CORN SUPPLY AGREEMENT

1.

Producer intends to construct, own and operate a plant at Fairmont, Minnesota for the production of 115 million gallons per year of denatured fuel grade ethanol (“Ethanol Facility”).

2.

The Ethanol Facility will be located immediately adjacent to Cargill’s grain handling facility located in Fairmont, Minnesota (“Grain Facility”).

3.

Producer and Cargill have executed that certain Grain Facility Lease under which Producer will lease from Cargill the Grain Facility for the purpose of receiving, storing and handling Corn (as defined below).

4.

The Parties intend for Producer to purchase Corn exclusively from Cargill for the purpose of ethanol production at the Ethanol Facility.

5.

Producer and Cargill have executed that certain Master Agreement of even date herewith (the “Master Agreement”).

6.

In consideration of the terms, conditions and covenants contained in this Agreement and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows.

(a)

Forecasts. On a monthly basis, Producer shall provide to Cargill a written forecast estimating Producer’s anticipated Corn requirements for the immediately following twelve (12) month period (“Forecast”).

(b)

Orders. Each Cargill Working Day, Cargill will provide to Commodity Manager (as defined below) a copy of Cargill’s applicable bid sheet reflecting expected basis levels (including futures reference month) required to purchase grain for each delivery period. Cargill will use commercially reasonable efforts to provide appropriate market information to the Commodity Manager as reasonably requested, without guarantee of accuracy or completeness, provided that Cargill did not engage in fraud or willful misconduct. The Commodity Manager will provide Cargill with a Corn purchase limit order sheet (the “Limit Order Sheet”). The Limit Order Sheet will instruct Cargill to purchase up to a given quantity of Corn for each delivery period at a cash corn basis at or below the basis amounts set forth in the applicable Limit Order Sheet. Cargill may contract for the purchase of Corn at terms up to the limits set forth in the most current Limit Order Sheet. Subject to the other terms and conditions herein, Cargill will use commercially reasonable efforts to procure Corn at the lowest deliverable cost.

(c)

Sales Confirmations. Each sale of Corn to Producer shall be evidenced by a separate Cargill sales confirmation (“Sales Confirmation”). Each Sales Confirmation at a minimum shall specify the quantity and quality of the Corn, the delivery date and delivery location, the purchase price (i.e., the applicable basis and futures reference month as determined in accordance with Section 6(a) above), and any applicable discount from or premium to the purchase price, and such other information as the Parties may agree to include. On a weekly basis (on Monday or the first business day of each week), Cargill will issue a Sales Confirmation for each delivery period in which it procured corn for the Project Company. To the extent that any terms of any Sales Confirmation conflict with the terms of this Agreement, the terms of this Agreement shall govern unless both Parties have specifically expressed their intent in writing to supercede the terms of this Agreement. If both parties mutually agree that a Sales Confirmation may be cancelled, then such Sales Confirmation will be cancelled. Upon Producer’s written request, Cargill will, within a reasonable time period, provide Producer with a summary of the terms of Cargill’s cash corn contracts relating to all Corn delivered to Producer that is not sourced from a grain facility owned by Cargill or its Affiliates.

(a)

Base Corn Price. Producer shall pay to Cargill the Base Corn Price for Corn supplied to the Grain Facility. For purposes of this Section 12, the term “basis” means the difference between the current cash price of U.S. No. 2 yellow corn and the futures price of U.S. No. 2 yellow corn for the nearby futures contract month.

(b)

Origination Fee. Producer shall pay to Cargill a fee of [*] (USD $[*]) per bushel of Corn delivered to the Grain Facility (“the Origination Fee”). The Origination Fee will increase each Contract Year in accordance with the CPI Index for Minnesota.

(c)

Origination Fee Adjustment.

(i)

On the fifth (5^th) anniversary of the Effective Date of this Agreement, upon the written request of either Party, the Parties shall negotiate in good faith to adjust the Origination Fee to take into account changes in market conditions, operating conditions or costs, inflation or other factors; provided, however, that in the event the Parties are unable to agree to any such adjustments within thirty (30) days following commencement of such negotiations, the Origination Fee will be unchanged and in full force and effect.

(ii)

On the seventh (7^th) anniversary of the Effective Date of this Agreement, and every five (5) years thereafter, at the written request of either Party, the Parties shall negotiate in good faith to adjust the Origination Fee then in effect to take into account changes in market conditions, operating conditions or costs, inflation or other factors; provided, however, that in the event the Parties are unable to agree to any such adjustments within thirty (30) days following commencement of such negotiations, at the written request of either Party the dispute shall be settled by “baseball” arbitration in accordance with Section 12(c)(iii).

(iii)

Following delivery of a written request to arbitrate an Origination Fee dispute pursuant to Section 12(c)(ii), the Parties shall, within thirty (30) days, each elect an independent arbitrator with experience in the grain supply industry. Within fifteen (15) days thereafter, the two arbitrators selected by the Parties shall confer and agree on a third independent arbitrator with experience in the grain supply industry. The Parties shall each submit to the arbitrators the amount of the Origination Fee requested by such Party, together with supporting documentation as such Party may determine reasonable. Within ten (10) days thereafter, the arbitrators shall select, by a majority vote, the submission of one of the Parties as the Origination Fee that will be applicable to this Agreement from that date until the next adjustment period. The selection made by the arbitrators shall be conclusive, binding on the Parties and not subject to challenge or appeal in any forum; provided, however, that at any time during the arbitration process, the Parties may agree on the Origination Fee. The Parties may also agree to use a single independent arbitrator in lieu of the three arbitrators as contemplated herein, and in that case selection by the single expert will be binding on the Parties.

(d)

Minimum Fee. Notwithstanding any other provisions in this Agreement but provided that Cargill is not in breach of the obligations hereunder, Producer will pay to Cargill a minimum Origination Fee of USD $1,200,000.00 in each Contract Year (the “Minimum Fee”). For clarification purposes, and without limiting the foregoing, the Minimum Fee will apply even where Producer claims Force Majeure.

13.

Payment.

(a)

Invoice. By no later than 10 a.m. CST on each Cargill Working Day after Corn is supplied to the Grain Facility, Cargill will send an invoice electronically to Producer setting forth the Purchase Price due from Producer for all such Corn (“Invoice”).

(b)

Payment Due.

(i)

Producer shall pay to Cargill the amount set forth in each Invoice no later than by 12:00 noon on the Payment Date. For purposes of this Section 13(b)(i), the term “Payment Date” means (x) during the first Contract Year, three (3) business days after Corn is supplied to the Grain Facility, (y) during the second Contract Year, two (2) business days after Corn is supplied to the Grain Facility and (z) thereafter, one (1) business day after Corn is supplied to the Grain Facility.

(ii)

Payment by Producer shall be made via ACH electronic payment. In addition to any other rights that Cargill may have relating to Producer’s failure to pay by the Payment Deadline, Cargill shall be entitled to apply, and Producer shall pay to Cargill, interest on all amounts outstanding past the Payment Deadline at the rate equal to the Default Rate.

(iii)

Notwithstanding anything to the contrary in Section 13(b)(i), Invoices up to the initial USD $3,000,000.00 of Corn supplied to the Grain Facility for the period from the Effective Date through the 14^th business day following the Effective Date (the “Start-up Period”) shall be payable no later than by 12:00 noon on the 74 ^th business day following the Effective Date (the “Deferred Payment Date”); provided, however, that interest shall accrue, and be payable by Producer, at the rate equal to the Default Rate on all Start-up Period Invoice amounts outstanding on the Payment Date until payment in full of such amounts. “Default Rate” means an interest rate per annum equal to the interest rate per annum for large

(iv)

Invoices for Corn supplied to the Grain Facility for the Start-up Period in excess of USD $3,000,000, but not exceeding USD $8,000,000, shall be paid by Producer by the Payment Date in accordance with Section 13(b)(i) or, upon Producer’s request, by the Deferred Payment Date in accordance with Section 13(b)(iii) if Producer has provided Cargill with an irrevocable letter of credit in a form reasonably acceptable to Cargill and in an amount corresponding to Cargill’s invoices in excess of USD $3,000,000.

(c)

Nonpayment. In addition to any other remedies available to Cargill under this Agreement, but subject to the provisions of the Master Agreement, Producer will be responsible for any and all resulting costs, expenses, losses, or damages incurred by Cargill in the event Producer fails to make timely payment.

(a)

Producer fails to pay any amount that is due to Cargill under this Agreement that is not excused by this Agreement, and (i) Cargill provides written notice to Producer of such failure, and (ii) Producer fails to pay to Cargill such past-due amount (plus all accrued interest) within 30 days of Producer’s receipt of Cargill’s written notice;

(b)

three or more incidents of willful misconduct by Producer, or any of Producer’s employees, agents or representatives in the performance of or in connection with Producer’s obligations hereunder occur in any 12 month period and Cargill provides Producer with written notice of each such incident, or any on incident of willful misconduct by Producer occurs where (i) such willful misconduct has a Material Adverse Effect on Cargill or the Grain Facility, and (ii) such willful misconduct is done under the direction of, with the knowledge of, or otherwise sanctioned by an officer of Producer;

(c)

Producer procures or purchases Corn or Alternative Commodity for ethanol production at the Ethanol Facility from any entity or person other than Cargill, except as permitted hereunder;

(d)

Producer files a voluntary petition in bankruptcy, has filed against it an involuntary petition in bankruptcy, makes an assignment for the benefit of creditors, has a trustee or receiver appointed for any or all of its assets, is insolvent or fails or is unable to pay its debts generally when due, in each case where such petition, appointment or insolvency is not dismissed, discharged or remedied, as applicable, within sixty (60) days;

(e)

Producer sells, leases, assigns or otherwise transfers the Ethanol Facility or any rights in the Principal Documents or the Grain Facility Lease to a third party other than as permitted in this Agreement or any other agreement to which Cargill and Producer are parties;

(f)

The Grain Facility Lease expires or is terminated for any reason whatsoever attributable to Producer; or

(g)

Producer fails to comply with any final and binding arbitration award rendered pursuant to Section 6 of the Master Agreement.

(a)

Cargill fails to deliver the quantities of Corn required to be delivered within the period(s) set forth in the applicable Sales Confirmation on five (5) separate occurrences within any 12 month period under circumstances where (i) such failure directly results in the inability of the Ethanol Plant to produce ethanol because of the absence of Corn, or (ii) it is substantially certain (applying an objective standard) that such failure will directly result in the inability of the Ethanol Plant to produce ethanol at the same level of production at which Producer was producing ethanol immediately prior to such failure, and Producer intended to produce ethanol at the same or higher level of production at which Producer was producing ethanol immediately prior to such failure; provided however, that any such failure will not constitute a triggering occurrence hereunder if (x) such failure is excused under this Agreement or the Master Agreement, including without limitation an event of Force Majeure, (y) such failure is caused in any part by Producer or Producer’s agents, employees, representatives, contractors or invitees, or (z) Producer has failed to provide Cargill with immediate written notice of such failure, or if such written notice has been provided on a timely basis, Cargill has cured such failure within 72 hours of its receipt of the written notice.

(b)

three or more incidents of willful misconduct by Cargill or any of Cargill’s employees, agents or representatives in the performance of or in connection with Cargill’s obligations hereunder occur in any 12 month period and Producer provides Cargill with written notice of each such incident, or any one incident of willful misconduct by Cargill occurs where (i) such willful misconduct has a Material Adverse Effect on Producer or the Ethanol Facility, and (ii) such willful misconduct is done under the direction of, with the knowledge of, or otherwise sanctioned by an officer of Cargill within the AgHorizons business unit;

(c)

Cargill files a voluntary petition in bankruptcy, has filed against it an involuntary petition in bankruptcy, makes an assignment for the benefit of creditors, has a trustee or receiver appointed for any or all of its assets, is insolvent or fails or is unable to pay its debts generally when due, in each case where such petition, appointment or insolvency is not dismissed, discharged or remedied, as applicable, within sixty (60) days;

(d)

Cargill fails to comply with any final and binding arbitration award rendered pursuant to Section 6 of the Master Agreement;

(e)

Cargill fails to pay any amount that is due to Producer under this Agreement that is not excused by this Agreement, and (i) Producer provides written notice to Cargill of such failure, and (ii) Cargill fails to pay to Producer such past-due amount within five (5) days of Cargill’s receipt of Producer’s written notice; or

(f)

Expiration or the termination of the Grain Facility Lease for reasons attributable to Cargill.

(a)

If (i) Producer at any time owes Cargill $500,000 or more for Corn delivered to the Grain Facility, or (ii) ▇▇▇▇▇▇▇’▇ ▇▇▇▇-to-market exposure on Corn procured for Producer but not yet delivered exceeds $1,000,000, then Cargill may exercise any one or more of the following remedies: (x) suspend performance of its obligations under this Agreement, including without limitation origination and delivery of Corn to Producer, until Producer is below the dollar thresholds set forth in Section 19(a)(i) and (ii), (y) require Producer to provide an irrevocable letter of credit in a form reasonably acceptable to Cargill as adequate assurance for amounts in excess of $500,000 in the case of subparagraph (i) above or $1,000,000 in the case of subparagraph (ii) above, or (z) with respect to ▇▇▇▇-to-market exposure on Corn, unwind cash positions to limit Cargill’s exposure on Corn. For purposes of this section, “▇▇▇▇-to-market exposure” refers to the difference, in the aggregate, between the actual price Cargill sold the Corn to Producer and the current market price for such Corn (based on Cargill’s daily posted basis or flat price, as applicable, for Corn delivered to the Grain Facility) as adjusted daily;

(b)

In the event either Party fails to pay any amounts due to the other Party when due, the Non-Defaulting Party shall be entitled to charge and receive interest accrued on the unpaid amount from the date it was due until the date actually paid at the Default Rate;

(c)

If a Party breaches or fails to perform in any material respect any of its commitments or agreements contained in this Agreement, the defaulting Party shall be liable to the Non-Defaulting Party for Damages arising out of or resulting from such breach as provided in Section 8 of the Master Agreement (subject to the Non-Defaulting Party’s duty to mitigate its Damages). Notwithstanding the foregoing, Cargill’s failure to deliver Producer quantities of Corn within the period set forth in any applicable Sales Confirmation will give rise to a Producer claim for Damages consistent with Rule 28 of the National Grain and Feed Association Grain Trade Rules.

(d)

If a Party breaches or fails to perform in any material respect any of its commitments or agreements contained in any Principal Document, and such breach or failure is of a continuing nature, the Non-Defaulting Party may (A) request the defaulting Party, as a condition of continuing its performance under this Agreement, to provide adequate assurance of performance of the defaulting Party’s obligations under this Agreement; and/or (B) seek injunctive relief.

(a)

All Corn shall be received subject to Producer’s right of inspection and acceptance; provided, however, that Corn must be accepted if it complies with specifications set forth in this Agreement or the applicable Sales Confirmation if different from this Agreement. Producer’s exclusive remedy and Cargill’s exclusive liability for shipment of non-conforming Corn or for breach of warranty is expressly limited to replacement, within a reasonable period of time, of the non-conforming Corn at no additional charge to Producer (shipping costs to be paid by Cargill); provided however, that any Corn received into the Grain Facility will be deemed to have been accepted by Producer as conforming Corn. All nonconforming Corn rightfully rejected shall be returned to Cargill, at Cargill’s sole expense, or, at Cargill’s direction, disposed of by Producer in a manner mutually acceptable to Producer and Cargill with all costs of such disposition to be paid by Cargill.

(b)

Notwithstanding anything to the contrary in this Agreement, any claim by Producer with respect to any Corn or any Sales Confirmation other than a claim for shipment of nonconforming Corn (which shall be governed by Section 22(a)), whether based on breach of warranty, contract, negligence, strict liability or other tort, shall be made promptly by Producer upon Producer’s notice or knowledge of any such claim and shall be deemed to be waived unless received, in writing, by Cargill within ten (10) days after the delivery of the Corn to the Grain Facility.

(c)

Notwithstanding anything to the contrary in this Agreement, each Party agrees to use commercially reasonable efforts to mitigate any Damages incurred by it hereunder.

▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇

BUFFALO LAKE ENERGY, LLC

By:

/s/ ▇▇▇▇▇▇ ▇▇▇▇▇

By:

/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇

Name: 

▇▇▇▇▇▇ ▇▇▇▇▇

Name: 

▇▇▇▇▇ ▇. ▇▇▇▇▇▇

Title:

▇.▇. ▇▇▇▇▇▇▇ AgHorizons

Title:

Authorized Representative

Date:

September 25, 2006

Date:

September 25, 2006