 MMGPY anhydrous alcohol on the basis of 350 operating days/year.

	 	1.1	 	Raw Material and Yield
	 
	 	 	 	Feedstock to the LICENSOR battery limits will be:
	 
	 	 	 	Cleaned U.S. No. 2 yellow corn (or Milo) with a moisture content of not more
than 16% wt. For design purposes, an average starch content of not less than 60% wt
on as-is basis is assumed. Corn (Milo) shall be milled to the fineness specified by
LICENSOR.
	 
	 	 	 	AND up to, but not to exceed 20% OF TOTAL STARCH in Substrate charge can be supplied
from:
	 
	 	 	 	Cleaned U.S. No. 2 Hulless Barley with a moisture content of not more than 14% wt.
For design purposes, an average starch content of not less than 57.5% wt on as-is
basis is assumed. Barley shall be milled to the fineness specified by LICENSOR.
	 
	 	 	 	The total carbohydrate feed to the alcohol plant shall be based on a yield of 1.96
pounds of starch per pound of anhydrous alcohol produced.
	 
	 	1.2	 	Capacity, Finished Product Quality
	 
	 	 	 	The plant will be designed to operate on a continuous basis 350 operating days per
year.
	 
	 	 	 	Anhydrous fuel alcohol shall conform to the current ASTM specification for fuel
alcohol (ASTM D-4806-04a).
	 
	 	 	 	Design capacity will be 5,960 gallons (at 60° F) per hour of anhydrous alcohol
including fusel oil at 0.8% wt. moisture maximum.

MAY 1, 2006

 

 

LICENSE AGREEMENT

SCHEDULE B

PROCESS DESIGN AND

TECHNICAL INFORMATION PACKAGE

	1.0	 	Design Basis

          The proposed alcohol plant to be located in Erskine, Minnesota. The nominal design capacity
will be 50 MMGPY anhydrous alcohol on the basis of 350 operating days/year.

	 	1.1	 	Raw Material and Yield
	 
	 	 	 	Feedstock to the LICENSOR battery limits will be:
	 
	 	 	 	Cleaned U.S. No. 2 yellow corn (or Milo) with a moisture content of not more than 16%
wt. For design purposes, an average starch content of not less than 60% wt on as-is
basis is assumed. Corn (Milo) shall be milled to the fineness specified by LICENSOR.
	 
	 	 	 	AND up to, but not to exceed 20% OF TOTAL STARCH in Substrate charge can be supplied
from:
	 
	 	 	 	Cleaned U.S. No. 2 Hulless Barley with a moisture content of not more than 14% wt.
For design purposes, an average starch content of not less than 57.5% wt on as-is
basis is assumed. Barley shall be milled to the fineness specified by LICENSOR.
	 
	 	 	 	The total carbohydrate feed to the alcohol plant shall be based on a yield of 1.96
pounds of starch per pound of anhydrous alcohol produced.
	 
	 	1.2	 	Capacity, Finished Product Quality
	 
	 	 	 	The plant will be designed to operate on a continuous basis 350 operating days per
year.
	 
	 	 	 	Anhydrous fuel alcohol shall conform to the current ASTM specification for fuel
alcohol (ASTM D-4806-04a).
	 
	 	 	 	Design capacity will be 5,960 gallons (at 60° F) per hour of anhydrous alcohol
including fusel oil at 0.8% wt. moisture maximum.

MAY 1, 2006

 

 

	 	1.3	 	LICENSOR’s Scope of Work
	 
	 	 	 	LICENSOR’S battery limits include the following areas:
	 
	 	 	 	Design by LICENSOR:

	 	1.3.1	 	Mash preparation and cooking, enzyme conversion and mash cooling (Area 1300)
	 
	 	1.3.2	 	Prefermentation, fermentation, beer well, fermentation air supply and carbon dioxide
scrubber (based on a continuous fermentation
system) (Area 1400)
	 
	 	1.3.3	 	Distillation of alcohol to near azeotropic point (Area 1500)
	 
	 	1.3.4	 	Dehydration of alcohol with a molecular sieve
designed and supplied by LICENSOR under a separate
contract. (Area 1550)
	 
	 	1.3.5	 	Stillage decantation (Area 1700)
	 
	 	1.3.6	 	CIP System for the Plant (Area 1900).

	 	1.4	 	Process Systems within Battery Limits of LICENSOR to be
Designed by Others:

	 	1.4.1	 	Waste heat evaporator (Area 1600)
	 
	 	1.4.2	 	Final forced circulation evaporator (Area 1650)

	 	1.5	 	Process Systems Outside LICENSOR’S Battery Limits

(System Specifications will be supplied):

	 	1.5.1	 	Grain Milling (Area 1200)
	 
	 	1.5.2	 	DDGS Drying (Area 1800)

	 	1.6	 	Utilities
	 
	 	 	 	LICENSOR will specify the quantity, temperature and pressure requirements for the following utilities:

	 	1.6.1	 	Steam within the Battery Limits: Steam at 150 psig will be furnished by LICENSEE.
	 
	 	1.6.2	 	Cooling water/Chilled water: Cooling water at 85°F
maximum supply temperature will be made available
as specified by LICENSOR.
	 
	 	 	 	Chilled water: Chilled water at 70° F maximum supply temperature will be made
available as specified by LICENSOR.

MAY 1, 2006

 

 

	 	1.6.3	 	Process water: Process water will be furnished to
the plant battery limits. Process water shall be
drinking water quality and shall be substantially
free of active micro-organism. Water may be
chlorinated, but residual chlorine content shall
not exceed 2 ppm. In order to minimize scaling of
equipment, hardness expressed as Calcium (Ca++)
shall not exceed 50 ppm. Silica content expressed
as Sio2 shall not exceed 20 ppm. Process water
shall have a pH value of not more than 8.5 and not
less than 5.0.
	 
	 	 	 	Process water supply for the scrubbers in fermentation (Area 1400) and
distillation (Area 1500) shall be treated, soft water to have a
calcium content of not more than 5 ppm as Ca. This water shall be
cooled to have a temperature of
55°F maximum.
	 
	 	1.6.4	 	Instrument and plant air: Air will be made
available to the plant battery limits at a
pressure of not less than 60 psig. Instrument air
shall be dry with a dew point of — 50°F maximum.
	 
	 	1.6.5	 	Waste water: The waste water from the alcohol
facility will be discharged to waste water
treatment facilities to be designed by others. An
estimate of COD loading will be supplied by
LICENSOR.
	 
	 	1.6.6	 	Electricity: Power at the required voltage will be supplied by the LICENSEE.

	2.0	 	Technical Information Package
	 
	 	 	For the areas included in its battery limits (except Areas 1600, Waste Heat Evaporator and
Area 1650-Final Evaporator), LICENSOR will supply the following documentation:
	 
	2.1	 	Overall block flow diagram including major material balance and
utility requirements for each area, as well as an estimate of the
waste treatment loads of the effluents when applicable.
	 
	2.2	 	Process Flow Diagrams (PFD’s) and Flow Data Lists (FList). PFD’s
will show all process equipment, all major process lines and
control philosophy. Indicated will be all critical flows
including temperatures and pressures and composition. Utility and
CIP connections will also be shown. Flow data lists will show all
material and utility flows with their composition and relevant
physical stream data.

MAY 1, 2006

 

 

	2.3	 	Equipment process specifications for equipment within the battery
limits and including laboratory equipment. The specifications
will contain sufficient information for the LICENSEE to obtain
firm quotes from vendors and to proceed with further detailed
engineering, purchasing and construction.
	 
	2.4	 	Process and Instrument Diagrams (P&ID’s) showing all equipment
within the battery limits, all connecting piping (including size,
material). The P&ID’s will include symbolic identification of
valves, check valves, strainers, sample points and CIP
connections. The P&ID’s will include all instrumentation and
safety relief valves. The P&ID’s will also show critical
elevations and relevant notes for piping design and field
installation.
	 
	2.5	 	EPA permit documentation including indication on a plot plan
provided by the LICENSEE the location of the emission points.
Also provided will be process schematics identifying each emission
source. Finally, detailed calculations for air emission control
equipment suitable for use in EPA permit applications will be
supplied.
	 
	2.6	 	Instrument process data lists (ISA format or equivalent) and
including relief valve specifications suitable for sizing of
control valves and relief valves by others.
	 
	2.7	 	Complete operating description and narrative description of
complex control functions. Preliminary operating instructions to
be completed during startup. Laboratory test procedures for in-process control and finished product quality.
	 
	2.8	 	For the process areas Waste Heat Evaporator (Area 1600) and Final
Evaporator (Area 1650), LICENSOR will supply Process Flow Diagrams
with flows to/from these areas and an overall system
specification. No detailed equipment specifications, P&ID’s,
equipment layouts or instrument process data lists will be
furnished for equipment within the system specification. LICENSOR
will furnish documentation for peripheral equipment within these
process areas.
	 
	2.9	 	For the process areas listed in Para. 1.5 (Outside LICENSOR’s
Battery Limits), LICENSOR’S services shall be limited to supply
the following information:
	 
	 	 	Area 1200 — Grain Milling: Required quantity and milling size distribution.
	 
	 	 	Area 1800 — DDGS Drying: Quantity and moisture content of wet cake
feed from Area 1700 (Decanter Centrifuge), quantity and moisture
content of concentrated product feed from Area 1650 (Final
Evaporator).
	 
	 	 	AutoCad 2006 will be used for all drawings. Microsoft Excel will be used for equipment and
line lists and most calculations. Electronic transmittals will be in pdf format except for
drawings.

MAY 1, 2006

 

 

	3.0	 	Documentation Not Included in Technical Information Package 
	 
	 	 	The following information will be supplied by others:

	 	3.1	 	Engineering for concrete, foundations, structures and
buildings.
	 
	 	3.2	 	Engineering for power and steam distribution and electrical
engineering information.
	 
	 	3.3	 	Final instrument specifications, loop drawings and control
valve sizing and relief valve sizing.
	 
	 	3.4	 	Engineering for boiler, boiler feed water, cooling tower,
chilled water, instrument/plant air, process and utility
water systems and effluent treatment.
	 
	 	3.5	 	Engineering for fire protection system.
	 
	 	3.6	 	Detailed specifications and engineering for piping,
insulation, electric heat tracing and painting.
	 
	 	3.7	 	Documentation for Waste Heat Evaporator (Area 1600) and Final
Evaporator (Area 1650) except Per Article 2.8.
	 
	 	3.8	 	Documentation for Grain Milling (Area 1200) except per
Article 2.9.
	 
	 	3.9	 	Documentation for DDGS Drying (Area 1800) except per Article 2.9.
	 
	 	3.10	 	Piping layout drawings.
	 
	 	3.11	 	Best Available Control Technology (BACT) review and
preparation and filing of EPA permits
	 
	 	3.12	 	HAZOP reviews and reports.
	 
	 	3.13	 	Any other documentation not specifically described in Article 2 hereof.

	4.0	 	Liaison Services (Hourly Rates per Schedule C)
	 
	 	 	At the request and expense of LICENSEE, LICENSOR will:

	 	4.1	 	Be available to clarify process design to the detail
engineers.
	 
	 	4.2	 	Review and markup of final vendor drawings for new equipment.
	 
	 	4.3	 	Review the detail engineering work for conformity with the
process design and to evaluate changes requested by the
detail engineers.

MAY 1, 2006

 

 

	 	4.4	 	Inspect the construction site for periodic reviews of progresses.

	5.0	 	Startup Services and Operator Training (Hourly Rates per Sched.C)

     To ensure complete transmittal of LICENSOR’s operating knowledge to the LICENSEE, at the
request and expense of LICENSEE, LICENSOR will:

	 	5.1	 	Provide operator classroom training.
	 
	 	5.2	 	Provide operator field training during the static and dynamic checkout of the equipment.
	 
	 	5.3	 	Provide assistance and advice to operations during the
initial startup period. This includes support in reaching
the process control parameters, troubleshooting, and control
loop tuning.
	 
	 	5.4	 	Provide assistance and advice to operations during a
Performance Guarantee Test run, monitor and evaluate results,
and issue a final report.

     Such services will consist of up to four (4) Process Consultants or Managers or Process
Engineers to provide twenty-four hour shift coverage during critical startup periods and to conduct
comprehensive operator training programs and to prepare final process operating instructions during
plant Startup.

MAY 1, 2006

 

 

LICENSE AGREEMENT

SCHEDULE C

RATE SCHEDULE AND PAYMENTS TERMS

The following engineering rate schedules will apply:

	 	A.	 	Process Engineering Package

          As described in Schedule B, 2.0 for the work in the Battery Limits in Schedule B, Para. 1.3:

          Total Price: $455,000.00

	 	A1.	 	With execution of Agreements or release to start process
engineering design, whichever comes earlier: $105,000.00
	 
	 	 	 	Less: Payments received for preliminary work will be credited towards this
amount.
	 
	 	A2.	 	On release of final PFD’s, material balances and major equipment
specifications: $100,000.00
	 
	 	A3.	 	On release of P&ID’s: $100,000.00
	 
	 	A4.	 	On release of all equipment specifications: $75,000.00
	 
	 	A5.	 	Balance on transfer of all remaining documentation:
$75,000.00

	 	B.	 	Services to be Invoiced in Addition to the Lump Sum Fixed Price per Para. A1

          Such services shall be requested and authorized by LICENSEE before they are provided. LICENSEE
shall have the right to request an estimate of hours for such services in advance.

	 	BI.	 	Liaison Services

          The services described in Schedule B, Para. 4.0 will be invoiced according to LICENSOR’S Rate
Schedule.

	 	BII.	 	Startup Service, Operator Training and Process Guarantee Run

          The services described in Schedule B, Para. 5.0 will be invoiced according to LICENSOR’S Rate
Schedule.

	 	BIII.	 	Consulting Services

          As described in Article 1, Para. 1.4 of the License Agreement, Consulting Services will be
invoiced according to LICENSOR’S Rate Schedule:

MAY 1, 2006

 

 

	 	 	 	 	 
	Licensor’s Rate Schedule	 	 	 	 
	Officers of Vogelbusch U.S.A., Inc.
and Senior Technical Personnel of
Vogelbusch GmbH-Vienna
	 	$ 160.00/Hour
	 
	 	 	 	 
	Senior Technical Personnel of
Vogelbusch U.S.A., Inc.
	 	$ 145.00/Hour
	 
	 	 	 	 
	Process & Mechanical Engineering
(According to experience)
	 	$110.00-$125.00/Hour
	 
	 	 	 	 
	Technical Support Personnel and
Drafting (includes computer time for AutoCad
drawings)
	 	$ 75.00/Hour
	 
	 	 	 	 
	Clerical (Typing, Expediting, etc.)
	 	$ 40.00/Hour

     Note: The above Rate Schedule is valid until December 31, 2006 and is subject to yearly review
and increases not to exceed 5% per annum beyond 2006.

          Reimbursable Expenses

          The expenses of LICENSOR and Vogelbusch GmbH for services requested by LICENSEE to be
performed away from their respective offices in Houston, Texas or Vienna, Austria will be
reimbursed at cost. Such expenses include those incurred by engineering personnel traveling or
assigned to LICENSEE’s offices or the Plant. The direct expenses include, but are not limited to,
air travel, lodging, rental cars, taxis, telephone calls and outside laboratory analytical
services. International air travel shall be subject to approval by LICENSEE. Meal allowance will
be invoiced at the rate of $45.00 per day.

          Manner and Times of Payment

          On or as soon as practicable after the first day of each calendar month, LICENSOR shall
prepare and submit to LICENSEE an invoice covering Engineering Fees and Reimbursable Expenses
incurred during the previous calendar month. LICENSEE shall pay to LICENSOR the amount shown to be
due within thirty (30) days after receipt of the invoice. Should LICENSEE dispute any portion of
any statement, LICENSEE shall pay the undisputed portion of the statement within the time stated
above, and at the same time, advise LICENSOR in writing of the disputed portion. Amounts owed to
LICENSOR more than thirty (30) days beyond the payment terms provided for in this Agreement shall
accrue interest each day such invoice is not paid at the rate of 12% per annum.

MAY 1, 2006exv10w13

 

Exhibit 10.13

PROCESS GUARANTEE

          THIS AGREEMENT, effective as of the 1st day of May, 2006 by and between VOGELBUSCH U.S.A.,
INC., a corporation duly organized and existing under the laws of the State of Texas, with its
principal place of business at 10810 Old Katy Road, Suite 107; Houston, Texas 77043; United States
of America (hereinafter referred to as “LICENSOR”), and AGASSIZ ENERGY LLC., a corporation duly
organized and existing under the laws of the State of Minnesota, having its principal place of
business at 510 County Road 71 Valley Technology Park Crookston, MN 56716 (hereinafter referred to
as “LICENSEE”).

WITNESSETH

     WHEREAS, LICENSOR is duly authorized to act as commissioned agent for Vogelbusch GmbH., a
corporation duly organized under the laws of the Republic of Austria.

     WHEREAS, LICENSOR and LICENSEE entered into a License Agreement effective as of the 24th
day of April 2006, where LICENSOR has agreed to provide certain proprietary Know-How and Technical
Information and to perform certain work and services for LICENSEE in connection with a fuel alcohol
plant located in Erskine, Minnesota (hereinafter referred to as the “Plant”) for operation under
said License Agreement between the parties hereto; and,

     WHEREAS, LICENSEE desires that the Plant meet certain standards of performance, and LICENSOR is
willing, as hereinafter provided, to guarantee the standard of performance of the Plant;

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

ARTICLE 1 Scope of Agreement

          This Agreement shall be considered part of the License Agreement and should there be a conflict
between the terms of this Agreement and the License Agreement, the terms of the License Agreement
shall prevail.

ARTICLE 2 Definitions

          (2.1) The defined terms in the License Agreement shall have the same meanings when used herein and
shall apply to this Agreement.

          (2.2) The terms defined in Schedule A annexed hereto shall, for all purposes of this Agreement,
have the meanings specified in said Schedule A.

MAY 1,
2006

1

 

ARTICLE 3 Application of Guarantees

          (3.1) LICENSOR’S guarantees as herein made shall apply to the Plant, only when the Plant is
installed, erected, operated and maintained under the design conditions and in accordance with the
engineering design specifications and instructions furnished or approved by LICENSOR.

          (3.2) When LICENSOR’S guarantee shall have been met as herein provided, such guarantee shall no
longer apply to the Plant and LICENSOR’S obligations with respect thereto shall be deemed satisfied
and shall cease.

ARTICLE 4 Performance Guarantee

          LICENSOR guarantees that during a Performance Test conducted as herein provided, the Plant will
process the Fresh Substrate Charge and produce therefrom “anhydrous alcohol”, as set forth in
Schedule B annexed hereto.

ARTICLE 5 Start-Up Assistance

          (5.1) LICENSEE shall give at least thirty (30) days notice in writing to LICENSOR specifying the
estimated date of Mechanical Completion of construction of the Plant. LICENSOR’S Senior
Technologists shall be in attendance at the Plant site two (2) weeks prior to startup, as
necessary, to inspect the Plant to determine if the Plant is ready to operate and that the
conditions as set forth in Article 3.1 have been met, and will inform LICENSEE in writing of any
required modifications. After such modifications are complete, LICENSOR will advise LICENSEE that
the plant is ready to commence initial operations.

          (5.2) LICENSOR’S personnel as described in Schedule B of the License Agreement shall assist
LICENSEE in the start-up and initial operation of the Plant in order to establish operating
conditions, and to carry out the Performance Guarantee Tests of Article 6.

          (5.3) LICENSOR’S personnel shall also provide technical and operation training for technical
representatives of LICENSEE.

          (5.4) LICENSEE agrees that it shall pay LICENSOR for Engineering Services, as set forth in Schedule
C of the License Agreement until the completion of the initial 180 operating day of the Plant,
during which LICENSOR’S personnel are in attendance, or the first successful Performance Test,
whichever occurs earliest. Thereafter, all LICENSOR’S expenses up to the limit set out in Article
12 of the License Agreement shall be paid by LICENSOR if failure to meet the Process Guarantee is
solely due to LICENSOR’S design and services, as defined in Schedule B of License Agreement.

MAY 1,
2006

2

 

ARTICLE 6 Performance Test

          (6.1) After the plant has been started up per Article 5.2 and has reached nameplate
capacity, but no longer than 90 (ninety) days from the date LICENSEE has completed the
required modifications per Article 5.1, LICENSOR shall notify LICENSEE that the Plant is ready for
the Performance Test.

          (6.2) LICENSEE shall then have the obligation of calling for the first Performance Test by setting
a date for same not less than fourteen (14) days nor more than thirty (30) days from the date of
the Notice from LICENSOR mentioned above. Delays caused by other portions of the plant outside the
“Battery Limits” of the Licensed Process shall not be deemed to constitute a material cause for a
delay of Performance Test, unless LICENSOR accepts such a delay.

          (6.3) The Performance Test shall be conducted by LICENSEE according to instructions by LICENSOR and
the guarantee made in Article 4 shall be deemed to have been met as soon as the Plant has satisfied
the requirements of the Performance Test.

          (6.4) LICENSOR shall have the right to conduct two (2) Performance Tests at LICENSEE’S expense.
Thereafter, LICENSOR shall have the right and LICENSEE shall permit LICENSOR to conduct as many
Performance Tests as LICENSOR deems necessary, at LICENSOR’S expense, provided LICENSEE shall not
be obligated to permit a Performance Test 180 days beyond the date of the first test; further
provided, however, that such time limit shall be exclusive of periods of delay caused by LICENSEE
or by matters beyond the control of either party.

          (6.5) Within a reasonable period of time after completion of each Performance Test, LICENSOR shall
submit to LICENSEE in writing the results thereof, and shall certify in writing whether the
guarantee relating to such Performance Test has been met. Such guarantee shall be deemed to have
been met if LICENSOR certified that the Performance Test was successful and if LICENSEE, within 30
(thirty) days after notification by LICENSOR of the results of such Performance Test, does not
respond in writing to LICENSOR in what respect, in LICENSEE’S opinion, such guarantee has not been
met.

          (6.6) LICENSEE shall furnish, at no cost to LICENSOR, Fresh Substrate Charge, yeast culture,
enzymes, chemicals, utilities, operating and maintenance personnel, maintenance materials and
necessary services, such as adequate laboratory inspection, operating supplies as are required for
the operation of the Plant in order to meet the guarantees as herein made. LICENSEE will be
responsible to process “fresh substrate charge” at a rate as required by LICENSOR during the
Performance Test, provided that such rate shall not exceed 115% of daily capacity, as specified in
Schedule B, Product Guarantee.

MAY 1,
2006

3

 

          (6.7) Failure of LICENSEE to call for the Performance Test within a period of 3 (three) years after
the effective date of this Agreement or 6 (six) months after start of commercial operation,
whichever comes earlier, or to perform any of its other obligations under this Article 6 shall
constitute a waiver of the requirement of a Performance Test or LICENSEE may voluntarily waive the
requirement for such test, in which either event shall result in LICENSOR’S guarantees being deemed
met, as per Article 3.2 of this Agreement.

ARTICLE 7 Responsibility and Liability

          (7.1) Until such time that LICENSOR gives notice per Para. 6.1 of this Agreement that the Plant is
ready for the Performance Test, or until the obligations of LICENSOR and LICENSEE to conduct
Performance Tests under Article 6 hereof shall have ceased, whichever first occurs, LICENSOR, at
LICENSEE’S expense, shall render such design and engineering services in order to permit LICENSEE
to make such changes, modifications or additions to the Plant to conform to the engineering
specifications furnished by LICENSOR as contemplated under the License Agreement.

          (7.2) Prior to the last Performance Test permitted under Article 6.4 hereof, LICENSOR shall have
the right to request such reasonable changes to the design specifications as are required to meet
the guarantees specified in this Agreement. LICENSOR will furnish the necessary design engineering
documentation at no charge to LICENSEE. LICENSEE shall be required to implement such changes or
modifications at its expense up to a maximum limit of $75,000 for each such change or $300,000 in
aggregate.

          (7.3) If the guarantee made in Article 4 hereof is not met at the conclusion of any Performance
Test prior to the last of the Tests permitted under Article 6.4 hereof, LICENSOR at its sole option
shall have the right to request such reasonable modifications to the “Process Design” as per
Schedule B, Para. 2 of the License Agreement as it deems necessary for the Plant to meet the
Performance Guarantee. LICENSEE shall promptly on request implement such modifications provided,
however, that LICENSOR shall pay to LICENSEE all costs in connection with design engineering,
equipment, parts, labor and other costs arising directly out of such modifications.

          In order to enable LICENSOR to determine, prior to making such changes, modifications or additions
to the Plant, the nature of the defects in the Plant, if any, LICENSEE shall, upon reasonable
notice and request by LICENSOR, operate the Licensed Process under safe operating conditions as may
be specified by LICENSOR from time to time during the Performance Test.

          Material failure on the part of LICENSEE to operate and maintain the Plant under safe operating
conditions as requested by LICENSOR shall constitute a waiver of the requirements for Performance
Tests and thereupon LICENSOR’S guarantee made in Article 4 hereof shall be deemed to have been met.

MAY 1,
2006

4

 

          (7.4) Should the Plant not meet the guarantee made in Article 4 hereof at the conclusion of the
last of the Performance Tests permitted under Article 6.4 hereof, due to fault of LICENSOR,
LICENSOR shall, within sixty (60) days after the submission by LICENSOR of the results of such
Performance Test as required under Article 6.5 hereof, pay to LICENSEE as liquidated damages, at
the office of LICENSEE designated on Page 1 of this Agreement, in lawful money of the United States
of America, a sum of money determined in accordance with the provisions of Schedule D annexed
hereto.

          (7.5) Except as may otherwise be provided herein and subject to Article 5.4, LICENSEE shall assume
all expenses of operation of the Plant, and shall have complete control of the Plant at all times.

          (7.6) LICENSEE shall indemnify and hold and save LICENSOR, its officers, directors and employees,
harmless from and against any and all actions or causes of action, claims, demands, liabilities,
loss damage or expense of any kind or nature whatsoever, including attorney’s fees, court costs and
costs of appeal, which arise out of or related to any activities supervised or directed by LICENSEE
under the terms and conditions of this Agreement, or any negligent act or omission of LICENSEE or
of any of its subcontractors or the employees of either, provided such actions, causes of action,
claims, demands, liabilities, loss or damage do not arise out of the fault, negligence, or strict
liability of LICENSOR.

          (7.7) LICENSOR shall indemnify and hold and save LICENSEE, its officers, directors and employees,
harmless from and against any and all actions or causes of action, claims, demands, liabilities,
loss damage or expense of any kind or nature whatsoever, including attorney’s fees, court costs and
costs of appeal, which arise out of or related to any activities supervised or directed by LICENSOR
under the terms and conditions of this Agreement, or any negligent act or omission of LICENSOR or
of any of its subcontractors or the employees of either, provided such actions, causes of action,
claims, demands, liabilities, loss or damage do not arise out of the fault, negligence, or strict
liability of LICENSEE.

          (7.8) LICENSEE expressly relieves LICENSOR, its officers, agents and employees and their
underwriters and insurers from any claims or responsibility arising out of injury to LICENSEE’S
personnel providing that such injury is not sustained due to willful act or gross negligence of
LICENSOR.

ARTICLE 8 Insurance

          (8.1) LICENSOR agrees to maintain in full force and effect during the entire time any work is
performed at the Plant by LICENSOR or by Vogelbusch GmbH. or the employees, agents or
subcontractors of either, a policy or policies of public liability and property damage insurance
under which LICENSOR and Vogelbusch GmbH. are

MAY 1,
2006

5

 

named as
insureds. Each such policy shall be noncancellable without thirty (30) days written Notice
to all insureds. The minimum limits of coverage of such policies in the aggregate shall be Two
Million and no/100 Dollars ($2,000,000.00) for injury or death to any one person, and One Million
and no/100 Dollars ($1,000,000.00) with respect to damage to property.

ARTICLE 9 Attachments

          The following documents are incorporated herein by reference and made a part hereof:

Schedule A, Definitions

Schedule B, Product Guarantee

Schedule C, Specifications of Chemicals and Utilities

Schedule D, Liquidated Damages

          IN WITNESS WHEREOF, the parties have agreed to the foregoing on the 1st day of May 2006.

	 	 	 
	AGASSIZ ENERGY LLC

	 	VOGELBUSCH U.S.A., INC.
	 
	 	 
	/s/ Donald Sargeant

	 	/s/ G. B. Brodl
	 

	 	 
	By: Donald Sargeant
	 	By: Gunter B. Brodl
	Title: Chief Manager

	 	Title: President

MAY 1,
2006

6

 

PROCESS GUARANTEE

SCHEDULE A

DEFINITIONS

1. The term “Performance Test” as used herein shall mean a period of seven (7) consecutive
Operating Days of the Plant, scheduled for the purpose of comparing its performance with the
guarantees made as per the Process Guarantee Agreement to which this Schedule is attached.

2. The term “Operating Days” as used herein shall mean consecutive days of 24 hours per day
continuous operation during which the Plant is on stream.

3. The term “gallon” as used herein shall mean the U.S. gallon of 231.0 cubic inches each,
measured at 60 degrees Fahrenheit.

4. The term “anhydrous alcohol” as used herein shall mean alcohol recovered from fermented mash by
Distillation followed by Dehydration in a Molecular Sieve Dehydration System. “Anhydrous alcohol”
shall contain no more than 0.8% w/w water and not more than 1.5% v/v organic impurities other than
the chemical “ethyl alcohol.” “Anhydrous alcohol” shall conform to current ASTM specifications for
fuel alcohol with respect to acidity, color and non-volatile residue. For the purpose of all
calculations in the context of this agreement, one (1) gallon of anhydrous alcohol measured at 60°F
shall be deemed to be equivalent to 6.640 lbs.

5. The term “starch” as used herein shall mean soluble forms of carbohydrates suitable for further
processing to hexose monosaccharides by saccharification with commercial enzymes
(Amyloglucosidase). The concentration of starch shall be expressed in percent of weight (%w/w) and
shall be determined by analysis according to the attached sample preparation method and the
modified method of the American Association of Cereal Chemists attached hereto (Modified Method No.
AACC 76-11 of AACC Methods) or such other analytical method as may be approved by LICENSOR.

6. The term “fresh substrate charge” as used herein shall mean a cleaned grain (U.S. No.2 corn and
up to 20% U.S. No 2 hulless barley) which has undergone a milling process. Such milled grain shall
not contain more than 5% w/w of particles retained on a 16 mesh tyler screen and shall have no
particles retained on a 12 mesh tyler screen. The moisture content of fresh substrate charge shall
not exceed 16% w/w. The starch content (as described in Article 5) of fresh substrate charge shall
not be less than 67% w/w average on a dry basis.

7. The term “fermented mash” as used herein shall mean an alcohol containing mash derived by
cooking, enzymatic conversion and saccharification and fermentation of fresh substrate charge.
“Fermented mash” shall contain alcohol at a concentration of not less than 9.0% w/w.

MAY 1,
2006

1

 

8. The term “Battery Limits” as used herein shall mean the extent and limits of the process for
which Vogelbusch U.S.A., Inc. assumes design liability. Those Battery Limits are described in
Schedule B of the License Agreement.

9. The term “safe operating condition” as used herein shall mean adherence to OSHA, State and
local codes and regulations and to sound engineering practice.

MAY 1,
2006

2

 

PROCESS GUARANTEE

SCHEDULE B

PRODUCT GUARANTEE

The following Product Guarantees are subject to the conditions as specified in Schedule C.

Fresh Substrate Charge and Products

Not more than 1.96 pounds of starch content in fresh substrate charge average, per pound anhydrous
alcohol produced.

Daily Capacity

Not less than an average of 949,520 pounds (143,000 gallons at 60°F) of anhydrous alcohol per day
on the basis of an average of seven consecutive days of Process Guarantee Test Run.

Energy Consumption

For LICENSOR’S process areas 1300, 1400, 1500, 1550 and 1900: Not more than 3.15 lbs. of steam per
pound of anhydrous alcohol produced. (Steam shall be saturated and at a pressure of not less than
150 psig at the battery limits.)

MAY 1,
2006

3

 

PROCESS GUARANTEE

SCHEDULE C

SPECIFICATIONS OF AUXILIARIES, CHEMICAL AND UTILITIES

AS PRE-CONDITION FOR PERFORMANCE TEST

1. Auxiliaries and Chemicals

     Auxiliaries, Enzymes and chemicals necessary for acceptable performance shall be provided by
LICENSEE in quality and quantity as specified by LICENSOR. Substandard performances due to
unavailability of auxiliaries, enzymes or chemicals in sufficient quantity or quality are not
within the responsibility of LICENSOR.

2. Utilities

     LICENSEE will be required to supply to the Licensed Process all utilities in quantity and quality
as specified by LICENSOR according to the design information, as per Schedule B of License
Agreement. Production stoppages or substandard performances due to unavailability of utilities in
sufficient quantity or quality are not within the responsibility of LICENSOR.

3. Suitability of Machinery and Apparatus

     To reach the guaranteed values of the Performance Test, it is necessary that the machines,
apparatus and equipment utilized in the Licensed Process are capable of operating at their design
capacities and nominal values as specified by LICENSOR. Production stoppages and substandard
performances due to defects in materials, workmanship and installation of machines, apparatus and
equipment or delays due to lack of spare units are not within the responsibility of LICENSOR.

4. Qualification of Operation Personnel

     LICENSEE’S personnel to be used for the operation, maintenance and supervision of the portion of
the Plant covered by the Licensed Process shall be pre-trained by LICENSOR and shall, in LICENSOR’S
reasonable opinion, be capable of operating said Plant according to LICENSOR’S instructions.
Production stoppages and substandard capacities of the Plant due to failure of personnel to follow
LICENSOR’S recommendations during the Performance Test period are not within the responsibility of
the LICENSOR.

5. Stoppages or substandard performance due to no fault of LICENSOR

Any such delays, production stoppages or substandard performances due to no fault and not within
the responsibility of LICENSOR during the conduct of the Performance Test shall terminate the Test,
and the Test shall not be counted as a Performance Test, as per Article 6.4 of the Process
Guarantee Agreement. The procedure for the conduct of a Performance Test, as described in Article 6
of the Process Guarantee Agreement, shall then be repeated. Any time limits imposed on LICENSOR
shall be extended by the time lost due to such events.

MAY 1,
2006

4

 

6. Measurement of Quantities and Production Analysis for the Performance Test Run

     Tolerances in flow measuring devices and standard values of deviation in laboratory sample analysis
can result in an average measured tolerance of approximately 1%, which are to be applied to the
guaranteed values as stated in Schedule B of the Process Guarantee Agreement. Therefore, deviation
up to 1% in guaranteed values shall not be applied for liquidated damages claims against the
Process Guarantee Agreement. Claim for liquidated damages (according to Schedule D) shall only be
allowed if the deviation in guaranteed quantity exceeds this 1% tolerance.

7. Suitability of Materials of Construction

     LICENSOR will recommend in its specifications materials of construction based on its experience and
data. Because of the known corrosive nature of components and products in the process, such
recommendations have to be based on economic considerations. LICENSOR shall therefore accept no
liability for defects caused by corrosion to stainless steel except for equipment specified by
LICENSOR which fails beyond repair due to the improper specification of material when such failure
occurs within two (2) years from the date the equipment was first operational.

     LICENSOR shall not be liable for any defects caused by corrosion to carbon steel equipment.

8.
Quality of Process water supply.

     All process water which is added directly to the process shall be of drinking water
quality and shall be substantially free of microorganism. Process water shall comply
with specification as defined in section 1.6.3 of Schedule B of the License Agreement

MAY 1,
2006

5

 

PROCESS GUARANTEE

SCHEDULE D

LIQUIDATED DAMAGES

     In the event that LICENSOR’S obligations under Article 4 and 6 of the Process Guarantee
shall not have been met, then in such event, for each pound of Alcohol product less than 99 percent
of daily capacity guaranteed in Schedule B hereof, averaged over the seven consecutive day period
of the final Performance Test permitted under Article 6 hereof, LICENSOR shall pay the sum of $5.00
dollars for each such pound less than 99 percent of guaranteed daily capacity. Under no
circumstances shall the amount guaranteed under this Schedule D be interpreted as more than average
daily capacity over the seven day period of the final Performance Test production of “anhydrous
alcohol” product, equivalent to 949,520 pounds, during the final Performance Test.

For purposes of computing liquidated damages for guaranteed values as set forth in Schedule B,
other than capacity, the following method shall be used:

For all values specified as “not less than” and “not more than,” the difference of actual values to
guaranteed value expressed in percent to two decimal fractions of the guaranteed value (for
example, a 5% differential shall yield a multiplier of 5) shall be multiplied by 100,000 to
determine the dollar amount eligible for damages herein.

THE TOTAL LIABILITY OF LICENSOR UNDER THIS SCHEDULE D SHALL NOT EXCEED THE LIMITS OF LIABILITY
OF LICENSOR AS SPECIFIED IN ARTICLE 12 OF THE LICENSE AGREEMENT.

MAY 1,
2006

6

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