Document:

Letter of intent dated October 27, 2006

 Exhibit 10.6 
 LETTER OF INTENT 
 This Letter of Intent reflects the agreement of Liberty Renewable Fuels LLC, a
Delaware limited liability company (“Liberty” or the “Buyer”) to acquire from all shareholders (collectively the “Seller”) of Auburn Bean and Grain Co., a Michigan corporation
(“ABGCO”) all of the capital stock (the “Purchased Shares”) of ABGCO, which is in the business of buying, receiving, storing and selling grain and in the business of selling seed, agri-chemicals, fertilizer and the
custom application thereof and to further acquire from the KMA Group, L.L.C., a Michigan limited liability company (“KMA”) those parcels of real estate hereinafter more particularly identified. It also reflects the agreement of the Seller
to sell the Purchased Shares and KMA to sell the Transferred real estate to Buyer as herein contemplated. The Acquisition by Liberty of the Purchased Shares (the “Acquisition”), when complete, will result in ABGCO becoming a wholly owned
subsidiary of the Buyer. 
 In connection with this Letter of Intent, the following are the points of understanding: 
  

	1.	Purchased Shares. Buyer shall purchase from Seller and Seller shall sell to Buyer all of the Purchased Shares, all of which are owned by Seller, free and clear of any liens
or encumbrances. KMA shall transfer to Buyer the parcels of real estate identified herein (the “Transferred real estate”). 

  

	2.	Purchase Price. The purchase price for all of the Purchased Shares shall be Fourteen million and Two hundred Twenty-Five thousand dollars ($14,225,000) less the indebtedness
ABGCO owes to Metropolitan Life at the time of Closing, which debt is to be paid at closing as hereafter set forth and 1,000 units of Class A membership interest in Buyer and the purchase price for the Transferred real estate to be purchased
from KMA shall be Three Million Seven Hundred Thousand dollars ($3,700,000), (the “Units,” and together with the cash portion of the purchase price, the “Purchase Price”). Seller understands that Buyer has not had
the opportunity to conduct due diligence of ABGCO, and therefore this Purchase Price is subject to good faith negotiation upon Buyer’s completion of such due diligence. Notwithstanding the fact that Buyer is buying the shares of stock of ABGCO,
the Purchase Price is also dependent on ABGCO owning, free and clear any liens, all of the assets used in its business, excepting those obligations incurred in the normal operations of its business (which includes the existing operating line of
credit in place as of the date hereof), and that the transferred real estate to be purchased from KMA will be free from all liens and encumbrances. It is understood that the transferred real estate and facilities used or owned by ABGCO and to be
purchased from KMA include: 

  

	 	a.	The parcel of land and grain processing, grain storage (approximately 700,000 bushels capacity) and equipment located in the City of Saginaw, Michigan and commonly known as 105 Lyon
Street, Saginaw, Michigan, but excluding therefrom the feed warehouse and bean processing portions towards the south end of the property (survey required, common wall to be established.) 

  

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	 	b.	The parcel of land and grain processing, grain storage (approximately 1,000,000 bushels capacity), and equipment located in the City of Auburn, Michigan, including the new grain
storage (approximately 1,500,000 bushels capacity) structures being built in the adjacent township, and commonly known as 504 North Auburn Road, Auburn, Michigan, but excluding therefrom the navy bean processing plant and associated bin(s) at the
east end of the property along the railroad tracks (“Navy Bean Plant”) but including the current ABGCO administrative office located at 315 N Auburn Road, (survey required) (“Administrative Building”). 

 

	 	c.	The parcel of land and agronomy facilities and equipment located at 4640 Seven Mile Road., Monitor Township, Bay County, Bay City, Michigan. 

  

	 	d.	As hereinafter provided, the parcel of land and grain processing, grain storage (approximately 4,900,000 bushels capacity), agronomy facilities and equipment located in Richland
Township, Saginaw County, Michigan, and commonly known as 485 South Hemlock, Hemlock, Michigan. 

  

	 	e.	The parcel of land and grain facilities located two blocks to the west of the 485 South Hemlock Road facility on 480 Pine Street, Richland Township, Saginaw County, Hemlock,
Michigan. 

  

	 	f.	Warehousing located directly south of the building at 504 Pine. 

  

	 	g.	The parcel of land and grain processing, grain storage (approximately 2,305,000 bushels capacity), agronomy facilities and equipment located in the Village of Oakley, Michigan, and
commonly known as 310 West Third, Oakley, Michigan. 

  

	 	h.	The parcel of land and grain processing, grain storage (approximately 2,200,000 bushels capacity) and equipment located in Brady Township, Saginaw County, Michigan and commonly
known as 18413 Oakley Rd, Oakley, Michigan. 

  

	3.	Purchase Agreement. By the later of completion of due diligence or within forty-five (45) days of Buyer’s execution and delivery of this Letter of Intent but in all
events as soon as possible, Buyer will, at Buyer’s expense, deliver to Seller an initial draft of the purchase agreement and appropriate exhibits thereto, which agreement will include, among other items, customary representations, warranties
and indemnities of the parties. The Parties hereto will use their best efforts to negotiate and execute the Purchase Agreement as quickly as possible. Without limiting any other provision hereof, the Purchase Agreement shall contain a right of first
refusal for the Buyer with respect to the Navy Bean Plant should it ever be sold or leased (but only certain types of leases, as shall be mutually agreed). 

  

	4.	Closing. The closing shall on or before July 1, 2007, subject to one extension of up to 120 days therefrom, if reasonably necessary for Buyer to achieve financial
closing of the necessary financing. 

  

	5.	 Upon signing of the Letter of Intent Buyer shall deliver to KMA a nonrefundable deposit of one percent (1%) of the Purchase Price for its property, the same to
be 

  

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retained by KMA if no Purchase Agreement is signed or applied to the Purchase Price if a Purchase Agreement is signed and the terms therein fulfilled.

  

	6.	Other Matters to Occur at Closing. At the Closing, the following shall occur, in addition to those things set forth as Closing items in the Purchase Agreement:
(i) Buyer will immediately upon transfer to it of the Purchased Shares cause ABGCO to forthwith pay the ABGCO’s indebtedness to Metropolitan Life Insurance Company together with any prepayment penalty required by Metropolitan and
the balance of the Purchase Price as herein contemplated. (ii) KMA will also deliver a standard deed for the conveyance of its transferred real estate. Buyer will, upon receipt of the deed(s) deliver to KMA its portion of the Purchase Price for
its transferred real estate. Buyer will also receive credit for the one percent (1%) deposit. (iii) Buyer will sign a lease (which will not permit subleasing or assignment) with the entity or entities designated by ABGCO for a 15 year
lease of the Administrative Building, at a rental rate of $1.00 per year (such lessee to bear the real estate taxes, insurance and maintenance on such building at its expense). The Closing shall take place on July 1, 2007, and is contingent,
among other things, upon Buyer’s (i) completion of its due diligence to its satisfaction, (ii) execution of a Purchase Agreement, and (iii) securing financing commitments to fund Acquisition. 

  

	7.	Grain Origination. As a separate agreement between Liberty and ABGCO, a grain origination agreement will apply to all corn delivered after July 1, 2008, and will
continue for a period of five (5) years thereafter. The terms of this agreement will be deemed effective upon any sale and closing of the shares identified as “Purchased Shares” to any person, which takes place within 12 months from
the date hereof. If no such sale of the Purchased Shares occurs within such 12 month period, then this agreement shall be null and void. 

  

	 	a.	ABGCO will (i) sell to Liberty all the corn ABGCO originates and (ii) receive a fixed handling and storage fee that Liberty will pay to ABGCO, to be 16 cents per bushel
handling fee or 2.5 cents per bushel per month storage fee. ABGCO will sell corn to Liberty at the same price ABGCO purchased corn from growers. Liberty will be responsible for setting market prices paid by ABGCO to the growers.

  

	 	b.	50% of the handling fee payment (.16 per bushel) will be received at the time the grain is received at an ABGCO facility. The remainder of the handling fee will be paid upon
shipment of corn. 

  

	 	c.	The storage fee will be paid on a monthly basis with ABGCO to invoice LIberty on the last day of the month and Liberty to pay ABGCO within five business days. The storage fee will
be accrued on a daily basis. 

  

	 	d.	ABGCO will be responsible for payment to customers for grain purchases and will invoice Liberty on a weekly basis for all such purchases. Liberty will pay ABCO the invoiced amount
within five business days for all invoiced purchases. 

  

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	 	e.	All other business practices associated with ABGCO concerning drying, conditioning, overages/shortages, and other grain issues will be accounted for in a manner consistent with
ABGCO’s past business practices. 

  

	 	f.	No other term in this Agreement to the contrary withstanding, the provisions of this section as regards grain origination, shall be deemed binding on Liberty and ABGCO.

  

	8.	Additional Facilities; Purchase Price Adjustment. Should ABGCO construct or acquire any additional corn processing-storage facilities prior to the Closing, Buyer will
purchase the same from the Seller at its actual cost in addition to the Purchase Price, less all debt incurred in connection with such acquisition, and the said additional facilities shall be added to and become part of the Acquisition.

  

	9.	Due Diligence. Following the execution of this Letter of Intent, Seller will (and will cause its representatives, officers, employees, consultants and advisors, including
accountants and legal advisors), provide Buyer and its representatives, officers, employees, consultants and advisors, including accountants and legal advisors, full and free access at all reasonable time and upon reasonable notice to the books,
records facilities and other assets of ABGCO, as well as ABGCO’s and officers, directors, employees, consultants and advisors, for meetings and discussions that Buyer reasonably considers necessary or appropriate in connection with its due
diligence inquiry with respect to the purchase of the Purchased Shares. A third party not affiliated with either Buyer or Seller or ABGCO, but familiar and well versed with the operation of grain elevators, will be appointed by Buyer, upon
acceptance by Seller, to coordinate and complete the due diligence required herein. As soon as practicable following execution of this Letter of Intent, ABGCO will provide to Buyer the information listed on Exhibit A attached hereto.
Seller acknowledges that Buyer will be pursuing bank financing for the cash portion of the Purchase Price and that this due diligence, including financial information, is necessary for Buyer to provide to financial institutions to secure financial
commitments for the cash portion. 

  

	10.	Employment Contracts. After the Closing, Buyer intends to operate ABGCO under the same management. Therefore, at the Closing Buyer shall enter into employment agreements with
each of the current employees of ABGCO that are interested in continuing to work for ABGCO. It is Buyer’s expectation that all of the employees whose continued services are deemed material to the on going success of the business of ABGCO will
sign such agreements which shall also contain mutually agreeable covenants not to compete. Such employment agreements shall be for a period of 3 years and shall include salaries and benefits (including continuation of normal bonuses based on
year-end results) at least equivalent to those being received by such employees on October 25, 2006, including reasonable cost of living increases. Such employment agreements shall also state that the employees shall report to those in the
position of management at the facilities where the employee works, who in turn will report to the Board of Liberty. Sellers shall enter into acceptable covenants not to compete. 

  

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	11.	Company Name. Buyer will receive ownership and rights to use and conduct business under the name “Auburn Bean & Grain Co.” 

  

	12.	Right of First Refusal. Should Buyer desire to sell ABGCO at anytime prior to the fifth anniversary of the Closing, Seller shall have first right of refusal to match any bona
fide offer for purchase of the same. This Right of First Refusal shall only apply to a sale of ABGCO on a stand alone basis and shall not apply to any sale of Buyer as a whole or any sale of ABGCO in connection with the sale of any other assets of
Buyer. 

  

	13.	Conduct of Business Pending Closing. During the period from the date of this Letter of Intent and continuing until the earlier of the termination of this Letter of Intent or
the Closing, Seller will cause ABGCO to, carry on their respective businesses in the usual and ordinary course in substantially the same manner as heretofore conducted (including fulfillment of all existing contracts or obligations), with ABGCO to
retain any profits earned during this time (this concept subject to further refinement in the negotiation of the Purchase Agreement), pay its debts and taxes when due, pay or perform other obligations when due, and use its commercially reasonable
efforts consistent with past practice and policies to preserve intact their respective present business organizations, keep available the services of their respective present officers and key employees and preserve their respective relationships
with customers, suppliers, distributors, licensors, licensees, and others having business dealings with it. During the period prior to Closing, all decisions outside the normal course of business made by ABGCO shall be made with notice to the Buyer.
Seller and ABGCO shall promptly notify Buyer of any materially negative event involving or adversely affecting either ABGCO or KMA or their respective businesses. ABGCO and KMA will continue to maintain adequate casualty, property and liability
insurance coverage with insurers which have an A.M. Best rating of A- or better and/or an equivalent rating from a recognized insurance company rating agency, to insure all the assets, facilities and equipment of ABGCO and maintain liability
insurance coverage in at least the following amounts: 

  

	 	a.	Employer’s Liability coverage with a minimum limit of $500,000 for bodily injury by accident or disease. 

  

	 	b.	Commercial General Liability coverage (including products and completed operations, broad from contractual, personal injury liability and broad form property damage) with minimum
limits of one million dollars ($1,000,000) per occurrence for bodily injury/property damage and one million dollars ($1,000,000) for personal injury and products/completed operations. 

  

	 	c.	Excess or Umbrella Liability coverage with a minimum limit of two million dollars ($2,000,000) in excess of the coverage as set forth in items (a) and (b) above.

 ABGCO will continue to carry applicable Stock Insurance from the First Closing to the Third Closing showing Buyer as a Party
of Interest on Seller’s insurance certificate. 
  

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	13.	Announcements. All press releases and public announcements relating to the transactions contemplated by this Letter of Intent will be agreed to and prepared jointly by the
parties. Seller hereby provides permission to Buyer to include this letter intent in Buyer’s Form SB-2 filing to the Security and Exchange Commission as part of the Buyer’s planned public offering to raise equity for Buyer’s proposed
ethanol plant in Gratiot County, Michigan, and in connection with Buyer’s private offering which is currently ongoing. 

  

	14.	Exclusivity. In consideration of the mutual covenants and agreements contained herein, Seller will not directly or indirectly, solicit, discuss, accept, approve, initiate,
respond to or encourage any inquiries or proposals relating to, or participate or engage in any negotiations with respect to the sale of the Purchased Shares of Sellers and the Transferred real estate to be sold by KMA for a period of one hundred
twenty (120) days after execution hereof by Buyer, unless it is necessary to facilitate Acquisition in accordance with this Letter of Intent or in accordance with existing contracts or obligations. This Section shall be binding upon the Parties
and inure to the benefit of their respective successors and assigns. 

  

	15.	Brokers. Each party represents and warrants to the other that there are no brokers or finders entitled to any compensation with respect to the transactions contemplated
hereby. 

  

	16.	Expenses. Each party shall be responsible for its own expenses incurred in connection with reaching agreement herein. Exception to this will be an equal sharing of all costs
and expenses for any required/wanted survey of the real estate. 

  

	17.	Buyer Committee. Buyer will appoint, at is sole discretion, a limited number of its board of managers to serve on an ABGCO Acquisition Committee to facilitate effective
communication and execution of a purchase agreement with ABGCO. 

  

	18.	Confidentiality. The parties agree that disclosure of the proprietary information of the other party hereto shall be governed by the terms of the Mutual Nondisclosure
Agreement attached hereto as Exhibit B, which each party has executed concurrently with their execution of this Letter of Intent. 

 While it is understood that this Letter of Intent, if accepted, does not constitute a binding agreement between the parties (except as set forth hereafter), it does set forth the understanding, principals and present
intentions of Buyer and Seller regarding the sale of the Purchased Shares by Seller to Buyer upon the terms and conditions set forth above. Buyer and Seller will each use their best good faith efforts to close the Acquisition on the terms set forth
in this Letter of Intent. The foregoing notwithstanding paragraph 14 hereof is binding. 
 If the above and foregoing correctly sets forth
your understanding and agreements, please so indicate by signing below and by returning one fully executed original or counterpart of this letter to the undersigned at 3508 E. M-21, Corunna, Michigan 48817. 
  

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 IN WITNESS WHEREOF, each of the parties to this Letter of
Intent has executed and delivered this Letter of Intent, or caused this Letter of Intent to be executed and delivered by its duly authorized representative, as of the date written below. 
  

			
	LIBERTY RENEWABLE FUELS LLC
		
	By:	 	 /s/ David Skjaerlund

	Its:	 	President
	Date:	 	1—27-06

 Accepted and agreed to this 27 day of October, 2006. 
  

			
	AUBURN BEAN & GRAIN CO.
		
	By:	 	 /s/ Clifford A. Vennix

		 	Clifford A. Vennix
	Its	 	President
	
	THE KMA GROUP, L.L.C.
		
	By:	 	 /s/ Clifford A. Vennix

		 	Clifford A. Vennix
	Its	 	Operating Manager

  

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 EXHIBIT A 
 DUE DILIGENCE INFORMATION 
 (1) Financial Statements. Copies of all available annual,
quarterly, or other financial statements for the past 3 years. 
 (2) Equipment and Machinery. A list and general description of all
material items of equipment and machinery which are used in the business. Please include in this some statements about the property’s condition and state of repair. 
 (3) Real Property. A list and general description of all real estate, including legal descriptions, and improvements thereon which are used in the business. Please include in this some statements about the
property’s condition and state of repair. 
 (4) Other property. An accurate list and description of all items of property, real
or personal, that have a value equal to or greater than $5,000 or that is materially significant to the operations. 
 (5) Liens. A
list of all mortgages, liens, easements, restrictive covenants or conditions, security interests, or other limitations, claims, or encumbrances in or on any material assets. 
 (6) Leases and Contracts. A list and copies, of each material lease (whether of real or personal property) and each material contract (not
restricted by any Confidentiality Agreement), promissory note, mortgage, license, or other agreement, as amended, to which ABGCO is a party. 
 (7) Loan Agreements. A copy of any loan agreement and other documents with respect to obligations for the repayment of borrowed money, 
 (8) Consents Required, Etc. A list of all agreements wherein consent to the contemplated transaction is required to avoid a default thereunder or where notice of such transaction is required at or subsequent to
any closing, or which contain any “rights of refusal,” or other rights triggered by a transaction. 
 (9) Articles and
Bylaws. Copies of the Articles of Incorporation and Bylaws of the Company and any subsidiaries, together with all amendments thereto. 
 (10) Shareholders. A list of all persons or entities holding capital stock of the Company to be acquired or holding any rights to subscribe for, acquire, or receive shares of the capital stock of the Company and any subsidiary
(whether warrants, calls, options, or conversion rights). This includes any person to whom shares or equity has been promised. Seller shall also include a listing of the shareholders selling shares, and their respective number of shares, in each of
the three closings and distribution of the Purchase Price. 
  

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 (11) Officers, Directors, and Key Employees. A list of all officers, directors, and key employees
of the Company and any subsidiary. 
 (12) Salary Schedule. A list of the names of and current salary rates and benefit packages,
including a list of all retirement or pension commitments by ABGCO, for each present employee of the Company and any subsidiary, who received $20,000 or more in aggregate compensation from the Company, whether in salary, bonus, or otherwise, during
the most recently ended fiscal year, or who is presently scheduled to receive, from the Company and any subsidiary, salary in excess of $20,000 during the current year. 
 (13) Litigation. A list and description of civil, criminal, administrative, arbitration, or other such proceedings or investigations (including, without limitation, unfair labor practice matters, labor
organization activities, environmental matters, and civil rights violations), pending or threatened, regarding the Company to be acquired or any subsidiary. 
 (14) Tax Returns. Copies of all United States federal and state tax returns for the Company for the last three fiscal years of the Company. 
 (15) Patents, Trademarks, and Service Marks. A list of all patents, patent applications, copyrights, inventions, licenses, trademarks, trademark
registrations (and applications therefor), service marks (and applications therefor), and trade names or other like matters that, as of the latest practicable date, are owned by the Company and any subsidiary or used in connection with the business
of the Company. 
 (16) Insurance Policies. A copy of all insurance policies owned by the Company, including without limitation
casualty, property, liability, life or health. 
 (17) Historical Volumes. A list of business volumes for the last three years,
including purchase of grain, sales of grain, purchase of agricultural supplies, sales of agricultural supplies, custom application and any other significant business transactions. 
  

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 EXHIBIT B 
 MUTUAL NONDISCLOSURE AGREEMENT 
 Each undersigned party (the “Receiving Party”)
understands that the other party (the “Disclosing Party”) has disclosed or may disclose information relating to the potential merger of the two parties or to the Disclosing Party’s business (including, without limitation,
financial and business information, computer programs, technical drawings, algorithms, know-how, formulas, processes, ideas, inventions (whether patentable or not), schematics and other technical, financial, business, customer and product
development plans, forecasts, strategies and information), which to the extent previously, presently or subsequently disclosed to the Receiving Party is hereinafter referred to as “Proprietary Information” of the Disclosing Party.

 In consideration of the parties’ discussions and any access of the Receiving Party to Proprietary Information of the Disclosing
Party, the Receiving Party hereby agrees as follows: 
 (1) The Receiving Party agrees (i) to hold the Disclosing Party’s
Proprietary Information in confidence and to take reasonable precautions to protect such Proprietary Information (including, without limitation, all precautions the Receiving Party employs with respect to its own confidential materials),
(ii) not to divulge any such Proprietary Information or any information derived therefrom to any third person, (iii) not to make any use whatsoever at any time of such Proprietary Information except to evaluate internally its relationship
with the Disclosing Party, (iv) not to copy or reverse engineer any such Proprietary Information and (v) not to export or reexport (within the meaning of U.S. or other export control laws or regulations) any such Proprietary Information or
product thereof. Without granting any right or license, the Disclosing Party agrees that the foregoing shall not apply with respect to any information after five years following the disclosure thereof or any information that the Receiving Party can
document (i) is or becomes (through no improper action or inaction by the Receiving Party or any affiliate, agent, consultant or employee of the Receiving Party) generally available to the public, or (ii) was in its possession or known by
it without restriction prior to receipt from the Disclosing Party, or (iii) was rightfully disclosed to it by a third party without restriction, or (iv) was independently developed without use of any Proprietary Information of the
Disclosing Party by employees of the Receiving Party who have had no access to any such Proprietary Information. The Receiving Party may make disclosures required by law or court order provided the Receiving Party uses diligent reasonable efforts to
limit disclosure and to obtain confidential treatment or a protective order and allows the Disclosing Party to participate in the proceeding. 
 (2) Immediately upon a request by the Disclosing Party at any time, the Receiving Party will turn over to the Disclosing Party all Proprietary Information of the Disclosing Party and all documents or media containing any such Proprietary
Information and any and all copies or extracts thereof. The Receiving Party understands that nothing herein (i) requires the disclosure of any Proprietary Information of the Disclosing Party or (ii) requires the Disclosing Party to proceed
with any transaction or relationship. 
 (3) This Agreement applies only to disclosures made before the first anniversary of this Agreement.
The Receiving Party acknowledges and agrees that due to the unique nature of the Disclosing Party’s Proprietary Information, there can be no adequate remedy at law for any breach of its obligations hereunder, which breach may result in
irreparable harm to the Disclosing Party, and therefore, that upon any such breach or any threat thereof, the Disclosing Party shall be entitled to appropriate equitable relief, without the requirement of posting a bond, in addition to whatever
remedies it might have at law. In the event that any of the provisions of this Agreement shall be held 

 
by a court or other tribunal of competent jurisdiction to be illegal, invalid or unenforceable, such provisions shall be limited or eliminated to the minimum
extent necessary so that this Agreement shall otherwise remain in full force and effect. This Agreement shall be governed by the laws of the State of Michigan without regard to the conflicts of law provisions thereof. This Agreement supersedes all
prior discussions and writings and constitutes the entire agreement between the parties with respect to the subject matter hereof. The prevailing party in any action to enforce this Agreement shall be entitled to costs and attorneys’ fees. No
waiver or modification of this Agreement will be binding upon a party unless made in writing and signed by a duly authorized representative of such party and no failure or delay in enforcing any right will be deemed a waiver. 
 (4) Until five years after the date of this Agreement, neither party will encourage or solicit any employee or consultant of the other party to leave
that other party for any reason. 
  

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	October 27, 2006	 		 	October 27, 2006
			
	LIBERTY RENEWABLE FUELS, LLC	 		 	CLIFFORD A. VENNIX
				
	By:	 	 /s/ David Skjaerlund
	 		 	 Clifford A. Vennix

	Name:	 	David Skjaerlund	 		 	
	Title:	 	President	 		 	

  

 3Employment Agreement dated October 19, 2006

 Exhibit 10.7 
 AGREEMENT TO HIRE CHIEF EXECUTIVE OFFICER FOR 
 DEVELOPMENT OF LIBERTY RENEWABLE FUELS,
LLC 
 AGREEMENT MADE this 19th day of October, 2006, by and among the following parties: 
 A. LIBERTY RENEWABLE FUELS, LLC
(referred to below as “Liberty”); 
 B. DAVID M. SKJAERLUND (referred to below as “Skjaerlund”). 
 I. RECITAL OF FACTS AND PURPOSES: 
 1.1 Liberty has been
organized to develop, own and operate an ethanol plant (hereafter “the Plant”) which is to be constructed in Gratiot County, Michigan. 
 1.2 Liberty desires to hire Skjaerlund as its President/Chief Executive Officer (referred to hereafter as CEO; the offices of President and CEO are the same office for purposes of this agreement) to provide the strategic leadership
necessary to the successful development of the Plant. 
 1.3 In exchange for the services to be provided by Skjaerlund, Liberty agrees to
provide Skjaerlund with the compensation described below. 
 NOW, THEREFORE, IT IS AGREED: 
 II. TERMS AND CONDITIONS OF AGREEMENT: 
 2.1 Liberty hereby
hires Skjaerlund as its CEO to provide the services set forth in Section 2.2. 
 2.2 Skjaerlund is to provide the general oversight and
leadership necessary to the development of the Plant through the date which is 90 days after the commencement of ethanol production (the 90 day period will help to ensure a proper and successful transition to a new CEO if either Skjaerlund or
Liberty desire to discontinue Skjaerlund’s services as CEO). It is understood that the Board of Liberty and other individuals and entities will also be providing complementary services. Skjaerlund’s services shall include the following:

 A. Service as a member of the Board of Liberty. 
 B. General supervision and control of Liberty’s business and affairs 
 C. Oversight concerning the legal and financial aspects of the development of the plant to assure that such matters are being performed
correctly and in a timely and efficient manner. 
 D. Oversight concerning Plant site acquisition and preparation, including
contact with local municipalities concerning land use requirements and restrictions. 
 E. Oversight concerning the fund
development and financing necessary for the construction of the Plant. 

 F. Development of strategies and business relationships that will better position the
Plant to be a competitive, profitable, and low-cost producer of ethanol. Such developments would include, but not by way of limitation, grain acquisition, energy inputs, transportation, ethanol marketing, and DDG usage, and having such arrangements
in place before ethanol production starts. 
 G. Providing analysis and recommendations concerning the hiring of key employees
and contractors (individual and entity contractors) necessary to the development and operation of the Plant. 
 H. Presiding
at all Managers’ and Member meetings. 
 Notwithstanding provisions of the Operating Agreement to the contrary, Skjaerlund’s duties
may not be expanded beyond this agreement without his prior written consent. 
 2.3 Compensation and Reimbursement of Expenses. In
consideration of the valuable services which have been provided and which are to be provided by Skjaerlund, he is hereby granted Class A membership units in Liberty according to the following provisions: 
  

	 	A.	The total number of Class A units which are hereby granted to Skjaerlund is the number of units equal to 3% of the total number of Class A and B units which will have been
issued by Liberty and any successor entity at the time the Gratiot County ethanol plant commences production of ethanol. The parties acknowledge that the total number of units will not be determinable until the commencement of the production of
ethanol. 

  

	 	B.	The Capital accounts of the units hereby granted have a zero value. 

  

	 	C.	Certificates for the Class A units hereby granted shall be issued to Skjaerlund as soon as reasonably possible following the later of the following dates (i) the date on
which the total Class A and B units issued by Liberty (and any successor entity) at the time that the Gratiot County ethanol plant commences production of ethanol are determinable; or (ii) 90 days after the commencement of ethanol
production. 

  

	 	D.	The total number of Class A units which are hereby granted to Skjaerlund shall be deemed purchased by Skjaerlund for purposes of section 5.4 of the Operating Agreement, said
section being entitled “Special Right of Appointment of Managers for Certain Members”. In other words, Skjaerlund may combine the Class A units which are granted by this section 2.3 with any other Class A or B units purchased by
him, or by an affiliate or related party, prior to the consummation of ethanol production at the first of the company’s facilities to begin production, and if Skjaerlund, his affiliates and related parties hold one thousand or more units (Class
A or Class B), Skjaerlund shall have the special right to appoint a manager pursuant to section 5.4. 

  

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	 	E.	A merger, acquisition, change of ownership or other alteration in Liberty’s structure shall not abridge the rights and obligations of the parties under this agreement except to
the extent agreed to in writing. 

  

	 	F.	Skjaerlund shall also be reimbursed reasonable expenses related to his services, including, but not limited to, travel, lodging and other business related expenses.

 Skjaerlund shall be entitled to no other compensation for his services as President/CEO through the termination of this
agreement unless agreed to in writing by the parties. 
 2.4 Compensation for the Continuation of Services as CEO. If
Skjaerlund’s services as CEO are continued beyond the time provided in section 2.2, he shall be paid fair and reasonable compensation for such services, and the parties agree to negotiate diligently and use their best good faith efforts to
reach an agreement for such compensation. Their efforts shall include, but shall not be limited to, considering the compensation paid to CEOs of reasonably similar companies. 
 2.5 Purchase of Life Insurance to Provide Replacement Compensation Upon Skjaerlund’s Death. As soon as reasonably possible following the
execution of this agreement, Liberty shall pay the premium for a 10-year level term life insurance policy on Skjaerlund’s life providing for a death benefit of $3,000,000. Liberty may select the insurance company, but the company selected shall
have, at a minimum, an A- rating with AM Best Company; a AA rating with Standard and Poors; or a B rating with Wiess Rating Service. The parties agree that the Hartford Life and Annuity Insurance Company is acceptable to them and may be utilized.
Skjaerlund may elect to upgrade the policy to provide for a term longer than 10 years and to include other features, such as guaranteed renewability beyond the term of the policy and conversion rights which would afford him an opportunity to change
from a term policy to permanent life insurance or some other type of life insurance vehicle. However, he shall be solely responsible for the portion of the premium equal to the difference between the premium payable for a 10-year level term policy
and the premium payable for the policy selected by him. Liberty shall continue to pay its share of the life insurance premiums until the commencement of production of ethanol at the Gratiot County plant. Payment shall be required at least 15 days
prior to the premium due date. 
 If Skjaerlund dies before the actual production of ethanol commences and this agreement has not been
terminated pursuant to section 2.6, then Skjaerlund’s personal representative shall have the option, but not the obligation, to purchase the number of Class A units equal to 3% of the total number of Class A and Class B units issued
by Liberty (and any successor entity) at the time the Gratiot County plant commencing the production of ethanol; provided, however, Liberty may consent to the purchase of more units. The unit price to be paid by Skjaerlund’s personal
representative shall be the unit price which was payable for units at the issuance of units prior to and nearest in time to Skjaerlund’s death. Except for the purchase option, Skjaerlund’s right to the compensation granted in section 2.3
shall be forfeited upon his death if he dies before the actual production of ethanol commences. 
 If Skjaerlund dies within the 90-day
period commencing with the actual production of ethanol (see the first paragraph of section 2.2 in this regard; Skjaerlund’s required performance 

  

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under this agreement requires a 90-day period following the commencement of the production of ethanol. This paragraph makes clear that the failure to
complete performance due to death shall be disregarded and Skjaerlund shall be entitled to the full number of units granted pursuant to section 2.3) and this agreement has not been terminated pursuant to section 2.6, his personal representative
shall be entitled to the full number of Class A units provided by section 2.3.A. Liberty shall have no claim to any portion of the insurance proceeds payable to Skjaerlund’s designated beneficiaries except its right to reimbursement
pursuant to the following paragraph. 
 Liberty shall be entitled to reimbursement for the premiums paid by it pursuant to this section and
payment shall be made within 30 days of the receipt of insurance proceeds by Skjaerlund’s personal representative. Reimbursement shall be required pursuant to this paragraph whether Skjaerlund dies before the commencement of the production of
ethanol or within the 90-day period following the commencement of the production of ethanol. 
 2.6 Termination of Agreement and
Modification of Compensation. 
 A. If either of the events described in part B, below, occur, then a portion of the units
granted to Skjaerlund in section 2.3 shall be forfeited. The number of units to be forfeited shall be a percentage of units equal to the percentage of services remaining to be performed. The parties shall endeavor in good faith to agree upon the
percentage of completion of services, but if they are unable to reach an agreement within a reasonable period of time, the percentage of completion shall be determined pursuant to section 2.7. The parties agree that the percentage of completion
shall be determined based on the strategic value of services provided relative to project development and not merely upon the time expended by Skjaerlund in the provision of such services. 
  

	 	B.	Part A shall apply to the following events: 

  

	 	(i)	A disability which renders Skjaerlund unable to complete services (see part C); and 

  

	 	(ii)	The termination of this agreement for cause (see part D). 

  

	 	C.	Liberty may terminate this agreement if, due to physical or mental disability or infirmity, Skjaerlund’s ability to perform the services required under this agreement are
significantly impaired, such impairment is likely to continue for a substantial period of time and Skjaerlund will be incapable of completing such services within a reasonable time period 

  

	 	D.	Except as provided in part E, Liberty may terminate Skjaerlund’s employment for any of the following reasons: 

  

	 	(i)	Willful engagement in significant dishonest or fraudulent actions performed within the course of Skjaerlund’s employment; 

  

	 	(ii)	 A material breach of the provisions of this agreement or the Company’s written policies or rules coupled with (I) the failure to remedy a breach within 30
days of written demand from Liberty; or (II) if it is unreasonable to expect the breach to be remedied within 

  

 4 

 
30 days, the failure to take all reasonable steps to remedy the breach within such time period 
  

	 	(iii)	Skjaerlund’s conviction of, or plea of guilty or no-contest to, a felony under the laws of the United States, the State of Michigan, or any other state; or Skjaerlund’s
conviction of, or plea of guilty or no-contest to, a lesser crime involving a significant violation of standards of moral conduct if the conviction or plea to such crime constitutes a reasonable basis for the Board of Directors to conclude that
Skjaerlund is unable to continue to effectively perform his duties as CEO of Liberty. 

  

	 	(iv)	A material breach of fiduciary duty resulting in personal profit to Skjaerlund and demonstrable harm to Liberty or, notwithstanding the lack of demonstrable harm to Liberty, which
constitutes a reasonable basis for the Board of Directors to conclude that Skjaerlund is unable to continue to effectively perform his duties as CEO of Liberty. 

  

	 	E.	Liberty may not terminate Skjaerlund’s employment under this section except pursuant to a resolution passed by the affirmative vote of a majority of the board of directors at a
meeting called for that purpose. 

 2.7 Dispute Resolution. The parties shall work diligently and in good faith to
resolve any claim, controversy or dispute arising out of or relating to this agreement, or the breach, performance, termination, enforceability or validity of this agreement, through facilitative mediation utilizing the services of a court approved
and highly experienced Circuit Court (State of Michigan) mediator acceptable to both parties. If their diligent and good faith efforts at mediation fail to result in a binding settlement agreement, the parties are free to pursue the remedies
available to them under Michigan law. 
 2.8 Reimbursement for Legal Expenses. Liberty hereby agrees to reimburse Skjaerlund for his
reasonable legal expenses related to the development, review and revision of this agreement to the extent such expenses exceed four thousand dollars ($4,000.00). Skjaerlund represents and warrants that, as of the date of this agreement, legal
expenses related to the development, review and revision of this agreement total seven thousand fifty-six dollars ($7,056.00). On the basis of such representation and warranty, Liberty agrees to reimburse Skjaerlund in the amount of three thousand
fifty-six dollars ($3,056.00). 
 2.9 Modification and Waiver. No modification or amendment of this agreement shall be valid unless in
writing and signed by or on behalf of the parties to this agreement. Further, a waiver of the breach of any term or condition of this agreement shall not be deemed to constitute a waiver of any subsequent breach of the same or any other term or
condition. 
 2.10 Severability. This agreement is intended to be performed in accordance with, and only to the extent permitted by,
all applicable laws, ordinances, rules and regulations. If any provisions of this agreement, or the application thereof to any person or circumstance, shall for any reason and to any extent be held invalid or unenforceable, such invalidity and

  

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unenforceability shall not affect the remaining provisions hereof and the application of such provisions to other persons or circumstances, all of which
shall be enforced to the greatest extent permitted by law. 
 2.11 Governing Law. This agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Michigan. 
 2.12 Binding Effect. This agreement shall be binding on and
shall inure to the benefit of the parties and their respective heirs, successors and assigns. 
 IN WITNESS WHEREOF, the parties have read
the foregoing agreement, acknowledge its contents and agree to the terms set forth herein. 
  

					
	Dated: October 19, 2006	 	 /s/ Thomas E. Pumford Jr.

		 	Liberty Renewable Fuels, LLC
			
		 	By:	 	 Thomas E Pumford Jr.

		 	Its:	 	 Secr. & Treas.

		
	Dated: October 24, 2006	 	 /s/ David M. Skjaerlund

		 	David M. Skjaerlund

 This instrument was prepared by: 
 Stephen J. St. Amant 
 Attorney at Law 
 615 North Capitol Avenue 
 Lansing, Michigan 48933 
 (517) 371-5889 
  

 6

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