Registration No.
As filed with the Securities and Exchange Commission on July 31, 2002.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

OREGON TRAIL ETHANOL COALITION, L.L.C.
(Exact name of registrant as specified in its charter)

Nebraska 2689 47-0843892
-------- ---- -----------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

Box 267
Davenport, Nebraska 68335
(402) 364-2428
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

MARK L. JAGELS
Chairman of the Board
Oregon Trail Ethanol Coalition, L.L.C.
RR 1 Box 189, Davenport, Nebraska 68335-9429
(402) 364-2428
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copies of communications to:
Dennis J. Fogland, Esq.
Victoria H. Finley, Esq.
Baird, Holm, McEachen, Pedersen, Hamann & Strasheim
1500 Woodmen Tower, Omaha, Nebraska 68102-2068
(402) 636-8254

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this Registration
Statement.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

CALCULATION OF REGISTRATION FEE

- ------------------------------------------------------------------------------------------------------------
Title of Each Class of Securities to be Amount to be Proposed Proposed Amount of
Registered Registered Maximum Maximum Registration
Offering Price Aggregate Fee
Per Share Offering Price
- ------------------------------------------------------------------------------------------------------------

Limited Liability Company
Membership Units 24,000 $1,000 $24,000,000 $2,208
- ------------------------------------------------------------------------------------------------------------

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

Preliminary Prospectus
Subject to Completion, dated ________________, 2002

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

OREGON TRAIL ETHANOL COALITION, L.L.C.
$1,000 per Membership Unit

Maximum Offering: 24,000 Membership Units Minimum Offering: 20,000 Membership Units

We are offering membership units of Oregon Trail Ethanol Coalition,
L.L.C., a Nebraska limited liability company. We intend to use the proceeds to
acquire the site for a 40 million gallon per year ethanol plant to be located
near Davenport, Nebraska and to pay for a portion of the construction and
start-up operational cost of the plant. We will also need significant debt
financing in order to complete the project. Our financing plan therefore
contemplates substantial leverage. This is our initial public offering and no
public market exists for our membership units.

Offering Terms. The initial public offering price for the membership
units will be $1,000 per unit. Each membership unit represents a pro rata
ownership interest in OTEC's capital, profits, losses and distributions. An
investor must purchase a minimum of 5 membership units ($5,000 minimum
investment). We are selling the membership units directly to investors without
using an underwriter. An aggregate minimum purchase of $20,000,000 by all
investors will be required before we will accept any subscriptions.

Escrow and Closing. All funds we receive from investors will be held in
an interest-bearing escrow account with Midwest Bank, N.A., Deschler, Nebraska,
Escrow Agent until the minimum subscription amount of $20,000,000 is received by
OTEC. We must raise the $20,000,000 minimum by January 15, 2003, subject to
extension in our sole discretion, but no later than February 15, 2003. We will
return your investment to you with interest within 30 days if we do not raise
the $20,000,000 minimum and secure a definitive agreement for debt financing
sufficient to complete construction and start-up of the plant by February 15,
2003.

A purchase of membership units involves risks. You should review the section
entitled "Risk Factors" beginning on page 4 before investing in our membership
units. Risks include:

. significant restrictions on transferability of membership units
may make it difficult for you to resell or liquidate your
investment;
. no public trading market exists for the membership units and
no public market is expected to develop which may make it
difficult for you to resell or liquidate your investment;
. fluctuations in corn and gas prices may significantly impact our
ability to earn a profit;
. we will not generate revenues until after the proposed ethanol
plant is completed and operating which we do not expect to
happen for an estimated 14 to 16 months after the offering
closes and construction of the plant commences;
. the project could suffer delays that could postpone our
ability to generate revenues and make it more difficult for us
to pay our debts or to earn a profit.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

The date of this prospectus is _______________, 2002.

PROSPECTUS SUMMARY

This summary outlines the main points of the offering. This summary does not
replace the more detailed information found in the remainder of the memorandum.
You are urged to read this memorandum in its entirety.

OTEC. Oregon Trail Ethanol Coalition, L.L.C., a Nebraska limited liability
company, was organized on August 16, 2001 to construct and operate an ethanol
plant. We are seeking capital to acquire the site for and develop, build and
operate a 40 million gallon per year ethanol plant to be located near Davenport,
Nebraska. Our Board of Directors has negotiated exclusive options to purchase a
60-acre site located 1 1/2 miles east of Davenport, Nebraska (the "Davenport
Site") just north of Highway 4 and south of the Union Pacific Railroad tracks.
We have entered into a memorandum of understanding with Lurgi PSI, Inc., an
ethanol construction and engineering firm, to design and construct our proposed
ethanol plant. Our primary business address is Box 267, Davenport, Nebraska
68335, (402) 364-2428

Offering. We are offering 24,000 membership units under the maximum offering and
20,000 membership units under the minimum offering. The price per membership
unit is $1,000 per unit with a minimum investment of $5,000. After the offering,
there will be 25,988 membership units issued and outstanding under the maximum
offering and 21,988 membership units issued and outstanding under the minimum
offering. OTEC intends to use the proceeds of this offering to pay for a portion
of the construction, operation and initial management of a 40 million gallon per
year ethanol plant at the Davenport Site. The purpose of this offering is to
permit us to raise sufficient capital to purchase the property for the plant,
build the plant and commence operations. We currently estimate total capital
expenditures will be approximately $58 million. We will need to supplement our
equity with debt financing.

The Plant. Once established, our ethanol plant is expected to convert, on an
annual basis, 14.3 million bushels of corn into approximately 40 million gallons
of ethanol per year and 128,000 tons of distillers grains. We plan to accept
corn and produce ethanol and distillers grains when construction is complete. We
currently expect to sell all of our ethanol to one distributor who will sell our
ethanol to national, regional and local markets. We also currently plan to sell
our distillers grain products to one distributor who will sell our distillers
grain products to the local, regional, national and international markets.

Distribution Policy. We will not distribute cash to our members in the immediate
future. Assuming we are successful in our public offering, we do not expect to
generate revenues until the ethanol plant construction is completed and the
ethanol plant is operational. Once operational, subject to loan covenants and
restrictions, we anticipate distributing our net cash flow to our members in
proportion to the membership units held. By net cash flow, we mean our gross
cash proceeds received less any portion, as determined by our directors in their
sole discretion, used to pay or establish reserves for our expenses, debt
payments, capital improvements, replacements and contingencies. If our financial
performance and loan covenants permit, our directors will try to make cash
distributions at times, and in amounts that will permit unit holders to make
income tax payments, but we may never be in a position to pay cash
distributions.

Risk Factors. You should consider the risks described in the section entitled
"Risk Factors" before making an investment in our membership units. These risks
include, but are not limited to the following:

. Our assumptions concerning our financing requirements and future
operations;

. Risks that we will not generate sufficient revenues to meet our debt
service obligations and comply with restrictive covenants;

. Risks in construction such as delays due to adverse weather conditions
which could delay commencement and/or completion of the ethanol plant;

. Risks related to our business, including that we may not generate
sufficient cash to make any distributions to members due to our
inability to manufacture ethanol as efficiently as we expect due to
factors related to costs and supply of corn, energy or water, or other
factors affecting demand for ethanol such as price, competition and
general economic conditions;

. Risks relating to state and federal ethanol subsidies, public
sentiment towards ethanol production and use, environmental
restrictions that could limit our activities or increase our costs and
liabilities, and demand for ethanol generally;

. Risks from our expected tax status as a partnership which if
challenged by the IRS, could have adverse financial and tax
consequences to us and to investors.

The Opportunity. We believe the ethanol industry may experience sustained and
accelerated growth. Ethanol is a high octane fuel additive also used to
oxygenate fuels, thereby enhancing gasoline performance and reducing gasoline
exhaust emissions. Because it is derived primarily from corn, a domestic,
readily available agricultural commodity, ethanol is a renewable source of
energy. Ethanol presently competes primarily with the other principal high
octane gasoline oxygenate,

methyl tertiary butyl ether, or MTBE, which is a petroleum-based additive that
historically dominated the market for oxygenated fuel, but we believe its usage
is declining due to environmental risks created primarily by the leaking of MTBE
reformulated fuels from underground storage tanks. We believe that the ethanol
industry will double in production capacity from 2001 to 2005 in an attempt to
meet anticipated demand.

We believe that there is a significant opportunity to build an ethanol plant in
Southeastern Nebraska, and that our units are a good investment, for the
following reasons:

. the significant growth currently being experienced by the ethanol
industry;

. the phasing out of MTBE;

. the existing and proposed federal and state incentives to encourage
ethanol production, spur economic development and reduce dependence on
foreign oil;

. the transportation advantages we expect to have, given readily
available raw materials, our location and easily accessible,
under-served markets for our products; and

. our single level of tax.

Operating Agreement and Management. We are governed by an Operating Agreement
which all investors must sign. We are managed by a Board of Directors comprised
of 9 directors. Each director must be a member of OTEC or an affiliate of a
member of OTEC. The directors serve three-year staggered terms. The directors
appoint our officers and our directors and officers manage OTEC. Members have
the right to vote on certain events, such as electing or removing directors,
dissolving OTEC and other extraordinary transactions. We will have annual
meetings of members at which members will elect directors. The first class of 3
directors will be up for reelection commencing in 2004. The Board reserves the
right, in its sole discretion and in accordance with the terms of the Operating
Agreement, to increase the size of the Board and appoint new directors to fill
the newly created director seats at the request of investors who make
significant investments to OTEC in this offering and desire representation on
the Board.

Tax Consequences. We expect to be taxed as a partnership for federal income tax
purposes. We will therefore not pay any federal income taxes and will instead
allocate our net income on a per membership unit basis to our members who must
include that income as part of his or her taxable income. This means that you
will have to pay taxes on your allocated share of our income whether or not we
make a distribution to you in that year. Generally you may be able to deduct
your share of our losses subject to certain limitations. You also may have state
and local tax obligations that we do not address in this memorandum. This
memorandum has a discussion of income tax consequences relating to the
investment in the membership units under the section entitled "INCOME TAX
CONSEQUENCES OF OWNING OUR MEMBERSHIP UNITS". You should review this discussion
and consult your tax or financial advisor to determine whether an investment in
the membership units is suitable for you.

Debt Financing. The funds raised in this equity offering from the sale of
membership units will not be sufficient to pay for all of our construction and
start-up costs. We are therefore seeking approximately $38 million (depending
upon how much equity we raise from this offering) in debt financing to pay the
balance of those expenses. We have no binding contracts or commitments with any
bank, lender or financial institution for debt financing, but we will not close
on this offering until we execute binding financing agreements. In addition, we
may seek subordinated debt financing from both financial institutions and
non-financial entities. Our memorandum of understanding with Lurgi includes a
provision under which Lurgi would provide up to $4,000,000 of subordinated debt
financing to OTEC.

Suitability. Investing in our membership units is highly speculative and very
risky. Our membership units are suitable only as a long-term investment and only
if you can bear a complete loss of your investment. Our membership units are
suitable only for persons of adequate financial means. You can only invest in
this offering if you meet one of the following suitability tests:

(1) You have annual income from whatever source of at least $30,000 and a
net worth of at least $30,000, exclusive of home, furnishings and
automobiles; or

(2) You have a net worth of at least $75,000, exclusive of home,
furnishings and automobile.

For husbands and wives purchasing jointly, the tests would be applied on a joint
basis. Even if you represent you meet the suitability standards set forth above,
the Board of Directors reserves the right to reject any subscription for any
reason, including if the Board determines that the membership units are not a
suitable investment for a particular investor.

We do not expect any public market to develop for our membership units, which
means that it will be difficult for you to sell them. In addition, our Operating
Agreement significantly restricts the transferability of membership units and
prohibits any sale or transfer without the consent of our Board of Directors.
You should not buy these membership units if you need to quickly sell them in
the future.

Escrow procedures. Proceeds from subscriptions for the membership units will be
deposited in an interest-bearing escrow account that we have established with
Midwest Bank, N.A. as escrow agent under a written escrow agreement. We will not
close on the offering until certain conditions to closing the offering are
satisfied and we will return your investment with interest within 30 days under
the following scenarios:

. If we determine in our sole discretion to terminate the offering prior
to January 15, 2003;

. If we do not raise the $20,000,000 minimum by February 15, 2003; or

. If as of February 15, 2003 we do not have binding written agreements
with a lender or lenders for between $34,000,000 and $38,000,000 of
debt financing (actual amount of debt financing depends on the amount
of equity raised and projected costs) or such amount as the Board of
Directors deems sufficient to complete construction and start-up of
the plant.

You will not be able to access your funds in the escrow account. We will invest
the escrow funds in short-term certificates of deposit issued by a bank,
short-term securities issued by the United States government, or money market
funds, including those available through the escrow agent.

Subscription Procedures. Investors must complete the subscription application
and agreement included as Appendix B to this prospectus, include a check payable
to Midwest Bank, N.A., Escrow Agent for Oregon Trail Ethanol Coalition, L.L.C.
and deliver an executed copy of the signature page to our Operating Agreement.
In the subscription application and agreement, an investor must make
representations to us concerning, among other things, that he or she has
received our prospectus and any supplements, agrees to be bound by the Operating
Agreement and understands that the membership units are subject to significant
transfer restrictions. The subscription application and agreement also requires
information about the nature of your desired ownership of your membership units,
your state of residence and your taxpayer identification or social security
number. Our Board of Directors reserves the right to reject any subscription. If
we reject your subscription, we will return your application, check and
signature page within 30 days.

Investors that may be deemed the beneficial owners of 5% or more, and 10% or
more of our issued and outstanding membership units may have reporting
obligations under Section 13 and Section 16 of the Securities and Exchange Act.
If you believe that you may become the beneficial owner of 5% or more of our
outstanding membership units, you should consult your own legal counsel to
determine what filing and reporting obligations you may have under the federal
securities laws.

RISK FACTORS

Investment in the membership units offered hereby is speculative and involves a
high degree of risk, and the membership units will not be readily marketable. As
a result, the membership units are appropriate only for investors with
substantial financial means who do not require liquidity with respect to this
investment and whose net worth would not be significantly affected by the loss
of their entire investment herein. Prospective investors should carefully
consider the following risk factors, in addition to those described elsewhere in
this document, before purchasing any membership units.

Risks Associated With This Offering And Our Financing Plan

Our membership units have no public trading market and are subject to
significant transfer restrictions which could make it difficult to sell your
membership units and could reduce the value of your membership units.

There is currently no established public trading market for the membership units
and an active trading market will not develop despite this offering. To maintain
our partnership tax status, you may not trade the membership units on an
established securities market or readily trade the membership units on a
secondary market (or the substantial equivalent thereof). We therefore will not
apply for listing of the membership units on any stock exchange or on the NASDAQ
Stock Market. As a result, you will not be able to readily sell your membership
units.

Your ability to transfer your membership units is also restricted by our
Operating Agreement. To help ensure that a secondary market does not develop,
our Operating Agreement prohibits transfers without the approval of our Board of
Directors. The Board of Directors will not approve transfers unless they fall
within "safe harbors" contained in the publicly-traded partnership rules under
the tax code, which include:

. transfers by gift,
. transfer upon death of a member,
. transfers between family members, and
. transfers that comply with the "qualifying matching services"
requirements.

Any transfers of membership units in violation of the publicly traded
partnership rules or without the prior consent of the Board will be invalid.

The illiquid nature of the membership units could impact the value of your
membership units and result in a lower sale price in the event you are permitted
to transfer your membership units. You may be required to bear the economic
risks associated with your investment in us for an indefinite period of time.

Our project is dependent upon obtaining debt financing and failure to obtain
debt financing will require us to abandon our business.

Based on current cost estimates, we believe we will need approximately
$58,000,000 in total funds to construct the proposed ethanol plant and finance
start-up operations. Regardless of whether we raise our $20,000,000 minimum or
$24,000,000 maximum, we must obtain debt financing in order to complete
construction and start-up of the ethanol plant. The use of debt financing
increases the risk that we will not be able to operate profitably because we
will need to make principal and interest payments on the indebtedness. Debt
financing will also expose you to the risk that your entire investment could be
lost in the event of a default on the indebtedness and a foreclosure and sale of
the ethanol plant and its assets for an amount that as less than the outstanding
debt.

The amount and nature of the debt financing that we are seeking is subject to
the interest rates and the credit environment as well as general economic
factors and other factors over which we have no control. We are in discussions
with various financial institutions but we have received no binding commitments
from any banks

or financial institutions for the debt financing that we need to construct the
ethanol plant. The current credit market and the start-up nature of our business
could make it difficult for us to obtain lending commitments from one or more
senior lenders, and subordinate lenders, if necessary. If financing is
unavailable for any reason, or it is available at an interest rate that we
cannot afford, or comes with covenants that we will not be able to accept or
comply with, we will be forced to abandon our business. We also cannot guarantee
that any financing will have terms acceptable to us. If we cannot obtain
adequate financing, we will not be able to begin building the ethanol plant.

We may not be able to generate sufficient revenue from our operations to support
our debt, and that could reduce the value of your membership units.

Our ability to repay our debt will depend on our financial and operating
performance and on our ability to successfully implement our business strategy.
We cannot assure you that we will be successful in implementing our strategy or
in realizing our anticipated financial results. Our financial and operational
performance depends on numerous factors including prevailing economic conditions
and certain financial, business and other factors beyond our control. Our cash
flows and capital resources may be insufficient to repay our anticipated debt
obligations. If we cannot pay our debt service, we may be forced to reduce or
eliminate distributions, reduce or delay capital expenditures, sell assets,
restructure our indebtedness or seek additional capital. If we are unable to
restructure our indebtedness or raise funds through sales of assets, equity or
otherwise, our ability to operate could be harmed and the value of your
membership units could decline.

Any institution lending funds to us, whether through a leasing arrangement or
direct loans, will take a security interest in our assets, including the
property, the ethanol plant and all of our accounts receivable, inventory,
equipment and fixtures along with all personal property and intangibles. If we
fail to make our debt financing payments, the lender will have the right to
repossess the secured assets, including the property and the plant, in addition
to other remedies. Such action would end our ability to continue operations. If
we fail to make our financing payments and we cease operations, your rights as a
holder of membership units are inferior to the rights of our creditors. We may
not have sufficient assets to make any payments to you after we pay our
creditors.

The terms of our debt financing are uncertain, and may restrict distributions
and our financial flexibility.

Based on current cost estimates and depending on how much equity is raised in
the public offering, we believe we will need approximately $58 million in total
funds to construct the proposed ethanol plant and finance start-up operations.
The less equity we raise in the public offering, the more debt financing we will
need and the more leveraged we will become. The more leveraged we become, the
less likely it is that we will be able to make distributions to members, either
as a going concern or in liquidation.

The current credit market and competition for debt financing could make it
difficult for us to obtain binding written commitments from one or more lenders
on favorable terms. If debt financing is only available at interest rates that
are higher than we anticipate, or our lenders impose restrictive covenants that
unduly restrict distributions or limit our financial flexibility, the value of
your units may be adversely affected. To the extent we obtain debt financing
with variable interest rates, we will be vulnerable to future interest rate
increases. Our ability to obtain debt financing on favorable terms is dependent
on the interest rate and credit environment, general economic conditions and
other factors beyond our control.

We anticipate having substantial debt service and restrictive loan covenants
that could make it difficult for us to borrow additional capital and could limit
our ability to make cash distributions to our members and engage in other
activities.

It is possible that our debt service requirements may make us more vulnerable to
economic or market downturns. If we are unable to service our debt, we may be
forced to reduce or delay planned capital

expenditures, sell assets, restructure our indebtedness or seek additional
equity capital. In addition, our debt load and service requirements could have
important consequences which could reduce the value of your investment,
including:

. Limiting our ability to obtain additional financing;

. Reducing funds available for operations and distributions because a
substantial portion of our cash flows will be used to pay interest and
principal on our debt;

. Making us vulnerable to increases in prevailing interest rates;

. Placing us at a competitive disadvantage because we may be
substantially more leveraged than some of our competitors;

. Subjecting all or substantially all of our assets to liens, which
means that there will be virtually no assets left for members in the
event of a liquidation; and

. Limiting our ability to adjust to changing market conditions, which
could make us more vulnerable to a downturn in general economic
conditions or our business.

We cannot assure you that we can accomplish any of these strategies on
satisfactory terms, if at all. In addition, the terms of any debt financing
agreements we enter into will likely contain numerous financial, maintenance and
other restrictive covenants. These covenants may limit our ability to, among
other things:

. Incur additional indebtedness;

. Make capital expenditures in excess of prescribed thresholds;

. Make distributions to our members, redeem or repurchase our membership
units;

. Make various investments;

. Create liens on our assets;

. Utilize asset sale proceeds; or

. Merge or consolidate or dispose of all or substantially all of our assets.

A breach of these covenants could result in default under applicable debt
agreements. If we default on any covenant, a lender could accelerate our
indebtedness, in which case the entire debt would become immediately due and
payable. If this occurs, we might not be able to repay our debt or borrow
sufficient funds to refinance it. Even if new financing is available, it may not
be on terms that are acceptable to us. These events could cause us to cease
construction, or if the plant is constructed and operating, to cease operations.

Our Board of Directors set the price for the membership units without an
independent evaluation and therefore the actual value may be lower.

The Board of Directors determined the $1,000 per membership unit purchase price
without an independent valuation. The Board established the total offering price
based on our estimate of capital and expense requirements and not based on
perceived market value, book value, or other established criteria. The actual
value of your membership units may be lower than the $1,000 offering price. We
also cannot guarantee that OTEC or any other person will purchase your
membership units at the offering price or any other price. You could therefore
lose all or a substantial part of your investment.

You will experience some dilution to the value of your membership units.

Purchasers of membership units in this offering will experience immediate
dilution of the net tangible book value of their membership units ranging from
approximately $70.61 (minimum offering) to $59.74(maximum offering) per
membership unit based on the net tangible book value of OTEC. See the section
entitled "Dilution".

Risks Associated With Construction And Development

We are dependent upon Lurgi PSI and ICM to design and build the ethanol plant,
but we have no executed definitive agreements with either of them.

We have a memorandum of understanding with Lurgi PSI, Inc. for various design
and construction services. The memorandum of understanding is not a binding
contract, and either party could terminate it at any time without penalty or
further obligation. Lurgi has delivered to us a proposed EPC contract that we
are currently negotiating, in which Lurgi will serve as our design-builder and
will engage ICM to provide design and engineering services to them. Lurgi's
obligation to build the proposed ethanol plant is not reflected in a binding
definitive agreement and a binding definitive agreement may never be executed.
If Lurgi or ICM were to terminate their relationship with us, we might not be
able to secure a definitive financing agreement and build the plant, which would
force us to abandon our business.

We may encounter hazardous or unexpected conditions at the construction site
that could increase our costs or delay the construction of the ethanol plant
which would delay our ability to generate revenues.

Lurgi is not responsible for hazardous or concealed unexpected conditions that
it encounters at the construction site. This could include environmental
permitting issues or other types of contamination. Environmental issues
regarding compliance with applicable environmental standards could arise at any
time during the construction and operation of the plant. We may have difficulty
obtaining the necessary environmental permits required in connection with the
operation of the plant. As a condition of granting necessary permits, regulators
could make demands that increase our costs of construction and operation. If we
encounter any of these kinds of conditions, Lurgi may immediately stop work in
the affected area and we must correct the problem. This could delay the project
and could require us to spend significant resources to correct the condition. In
addition, Lurgi may be entitled to an adjustment in price and time of
performance if its price and performance time have been adversely affected by
any unexpected or hazardous conditions. This could result in additional costs to
us and delay our ability to generate revenues, which could reduce the value of
your membership units.

The project could suffer delays that could postpone our ability to generate
revenues and make it more difficult for us to pay our debts.

We expect that it will be an estimated 14 to 16 months after we begin
construction before we begin operation of the proposed ethanol plant. Our goal
is to begin construction of the plant promptly upon the close of this offering,
but in any event within 60 days of the close of this offering, subject to
additional delays due to adverse weather conditions. Construction projects often
involve delays in obtaining construction permits, construction delays due to
weather conditions, or other events that delay the construction schedule. If it
takes longer to obtain necessary permits or construct the plant than we
anticipate, it would delay our ability to generate revenues and make it
difficult for us to meet our debt service obligations. This could reduce the
value of your membership units.

Assuming successful completion of the offering, we currently intend to break
ground on the plant in the spring of 2003, but in any event within 60 days after
the completion of this offering, subject to weather conditions. If we encounter
delays in this offering or in obtaining debt financing or the required permits,
our expected date to break ground will also be delayed. If Lurgi is not able to
begin construction on the plant early enough to complete the framework and
enclose the plant structure before winter conditions require

construction to cease, our estimated date for commencing operations will likely
be delayed beyond 16 months after closing this offering. In addition, our
construction costs may increase due to additional costs associated with winter
construction. The actual date we break ground also depends on how quickly we can
successfully complete this offering. Delays and weather conditions could result
in us breaking ground in the fall of 2003 which will also delay the date we
become operational and begin to generate revenue. Such a delay will also
preclude OTEC from receiving any Nebraska producer tax credits because the State
of Nebraska will only provide producer tax credits to plants that are operation
and in production by June 30, 2004. The longer it takes us to generate revenue,
the longer you will have to wait to receive any distributions from OTEC.

The project could also be delayed if we encounter defective material or
workmanship from Lurgi which could delay production and our ability to generate
revenues. Under the proposed engineering, procurement and construction contract,
Lurgi warrants that the ethanol plant will be free from defects in material or
workmanship. If this warranty is breached and there are defects in material or
workmanship, it may delay our commencing operations and delay our ability to
generate revenues. If defects are discovered after we begin operating, it could
cause us to halt or discontinue our operation, which could damage our ability to
generate revenues and reduce the value of your membership units. Our recourse in
the event of a breach of this warranty by Lurgi is to file an action against
Lurgi for breach of contract or breach of warranty which will be subject to the
applicable statutes of limitation under the laws of the State of Nebraska.

RISKS ASSOCIATED WITH OUR FORMATION AND OPERATION

We are a newly formed company with limited working capital which could result in
losses that will affect the value of your membership units.

Oregon Trail Ethanol Coalition, L.L.C. was organized on August 16, 2001 and has
no operating history. You should consider our company promotional and in its
early development stages. We have limited experience concerning whether we will
be successful in the proposed construction and operation of the proposed ethanol
plant or that our plans will materialize or prove successful. We cannot make
representations about our future profitable operation or the future income or
losses of OTEC. We do not know whether we will ever operate at a profit or that
OTEC will appreciate in value. If our plans prove to be unsuccessful, you will
lose all or a substantial part of your investment.

We presently have very limited working capital and require the proceeds of this
offering to begin constructing the ethanol plant and to meet our initial
operational needs. Our ability to begin construction of the plant depends upon
the success of this offering, the public offering and the receipt of debt
financing. Even upon the successful completion of this offering and the public
offering, the proposed use of proceeds will pay our expenses for only a limited
amount of time and there can be no assurance that the funds received through
this offering will be sufficient to allow us to continue successfully.

Operational costs could be higher than anticipated which could reduce our
profits and the value of your membership units.

In addition to general market fluctuations and economic conditions, we could
experience significant cost increases associated with the on-going operation of
the plant caused by a variety of factors, many of which are beyond our control.
These cost increases could arise from an inadequate supply and resulting
increased prices for corn. Labor costs can increase over time, particularly if
there is any shortage of labor, or shortage of persons with the skills necessary
to operate the plant. Adequacy and cost of water, electric and natural gas
utilities could also affect our operating costs. Changes in price, operation and
availability of truck and rail transportation may affect our profitability with
respect to the transportation of ethanol and other products to our customers.

In addition, the operation of the plant will be subject to ongoing compliance
with all applicable governmental regulations, such as those governing pollution
control, ethanol production, grain purchasing and other matters. If any of these
regulations were to change, it could cost us significantly more to comply with
them. Further, other regulations may arise in future years regarding the
operation of the ethanol plant, including the possibility of required additional
permits and licenses. We might have difficulty obtaining any such additional
permits or licenses, and they could involve significant unanticipated costs. We
will be subject to all of those regulations whether or not the operation of the
ethanol plant is profitable.

Our success depends on hiring competent personnel, which may be difficult to
attract to a rural community.

Our success is primarily dependent upon the personal efforts and abilities of
the nine members of our Board of Directors; however, none of the directors are
full-time employees of OTEC. The unavailability of their services for any reason
could have a material adverse effect on OTEC. We intend to hire additional
employees as needed to perform marketing, capital raising and management
functions and to oversee the day to day operations of the ethanol plant.

Upon completion of the plant, we currently plan to hire up to approximately 40
employees operating our business. Our success will depend in part on our ability
to attract and retain competent personnel who will be able to help us achieve
our goals. We must hire qualified managers, accounting, human resources and
other personnel to staff our business. It may be difficult finding and hiring
qualified employees at a salary that we will be able to afford. It may also be
difficult to attract qualified employees to Thayer County, Nebraska, a rural and
sparsely populated area. If we are unable to hire productive and competent
personnel, our ability to produce and sell ethanol could be adversely affected.
This would reduce our revenues and the value of your units.

Our business is not diversified and this could reduce the value of your
membership units.

Our success depends largely upon our ability to timely complete and profitably
operate our ethanol business. We do not have any other lines of business or
other sources of revenue if we are unable to build the ethanol plant and
manufacture ethanol. If we were not able to complete construction, or if
economic or political factors adversely affect the market for ethanol, the value
of your investment could decline because we have no other line of business to
fall back on if the ethanol business declines. Our business would also be
significantly harmed if our ethanol plant could not operate at full capacity for
any extended period of time.

Our Operating Agreement contains restrictions on member's rights to participate
in corporate governance of our affairs.

Our Operating Agreement contains significant restrictions on member's rights to
influence the manner or direction of management. Our Operating Agreement
contains restrictions on the ability of members to call a special meeting. A
member or members owning at least 10% of the outstanding membership units may
call a special meeting of the members. These restrictions may make it difficult
for members to propose changes to our Operating Agreement, without support from
our Board of Directors. Our Board of Directors is divided into three classes,
with each class serving staggered three-year terms. The classification of the
Board of Directors will make it more difficult for members to change the
composition of the Board because only a minority of the directors can be elected
at one time. If a vacancy develops in our Board of Directors for any reason
other than removal or expiration of a term, the remaining directors would fill
the vacancy.

Our directors must discharge their duties with reasonable care, in good faith
and in the best interest of OTEC and its members. Despite this obligation, our
Operating Agreement limits director liability to members unless it involves
misconduct or negligence.

Risks Associated With The Ethanol Industry

We will be operating in an intensely competitive industry and we will compete
with larger, better financed entities which could impact our ability to operate
profitably.

There is significant competition among ethanol producers. Our business faces a
competitive challenge from larger plants, from plants that can produce a wider
range of products than we can, and from other plants similar to our proposed
ethanol plant. Our ethanol plant will be in direct competition with other
ethanol producers, many of which have greater resources than we currently have.
Large ethanol producers such as Archer Daniels Midland, Minnesota Corn
Processors and Cargill, among others, are capable of producing a significantly
greater amount of ethanol than we expect to produce. In addition, there are
several Nebraska, Minnesota, Wisconsin, South Dakota and other Midwest regional
ethanol producers which have recently formed, are in the process of forming, or
are under consideration, which are or would be of a similar size and have
similar resources to us. There are currently seven operational ethanol plants in
Nebraska with at least two new plants under construction.

The proposed ethanol plant will also compete with producers of other gasoline
additives made from raw materials other than corn having similar octane and
oxygenate values as ethanol, such as producers of methyl tertiary butyl ether
(MTBE). MTBE is a petrochemical derived from methanol which generally costs less
to produce than ethanol. Many major oil companies produce MTBE and strongly
favor its use because it is petroleum-based. Alternative fuels, gasoline
oxygenates and alternative ethanol production methods are also continually under
development. The major oil companies have significantly greater resources than
we have to market MTBE, to develop alternative products, and to influence
legislation and public perception of MTBE and ethanol. These companies also have
significant resources to begin production of ethanol should they choose to do
so.

Changes in the supply and demand, and production and price with respect to corn
could make it more expensive to produce ethanol which could decrease our
profits.

Ethanol production will require substantial amounts of corn. Corn, as with most
other crops, is affected by weather, governmental policy, disease and other
conditions. A significant reduction in the quantity of corn harvested due to
adverse weather conditions, farmer planting decisions, domestic and foreign
government farm programs and policies, global demand and supply or other factors
could result in increased corn costs which would increase our cost to produce
ethanol. The significance and relative impact of these factors on the price of
corn is difficult to predict. Significant variations in actual growing
conditions from normal growing conditions also may adversely affect our ability
to procure corn for the proposed plant. Any events that tend to negatively
impact the supply of corn will tend to increase prices and harm our business.

Rising corn prices produce lower profit margins for the production of ethanol
and therefore, represent unfavorable market conditions. This is especially true
when market conditions do not allow us to pass along increased corn costs to our
customers. The price of corn has fluctuated significantly in the past and may
fluctuate significantly in the future. Substantial increases in the price of
corn in 1996 caused some ethanol plants to temporarily cease production or lose
money. We cannot assure you that we will be able to offset any increase in the
price of corn by increasing the price of our products. If we cannot offset
increases in the price of corn, our financial performance may be materially and
adversely affected.

We have no definitive agreements with any corn producers or grain elevators to
provide corn to the proposed ethanol plant. We currently do not anticipate
entering into agreements with corn producers or grain elevators until shortly
before the plant becomes operational and subject to our evaluation of local feed
product availability and market prices and conditions.

We intend to establish an output contract with one distributor that will
purchase all of the ethanol we produce, which may not be as financially
rewarding as creating our own sales organization.

We currently intend to sell all of the ethanol we produce to one distributor
pursuant to an output contract who will market our ethanol in national, regional
and local markets. As a result, we will be dependent on one distributor to sell
ethanol. We do not plan to build our own sales force or sales organization to
support the sale of ethanol. If this distributor breaches our output contract,
or is not in the financial position to purchase all of the ethanol we produce,
we may be required to find alternative means to sell our ethanol and our
financial performance may be adversely and materially affected. In the event of
a breach of our output contract by our distributor, we may pursue either an
injunctive action or claim for damages, but in such circumstances, the
distributor may not be able to perform or may be insolvent. In addition, it
could be more financially advantageous to sell ethanol ourselves through our own
sales force, but we have decided not to pursue this route. This strategy could
result in lower revenues and reduce the value for your units if our ethanol
distributor does not perform as we plan. Our financial performance is dependent
upon the financial health of the distributor we contract with. We are currently
in preliminary discussions with various distributors, but have not entered into
any binding agreements. We currently do not anticipate entering into agreements
with a distributor until shortly before the plant becomes operational, subject
to our evaluation of market prices and conditions.

Low ethanol prices and low gasoline prices could reduce our profitability which
could reduce the value of your membership units.

Prices for ethanol products can vary significantly over time and decreases in
price levels could adversely affect our profitability and viability. The price
for ethanol has some relation to the price for gasoline. The price of ethanol
tends to increase as the price of gasoline increases, and the price of ethanol
tends to decrease as the price of gasoline decreases. Any lowering of gasoline
prices will likely also lead to lower prices for ethanol and adversely affect
our operating results.

Increases in the production of ethanol could result in lower prices for ethanol
and have other adverse effects which could reduce our profitability.

We expect that existing ethanol plants will expand to increase their production
and that new fuel grade ethanol plants will be constructed as well. We cannot
provide any assurance or guarantee that there will be any material or
significant increases in the demand for ethanol, so the increased production of
ethanol may lead to lower prices for ethanol. The increased production of
ethanol could have other adverse effects as well. For example, the increased
production will also lead to increased supplies of co-products from the
production of ethanol, such as distillers grain/solubles. Those increased
supplies could lead to lower prices for those co-products. Also, the increased
production of ethanol could result in increased demand for corn which could in
turn lead to higher prices for corn, resulting in higher costs of production and
lower profits.

Hedging transactions involve risks that could harm our business.

In an attempt to minimize the effects of the volatility of corn costs on
operating profits, we will likely take hedging positions in corn and energy
futures markets. Hedging means protecting the price at which we buy corn and the
price at which we will sell our products in the future. It is a way to attempt
to reduce the risk caused by price fluctuation. The effectiveness of hedging
activities is dependent upon, among other things, the cost of corn and our
ability to sell sufficient amounts of ethanol and distillers grains to utilize
all of the corn subject to the futures contracts. Hedging activities can result
in costs to us because price movements in grain contracts are highly volatile
and are influenced by many factors which are beyond our control. We may incur
similar costs in connection with our hedging transactions and these costs may be
significant.

Ethanol production is energy intensive and interruptions in our supply of energy
could have a material adverse impact on our business.

Ethanol production also requires a constant and consistent supply of energy. If
there is any interruption in our supply of energy for whatever reason, such as
supply, delivery or mechanical problems, we may be required to halt production.
If production is halted for any extended period of time, it will have a material
adverse effect on our business. If we were to suffer interruptions in our energy
supply, either during construction or after we begin operating the ethanol
plant, our business would be harmed.

We have entered into discussions with natural gas suppliers; however, at the
present time we have no binding commitments with any natural gas supplier. If we
are unable to obtain a natural gas supply or procure an alternative source of
natural gas on terms that are satisfactory to us, the adverse impact on our
plant and operations could be material. In addition, natural gas and electricity
prices have historically fluctuated significantly. Increases in the price of
natural gas or electricity would harm our business by increasing our energy
costs.

We will also need to purchase significant amounts of electricity to operate the
proposed ethanol plant. The prices which we will be required to pay for
electrical power will have a direct impact on our costs of producing ethanol and
our financial results.

Risks Associated With Government Regulation And Subsidization

Federal regulations concerning tax incentives could expire or change which could
reduce our revenues.

Congress currently provides certain federal tax incentives for oxygenated fuel
producers and marketers, including those who purchase ethanol to blend with
gasoline in order to meet federally mandated oxygenated fuel requirements. These
tax incentives include, generally, a lower federal excise tax rate for gasoline
blended with at least 10 percent, 7.7 percent, or 5.7 percent ethanol, and
income tax credits for blenders of ethanol mixtures and small ethanol producers.
Gasoline marketers pay a reduced tax on gasoline that they sell that contains
ethanol. The current credit for gasoline blended with 10% ethanol is 5.3(cent)
per gallon. The subsidy will gradually drop to 5.1(cent) per gallon by 2005.
Currently, a gasoline marketer that sells gas without ethanol must pay a federal
tax of 18.4(cent) per gallon compared to 13(cent) per gallon for gas with 10%
ethanol. The tax on gasoline blended with 10% ethanol will gradually increase to
13.3(cent) per gallon by 2005. Smaller credits are available for gasoline
blended with 7.7 percent and 5.7 percent ethanol.

The ethanol industry and our business depend on continuation of the federal
ethanol credit. This credit has supported a market for ethanol that might
disappear without the credit. The federal subsidies and tax incentives are
scheduled to expire September 30, 2007. These subsidies and tax incentives to
the ethanol industry may not continue beyond their scheduled expiration date or,
if they continue, the incentives may not be at the same level. The revocation or
amendment of any one or more of those laws, regulations or programs could
adversely affect the future use of ethanol in a material way, and we cannot
assure you that any of those laws, regulations or programs will be continued.
The elimination or reduction of federal subsidy and tax incentives to the
ethanol industry would have a material adverse impact on our business by making
it more costly or difficult for us to produce and sell ethanol. If the federal
ethanol tax incentives are eliminated or sharply curtailed, we believe that a
decreased demand for ethanol will result.

Nebraska state producer incentives may be unavailable or could be modified which
could reduce our revenues.

amount less a handling fee. No producer can receive tax credits for more than
15,625,000 gallons of ethanol produced in one year and no producer will receive
tax credits for more than 125 million gallons of ethanol produced over the
consecutive 96 month period. The minimum production level for a plant to qualify
for credits is 100,000 gallons of ethanol annually. The newly enacted
legislation requires us to enter into a written agreement with the Tax
Commissioner on behalf of the State of Nebraska pursuant to which we will agree
to produce ethanol at our designated facility and the State of Nebraska will
agree to furnish the producer tax credits in accordance with the terms of the
new law. We have entered into a written agreement with the State of Nebraska,
but our plant must be operational and in production prior to June 30, 2004 in
order to be eligible for the tax credit.

In 2002, because of State of Nebraska budget shortfalls, various tax credit
provisions in effect in Nebraska, including LB 536, have come under increased
scrutiny from the Nebraska Unicameral. As a result there can be no assurance
that the Nebraska legislature will not in 2002, or in subsequent years, enact
new legislation which would revise LB 536, or otherwise adversely impact ethanol
plants, such as that proposed by OTEC, which are to benefit from LB 536. During
the 2002 Nebraska legislative session, a bill has been proposed that would alter
the LB 536 tax credit based upon a sliding scale making the credit as much as
20(cent) per gallon or as little as zero. However, this bill has been amended
and significantly altered in the committee stage, such that the tax credit would
remain the same. The amendment did make a change to LB 536's structure such that
honoring certificates for motor fuel tax credits would be deferred if there are
not sufficient funds in the Ethanol Production Incentive Cash Fund ("EPIC") to
reimburse the Highway Trust Fund. The amendment also provides that if the
unobligated balance in the EPIC fund falls below $5 million, the corn and grain
sorghum excise tax is to double to 1(cent) per bushel or corn or hundredweight
of grain sorghum beginning at the start of the next calendar quarter. If, after
at least one quarter of the higher checkoff, the balance remains or again falls
below $5 million an excise tax of one dollar per dry ton of animal feed
byproducts generated by an ethanol facility that has received benefits under the
Ethanol Development Act would be imposed. Once an unobligated balance of $15
million exists in the EPIC fund, the animal feed byproducts excise, the higher
checkoff, and the original checkoff are to be suspended in the order they were
imposed. Finally, the amendment would change the date for the report to the
Legislature about the incentive program from each December 1/st/ beginning 2003
to each November 1/st/ beginning in 2002. As of April 2, 2002, this bill has
been passed out of committee and has been placed on the general file.

Because we will not be in a position to produce 100,000 gallons of ethanol until
at least 2004, we will not qualify for the payments until that time. We believe
there are several existing projects in Nebraska that could compete with us for
the payment. If another ethanol plant came online and produced 100,000 or more
gallons of ethanol, it could also qualify for the producer payment. This would
require the legislature to increase funding for the producer incentive program
through either an increase in general fund appropriation or other source such as
the grain checkoff program. Despite our written agreement with the State of
Nebraska, the Nebraska legislature could reduce or eliminate the producer tax
credits at any time; however, a reduction or elimination would constitute a
breach of our contract by the State of Nebraska. The State of Nebraska could
also impose taxes on the ethanol plants to provide additional funds for the
ethanol production incentive fund which could have a serious adverse impact on
our net income from the production incentive. The production incentive is
scheduled to expire June 30, 2012, and the longer it takes us to raise our
financing and complete construction, the greater the risk that we will not be
operational and in production prior to June 30, 2004, and thus be ineligible for
LB 536 payments or that we will receive less subsidy payments than the maximum
permitted under Nebraska law.

The failure to enforce existing environmental and energy policy regulations will
result in a decreased demand for ethanol which will impact the profitability of
our business.

Our success will depend in part on effective enforcement of existing
environmental and energy policy regulations. Many of our potential consumers are
unlikely to switch from the use of conventional fuels unless compliance with
applicable regulatory requirements leads, directly or indirectly, to the use of
ethanol. Both additional regulation and enforcement of such regulatory
provisions are likely to be vigorously opposed by the entities affected by such
requirements. If existing emissions-reducing standards are weakened, or if

governments are not active and effective in enforcing such standards, our
business and results of operations could be adversely affected. Even if the
current trend toward more stringent emissions standards continues, we will
depend on the ability of ethanol to satisfy such emissions standards more
efficiently than other alternative technologies. Certain standards imposed by
regulatory programs may limit or preclude the use of our products to comply with
environmental or energy requirements. Any decrease in the emission standards or
the failure to enforce existing emission standards and other regulations could
result in a reduced demand for ethanol. A significant decrease in the demand for
ethanol will reduce the price of ethanol, and adversely affect our profitability
and decrease the value of your membership units.

Previously unknown, material adverse environmental effects may be discovered to
be caused by ethanol, materially damaging the ethanol industry.

With the phaseout of MTBE and increasing reliance upon ethanol has come
increased attention to the potential environmental impacts of widespread ethanol
usage. One recent study of such potential effects in the northwestern United
States, while discounting the possibility that fuel ethanol may pose significant
new health risks, also recommended further study of the potential for adverse
impacts from large scale exposure to low levels of ethanol. As the environmental
effects of widespread adoption of fuel ethanol come under heightened scrutiny,
previously unknown and harmful environmental impacts of such usage may be
discovered. Any such discovery could have material adverse effects on the entire
ethanol industry, including our business.

The federal oxygen mandate could be eliminated, made subject to waiver or
otherwise revised to the detriment of the ethanol industry.

In connection with a large scale shift away from MTBE or because air quality in
metropolitan areas is determined to have improved sufficiently, changes in the
environmental regulations regarding the required oxygen content of automobile
emissions could be made which have an adverse effect on the ethanol industry.
Various proposals and recommendations are currently under consideration to
eliminate, retain, allow for waivers of or otherwise change the federal oxygen
mandate. If that mandate is eliminated or overall obligations to comply with it
are reduced, the ethanol industry and our business may suffer material adverse
effects.

We are subject to extensive environmental regulation and operational safety
regulations that could result in higher than expected compliance costs and
liabilities.

Ethanol production involves the emission of various airborne pollutants,
including particulate matters, carbon monoxide, oxides of nitrogen, volatile
organic compounds and sulfur dioxide. To construct the plant and operate our
business, we will need an Air Quality Construction Permit and an Air Quality
Operating Permit from the State of Nebraska Department of Environmental Quality.
We applied for an Air Quality Construction Permit on July 30, 2002. An Air
Quality Construction Permit is valid for 18 months. If we cannot complete
construction within 18 months our Air Quality Construction Permit will lapse
unless we can demonstrate that the construction of our plant requires additional
time and therefore, we will need to apply for an extension. Our ability to
commence construction and operation of the plant is dependent on our receipt of
this permit. Once the proposed plant is completed, we must conduct emission
testing and apply for an Operating Permit that will allow us to operate our
business. We anticipate submitting an application for this permit before we
begin operations. We need to obtain this permit to operate the plant after the
Air Pollution Construction Permit expires. We have twelve months once the plant
becomes operational to obtain an Air Quality Operating Permit. If granted, we
expect the permit will be valid for five years.

We also plan to apply for a Nebraska Pollutant Discharge Elimination General
Permit to allow us to discharge water into a nearby lagoon or creek and for
general discharges. This permit requires a 30-day public comment period. We may
also need to apply with the Nebraska Department of Environmental Quality for a
Storm Water Runoff Permit or a similar permit. We have not applied for these
permits, but anticipate doing so at least 180 days before we begin operations.
If these permits are not granted, we will

have to construct an alternative discharge and treatment system (e.g. storm
pond) on site for which we will need to obtain different permits. If granted, we
expect the permit will be valid for five years.

We will also need to obtain a certain well permits from the Nebraska Department
of Environmental Quality to construct and operate our on-site wells. Without
these permits, we cannot drill our wells and could be forced to use water from
an alternative source, if a sufficient supply is available, or terminate our
business. Using water from an alternative source may significantly increase our
operating costs, harm our financial performance and reduce the value of your
units.

Even if we receive all required permits from the State of Nebraska, we may be
subject to regulations on emissions from the United States Environmental
Protection Agency. Further, EPA and Nebraska's environmental regulations are
subject to change and often such changes are not favorable to industry.
Consequently, even if we have the proper permits now, we may be required to
invest or spend considerable resources to comply with future environmental
regulations.

Our failure to comply or the need to respond to threatened actions involving
environmental laws and regulations may adversely affect our business, operating
results or financial condition. Once our ethanol plant becomes operational and
as our business grows, we will have to develop and follow procedures for the
proper handling, storage, and transportation of finished products and materials
used in the production process and for the disposal of waste products. In
addition, state or local requirements may also restrict our production and
distribution operations. We could incur significant costs to comply with
applicable laws and regulations as production and distribution activity
increases. Protection of the environment will require us to incur expenditures
for equipment or processes.

We also will be subject to federal and state laws regarding operational safety.
Risks of substantial compliance costs and liabilities are inherent in a
large-scale construction project and in ethanol production after the facility is
constructed. Costs and liabilities related to worker safety may be incurred.
Possible future developments-including stricter safety laws for workers or
others, regulations and enforcement policies and claims for personal or property
damages resulting from our construction or operation could result in substantial
costs and liabilities that could reduce the amount of cash that we would
otherwise have to distribute or use to further enhance our business.

We could be subject to nuisance claims or environmental litigation.

We could be subject to environmental nuisance or related claims by employees,
property owners or residents near the proposed ethanol plant arising from odor,
air or water discharges. Ethanol production has been known to produce an odor to
which surrounding residents could object. If odors become a problem, we may be
subject to fines and could be forced to take costly curative measures.
Environmental litigation or increased environmental compliance costs could
increase our operating costs.

Risks Related To Tax Issues In A Limited Liability Company

You may be required to pay taxes on your share of our income even if we make no
distribution to you.

We expect to be treated as a partnership for federal income tax purposes unless
there is a change of law or trading in the membership units is sufficient to
classify OTEC as a "publicly traded partnership." This means that OTEC will pay
no income tax and all profits and losses will "pass-through" to our members who
will pay tax on their share of OTEC's profits. It is likely that you may receive
allocations of taxable income that exceed any cash distributions we make. This
may occur because of various factors, including but not limited to, accounting
methodology, lending covenants that restrict our ability to pay cash
distributions, or our decision to retain or use the cash generated by the
business to fund our operating activities and obligations. Accordingly, you may
be required to pay income tax on your allocated share of our taxable income with
personal funds, even if you receive no cash distributions from us.

Because we are treated as a partnership for federal income tax purposes, the IRS
may audit our tax returns which could result in an audit of your tax returns or
in tax obligations to you.

The IRS may audit our tax returns and may disagree with the tax positions that
we take on our returns. If challenged by the IRS, the courts may not support the
position we take on our tax returns. An audit of our tax returns could lead to
separate audits of your tax returns, especially if adjustments are required,
which could result in adjustments on your tax return. This could result in tax
liabilities, penalties and interest to you.

The foregoing discusses the most significant risks associated with this
offering, but it is not intended to be an exhaustive discussion of all the risks
that may be associated with an investment in OTEC. Moreover, because there are
many inherent risks that may not be anticipated by OTEC, prospective investors
should be aware that additional risks inherent in an investment in OTEC may be
experienced that are not presently foreseen by OTEC.

FORWARD-LOOKING STATEMENTS

Some of the information in this memorandum including the above Risk Factors
section, contains forward-looking statements that involve substantial risks and
uncertainties. You can identify these statements by forward-looking words such
as "may," "will," "expect," "anticipate," "believe," "estimate," "project," and
"continue" or similar words.

You should read statements that contain these words carefully because they:

. Discuss our future expectations
. Contain projections of our future results of operations or of our
financial condition
. State other "forward-looking" information

We believe it is important to communicate our expectations to our investors.
However, there may be events in the future that we are not able to predict
accurately or over which we have no control. The risk factors listed above, as
well as any cautionary language in this memorandum, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Before you
invest in our membership units you should be aware that the occurrence of the
events described in these risk factors and elsewhere in this memorandum could
have a material adverse effect on our business, operating results and financial
condition.

USE OF PROCEEDS

The gross proceeds before deducting expenses from this offering will be
$20,000,000 if the minimum number of membership units offered is sold, and
$24,000,000 if the maximum is sold. We estimate the offering expenses to be
approximately $500,000, and the net proceeds of the offering to be $19,500,000
if the minimum is sold and $23,500,000 if the maximum is sold.

We intend to use the net proceeds of the offering to build an ethanol plant and
to start operating the ethanol plant as a going concern. We must supplement the
proceeds of this offering with debt financing to meet our stated goals. We
estimate total capital expenditures for the construction of the plant will be
$43,500,000 and that we will need a total of $58 million to construct the plant
and finance start-up costs. The following table describes our proposed use of
proceeds based on a maximum offering amount of $24,000,000 and a minimum
offering amount of $20,000,000.

The following figures are intended to be estimates only, and the actual use of
funds may vary significantly from the descriptions given below.

----------------------------------------------------------------------------------------
Maximum Minimum
OFFERING PROCEEDS: Offering Offering
----------------------------------------------------------------------------------------

Offering Proceeds $24,000,000 100% $20,000,000 100%
----------------------------------------------------------------------------------------
Less Estimated Offering Expenses $ 500,000 2.0 $ 500,000 2.5%
----------------------------------------------------------------------------------------
Net Proceeds from Offering $23,500,000 98.0% $19,500,000 97.5%
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
ESTIMATED USE OF PROCEEDS:
----------------------------------------------------------------------------------------
Financing Costs $ 1,500,000 6.4% $ 1,500,000 7.7%
----------------------------------------------------------------------------------------
Insurance Costs $ 500,000 2.1% $ 500,000 2.6%
----------------------------------------------------------------------------------------
Exercise of Property Options $ 450,000 1.9% $ 450,000 2.3%
----------------------------------------------------------------------------------------
Plant Site Preparation $ 4,000,000 17.0% $ 4,000,000 20.5%
----------------------------------------------------------------------------------------
Rail costs $ 670,000 2.8% $ 670,000 3.4%
----------------------------------------------------------------------------------------
General and Administrative Expenses $ 500,000 2.1% $ 500,000 2.6%
----------------------------------------------------------------------------------------
Construction Costs $15,880,000 67.7% $11,880,000 60.9%
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
TOTAL ESTIMATED USE $23,500,000 100% $19,500,000 100%
OF PROCEEDS:
----------------------------------------------------------------------------------------

Because we must secure a significant amount of debt, we will first pay financing
costs of approximately $1,500,000. This figure is an estimate and our actual
debt financing expenses could be substantially higher. The Board of Directors is
currently researching various insurance structures for directors and officers'
insurance, builder's risk insurance, general liability insurance, workers'
compensation and property insurance. In order to attract and retain qualified
individuals to serve on our Board of Directors, it is necessary for us to obtain
directors' and officers' liability insurance. We are reserving approximately
$500,000 to cover costs associated with securing appropriate insurance coverage.
This reserve amount is based on an estimate only and our actual insurance costs
may exceed the reserve amount.

We are reserving $450,000 for the exercise of the property options for the
60-acre plant site located near Davenport, Nebraska. We are also reserving
$4,000,000 for plant site preparation in order to meet site preparation
requirements established by Lurgi and ICM, Inc. and $670,000 for rail costs.
Prior to Lurgi's commencement of construction of the plant, we must obtain all
legal authority to use the site for its intended purposes, including obtaining
proper zoning approvals, complying with elevation restrictions and conducting
soil and water tests. The plant site must be within 3 inches of final grade
specifications including rough grading for site roadways prior to breaking
ground. The site's soil must be tested and modified to provide a minimum
allowable safe soil bearing pressure of 5,000 psf for the fermentation, ethanol
and grain storage tank foundations and 3,000 psf for all other plant foundation
elements with a maximum settlement of approximately 1".

Lurgi and ICM have also required that we prepare the plant site for specific
natural gas, electrical and water supply requirements necessary for the
operation of the plant. Our plant will require a continuous supply of natural
gas of at least 1.480 billion cubic feet per year at a minimum rate of 170 MCF
per hour and at a minimum pressure of 15 psig. Our plant will also require a
continuous supply of 5500 kVA, 13500-volt electrical energy or more to a point
adjacent to the plant's perimeter road. We must also provide a high voltage
switch. We must supply two on-site wells capable of providing 350 gallons per
minute which meet minimum water quality standards.

Water storage, pressurization and piping systems sufficient to satisfy the needs
of local, state and federal life safety regulations and a process fresh water
supply line terminating in the plant's process building are also required. We
must provide a septic tank and drain field system or wastewater lagoon required
for the

sanitary sewer requirements applicable to the plant along with a retention pond
for continuous utility discharge and process wastewater discharges during
emergency failure of the plant's bio-methanation system. Special requirements by
the state may dictate additional treatment of water prior to discharging into
the retention pond.

We are also reserving $500,000 to pay general and administrative costs for
managerial fees, on-going legal and accounting fees, out-of-pocket
reimbursements and general office expenses. Our actual general and
administrative expenses may exceed this amount. The remainder of the funds will
be used to pay construction costs, such as digging, laying foundations,
purchasing and installing equipment, and constructing buildings.

We must obtain debt financing in order to complete construction on the ethanol
plant. The amount and nature of the debt financing that we are seeking is
subject to the interest rates and the credit environment as well as other
economic factors over which we have no control. We have no binding contracts or
commitments with any bank, lender or financial institution for our debt
financing, but we will not close on this offering until we execute binding
financing arrangements.

We have not obtained the services of any underwriter, placement agent or
broker-dealer for this offering, although we reserve the right to pay a finder's
fee or placement agent fee to a registered broker-dealer in connection with the
sale of membership units in accordance with applicable laws, and any such
payment would increase our offering costs materially. We currently do not intend
to pay any such fees unless it is necessary to do so in order to raise at least
the aggregate minimum of $20,000,000.

After completion of this offering and the receipt of the required debt
financing, if we require additional cash, we may seek additional financing by
borrowing, and/or through the sale of additional membership units. We cannot
guarantee that we will be successful in obtaining additional financing if
needed.

CAPITALIZATION

Membership Unit Split

On July 3, 2002, the Board authorized a two for one membership unit split for
all members of record as of July 3, 2002 which increased the issued and
outstanding membership units from 994 units to 1,988 units. The number of
membership units and prices paid for the membership units issued throughout the
remainder of this document have been retroactively restated to give effect to
the membership unit split.

Capitalization Table

The following table describes the capitalization of OTEC as of June 30, 2002 on
an actual and as adjusted basis.

As adjusted /(1)/
-----------------
Actual Minimum Maximum
------ ------- -------

Members' equity
Membership units issued and
outstanding (1,988 units, actual;
minimum 21,988 units and
maximum 25,988 units, as adjusted) $ 955,401 $ 20,455,401 $ 24,455,401
Accumulated deficit (19,914) (19,914) (19,914)
------------ ------------ ------------
Total members' equity and
capitalization $ 935,487 $ 20,435,487 $ 24,435,487
============ ============ ============

______________________________
/(1)/ As adjusted reflects the issuance of 20,000 (minimum) and 24,000 (maximum)
membership units at $1,000 per share, net of expenses of $500,000.

Principal Members

The following table presents the names and other information about beneficial or
record owners of more than five percent (5%) of our membership units as of the
date of this prospectus.

----------------------------------------------------------------------------------------------------
FIVE PERCENT (5%) BENEFICIAL OWNERSHIP

----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
Name and Address Amount and Percent Of
Title of Class Of Nature Class Prior to
Beneficial Owner of Beneficial the Offering
---------------- Ownership ------------
---------
----------------------------------------------------------------------------------------------------

Membership Glenn Elting & Sons
Units RR 1 Box 117 100 Units 5.03%
Edgar, NE 68935
----------------------------------------------------------------------------------------------------
Membership Keim Brothers, Inc.
Units RR 1 Box 123 200 Units 10.06%
Davenport, NE 68335
----------------------------------------------------------------------------------------------------
Membership Alvin and Merilee Hein(/(1)/
Units RR 1 Box 198 250 Units 12.58%
Mabel, MN 55954
----------------------------------------------------------------------------------------------------

/(1)/ Alvin and Merilee Hein hold the membership units as joint tenants
with rights of survivorship.

Ownership By Management

The following table describes the ownership of membership units by OTEC's
directors and officers and by all directors and officers of OTEC as a group as
of the date of this prospectus. Members of the Board and our management do not
hold any outstanding options or other convertible securities giving them a right
to additional membership units.

- --------------------------------------------------------------------------------------------------------------------
UNITS BENEFICIALLY OWNED BY DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Number Percentage of Total Percentage of Total
Directors and Officers of OTEC of Units Prior to Offering After the Offering/(1)/

Maximum Minimum
------- --------
- --------------------------------------------------------------------------------------------------------------------

Mark L. Jagels, Chairman of the 50 Units 2.632% 0.1930% 0.2283%
Board, President and Director
- --------------------------------------------------------------------------------------------------------------------
Michael Schardt, Vice Chairman 52 Units/(2)/ 2.738% 0.2008% 0.2374%
of the Board, Vice President and
Director
- --------------------------------------------------------------------------------------------------------------------
Kent D. Hummel, Treasurer and 44 Units 2.317% 0.1699% 0.2009%
Director
- --------------------------------------------------------------------------------------------------------------------
Pamela Maynard, Secretary and 2 Units 0.105% 0.0077% 0.0091%
Director
- --------------------------------------------------------------------------------------------------------------------
Todd Fangmeier, Director 12 Units 0.632% 0.0463% 0.0548%
- --------------------------------------------------------------------------------------------------------------------
Brian Nedrow, Director 32 Units 1.685% 0.1235% 0.1461%
- --------------------------------------------------------------------------------------------------------------------
Daniel J. Miller, Director 12 Units 0.632% 0.0463% 0.0548%
- --------------------------------------------------------------------------------------------------------------------
Gene L. Thomas, Director 32 Units 1.685% 0.1235% 0.1461%
- --------------------------------------------------------------------------------------------------------------------
Darrel D. Dageforde, Director 40 Units/(3)/ 2.106% 0.1544% 0.1826%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
All Directors and Officers as a Group 276 Units 14.532% 1.0654% 1.2601%
- --------------------------------------------------------------------------------------------------------------------

/(1)/ The percentages reflected assume that the director does not purchase
any additional membership units in this offering.
/(2)/ Includes 50 membership units held by Edgar and Allen Schardt Inc. of
which Mr. Schardt is Vice President.
/(3)/ Includes 22 membership units held by his wife, Rosemary Dageforde.

DILUTION

As of the date of this prospectus, we have 1,988 membership units issued and
outstanding. The 1,988 membership units have a net tangible book value of
$935,487 or $470.57 per membership unit, based on the June 30, 2002 balance
sheet. The tangible book value per unit" is determined by dividing the tangible
assets of OTEC less total liabilities by the number of membership units
outstanding.

The following table illustrates the dilution in the value of your equity in a
membership unit based on a total of 21,988 membership units (if the aggregate
minimum units were sold) and of 25,988 membership units (if the aggregate
maximum membership units were sold) units outstanding. The following table
assumes that the net proceeds from this offering were $19,500,000 and
$23,500,000 respectively. This table does not take into account any other
changes in the net tangible book value of our membership units occurring after
June 30, 2002 or other expenses not related to this offering.

---------------------------------------------------------------------------------------------------
Minimum Maximum
Offering Offering
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------

Offering Price per Unit $ 1,000 $ 1,000
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
Net tangible book value of company at June 30, 2002. 935,487 935,487
---------------------------------------------------------------------------------------------------
Net tangible book value per unit at June 30, 2002. 470.57 470.57
---------------------------------------------------------------------------------------------------
Increase in net tangible book value per unit attributable 19,500,000 23,500,000
to the sale of 20,000 (minimum) and 24,000 (maximum) units
---------------------------------------------------------------------------------------------------
Net tangible book value per unit at June 30, 2002 as 929.39 940.26
adjusted for the sale of 20,000 (minimum) and 24,000
(maximum) units
---------------------------------------------------------------------------------------------------
Immediate dilution per unit to new investors 70.61 59.74
---------------------------------------------------------------------------------------------------

Each member of our Board of Directors purchased his original two membership
units for $500 per unit to capitalize the company upon its organization. During
the private offering which expired on May 31, 2002, the following directors
purchased membership units for $500 per unit in accordance with and subject to
the terms set forth in the private placement memorandum:

----------------------------------------------------------------------------

Director Number of Units Purchased

----------------------------------------------------------------------------
Mark L. Jagels 48 Units
----------------------------------------------------------------------------
Michael Schardt/(1)/ 50 Units
----------------------------------------------------------------------------
Kent D. Hummel 42 Units
----------------------------------------------------------------------------
Todd Fangmeier 10 Units
----------------------------------------------------------------------------
Daniel Miller 10 Units
----------------------------------------------------------------------------
Brian Nedrow 30 Units
----------------------------------------------------------------------------
Darrel Dageforde/(2)/ 36 Units
----------------------------------------------------------------------------
Gene Thomas 30 Units
----------------------------------------------------------------------------
/(1)/ Includes 50 membership units held by Edgar and Allen Schardt Inc. of
which Mr. Schardt is Vice President.
/(2)/ Includes 20 membership units purchased by his wife, Rosemary
Dageforde.

An investor purchasing units in this offering will receive units diluted by the
prior purchase of units by purchasers during our seed capital offerings. We have
previously sold units at $500 per unit after this membership unit split compared
to the $1,000 per unit price at which we are selling units in this offering. We
believe that these differences in pricing accurately reflect the additional
risks taken by seed capital investors. The presence of these previously sold
units will dilute the relative ownership interests of the units sold in this
offering because these earlier investors received a relatively greater share of
our equity for less consideration than investors in this offering will receive.

DISTRIBUTION POLICY

Distributions are payable at the discretion of our Board of Directors, subject
to the provisions of the Nebraska Limited Liability Company Act and our
Operating Agreement. The Board has no obligation to distribute profits, if any,
to members. We have not declared or paid any distributions on our membership
units.

We do not expect to generate revenues until the proposed ethanol plant is
operational, which we expect will occur approximately 14 to 16 months after
construction commences. After operation of the proposed ethanol plant begins, we
anticipate, subject to any loan covenants or restrictions with our senior and
subordinated lenders, distributing a portion of our available cash to our
members in proportion to the membership units held and in accordance with our
Operating Agreement. By net cash flow, we mean our gross cash proceeds received
less any portion, as determined by our directors in their sole discretion, used
to pay or establish reserves for our expenses, debt payments, capital
improvements, replacements and contingencies. If our financial performance and
loan covenants permit, our directors will try to make cash distributions at
times and in amounts that will permit unit holders to make income tax payments,
but we might not ever be able to make any cash distributions. Any such
distributions are totally discretionary with the Board and may not, for various
reasons, occur. As a result, you could owe more in taxes due to your share of
company profits, than cash distributions received by you from OTEC in any
taxable year. The Board may elect to retain future profits to provide
operational financing for the plant, debt retirement and possible plant
expansion.

We do not know the amount of cash that we will generate, if any, once we begin
operations. At the start, we will generate no revenues and do not expect to
generate any operating revenue until the proposed ethanol plant is operating
fully. Cash distributions are not assured, and we may never be in a position to
make distributions. Whether we will be able to generate sufficient cash flow
from our business to make distributions to members will depend upon numerous
factors, including:

. Successful and timely completion of construction since we will not
generate any revenue until our plant is constructed and operational;

. Required principal and interest payments on any debt and compliance
with applicable loan covenants which will reduce the amount of cash
available for distributions;

. Our ability to operate our plant at full capacity which directly
impacts our revenues;

. Adjustments and amounts of cash set aside for reserves and unforeseen
expenses; and

. State and federal regulations and subsidies, and support for ethanol
generally which can impact our profitability and the cash available
for distributions.

SELECTED FINANCIAL DATA

The following table summarizes important financial information from our
financial statements. You should read this table in conjunction with our
financial statements and their notes, and our plan of operation and other
financial information included elsewhere in this prospectus.

August 16, 2001 August 16, 2001
(Inception) Six Months (Inception)
through ended through
December 31, 2001 June 30, 2002 June 30, 2002

------------------- --------------- ---------------

Statement of Operations Data:
Revenues $ - $ - $ -
Operating loss (67,636) (62,907) (130,543)
Income (Net loss) (34,546) 14,632 (19,914)

December 31,
2001 June 30, 2002
------------------- ----------------------------------

As adjusted/(1)/
----------------
Actual Actual Minimum Maximum
------ ------ ------- -------

Balance Sheet Data:
Cash and cash equivalents $ 51,611 $ 101,296 $ 19,601,296 $ 23,601,296
Working capital (deficit) (23,546) 907,390 20,407,390 24,407,390
Total assets 51,611 969,189 20,469,189 24,469,189
Total members' equity (deficit) (23,546) 935,487 20,435,487 24,435,487

_______________________
(1) As adjusted reflects the issuance of 20,000 (minimum) and 24,000 (maximum)
membership units at $1,000 per share, net of expenses of $500,000.

MANAGEMENT'S PLAN OF OPERATIONS

This prospectus contains forward-looking statements that involve risks and
uncertainties. Actual events or results may differ materially from those
indicated in such forward-looking statements. The following discussion of the
financial condition and results of our operations should be read in conjunction
with the Financial Statements and related notes thereto included elsewhere in
this prospectus, as well as the Risk Factors described earlier.

We are a start-up limited liability company, which was formed for the purpose of
building a plant to produce ethanol and animal feed products near Davenport,
Nebraska. We entered into four written option agreements with each of the four
owners, in which they grant to OTEC an exclusive option on the Davenport site
real property through June 30, 2003, in consideration of payment of $1,000
option fee to each of the four owners. The total purchase price for the site
under the option agreements is $365,000, which includes a $5,000 payment to one
of the owners in consideration of the diminution in value of the owner's
residence which is located contiguous to the site, and a release of claims
arising out of OTEC's purchase of the land and construction and operation of the
proposed ethanol plant. The exercise of the options, and payment of the purchase
price would not occur until after the successful completion of this offering,
using the proceeds of this offering.

In the option agreements, we have agreed that the core physical ethanol plant
will be located on the east one-half of the site property, and that if any
portion of the external structural walls of the core plant intrude beyond the
east one-half of the property when completed, that OTEC must pay the owners a
total of $130,000 as liquidated damages, and as the owners' sole remedy. The
current site plans for the ethanol plant provide for the core physical plant to
be located on the east 1/3 of the site.

Our plant is expected to consume approximately 14.3 million bushels of locally
grown corn annually, and produce approximately 40 million gallons of fuel-grade
ethanol and 128,000 tons of wet distillers grains for cattle feed annually. We
currently estimate that it will take 14 to 16 months from the date that we close
the offering, which includes obtaining our debt financing, and obtaining all
necessary permits, to complete the construction of the plant.

We anticipate that we will have an agreement with an experienced ethanol
marketer to sell our ethanol production. We also anticipate that we will have an
agreement with an experienced marketer to sell all of our animal feed products
to the local, regional, national and international markets. We will be hiring
staff to handle the direct operation of the plant, and currently expect to
employ approximately 40 people.

Plan for next 12 months of operation

We expect to use the next 12 months for the design-development and construction
of the ethanol plant. We also plan to obtain debt financing and negotiate and
execute finalized contracts concerning the construction of the plant, provision
of necessary electricity, natural gas and other power sources, and marketing
agreements for ethanol and distiller grain sales. Assuming the successful
completion of this offering and our obtaining necessary debt financing, we
expect to have sufficient cash on hand to cover construction and related costs
necessary to make the plant operational. We estimate that we will need
approximately $54 million to construct the plant, and a total of approximately
$58 million to cover all capital expenditures necessary to complete the project
and make the plant operational and produce revenue.

If we close on the offering and obtain the necessary debt financing, we expect
to have sufficient cash to cover our costs over the next 12 months, and through
the completion of the plant construction, including staffing, general and
administrative expenses and legal, accounting and related expenses. The
following is our estimate of costs and expenditures for the 12 months following
the completion of this offering. These estimates are based on the experience of
Lurgi in the construction of other ethanol plants. It is only an estimate and
our actual expenses could be much higher because of a number of factors, as
described in the "Risk Factors" section.

Financing and organization costs $ 1,500,000
Offering costs 500,000
Insurance 500,000
General and administrative costs 500,000
Exercise of property options 450,000
Land and site preparation 4,000,000
Rail costs 670,000
Construction in progress payments (for 12-month period) 37,839,450
-----------

TOTAL $45,959,450
===========

We anticipate spending approximately $45,959,450 on our business over the next
12 months, the largest portion of which will be for the construction of our
ethanol plant. The financing and organization costs represent the fees and costs
which we may incur in connection with obtaining our debt financing from our
lenders. These financing costs include lending and legal fees. We have not
obtained the services of a professional advisor in connection with obtaining
debt financing, and our financing costs may be significantly higher if we cannot
obtain such debt financing on our own, and are required to hire a professional
advisor for such purposes. We are reserving $450,000 for the exercise of the
property options for the 60-acre plant site located near Davenport, Nebraska. We
estimate that we will spend approximately $500,000 on directors and officers'
insurance, general commercial liability and property insurance for our business.
We also expect to spend an estimated $500,000 on general and administrative
expenses during the next 12 months, including managerial fees, general office
expenses, and disbursement reimbursements. We estimate the costs of land and
site preparation to be approximately $4,000,000, which will include leveling and
grading the site, constructing a road from the plant to Highway 4, and drilling
wells to meet our water supply needs. We also estimate that the total rail costs
associated with construction and start-up operations of the plant will be
approximately $670,000.

We expect to spend the majority of our funds over the next 12 months,
approximately $38 million, on plant construction. These costs will include
preparing and pouring foundations, material and labor to construct the plant,
including the grain and ethanol storage and handling facilities, offices and a
cooling tower. We will also be purchasing and installing ethanol production
equipment, such as pumps, grinders, processing equipment, storage tanks and
conveyors. Such construction, equipment purchases and installation will be
handled by Lurgi, which will be paid by us by making monthly progress payments
based on the work completed and invoiced to us by Lurgi.

We estimate our offering costs as follows:

Securities and Exchange Commission registration fee $ 2,208
Legal fees and expenses 150,000
Accounting fees 25,000
Blue Sky filing fees 60,000
Printing expenses 75,000
Escrow agent fees 12,000
Costs relating to sales meetings 50,000
Miscellaneous expenses 125,792
---------

TOTAL $ 500,000
=========

We have not obtained the services of any underwriter, placement agent or
broker-dealer for this offering, although we reserve the right to pay a finder's
fee or placement agent fee to a registered broker-dealer in connection with the
sale of membership units in accordance with applicable laws , and any such
payment would increase our offering costs materially. We currently do not intend
to pay any such fees unless it is necessary to do so in order to raise at least
the aggregate minimum of $20,000,000.

We intend to fund our costs and expenditures for the next 12 months through
proceeds raised in this offering and our debt financing. We are currently
searching for a project manager to assist with organizational matters related to
our business. We do not plan to begin hiring additional employees related to the
ethanol plant operations until approximately six months before completion of the
plant construction and commencement of production operations.

Operating Expenses

We will have certain operating expenses, such as office supplies, utilities and
salaries and related employment costs, when we hire a manager and other staff.
Along with these operating expenses, as noted above, we will have significant
offering and financing and organizational expenses. We have allocated funds in
our capital budget for such expenses, although such expenses may be greater than
those we have budgeted. If such costs are greater than we have budgeted, or if
construction costs run higher than budgeted, we may need to obtain additional
funding to cover such costs.

Books and Records

We currently do not have a full-time office staff or general manager. We are
currently seeking a project manager to assist us in organizational business
matters, but cannot be assured of hiring such person in the near future. We are
currently dependent on our Board of Directors for the maintenance of our books
and records. We intend to hire and train full-time staff personnel prior to
commencement of operations, and the salaries of such persons are included in our
budget. Such personnel are and will be responsible for compliance with the rules
and regulations promulgated under the Securities and Exchange Act of 1934
concerning the maintenance of accurate books and records, and the timely and
accurate submission of annual and periodic reports with the Securities and
Exchange Commission.

Liquidity and Capital Resources

We are proposing to raise $20 million minimum and $24 million maximum in this
offering. The offering proceeds will be placed in an interest-bearing escrow
account with Midwest Bank, N.A., Deschler, Nebraska. We will not close on the
escrow and accept subscribers' funds until we have executed definitive
agreements for our debt financing. We are seeking approximately up to $38
million in debt financing from one or more lenders in order to complete
construction of the ethanol plant.

We do not currently have financing commitments for any debt financing. We have
had preliminary discussions with several local banks that have expressed
interest in participating in our debt financing, but we do not have any
commitments and have not entered into any letters of intent or binding
agreements with any lending institutions. Our ability to complete the
construction of the plant is totally dependent upon our ability to successfully
complete this offering and obtain debt financing. If we cannot obtain debt
financing by February 15, 2003, we will return the proceeds raised in this
offering with interest.

We currently expect to enter into a construction loan for up to $38 million,
which will be secured by all our assets, including real property, plant and
equipment, receivables and inventory. We currently expect that the construction
loan will be converted into a term debt, to be paid in full over an agreed upon
term period upon completion of construction and operation of the ethanol plant.
Our ability to obtain both the construction loan and term loan will be dependent
upon our ability to construct the plant on a timely basis. The cost of such
financing will be dependent upon the interest rate which we are able to obtain,
which will depend upon factors, such as the debt financing market as a whole,
which we cannot control. In addition to the term loan, we may need a revolving
line of credit during the first year of operations to provide cash flow
necessary to finance our inventories and receivables. Our need for such
financing may be lessened if the maximum amount of $24 million is raised in this
offering. Our current plans call for our maintaining a cash reserve of $4
million after we commence operations, which we have estimated to be
approximately one-month's operating expenses. We do not currently have any
commitments for any of our debt financing requirements, including any line of
credit financing which we may require.

On August 22, 2001, the Nebraska Department of Agriculture awarded us a $75,000
grant under the Agricultural Opportunities and Value-Added Partnerships Act to
assist us with the construction of our ethanol plant. We entered into an
agreement with the Nebraska Department of Agriculture in connection with the
award which governs our obligations relating to the grant award. This agreement
requires us to use the grant funds exclusively for the activities listed in our
application which includes payment of legal fees, accounting fees, consulting
fees and permitting costs associated with the construction of the ethanol plant.
The Nebraska Cooperative Development Center has also awarded us a $21,000 grant.
We are currently in the process of seeking a second $75,000 grant from the
Nebraska Department of Agriculture under the Agricultural Opportunities and
Value-Added Partnerships Act and additional grants through the United Stated
Department of Agriculture.

The following table shows the sources of our liquidity in connection with the
construction of our ethanol plant and commencement of its operations. We do not
currently have any commitments or agreements with any third party to provide us
with these funds. The following shows both the minimum offering amount of $20
million and the maximum offering amount of $24 million. Based on the current
interest rate market, the following assumes an interest rate of 7.5% on term
debt. Interest rates have historically fluctuated and our interest rate could be
significantly higher.

The following table represents only ranges of estimates, and our actual sources
and uses of funds could vary materially from the following estimates. We have
assumed in the table the maximum amount of borrowing permissible assuming the
lender will require we have a 40% equity, but will include the $4 million of
subordinated debt financing from Lurgi in the 40% equity requirement. For a
minimum equity offering of $20 million, this 40% equity requirement would permit
borrowings from our primary lender of approximately $36 million. For a maximum
equity offering of $24 million, this 40% equity requirement would permit
borrowings from our primary lender of approximately $42 million. For purposes of
the following table, we

have assumed only $34 million in primary lender financing is necessary, along
with the $4 million subordinated debt financing from Lurgi.

Sources of Funds
Minimum Offering Maximum Offering
---------------- ----------------

Equity offering net proceeds $ 19,500,000 $ 23,500,000
Private offering net proceeds 941,000 941,000
State of Nebraska grant 75,000 75,000
Subordinated Debt from Lurgi 4,000,000 4,000,000
Debt financing 34,000,000 34,000,000
------------ ------------

Total Sources of Funds $ 58,516,000 $ 62,516,000
============ ============
_____________________________________

Uses of Funds

Minimum Offering Maximum Offering
---------------- ----------------

Costs Related to Purchase of Equipment $44,517,000 $44,517,000
and Construction of the Ethanol Plant/(1)/

-Grain receiving, storage and milling equipment, 4,345,960 4,345,960
and DDGS storage
-Conversion and liquefaction system 1,931,476 1,931,476
-Fermentation system 5,794,429 5,794,429
-Distillation and molecular sieve 4,345,822 4,345,822
-Liquid/Solid separation system 2,172,911 2,172,911
-Evaporation system 3,862,953 3,862,953
-Product storage area 3,380,084 3,380,084
-Utilities: 1,925,059 1,925,059
-General plant infrastructure 12,758,307 12,758,307
-Engineering and architectural fees 4,000,000 4,000,000

Exercise of Property Options 450,000 450,000
Plant Site Preparation 4,000,000 4,000,000
Rail Costs 670,000 670,000
Capitalized Interest 2,000,000 1,800,000
Start-up Expenses: through first month of production 4,700,000 4,700,000
Financing Costs 1,500,000 1,500,000
Cash Reserve 679,000 4,879,000
----------- -----------

Total Uses of Funds $58,516,000 $62,516,000
=========== ===========

_______________________________________
/(1)/ The costs referred to above as part of the "Costs Related to Purchase of
Equipment and Construction of the Ethanol Plant" include estimated costs
of equipment, installation and construction of that portion of the
ethanol plant implementing the identified process or system. The
respective process or system and the equipment necessary to implement
such process or system is described in greater detail below.

Grain Receiving, Storage and Milling Equipment. Corn delivered to the plant for
processing will be dumped into one of two dump pits in this grain receiving
building. The truck drivers delivering the corn will start the grain system,
dump the grain and obtain a weight ticket from the scale system. A 15,000 bushel
leg or its equivalent will lift the corn to a scalper to remove rocks and debris
before conveying the product to one of two bushel storage bins. A dust
collection system will be installed in the grain receiving system to limit
particulate emissions. The corn will be removed from storage and processed
through a hammermill. The result of this process is ground corn.

Conversion and Liquefaction System, Fermentation System and Evaporation System.
Ground corn will be mixed in a slurry tank, routed through a pressure vessel and
steam flashed off in a flash vessel which results in a cooked mash product. The
cooked mash will then continue through two liquefaction tanks and into one of
three fermenters. Simultaneously, propagated yeast will be added to the cooked
mash as the fermenters are filling. After batch fermentation is complete, the
beer produced by the fermentation process will be pumped to the beer well and
then to the beer column to separate the alcohol from the mash.

Distillation and Molecular Sieve. Alcohol streams are dehydrated in the
rectifier column, the side stripper and the molecular sieve system. Two hundred
proof alcohol is then pumped to the tank farm shift tanks and blended with 5%
gasoline as the product is being pumped into a final storage tank.

Product Storage Area. Farm tanks include two tanks for 190 proof storage, two
tanks for 200 proof storage, one tank for denaturant storage and two 750,000
gallon tanks for denatured ethanol storage. All tanks are covered carbon steel
tanks with floating roofs as may be required by our Air Quality Permit.

Liquid/Solid Separation System. The corn mash from the beer stripper is
dewatered in decanter type centrifuges.

General Plant Infrastructure and Utilities. The plant will also consist of
boilers, cooking, cooling towers and other processes for which we must supply
fresh water from our wells or from an alternative source. Boiler feedwater is
conditioned in regenerative softeners and/or other treatment equipment and
pumped through a deaerator and into a deaerator tank. Appropriate boiler
chemicals are added and the pre-heated water is pumped into the boiler. Steam
energy will be provided by a heat recovery steam generation (HRSG) boiler system
driven by the thermal oxidizer system . Process cooling will be provided by
circulating cooling water through heat exchangers, a chiller and a cooling
tower. The plant design also includes a compressed air system consisting of an
air compressor, receiver tank, pre-filter, coalescing filter and air dryer. The
plant design also incorporates the use of a clean-in-place (CIP) system for
cleaning cook, fermentation, distillation, evaporation, centrifuges and other
systems. Fifty percent caustic is used to conduct the CIP process and it is
received by truck and stored in a tank. CIP makeup is accomplished in two makeup
tanks and is returned to one waste CIP tank after solids are removed in the
screener. The plant will use an ICM/Pheonix Bio-Methanator to reduce organic
acids in the process water allowing water recycle within the plant. The plant
will have blowdown discharges from the cooling tower and boiler. The plant will
be computer controlled by a distributed control system with graphical user
interface and multiple workstations. Other tanks and equipment include a thin
stillage tank, alpha and gluco amylase tanks, yeast tank, reflux and regen
tanks, 200 proof flash vessel, 200 proof receiver tank, whole stillage tank,
syrup tank, storage tank for anhydrous ammonia used within the cooking system
and a storage tank for sulfuric acid used within the plant.

BUSINESS OF OTEC

General

Oregon Trail Ethanol Coalition, L.L.C., a Nebraska limited liability company,
was organized on August 16, 2001 for the purpose of constructing and operating
an ethanol plant described more fully below. The principal business office of
OTEC is currently located at Box 267, Davenport, Nebraska 68335. OTEC is managed
by a nine-member Board of Directors.

We intend to purchase land near Davenport, Nebraska on which to construct the
plant, and our Board of Directors has obtained an exclusive option for a 60-acre
site located 1 1/2 miles east of Davenport, Nebraska (the "Davenport Site")
which is just north of Highway 4 and south of the Union Pacific Railroad tracks.
We are planning to build an ethanol plant that will have an annual capacity to
process approximately 14.3 million bushels of corn into approximately 40 million
gallons of ethanol per year (mgy). The ethanol plant is also expected to produce
approximately 128,000 tons annually of animal feed known as distiller grains,
which may be sold as distillers dried grains with solubles, distillers modified
wet grains and distillers wet grains. These are the principal co-products of the
ethanol production process.

Background - - What is Ethanol?

Ethanol is a chemical produced by the fermentation of sugars found in grains and
other biomass. Ethanol can be produced from a number of different types of
grains, such as wheat and sorghum, as well as from agricultural waste products
such as sugar, rice hulls, cheese whey, potato waste, brewery and beverage
wastes and forestry and paper wastes. However, approximately 90% of ethanol in
the United States today is produced from corn because corn produces large
quantities of carbohydrates, which convert into glucose more easily than other
kinds of biomass. Current annual domestic ethanol production is approximately 2
billion gallons.

Ethanol contains 35% oxygen by weight. When combined with gasoline, ethanol acts
as an oxygenate, which means that it increases the percentage of oxygen in
gasoline. As a result, the gasoline burns more cleanly, and releases less carbon
monoxide and other exhaust emissions into the atmosphere. Oxygenated gasoline is
commonly referred to as reformulated gasoline or "RFG." Although not all
scientists agree about the existence or extent of environmental benefits
associated with the use of ethanol, the use of ethanol is commonly viewed as a
way to improve the quality of automobile emissions.

Federal and State Regulation

Most ethanol is used in its primary form for blending with unleaded gasoline and
other fuel products. We believe that the implementation of the Federal Clean Air
act has made ethanol fuels an important domestic renewable fuel additive,
allowing the country to meet its environmental goals and reduce imports of
petroleum based fuels. Ethanol used as a fuel oxygenate provides one of the
easier, less expensive means to control carbon monoxide in problem areas.

Recently, the demand for ethanol has increased somewhat, particularly in the
upper Midwest, as a result of at least one of two major programs established by
the Clean Air Act Amendments of 1990 ("Clean Air Amendments"). The first
program, the Federal Oxygen Program, is a recurring wintertime program, designed
to reduce carbon monoxide levels during the winter months. The Clean Air
Amendments currently require the use of oxygenated fuels, at a minimum rate of
2.7% oxygen by weight, during the winter months in approximately 44 metropolitan
areas that were not in compliance with carbon monoxide standards.

The demand for ethanol may also be increasing as a result of a second Clean Air
Amendments program, the reformulated gasoline ("RFG") program. This program,
which began on January 1, 1995, is intended to reduce ground level ozone or
smog. The program initially required the use of RFG (containing oxygenates) in
nine metropolitan areas with severe ozone pollution. Other less severe
non-attainment areas are to be phased into the program over time. Although not
required, all or a portion of 14 states and the District of Columbia voluntarily
opted into the program at its inception.

The program has now been in place for approximately seven years; however, we
cannot determine the future impact of the RFG program on the demand for ethanol.
Prior to the inception of the program, the Environmental Protection Agency
mandated that a 30% share of the oxygen required in RFG come from renewable
oxygenates, meaning primarily ethanol; however, in April 1995, a federal
appellate court struck down the rule on the basis that the rule exceeded the
EPA's authority. While the ethanol industry has generally discounted the effect
of the court case on the basis that ethanol can compete in the marketplace with
other oxygenates (primarily MTBE (as defined below)) on its own merits, the
prospects for the ethanol market are further clouded by the growing resistance
to the reformulated fuel program. Consumers have resisted higher RFG prices and
a number of regions that had opted-in to the program have now opted-out.
Moreover, Congress has indicated a willingness to reexamine the program.

Currently, ten major U.S. metropolitan areas are out of compliance with the
Clean Air Amendments standards and are required to use RFG year-round. Other
areas are only required to use RFG during the winter months. Fourteen states and
the District of Columbia have voluntarily chosen to use RFG to help achieve
their clean air goals.

Currently, the most common oxygenate is MTBE. MTBE, a petroleum-based product,
is produced from methanol and natural gas and is largely imported from the
Middle East. About 13% of the nation's RFG uses ethanol as an oxygenate and MTBE
makes up the vast majority of the balance. Since MTBE was introduced and has
become a commonly used oxygenate, MTBE has been found in well water, lakes and
streams. While MTBE has not been classified as a carcinogen, it has been shown
to cause cancer in animals and its continued use has raised serious
environmental concerns. On March 26, 1999, the Governor of California issued an
order requiring the phase out of MTBE in gasoline sold in California by December
31, 2002. California's actions initiated a national debate about the use and
possible danger of MTBE. In June 2001, the Bush administration decided to
continue requiring oxygenated gasoline in California and on June 12, 2001, the
EPA announced the denial of California's request for a waiver from the oxygenate
requirement. As a result, the demand for ethanol is currently expected to double
by 2003 to 3.5 billion gallons per year. In response to the denial of the
California waiver request, the California Environmental Protection Agency's Air
Resources Board filed a lawsuit against the federal EPA in San Francisco's Ninth
Circuit Court of Appeals. The California agency maintains that the federal EPA
ignored evidence that ethanol will drive up the cost of gasoline and requests
that the EPA drop its requirement that oxygenates be added to 70 percent of
California gasoline.

In addition to California, many states, including Arizona, Connecticut,
Illinois, New York, Maine, Minnesota and South Dakota have enacted legislation
prohibiting the sale of gasoline containing specified levels of MTBE and/or
requiring the phase-out of MTBE and other ether based oxygenates.

On March 20, 2000, the Environmental Protection Agency called for MTBE to be
banned or to have its use significantly reduced because of environmental
problems associated with its use as a fuel oxygenate.

Demand for Ethanol

Market Overview

Local Ethanol Markets. Local markets must be evaluated on a case-by-case basis.
While local markets are the easiest to service, they often are the first to
become oversold, which depresses the ethanol price.

Regional Ethanol Markets. Typically a regional market is one that is outside of
the local market, yet within the neighboring states. This market will likely be
serviced by rail, and is within a 450-mile radius of the plant. Regional markets
typically include large cities that are either carbon monoxide or ozone
non-attainment areas, such as, Chicago, Madison, Milwaukee, St. Louis, Kansas
City and Denver.

Generally, the regional market is good business to develop. The freight is
reasonable, the competition, while aggressive, is not too severe, and the
turn-around time on the rail cars is an advantage. In addition, it is often
easier to obtain letters of intent to purchase product from regional buyers than
from national buyers.

Regional pricing tends to follow national pricing less the freight difference.
As with national markets, the use of a group-marketing program or a broker is
advantageous, especially in the first one to three years of operation.

Occasionally there are opportunities to obtain backhaul rates from local
trucking companies. These are rates that are reduced since the truck is loaded
both ways. Normally the trucks drive to the refined fuels terminals empty and
load gasoline product for delivery. A backhaul is the opportunity to load the
truck with ethanol to drive to the terminal.

National Ethanol Markets. Recently, California has been the focus of a major
ethanol campaign as MTBE is now being phased out. California has banned the use
of MTBE beginning January 1, 2003. MTBE is still used in significant quantities
throughout the state, but ethanol use is beginning to increase as the 2003 date
approaches. California represents a market of about 650 million gallons annually
due to the oxygenate requirement for RFG. With the recent denial of the
California RFG oxygenate waiver request, the size of the

California market is now better known although California may delay the phase
out of MTBE to avoid gasoline price spikes due to ethanol supply issues in the
near term.

While there is a great deal of focus on California, another emerging ethanol
market is in the Northeast. As in California, the primary reasons are the health
and water concerns surrounding the use of MTBE. The market potential for ethanol
in the Northeast is estimated at about 1 billion gallons annually. The ultimate
size of the California and Northeast markets will depend to a large degree on
how the RFG oxygenate and MTBE issues are determined in the regulatory,
political and judicial processes.

Historically, Illinois, Ohio and Minnesota have been by far the largest ethanol
markets. In addition to California and the Northeast, there are also other
significant national ethanol market opportunities such as Arizona, Colorado,
Texas, Oregon, Washington, New Mexico and Nevada.

------------------------------------------------------------------------
State Total Ethanol Consumed in 1999
(gallons)
------------------------------------------------------------------------
Arizona 13,737,000
------------------------------------------------------------------------
California 52,384,000
------------------------------------------------------------------------
Colorado 47,925,000
------------------------------------------------------------------------
Illinois 215,565,000
------------------------------------------------------------------------
Minnesota 206,542,000
------------------------------------------------------------------------
Nevada 23,883,000
------------------------------------------------------------------------
New Mexico 21,030,000
------------------------------------------------------------------------
Ohio 207,956,000
------------------------------------------------------------------------
Oregon 11,238,000
------------------------------------------------------------------------
Texas 51,218,000
------------------------------------------------------------------------
Washington 26,651,000
------------------------------------------------------------------------
Source: U.S. Department of Transportation Highway Statistics 1999

General Demand.

Ethanol demand is expected to continue to grow as demonstrated in the following
chart from the Department of Energy's Energy Information Administration (EIA).
Today's 2 billion gallon per year demand is expected to grow to 4.5 billion
gallons by the year 2015 according to the EIA. If the use of MTBE is phased out
on a national level in the next few years and the RFG oxygenate requirement
remains unchanged, a doubling of ethanol demand could occur sooner. This
projected growth is, however, subject to the risk that changes in governmental
policies and tax support incentives occur that adversely affect the demand for
ethanol.

U.S. ETHANOL DEMAND
(000 Gallons)

[GRAPHIC]

Source: Energy Information Administration

Ethanol Pricing

Historical ethanol, corn and gasoline prices are shown In the following chart.
Ethanol prices tend to track the wholesale gasoline price plus the federal tax
incentive of 54(cent) per gallon (now 53(cent) per gallon). In 1996 the ethanol
price increased dramatically because high corn prices caused many ethanol plants
to curtail or shutdown operations.

Average US Market Pricing of Ethanol, Gasoline and Corn

[GRAPHIC]

Wholesale Gasoline Data Source: DOE U.S. Refiner Prices of Petroleum
Products for Resale
Corn and Sorghum Data Source: USDA
Ethanol Data Source: Hart's Oxy-Fuel News
Prepared by BBI International.

Governmental Incentives

Federal Tax Incentives

Recognizing the need for a cleaner source of energy, and appreciating that
ethanol is also renewable and can be produced in the United States, legislators
have created federal and state incentives for ethanol production. These tax
incentives allow the ethanol industry to compete successfully in domestic fuel
markets with gasoline blended with MTBE produced by the oil industry. Although
the regulatory program is complicated and there are other federal tax incentives
for ethanol production, the most important incentive for our proposed ethanol
plant and our anticipated customers is the partial exemption from the federal
excise tax on gasoline.

The 5.3(cent) per gallon partial exemption from the federal excise tax on
gasoline is for alcohol fuels such as ethanol that are produced from biomass and
used as fuels. Currently, if gasoline contains up to 10% ethanol produced from
biomass, then the gasoline is exempt from 5.3(cent) of the 18.4(cent) per gallon
federal excise tax. This exemption will be reduced from 5.3(cent) per gallon to
5.2(cent) per gallon for the years 2003 and 2004 and 5.1(cent) per gallon for
2005, 2006 and 2007, when the current legislation is scheduled to expire. The
Energy Policy Act of 1992 revised the tax exemption to include gasoline blends
with less than 10 percent ethanol.

--------------------------------------------------------------------
Ethanol Blend Oxygen Content Tax Exemption
(% volume) (% weight) (cents/gallon blended)
--------------------------------------------------------------------
5.7 2.0 3.0
--------------------------------------------------------------------
7.7 2.7 4.1
--------------------------------------------------------------------
10 3.5 5.3
--------------------------------------------------------------------

Currently, there is a piece of legislation pending in Congress that would
provide a significant revenue boost to all ethanol plants, if passed, by
requiring a five (5) billion gallon renewable fuels standard (RFS) for either
ethanol or biodiesel by 2012, eliminate the 2% oxygenate mandate, ban the use of
MTBE in four years and eliminate the distillation index cap. We cannot assure
you that this legistation which is favorable to ethanol will pass Congress.

Nebraska Producer Tax Incentive

LB 536, a State of Nebraska legislative bill which came into law on May 31,
2001, establishes a production tax credit of 18(cent) per gallon of ethanol
produced during a 96 consecutive month period by newly constructed ethanol
facilities in production prior to June 30, 2004. The tax credit is only
available to offset Nebraska motor fuels excise taxes. The tax credit is
transferable and therefore OTEC intends to transfer credits received to a
Nebraska gasoline retailer who will then reimburse OTEC for the face value of
the credit amount less a handling fee. No producer can receive tax credits for
more than 15,625,000 gallons of ethanol produced in one year and no producer
will receive tax credits for more than 125 million gallons of ethanol produced
over the consecutive 96 month period. The minimum production level for a plant
to qualify for credits is 100,000 gallons of ethanol annually. The newly enacted
legislation requires us to enter into a written agreement with the Tax
Commissioner on behalf of the State of Nebraska pursuant to which we will agree
to produce ethanol at our designated facility and the State of Nebraska will
agree to furnish the producer tax credits in accordance with the terms of the
new law. We have entered into a written agreement with the State of Nebraska,
but our plant must be operational and in production prior to June 30, 2004 in
order to be eligible for the tax credit. The production incentive is scheduled
to expire June 30, 2012. Once operational and assuming we are producing at least
15,625,000 gallons of ethanol in one year, this producer tax credit could result
in payments of up to $2,812,500 to us annually, subject to the statutory maximum
limit.

We believe there are several existing or proposed projects in Nebraska that
could compete with us for these payments. If another ethanol plant came online
and produced 100,000 or more gallons of ethanol, it could also qualify for the
producer payment. This would require the legislature to increase funding for the
producer incentive program through either an increase in general fund
appropriation or other sources such as the grain checkoff program. Despite our
written agreement with the State of Nebraska, the Nebraska legislature could
reduce or eliminate the producer tax credits at any time; however, a reduction
or elimination may constitute a breach of our contract by the State of Nebraska.
The State of Nebraska could also impose taxes on the ethanol plants to provide
additional funds for the ethanol production incentive fund which could have a
serious adverse impact on our net income from the production incentive. The
production incentive is scheduled to expire June 30, 2012, and the longer it
takes us to raise our financing and complete construction, the greater the risk
that we will be ineligible for LB 536 payments or that we will receive less
subsidy payments than the maximum permitted under Nebraska law.

Industry Growth

In part, because of federal and state policies promoting cleaner air and tax and
production incentives, the ethanol industry has grown in recent years.
Currently, domestic ethanol plants have the capacity to produce about 2 billion
gallons of ethanol annually, compared to only 175 million gallons in 1980.
Automobile companies have developed ethanol-friendly vehicles. Gasoline blends
containing up to 10% ethanol are approved under the warranties of most major
domestic and foreign automobile manufacturers marketing vehicles in the United
States, and many recommend the use of cleaner burning fuel, such as ethanol, in
their vehicle owner manuals. Similarly, most major manufacturers of power
equipment, motorcycles, snowmobiles and outboard motors endorse the use of
ethanol blends in their products. In the last several years, automobile
companies have introduced a growing number of flexible fuel vehicles that
operate on fuel mixtures of up to 85% ethanol. In addition, ethanol industry
advocates have developed new diesel fuels, commonly referred to as "OxyDiesel,"
which are blends of diesel fuel and ethanol.

The discovery of unacceptable levels of MTBE in groundwater in California has
accelerated the growth of the ethanol industry and stimulated federal and state
analysis of, and legislative activity relating to, a potential large scale shift
from MTBE to ethanol. As a result, California, Illinois and other areas of the
country are phasing out the use of MTBE, and the country may be shifting to
ethanol as the principal high octane gasoline oxygenate.

The California Energy Commission conducted a survey and issued a staff report
entitled "U.S. Ethanol Industry Production Capacity Outlook" (August 2001)
("Production Outlook"). Production Outlook is a comprehensive inventory of
current and likely near-term U.S. ethanol production. According to Production
Outlook, as of the end of 2000, there were 44 companies operating 57 ethanol
plants, 40 new companies planning ethanol projects, 34 new plants planned and 13
new plants under construction.

Illinois, Nebraska, Iowa and Minnesota, currently are, and are expected to
remain, the top four ethanol producing states, and the Midwest states are
expected to have over 83% of 2005 capacity. There are no existing plants and
only two planned plants totaling 26 MGY in capacity, among the east coast states
According to Production Outlook, the U.S. ethanol industry is expected to grow
from about 2200 MGY presently to about 4400 MGY by the end of 2005. Our proposed
ethanol plant is not included in these survey results.

The impending demise of MTBE and rise of ethanol

Since 1995, as mandated by the federal Clean Air Act, reformulated gasoline
(RFG) must contain a minimum of 2% oxygen by weight, i.e., it must satisfy the
minimum federal oxygen requirement. In the Northeast, for example, the New York
City metropolitan area, greater Connecticut (Hartford and environs) and the
Philadelphia metropolitan area must sell RFG, and many other parts of the region
have voluntarily imposed this requirement through January 1, 2004. In addition
to the federal oxygen standard, RFG must also meet the federal RFG program's
emission performance standards and fuel specifications (such as those relating
to octane and volatility).

Until recently, MTBE has been the primary oxygenate in gasoline marketed in the
northeast United States because it burns cleanly, is a good source of octane, is
relatively inexpensive and can be blended with gasoline at the refinery and
transported through existing pipelines. However, "a broad consensus has emerged
that the use of MTBE in gasoline should be curtailed". EPA has classified MTBE
as a possible carcinogen, and has issued a taste and odor advisory of 20-40
micrograms/liter.

Due to its high mobility in ground water and its resistance to biodegradation,
MTBE has been detected in an increasing number of public and private water
supplies at levels giving rise to concern about possible acute and chronic
health effects. One recent study suggests that $27 billion would be required to
remediate more than 140,000 leaking underground storage tanks containing MTBE
reformulated fuels. That same study estimates that another $2 billion would be
needed to remove MTBE plumes from at least 500 public drinking water wells and
45,000 private wells across the country. In contrast, ethanol biodegrades
quickly. However, given the other differing properties of MTBE as compared with
ethanol, refiners cannot simply replace MTBE with ethanol and still meet all the
other requirements of the federal RFG program's requirements. MTBE blended
gasoline satisfying the minimum federal oxygen requirement is 11% MTBE by
volume, while ethanol blended gasoline satisfying the same requirement is 5.7%
ethanol by volume, because ethanol contains more oxygen than MTBE. When ethanol,
which is more volatile than MTBE, replaces MTBE, refiners must somehow lower the
volatility of the overall blend because ethanol is more volatile than MTBE. In
addition, although ethanol has a slightly higher octane rating than MTBE,
because it takes less ethanol than MTBE to satisfy the federal oxygen
requirement, when ethanol replaces MTBE at the RFG minimum there is an overall
reduction in the octane rating which requires the addition of one or more high
octane replacements. The most likely substitutes are toxic aromatic compounds
such as benzene and toluene, which pose their own groundwater threats. Also, if
blended at the RFG minimum, ethanol is less effective at displacing and diluting
other toxic octane-enhancing constituents than MTBE. Consequently, EPA's Complex
Model, a computerized air pollution modeling program used to certify compliance
with its RFG program, predicts that emissions of the toxic air pollutant
acetaldehyde will increase 50-70% if ethanol replaces MTBE, while there would be
15% fewer emissions of the toxic air pollutant formaldehyde. In short, the
ultimate resolution of this ongoing shift from MTBE to ethanol is complicated by
scientific complexity, the political process, overriding environmental policy
and other factors beyond our control.

The United States' dependence on foreign oil.

According to an article appearing in The Wall Street Journal on November 13,
2001, of the 77 million barrels of oil produced a day worldwide, the United
States consumes about a quarter of this amount. However, the United States
produces only 40% of the oil it consumes and imports the rest from foreign
countries. Of the approximately 60% of oil that the United States imports, at
least until recently about half of this amount comes from OPEC nations. We
believe ethanol provides an attractive alternative to this signficant reliance
on foreign oil, particularly given the volatility of foreign relations in the
Middle East.

Historically, according to a 1993 General Accounting Office report, the world
price of crude oil has been determined by the following factors: the supply
decisions of the Organization of Petroleum Exporting Countries (OPEC); the
relative scarcity of oil and the lack of substantial substitutes for oil in
certain uses such as transportation; and seasonal demand. The extent of local
competition is also a factor in prices of refined petroleum products.

Since the early 1970's, the world has experienced three major oil supply
disruptions that impacted the United States economy, including the 1973 Arab oil
embargo, the 1979 Iranian revolution and the 1990 invasion of Kuwait by Iraq. In
October 1973, the Arab oil embargo disrupted world oil supplies and caused the
price of gasoline to reach unprecedented highs. Two weeks after the first Arab
oil embargo, President Nixon announced "Project Independence", whereby the
United States would develop the potential to meet its own energy needs without
relying on foreign energy sources. In 1975, as a result of the oil crisis, the
United States created the Strategic Petroleum Reserve to reduce the impact of
severe interruptions of petroleum supply on the domestic economy.

Again according to the GAO, during past oil disruptions in the Middle East, our
nation's oil prices have risen significantly. For example, during the first week
after Iraq invaded Kuwait on August 20, 1990, domestic crude oil prices rose
from about $22 to about $30 per barrel, an increase of about 36%.

In 1995, the Clinton Administration, through its Natural Energy Policy Plan
(NEPP), adopted various policies and programs intended to reduce the nation's
growing dependence on low-cost imported oil and its resultant vulnerability to
foreign oil supply disruptions and price shocks. Among the NEPP's initiatives
were programs to increase domestic oil production and promote alternative and
renewable fuels and energy efficiency.

Increases in oil prices in 2000 caused Congress to consider various alternatives
to boost our domestic oil production. As part of its desire to decrease foreign
oil dependence, Congress advocates the increased use of hydrogen-based fuel
cells, the adoption of new automotive technologies, the increased implementation
of conservation measures, the adoption of heightened vehicle fuel efficiency
standards, and the creation and expansion of renewable energy sources. Our
government has also been debating increased drilling in restricted land in
western United States, the Gulf of Mexico and Alaska's Arctic National Wildlife
Refuge. However, environmentalists continue to protest that allowing exploration
in these areas will harm our environment. To decrease its reliance on OPEC, the
United States has also sought to increase its imports from Canada, Mexico,
Russia, and Latin America.

Although diplomatic talks caused OPEC to boost its oil production in 2000,
President Bush has continued to call for increased domestic production of oil
through the opening of new areas such as the Arctic National Wildlife Refuge.
Although the President's National Energy Plan has passed the House, it remains
deadlocked in the Senate.

Despite these various initiatives, our country's dependence on foreign oil
imports has continued to increase, while domestic production has continued to
decrease, as illustrated by the graph above. [Today], the United Stated imports
56% of its oil compared to 35% in 1973. Although our per capita use of oil has
decreased, our domestic crude oil production has decreased as well, and as our
population continues to grow, our dependence on oil imports also continues to
grow. As the search continues to find alternative sources of energy, we believe
the demand for renewable energy sources such as ethanol may increase.

Our Ethanol Plant

Our objective is to break ground on the plant in early 2003 upon completion of
the public offering and receipt of necessary debt financing. The elapsed time
from ground breaking to mechanical completion of the plant is currently expected
to take approximately 14 to 16 months. We currently anticipate that the total
capital costs will be approximately $58 million to construct the Plant. We
anticipate that the plant will produce fuel-grade ethanol as its main product,
in addition to the co-product distillers grains, using a dry milling process.
The plant is currently expected to have a design capacity to produce 40 million
gallons of ethanol per year. In addition to ethanol, the plant is currently
estimated to produce 128,000 tons of distillers' grain annually.

Description of Dry Mill Process

Our ethanol plant will produce ethanol by processing corn. The corn will be
received by rail and by semi-trailer truck, and will be weighed and stored in a
receiving building. It will then be transported to a scalper to remove rocks and
debris before it is conveyed to storage bins. Thereafter, the corn will be
transported to a hammermill or grinder where it is ground into a mash and
conveyed into a tank for processing. We will add water, heat and enzymes to
break the ground corn into a fine liquid. This liquid will be heat sterilized
and pumped to a tank where other enzymes are added to convert the starches into
glucose sugars. Next, the liquid is pumped into fermenters, where yeast is
added, to begin a forty-eight to fifty hour batch fermentation process. A
distillation process will divide the alcohol from the corn mash. The alcohol
which exits the

distillation process is then partially dried. The resulting 200 proof alcohol is
then blended with gasoline as it is pumped into storage tanks. Corn mash from
the distillation process is then pumped into one of several centrifuges. Water
from the centrifuges is dried into a thick syrup. The solids that exit the
centrifuge or evaporators is called wet cake and is conveyed to dryers. Corn
mash is added to the wet cake as it enters the dryer, where moisture is removed.
This process produces distiller grains, which can be used as animal feed.

Our Principal Products and Their Markets

We intend to operate the plant to produce two products from grain: (1) ethanol
and (2) distillers grains. Concentrated distillers solubles syrup is a potential
additional co-product which the plant may produce. Concentrated distillers
solubles syrup is a product that is normally sprayed on the distillers grains
and dried. While carbon dioxide is also a co-product of the ethanol production
process, the potential demand for carbon dioxide in the local market has not
been determined and we do not currently intend to capture and sell the carbon
dioxide produced at the plant.

Ethanol. Ethanol is ethyl alcohol, a fuel component made primarily from corn
and various other grains, and can be used as:

. An octane enhancer in fuels;

. An oxygenated fuel additive that can reduce ozone and carbon monoxide
vehicle emissions; and

. A non-petroleum-based gasoline extender.

Ethanol has important applications and is used primarily as a high quality
octane enhancer and an oxygenate capable of reducing air pollution and improving
automobile performance. Approximately 95% of all ethanol is used in its primary
form for blending with unleaded gasoline and other fuel products. As a fuel
additive, the demand for ethanol is derived from the overall demand for
gasoline, as well as the competition of ethanol versus competing oxygenate
products and technologies. Motor vehicles in the United States consume more than
130 billion gallons of gasoline every year.

Distiller Grains. A principal co-product of the ethanol production process are
distiller grains, a high protein, high-energy animal feed supplement primarily
marketed to the dairy and beef industry. Dry mill ethanol processing creates
three forms of distiller grains: distillers wet grains, distillers modified wet
grains, and distillers dried grains. Distillers wet grain is processed corn mash
that contains approximately 70% moisture. It has a shelf life of approximately 3
summer days (5 winter days) and can be sold only to farms within the immediate
vicinity of an ethanol plant. Distillers modified wet grain is similar except
that it has been dried to approximately 50% moisture. It has a slightly longer
shelf life of approximately two to three weeks and is often sold to nearby
markets. Dried distillers grain is corn mash that has been dried to 10%
moisture. It has an almost indefinite shelf life and may be sold and shipped to
any market regardless of its vicinity to an ethanol plant.

Corn Supply and Corn Prices

We anticipate that the plant will need approximately 14.3 million bushels of
corn per year or 40,500 bushels per day as the feedstock for its dry milling
process. The grain supply for the plant will be obtained primarily from local
markets. The eight county area surrounding the plant corn production has
averaged approximately 90 million bushels of corn annually. The following table
provides a summary of the approximate number of bushels of corn produced by
suppliers falling within the eight counties surrounding the plant for the year
2000 and on a 10-year average:

---------------------------------------------------------------------
County Bushels of Corn Produced
---------------------------------------------------------------------
2000 10-year average
---------------------------------------------------------------------
Thayer, Nebraska 13,186,100 15,015,264
---------------------------------------------------------------------
Nuckolls, Nebraska 6,788,700 7,481,991
---------------------------------------------------------------------

---------------------------------------------------------------------
Jefferson, Nebraska 7,331,800 6,812,482
---------------------------------------------------------------------
Filmore, Nebraska 23,944,000 24,743,255
---------------------------------------------------------------------
Clay, Nebraska 19,886,000 21,467,627
---------------------------------------------------------------------
Saline, Nebraska 11,018,300 10,470,045
---------------------------------------------------------------------
Washington, Kansas 2,528,000 2,063,700
---------------------------------------------------------------------
Republic, Kansas 6,531,000 6,918,236
---------------------------------------------------------------------
Jewell, Kansas 1,325,000 1,649,190
---------------------------------------------------------------------
TOTAL 92,538,900 96,621,890
---------------------------------------------------------------------

The price and availability of corn are subject to significant fluctuations
depending upon a number of factors which affect commodity prices in general,
including crop conditions, weather, governmental programs and foreign purchases.
Because the market price of ethanol is not related to grain prices, ethanol
producers are generally not able to compensate for increases in the cost of
grain feedstock through adjustments in prices charged for their ethanol.
Accordingly, we anticipate that our plant's profitability will be negatively
impacted during periods of high grain prices.

Marketing of our Ethanol and Distillers Grains

Ethanol. After completion of our plant, we intend to sell and market ethanol
through normal and established markets which will include local, regional and
national markets. We currently expect to sell the ethanol produced by our plant
in bulk to a single distributor pursuant to an output contract, although our
Board has not made a firm decision on this issue. We believe that most of our
ethanol will be sold into markets throughout the United States and will be
shipped primarily by rail. The target market area for the ethanol produced at
the plant is expected to include local, regional and national markets. The local
and regional markets include the State of Nebraska, as well as markets in South
Dakota, Kansas, Missouri, Indiana, Colorado, Minnesota, Illinois, Wisconsin and
Iowa.

The plant is being designed with rail facilities and connections to the Union
Pacific Railroad system, which will facilitate transporting the ethanol we
produce to our national target markets. Marketing to markets outside of Nebraska
will likely increase the percentage of ethanol marketed by rail. Based on the
Nebraska market and our target national market, we currently anticipate
approximately two-thirds of the ethanol to be marketed by rail, although this
may change as various market conditions change. Rail costs are more expensive
than truck costs and therefore, as our rail market increases, so will our
marketing costs. The national target rail markets for the facility will include
the Pacific Northwest, the Southern and Southwest markets, as well as potential
new markets on the East Coast and California due to anticipated MTBE phase outs.

Northeast markets are another growing market. Groups in New Jersey and
surrounding states have been very active in seeking a ban on the use of MTBE. As
in California, the primary impetus is the health and water concerns surrounding
the use of MTBE. As New Jersey and other Northeastern states become successful
in their attempts to ban MTBE, additional market potential for ethanol should
emerge.

We anticipate negotiating with potential ethanol marketers to market and sell
100% of our ethanol, although we have not yet entered into any negotiations with
such marketers and we do not anticipate entering into a marketing agreement with
any ethanol marketers until we are nearly operational.

Even if OTEC sells its entire ethanol output to a single distributor, the
selected ethanol distributor could market the OTEC ethanol into three distinct
markets: national, regional and local. Ethanol marketers typically evaluate
demand, price and cost when determining the market to which they sell and will
typically sell ethanol into the market paying the highest price which could be a
national market.

Distillers Grains. The dry milling process that produces ethanol also produces
distillers grains, which is primarily used as a high protein animal feed. The
price of distillers grains generally varies with grain prices, so that increases
in grain costs are partially offset by increases in distillers grain prices. We
currently expect

to retain a single distillers grain marketer to market and sell 100% of our
distillers grains, although we have not yet entered into any negotiations with
such marketers and we do not anticipate entering into a marketing agreement
until we are nearly operation. We expect that a substantial portion of our
distillers grains will be sold to farms in close proximity to the proposed
ethanol plant; however, we anticipate selling in the local, regional, national
and international markets. Our business is expected to enjoy a significant
competitive freight advantage in the distillers grains market since we believe
that a sufficient market is located within the plant's service area to consume
the majority of the distillers grains we produce.

Transportation and Delivery

The plant will have the facilities to receive corn by truck and rail and to load
ethanol and distillers grains onto trucks and rail cars. We currently expect
that the Union Pacific Railroad will provide rail service directly to the
proposed site. We expect to negotiate an agreement with the Union Pacific
Railroad but do not currently have an agreement to provide such transportation
services.

In terms of freight rates, rail is considerably more cost effective. Currently,
moving product from Nebraska to the Northwestern United States or California
could be accomplished for about $.10 to $.14 per gallon. Generally, the market
prices in those areas reflect the additional freight costs associated with
getting the ethanol there. We may be able to obtain lower rates through
negotiated contracts. In terms of markets that are closer, but yet beyond the
range of economical truck transportation, railed product currently could be
shipped to Minneapolis for example, for about $.06 per gallon, to Chicago for
$.07 per gallon, and to Kansas City for $.03 - .04 per gallon. These rates are
to be considered as rough estimates since a short line railroad is involved and
all cars leaving the plant will have to be delivered to a main line railroad for
completing the shipping process.

Utilities

The production of ethanol is a very energy intensive process which uses
significant amounts of electricity and natural gas. Water supply and quality are
also important considerations.

Energy Services. Significant strides have been made over the past 15 years to
reduce the energy intensiveness of ethanol production. Presently, about 40,000
BTUs of energy are required to produce a gallon of ethanol. If we sell
distillers wet grain, our actual BTU per gallon requirements are estimated to be
approximately 29,400 BTUs. To the extent we use dryers to create modified wet
grain or dried distillers grain, our energy usage will increase.

Natural Gas. We anticipate that our plant will require a natural gas supply of
at least 1.480 billion cubic feet per year at a minimum rate of 170 MCF per hour
and at a minimum of 15 psig at the plant site. To access sufficient supplies of
natural gas to operate the plant, a connection to an underground distribution
pipeline located approximately 8 miles from our site will be required. We have
no current agreement with any third party to construct such a connection.

We anticipate that natural gas may also be procured from various suppliers on
the open market and we could enter into a contract for distribution services
that would include the costs of construction of the connection to the
underground pipeline to our plant. We have had preliminary discussions with a
potential natural gas suppliers, although we currently have no agreement with a
natural gas supplier. We anticipate entering into an agreement with a natural
gas supplier before we begin construction of the plant and that the natural gas
supply will be sufficient to meet our needs; however, we anticipate that our
natural gas suppliers will not be able to guarantee that the natural gas supply
will be uninterrupted. We intend to purchase a propane tank to serve as a
back-up energy source in the event of interruption of our natural gas supply, we
expect that our back-up propane tank will allow us to continue operations for
about three to four days.

Natural gas prices have historically fluctuated dramatically, which could
significantly affect the profitability of our operations.

Electricity. The proposed plant will require a continuous supply of 5,500 KVA,
13,500 volt electrical energy. We expect to purchase electricity from Norris
Public Power District but have not yet entered into any agreement with this
utility regarding the specific type and nature of service to be provided. We
anticipate doing so before we begin construction of the ethanol plant.

Water. We will require a significant supply of water. Fresh water requirements
for a 40 mgy ethanol plant are approximately 350 gallons per minute. Much of the
water used in an ethanol plant is recycled back into the process. There are,
however, certain areas of production where fresh water is needed. Those areas
include boiler makeup water and cooling tower water. Boiler makeup water is
treated on-site to minimize all elements that will harm the boiler and recycled
water cannot be used for this process. Cooling tower water is deemed non-contact
water (it does not come in contact with the mash) and, therefore, can be
regenerated back into the cooling tower process. The makeup water requirements
for the cooling tower are primarily a result of evaporation. Depending on the
type of technology utilized in the plant design, much of the water can be
recycled back into the process, which will minimize the effluent. This will have
the long-term effect of lowering waste water treatment costs. Many new plants
today are zero or near zero effluent facilities. At most, there should be no
more than 200 gallons per minute of effluent. The water from the cooling tower
and the boiler blow-down water will be put in a pond and eventually released to
the environment. We anticipate that our water requirements will be supplied
through the drilling of our own wells.

Our Primary Competition

We will be in direct competition with numerous other ethanol producers, many of
whom have greater resources than we do. We also expect that additional ethanol
producers will enter the market if the demand for ethanol continues to increase.
Our proposed ethanol plant will compete with other ethanol producers on the
basis of price and, to a lesser extent, delivery service. We believe we can
compete favorably with other ethanol producers due to our proximity to ample
corn supplies at favorable prices. Historically, prices for corn grown in
Nebraska have been lower, compared to prices for corn grown in other areas of
the United States.

During the last twenty years, ethanol production capacity in the United States
has grown from almost nothing to an estimated approximately 1.8 billion gallons
per year. Plans to construct new plants or to expand existing plants have been
announced which would increase capacity by approximately 235 million gallons per
year and this increase in capacity may continue in the future. We cannot
determine the effect of this type of an increase upon the demand or price of
ethanol, although such plants may compete with us in the sale of ethanol and
related products.

The ethanol industry has grown to over 55 production facilities in the United
States. Industry authorities estimate that these facilities are capable of
producing approximately 2 billion gallons of ethanol per year. The largest
ethanol producers include Archer Daniels Midland, Cargill, Minnesota Corn
Processors, Midwest Grain, Williams Energy Service, New Energy Corporation and
High Plains Corporation, all of which are capable of producing more ethanol than
we expect to produce. In addition, there are several regional entities recently
formed, or in the process of formation, of a similar size and with similar
resources to ours.

The following is a representative list of the ethanol plants in production
throughout the United States and their respective production capacities as of
May 2001:

U.S. FUEL ETHANOL PRODUCTION CAPACITY
Million Gallons per Year (MGY)

COMPANY LOCATION FEEDSTOCK MGY
A.E. Staley Loudon TN Corn 45
AGP Hastings NE Corn 52

U.S. FUEL ETHANOL PRODUCTION CAPACITY
Million Gallons per Year (MGY)

COMPANY LOCATION FEEDSTOCK MGY

Agri-Energy Luverne MN Corn 17
Alchem Grafton ND Corn 10.5
Al-Corn Claremont MN Corn 17
Archer Daniels Midland (total capacity) Decatur IL Corn 750
Peoria IL Corn
Cedar Rapids IA Corn
Clinton IA Corn
ADM Corn Walhalla ND Corn/barley 28
Broin Enterprises Scotland SD Corn 7
Cargill (total capacity) Blair NE Corn 100
Eddyville IA Corn
Central Minnesota Little Falls MN Corn 18
Chief Ethanol Hastings NE Milo/Corn 62
Chippewa Valley Ethanol Benson MN Corn 19
Corn Plus Winnebago MN Corn 20
DENCO, LLC. Morris MN Corn 15
ESE Alcohol Leoti KS Seed corn 1.1
Ethanol2000 Bingham Lake MN Corn 28
Exol, Inc. Albert Lea MN Corn 17
Georgia-Pacific Bellingham WA Paper waste 7
Golden Cheese Corona CA Whey 5
Golden Triangle St. Joseph MO Corn 15
Gopher State Ethanol St. Paul MN Corn 15
Grain Processing Corp. Muscatine IA Corn 10
Heartland Corn Products Winthrop MN Corn 17
Heartland Grain Fuel (total capacity) Aberdeen SD Corn 8
Huron SD Corn 14
High Plains Corp. (total capacity) York NE Corn/milo 70
Colwich KS
Portales NM
J.R. Simplot (total capacity) Caldwell ID Potato waste 6
Burley ID
Kraft, Inc. Melrose MN Whey 2.6

Manildra Ethanol Hamburg IA Corn/milo/ 7
Wheat starch
Merrick/Coors Golden CO Waste beer 1.5
Midwest Grain (total capacity) Pekin IL Corn/wheat starch 78

Atchison KS

MN Corn Processors (total capacity) Columbus NE Corn 110
Marshall MN Corn
Minnesota Energy Buffalo Lake MN Corn 12
New Energy Corp. South Bend IN Corn 85
Northeast MO Grain Processors Macon MO Corn 15
Pabst Brewing Olympia WA Brewery waste 0.7
Parallel Products (total capacity) Louisville KY Beverage waste 12
Bartow FL
R. Cucamonga CA
Permeate Refining Hopkinton IA Sugars & Starches 1.5
Pro-Corn Preston MN Corn 18

U.S. FUEL ETHANOL PRODUCTION CAPACITY
Million Gallons per Year (MGY)

COMPANY LOCATION FEEDSTOCK MGY

Reeve Agri-Energy Garden City KS Corn/milo 10
Sunrise Energy Blairstown IA Corn 7
Sutherland Associates Sutherland NE Corn 15
Williams Energy Services Pekin IL Corn 100
Nebraska Energy (Williams Energy) Aurora NE Corn 30
Wyoming Ethanol Torrington WY Corn 5
Total Capacity (MGY) 1,909
Source: BBI International - May 2001

The ethanol industry is highly competitive with most of the ethanol producers
located in the Midwest. Major competitors in this area include Archer Daniels
Midland and Cargill, which are capable of producing approximately 700 million
and 100 million gallons of ethanol per year, respectively. These companies, and
others, have (and will continue to have) substantially greater financial
resources than OTEC and have substantial operating histories. In addition, as
large volume shippers, they may have the ability to transport their ethanol at
lower transportation costs than OTEC.

OTEC will also compete with producers of octane enhancers and oxygenates other
than ethanol. OTEC's primary competition in this area comes from producers of
MTBE. MTBE, which is a petrochemical derived from methanol, costs less to
produce than ethanol. While ethanol supplied 53% of the demand for oxygenates in
1991, MTBE has dominated the market for oxygenates. According to the Renewal
Fuels Association, which represents ethanol interests, ethanol currently holds
about an 11% share of the fuel additives market. Many major oil companies
produce MTBE, and because it is petroleum based, its use is strongly supported
by such companies. These companies have significantly greater resources than
OTEC to market MTBE and to influence legislation and public perception of MTBE.

Operating Ethanol Plants in the State of Nebraska

Currently there are seven operational ethanol plants in the state of Nebraska.

Blair, Nebraska. Cargill operates a wet milling plant in Blair using corn as its
feedstock. It is a 75 million gallons per year plant, producing ethanol and corn
sweeteners. Plans are now underway to install a large new facility as a joint
venture with Dow to build a large biobased plastics plant adjacent to the
ethanol facility. This facility uses approximately 65 million bushels of corn
annually.

Hastings, Nebraska. Chief Ethanol Fuels operates a dry mill plant in Hastings
using corn and milo as its feedstock. The Chief Ethanol Fuels plant has been
expanded several times since the late 1980's and processes about 24 million
bushels of corn annually to produce 60 million gallons per year of fuel grade
ethanol.

Hastings, Nebraska. Ag Processing, Inc. is a 45 million gallons per year dry
mill ethanol plant which uses corn and milo as its feedstock. The plant uses
approximately 18 million bushels annually.

York, Nebraska. High Plains Corporation of Wichita, Kansas operates a 40 million
gallons per year dry mill, fuel grade ethanol plant in York, Nebraska using corn
and milo as its feedstock. The York plant consumes 16 million bushels of corn
per year. High Plains Corporation is currently expanding its York facility to
increase total production to approximately 60 million gallons per year.

Columbus, Nebraska. Minnesota Corn Processors of Marshall, Minnesota, owns and
operates an 80 million gallons per year, fuel-ethanol plant in Columbus. This is
a wet milling facility that produces ethanol and corn sweetener from
approximately 80 million bushels of corn each year.

Sutherland, Nebraska. Delta-T Corporation has purchased and completely renovated
an idled plant in Sutherland. Sutherland Ethanol Company, LLC is a 15 million
gallons per year dry mill facility which operates with corn as its feedstock.
The plant uses approximately 6 million bushels of corn annually. The plant is
currently one of the furthest west grain-to-ethanol facilities in the United
States.

Aurora, Nebraska. Williams Energy Ventures, Inc. and a partnership of Nebraska
cooperatives own and operate Nebraska Energy, LLC a 30 million gallons per year
fuel ethanol facility in Aurora. This is a dry mill plant which uses corn and
milo as its feedstock.

There are also current plans for two new ethanol plants in Nebraska. Kearney
Area Ag Producers Alliance is in the process of constructing a new ethanol plant
in Kearney County about 9 miles west of Minden, Nebraska. The Kearney Area Ag
Producers Alliance has announced that it intends to build a 40 million gallons
per year ethanol plant that will consume 14 million bushels of corn annually.

Husker Ag Processing, Inc. is in the process of constructing a 20 million gallon
per year ethanol plant located in Plainview, Nebraska in Northeast Nebraska
which will consume 7.5 to 8 million bushels of corn annually.

None of the above Nebraska ethanol plants are located in close proximity to our
proposed plant near Davenport, Nebraska. The nearest ethanol plant listed above
is in York, Nebraska which is approximately 60 miles from Davenport, Nebraska.
Because of the significant distance between the existing ethanol plants in
Nebraska and our plant site, there will be less competition for corn and other
feedstock. We believe that there is sufficient feedstock available within the
local community to supply our ethanol plant. The fact that there are other
ethanol plants within the State of Nebraska should not significantly impact our
ability to find customers for our ethanol or our distillers grains.

Competition From Alternative Fuel Additives

Alternative fuels, gasoline oxygenates and ethanol production methods are
continually under development by ethanol and oil companies with far greater
resources that we have. New products or methods of ethanol production developed
by larger and better financed competitors could provide them competitive
advantages over us and harm our business.

The development of ethers to be used as oxygenates may provide a growth segment
for ethanol. Ethers are composed of isobutylene (a product of the refining
industry) and ethanol or methanol. The products are MTBE or ethyl tertiary butyl
ether (ETBE). We expect to compete with producers of MTBE, a petrochemical
derived from methanol which costs less to produce than ethanol. MTBE is a
commonly used oxygenate used in fuels for compliance with Federal Clean Air Act
mandates, and is a major competitor of ethanol. Many major oil companies produce
MTBE, and strongly favor its use because it is petroleum based. These companies
have significant resources to market MTBE and to influence legislation and
public perception of MTBE. These companies also have sufficient resources to
begin production of ethanol should they choose to do so.

However, MTBE has recently been linked to groundwater contamination at various
locations in the East and West. As a result, California currently intends to
completely phaseout MTBE from its gasoline pool by December 2002. Similarly, New
York currently intends to phase out the use of MTBE by December 2004. The Iowa
Senate declared MTBE to be a threat to public health and the environment and
passed a bill limiting the MTBE content of gasoline to a maximum of 0.5%.
Ethanol is the most readily available substitute for MTBE in these markets.
Assuming that additional states and/or the US Environmental Protection Agency
force elimination of MTBE, the demand for ethanol is estimated to increase from
the current 1.34 billion gallons per year to 3.17 billion gallons per year in
2004, although there can be no

assurance that this will occur. The additional capacity would need to come from
existing plant expansions and new plant construction.

ETBE's advantages over ethanol in a blend include its low affinity for water and
low vapor pressure. Because petroleum pipelines and storage tanks contain water
in various amounts, ETBE's low affinity for water allows it to be distributed
through existing pipeline systems, as contrasted with ethanol which must be
shipped via transport truck or rail car. In addition, blending ETBE with
gasoline reduces the overall vapor pressure of the blend thereby reducing the
normal volatile organic compound evaporative emissions. ETBE is not widely
commercially available yet, and it may suffer from the same negative
environmental effects as MTBE. Scientific research to better define the
properties of ETBE as it relates to the environment is underway.

Debt Financing

We must obtain debt financing in order to complete construction on the plant and
commence business operations. While the Board believes that acceptable financing
arrangements will be available to OTEC, there can be no assurance that this will
be the case, or that the we will be able to finalize an agreement concerning
such financing. In addition, we may seek subordinated debt financing form both
financial institutions and non-financial entities. Our memorandum of
understanding with Lurgi includes a provision under which Lurgi would provide up
to $4,000,000 of subordinated debt financing to OTEC, pending final approval by
the Lurgi AG Risk Board.

Employees

We initially intend to hire up to 40 employees, and approximately 5 of our
employees will be involved primarily in management and administration and the
rest will be involved primarily in plant operations.

We intend to enter into written confidentiality and assignment agreements with
our officers and employees. Among other things, these agreements will require
such officers and employees to keep strictly confidential all proprietary
information developed or used by OTEC in the course of its business and also
will require such officers and employees to assign to OTEC all right, title and
interest in and to any software, hardware or other intellectual property
developed by such officers or employees in the course of their employment by
OTEC.

Development and Construction Team

We have entered into a memorandum of understanding with Lurgi PSI, Inc., an
ethanol construction and engineering firm, to design and construct our proposed
ethanol plant. As set forth in the memorandum of understanding, OTEC and Lurgi
agree to enter into a EPC contract amounting to approximately $44.5 million. The
memorandum sets forth the general nature and terms of the construction project,
establishes the responsibilities of the parties involved and includes a
provision under which Lurgi would provide up to $4,000,000 of subordinated debt
financing to OTEC, pending final approval by the Lurgi AG Risk Board. The
memorandum of understanding remains in effect until February 4, 2003. Upon such
date either OTEC or Lurgi may terminate the memorandum of understanding upon 30
days written notice to the other party. If neither party gives a termination
notice, the memorandum of understanding will renew for successive periods of 6
months until a 30 day termination notice is given by either party prior to the
end of the then current 6 month renewal term. No party has any obligation to
enter into a binding definitive agreement. The memorandum of understanding
obligates the parties to engage in good faith negotiations to prepare definitive
design-build agreement covering the provisions described in the memorandum of
understanding.

Lurgi PSI Inc.

Lurgi PSI was founded in 1974 as a Tennessee corporation to offer services in
process and detailed engineering, procurement and construction management. The
corporate intent was to be customer focused and to meet or exceed client
expectations when it came to delivery on time, on budget and to specification.

From the outset Lurgi has been focused on the corn industry and over the past 25
years has been involved in the delivery of large-scale wet and dry-milling
facilities and has delivered all aspects of starch processing including modified
starches, HFCS and ethanol.

Lurgi's ethanol expertise has been used to plan and build plants from 20-million
to 100-million gallon capacity and to expand and optimize existing production
facilities of all sizes. Lurgi specializes in the design and construction of
plants associated with ethanol co-products and processes including protein
extraction and processing, corn oil and its derivatives, biodiesel, corn fiber
derivatives, biodegradable resins, glycerin and ethyl esters.

Lurgi PSI has a wide range of experience in different starch sources and their
preparation, maximizing yield in mainstream processes: Corn (Maize); Wheat;
Barley; Milo (Sorghum); Cassava and Sugar Cane. Lurgi often provides complete
turnkey projects and would be more accurately described as a Project Integrator
- - bringing together all of the individual elements of the services required to
build the complete ethanol plant, including the following specific capabilities:
Feasibility studies; Market studies; Project development; Financial engineering;
Process engineering; Detailed engineering; Process automation; General
contracting; Construction; Specialty fabrication; Start-up and commissioning,
and Training & optimization.

ICM.

ICM, Inc. is a full service engineering, manufacturing and merchandising firm
based in Kansas. ICM employs over 60 people in process consulting, engineering,
equipment fabrication, field installation and start-up consulting. Engineering
operations consist of consulting, design by professional engineers, procurement
and project management, as well as manufacturing engineering for dryers and
ICM/Phoenix Bio-Methanator wastewater treatment product lines used in ethanol
plants. ICM's merchandising operation currently procures and markets various
grain products.

ICM personnel have many years of experience in the ethanol industry and combined
dry and wet mill operation and design. They have been involved in the research,
design, construction, fabrication and operation of many ethanol plants. Dave
VanderGriend, President and CEO, formed ICM after 15 years of professional
experience in the ethanol industry, including nine years as Vice President of
High Plains Corporation. ICM is currently providing engineering, fabrication and
installation services for several ethanol plants including, Wyoming Ethanol in
Torrington, Wyoming, Heartland Corn Products in Winthrop, Minnesota and US
Energy Partners in Russell, Kansas. ICM has also recently completed work at many
other ethanol plants, including AGP Corn Processing in Hastings, Nebraska,
Gopher State Ethanol in St. Paul, Minnesota, Denco in Morris, Minnesota and
Commercial Alcohol in Ontario, Canada.

ICM also works closely with Phoenix Bio-Systems, which has experience with
brewery and ethanol production. Phoenix Bio Systems designed a Bio-Methanator, a
treatment system that removes waste produced in ethanol production before water
is recycled into production. This design will be incorporated into our proposed
ethanol plant, which will have no process water discharge during normal
operation. When the Bio-Methanator malfunctions, we will continue to recycle
water without treatment, which may cause slight production inefficiencies until
the Methanator is restored to normal operation.

Proposed Engineering, Procurement and Construction Contract

Lurgi has provided us a proposed engineering, procurement and construction
contract, which we have not executed. The Board is currently negotiating the
terms of the proposed EPC contract which is expected to be executed after the
completion of this offering when we have completed the required plant site
preparations, Lurgi has inspected the plant site and we have issued a Notice to
Proceed to Lurgi. Even upon completion of our negotiations with Lurgi regarding
the terms of the proposed EPC contract, the contract is not binding and is
subject to modification and approval by lenders. Under the proposed EPC
agreement, Lurgi will act as our design-builder and will design and construct
the ethanol plant. We expect that the EPC contract we enter into with Lurgi will
include provisions substantially similar to those described below.

General Terms and Conditions. We will pay Lurgi an estimated lump sum payment of
$44,517,000, subject to adjustments made in accordance with the general
conditions of the EPC contract, to design and construct the ethanol plant. No
later than the date we issue the Notice to Proceed, we must pay Lurgi a down
payment equal to $4,451,700 which is 10% of the lump sum payment. All drawings,
specifications and other construction related documents belong to Lurgi. We will
be granted a limited license to use documents in connection with our occupancy
of the ethanol plant. If the contract is terminated by us without cause or by
Lurgi for cause, such as failing to pay undisputed amounts when due, then we
must pay Lurgi a fee of up to $1,000,000 if we resume construction of the
ethanol plant through our own employees or third parties.

We will make payments to Lurgi on a progress billing basis, based upon monthly
requests for payment for all work performed as of the date of the request. We
will retain 5% of the amount submitted in each payment request. Once Lurgi
achieves the status of "Ready for Start-up for the Plant", which means that the
plant has attained mechanical completion and all commissioning has occurred, we
must reduce our retainage amount to 2% of the payment request. We must make our
final payment to Lurgi, including all amounts we have retained, within 15 days
after the issuance of an Owner Acceptance Certificate. If we do not pay all
undisputed amounts due within 30 days after our receipt of the invoice, we will
be charged interest at the rate charged to preferred customers plus 2% as
announced by J.P. Morgan Chase & Co, New York, New York and we will be in
default under the EPC contract.

Lurgi will be entitled to an adjustment in the contract price and time of
performance if we request a change to or in the scope of work set forth in the
EPC contract, there is an OTEC caused delay, a change in requirements or a force
majeure event which adversely impacts the cost, the schedule or performance
guarantees. In such an event, we will enter into a Change Order with Lurgi which
sets forth in detail the particulars of the changes. If we cannot agree with
Lurgi on a fixed price for the change, the costs of the change will be charged
at Lurgi's standard time and materials rate.

Lurgi will be responsible for:

. Providing design services, such as architectural and engineering design
services;

. Performing all work in accordance with all legal requirements
and performance guarantees;

. Obtaining all permits, approvals, licenses and fees related to the
construction of the ethanol plant, except for environmental permits that
we are responsible for;

. Performing its responsibilities in a safe manner to prevent damage,
injury or loss;

. Providing a warranty that the work performed for us is new, of good
quality, conforms to the contract and is free of defect in materials and
workmanship;

. Correcting defects in materials and workmanship for one year after
mechanical completion;

. Obtaining insurance covering us for claims for worker's compensation,
disability, damage or destruction of tangible personal property; and

. Indemnifying, defending and holding us, our officers, directors, agents
and employees harmless against any claims, losses, damages, liabilities,
including attorney's fees and expenses, for any claims that any of its
services constitutes infringement of any US patent issued prior to the
effective date of the EPC contract and any claims, demands, damages,
costs or expenses resulting from any (i) liens and (ii) property damage
of or personal injury or death to any third party arising from Lurgi's,
or anyone acting on its behalf, acts or omissions.

We are responsible for:

. Builder's risk insurance to protect us from claims which may arise from
performance of our responsibilities;

. Indemnifying, defending and holding Lurgi, its officers, directors,
agents and employees harmless against any claims, losses, damages,
liabilities, including attorney's fees for any claims resulting from any
(i) liens and (ii) property damage of or personal injury or death to any
third party arising from our or anyone acting on its behalf, acts or
omissions.

. Preparing the construction site to the specifications of Lurgi or ICM;

. Obtaining the permits and approvals required for the project;

. Installing separate roads and gates to be used solely by Lurgi personnel
during the construction of the plant; and

. Appointing a representative who will be authorized to issue and receive
orders, directions, notices and instructions.

We have the right to terminate the EPC contract for any reason; but if our
termination is without cause, then we must provide Lurgi with prior written
notice. In addition, we must pay Lurgi for:

. All work completed and any proven loss, cost or expense incurred in
connection with such work;

. All third party cancellation charges incurred by Lurgi;

. All other reasonable charges and expenses paid or incurred in connection
with the termination.

Lurgi may terminate the EPC contract if (a) a petition is filed either by or
against us in any court or pursuant to any statute, either in bankruptcy,
insolvency or similar proceedings, which is not dismissed within sixty (60) days
of filing, or if we make an assignment for the benefit of creditors, or if a
receiver of any property of ours shall be appointed in any suit or proceedings,
or (b) any amount due to Lurgi from us remains unpaid after forty-five days.

Limitation of Liability and Consequential Damages. Lurgi is not liable to us for
any consequential damages or losses such as loss of use, profits, business,
reputation or financing. Lurgi cumulative maximum liability for Lurgi and its
subcontractors arising out of the performance of the EPC contract may not exceed
15% of the lump sum amount, or $6,677,550.

Liquidated Damages. We will be entitled to a negotiated daily liquidated damages
amount in the event Lurgi fails to achieve "Ready for Start-up" status by the
EPC contract's guaranteed date; provided, however, this liquidated amount will
not exceed $2,225,850 which is 5% of the lump sum amount. We expect to begin
construction promptly after the close of this offering, but in any event, no
later than 60 days after the close of the offering, subject to delays resulting
from adverse weather conditions. We expect that the Ready for Start-up date will
be approximately 14-16 months after construction commences. The Ready for
Start-up date will be the date that the ethanol plant is fully operational and
we are producing ethanol. If Lurgi achieves the Ready for Start-up prior to the
EPC contract's guaranteed date, then we must pay Lurgi a performance bonus for
each day ahead of schedule up to a maximum of $2,175,000 which is 5% of the lump
sum amount.

Construction and Timetable for Completion of the Project. Assuming the offering
is successful, and we are able to complete the debt portion of our financing, we
estimate that the project will be completed approximately 14-16 months after
construction commences. This assumes that we will be able to close this offering
in winter of 2002/2003. This schedule further assumes that site improvements,
such as rough grading is complete and the site is ready for construction when we
close the offering. This schedule also assumes that weather, interest rates and
other factors beyond our control do not upset our timetable. Factors or events
beyond our control could hamper our efforts to complete the project in a timely
fashion.

Legal Proceedings

We are not currently a party to any legal proceedings.

Description of Davenport Site Property

Our Board of Directors originally identified 4 potential sites located in
Carleton, Davenport, Sedan and Superior, Nebraska. Our Board made evaluations
and assessments of these sites based on a number of key criteria, including,
without limitation, the following: proximity to plant feedstock, rail and
highway access, availability of utilities, environmental factors, including
drainage and proximity to streams and flood plain, site preparation required,
proximity to distillers grains markets, potential governmental or regulatory
issues, and overall cost to OTEC. After presentations by each of the four
communities and based on a review of these key criteria by our Board and our
design-build firm, Lurgi PSI, Inc., our Board selected a site located 1 1/2
miles east of Davenport, Nebraska, which is located on approximately 60 acres of
land located just north of Highway 4 and south of the Union Pacific Railroad
tracks. We believe that the site property is well situated for the construction
and operation of the proposed ethanol plant.

The site property is jointly owned by four related parties, who each own an
undivided one-quarter interest in the property. On May 15, 2002, we entered into
four written option agreements with each of the four owners, in which they grant
to OTEC an exclusive option on the site real property through June 30, 2003, in
consideration of payment of $1,000 option fee to each of the four owners. The
total purchase price for the site under the option agreements is $365,000, which
includes a $5,000 payment to one of the owners in consideration of the
diminution in value of the owner's residence which is located contiguous to the
site, and a release of claims arising out of OTEC's purchase of the land and
construction and operation of the proposed ethanol plant. The exercise of the
options, and payment of the purchase price would not occur until after the
successful completion of this offering, using the proceeds of this offering. In
the option agreements, we have agreed that the core physical ethanol plant will
be located on the east one-half of the site property, and that if any portion of
the external structural walls of the core plant intrude beyond the east one-half
of the property when completed, that OTEC must pay the owners a total of
$130,000 as liquidated damages, and as the owners' sole remedy. The current site
plans for the ethanol plant provide for the core physical plant to be located on
the east 1/3 of the site.

We have also agreed to rent back to one of the owners of the site that portion
of the site which our Board determines in its sole discretion that it does not
need, or intend to use, in connection with the construction and operation of the
ethanol plant. This rental option is for an initial term of six years, and on a
biennial (two-year) basis thereafter, for $75/acre for irrigated farming, and
$50/acre for dry land farming, pursuant to a written lease agreement to be
entered into between the parties.

We have the right, during the terms of the option agreements, and prior to
purchasing the land, to obtain at its cost a certified written title insurance
commitment, land survey, and environmental inspection, and is currently in the
process of obtaining and reviewing such documents. An issue we are reviewing in
its title search is the status of old Nebraska State Highway No. 4, which ran
through the northern portion of the site property, but has been abandoned and
have been relinquished by the State of Nebraska to Thayer County, Nebraska. We
are reviewing whether additional legal action is required by Thayer County
regarding the old Nebraska State Highway No. 4 land for us to have necessary
legal title to the site property upon exercise of the option agreements.

In addition to the payment of $365,000 for the site property, we have entered
into a letter agreement with owners of the land immediately east of the
Davenport Site to pay relocation expenses of $40,000 to them no later than five
days after the closing of the purchase of the site. In consideration of the
relocation payment, the landowner releases OTEC from all claims and liabilities
arising out of OTEC's purchase of the site, and its construction and operation
of the ethanol plant, and agrees to support OTEC's purchase of the site and not
to directly or indirectly oppose or object to such purchase and construction of
an ethanol plant.

In addition to the Davenport site option agreements, our Board has negotiated
and reached agreement in principal on the terms and conditions for two option
agreements to purchase an 8.9 acre portion of land located immediately north of
the site property, between such property and the Union Pacific Railroad tracks
(the "North Property") with the two co-owners of the North Property. In
consideration of the payment of a $250 option fee each, the co-owners grant OTEC
an exclusive option on the North Property through June 30, 2003, at a total
exercise price of $22,250. As with the site option agreements, the exercise of
the North Property option agreements and purchase of the North Property would
not occur until after the successful completion of this offering, using the
proceeds of this offering.

As currently proposed, the total cost of the site, represented by the site
option agreements payments, the relocation payment, and the North Property
option agreement payments, is $427,250, although this does not include the costs
of title commitments, land surveys, environmental inspections, and related
transactional costs, and there may be additional costs to OTEC in connection
with procuring additional land or easements necessary to build the proposed
ethanol plant.

Under the current proposed site plan of OTEC for the site, it will be necessary
to obtain either additional land or easements to build the necessary railroad
track siding to the plant, and may also be necessary to close a county road
which would cross the railroad siding. While we believe that it will be able to
obtain the necessary land or easements, and obtain the necessary county approval
to close the road, there can be no assurance that there will not be objections
from those affected by such actions, which may delay our plans, cost us more
money, or cause us to adjust its site plan in material respects.

In the event we are not able to obtain necessary regulatory approvals or
agreements with respect to the site on terms and conditions deemed satisfactory
to the our Board in its sole discretion, we will re-evaluate the site to be
selected for the ethanol plant, and may determine to select another site. While
we believe that the Davenport, Nebraska community is very supportive of the plan
to locate the ethanol plant near Davenport, there can be no assurance that there
may be those in the community who object to such plant location, and who may
express such objections to governmental bodies or agencies, or take other action
intended to change, delay or stop our plans. As of the date of this prospectus,
we are not aware of any such opposition.

Regulatory Permits

We will be required to obtain various environmental, construction and operating
permits, as discussed below. Pursuant to the proposed EPC contract, Lurgi and
ICM are responsible for construction permits and registrations. The inability to
obtain any necessary permit or to comply with the various environmental or other
governmental regulations may have a material effect on our business and may
prevent our proposed plant from being constructed.

Nebraska Air Quality Permits. We have hired an environmental permitting
consultant to provide professional consulting and support services in air
quality monitoring, modeling, permitting, analysis, and research. We applied for
an Air Quality Construction Permit with the Nebraska Department of Environmental
Quality on July 30, 2002. Once obtained, an Air Quality Construction Permit is
valid for 18 months. If we cannot complete construction within 18 months our Air
Quality Construction Permit will lapse unless we can demonstrate that the
construction of our plant requires additional time, we will need to apply for an
extension. To operate our business, we will also need an Air Quality Operating
Permit from the State of Nebraska Department of Environmental Quality. Once the
proposed ethanol plant is completed, we must conduct emission testing and apply
for an Air Pollution Operation Permit that will allow us to operate our
business. We anticipate submitting an application for this permit approximately
four months before the Air Pollution Construction Permit expires. We need this
permit to operate the ethanol plant after the Air Pollution Construction Permit
expires. We have twelve months once the plant becomes operational to obtain an
Air Quality Operating Permit. If granted, we expect the permit will be valid for
five years.

National Pollutant Discharge Elimination Permit. We must obtain a National
Pollutant Discharge Elimination Permit for any waste water discharges and
surface water runoff. Specifically, we will use a significant amount of water
per day to cool our closed circuit systems in the proposed ethanol plant and to
produce ethanol. We will likely discharge the water into a nearby creek,
although we may also be required to discharge it to a larger body of water. The
National Pollutant Discharge Elimination Permit application will be filed with
the Nebraska Department of Environmental Quality. This permit must be applied
for at least 180 days prior to any discharge. We have not applied for this
permit, but plan to do so soon after we begin construction. There can be no
assurance that this permit will be granted to us. If granted, we expect the
permit will be valid for five years.

Well Permits. We plan to drill two separate wells near the ethanol plant to
provide us with our necessary water supply. The Department of Environmental
Quality considers these wells high capacity wells, and we must obtain a High
Capacity Well Permit before we can begin digging the wells. To get this permit,
we must apply to the Department of Environmental Quality, which will determine
if the location of the well will support a sufficient water supply, and whether
it is safe from any soil or ground water contamination. We are currently
negotiating with a well construction company to provide us services for the
digging and construction of these wells. We will apply for the required permits
before we begin digging our wells.

Spill Prevention, Control and Countermeasures Plan. We must prepare a spill
prevention, control and countermeasures plan in accordance with standards set by
the Environmental Protection Agency. The plan will outline our spill prevention
measures for oil-based products such as denatured ethanol and will be supervised
by the Nebraska Department of Environmental Quality. The plan must be reviewed
and certified by a professional engineer.

Nuisance

Even if we receive all Nebraska environmental permits for construction and
operation of the ethanol plant, we may be subject to the regulations on
emissions by the Environmental Protection Agency. We could also be subject to
environmental or nuisance claims from adjacent property owners or residents in
the area arising from odors or other air or water discharges from the plant,
although we do not expect any such claims.

MANAGEMENT

Directors and Officers of OTEC

The following table shows the directors and officers of OTEC as of the date of
this memorandum:

- -----------------------------------------------------------------------------------------------------
NAME AGE POSITION DIRECTOR TERM EXPIRES
- -----------------------------------------------------------------------------------------------------

Mark L. Jagels 40 Chairman, President and Class I Director 2004
- -----------------------------------------------------------------------------------------------------
Michael Schardt 33 Vice-Chairman, Vice-President and Class 2006
III Director
- -----------------------------------------------------------------------------------------------------
Kent D. Hummel 66 Treasurer and Class II Director 2005
- -----------------------------------------------------------------------------------------------------
Pamela Maynard 55 Secretary and Class III Director 2006
- -----------------------------------------------------------------------------------------------------
Todd Fangmeier 33 Class II Director 2005
- -----------------------------------------------------------------------------------------------------
Brian Nedrow 31 Class I Director 2004
- -----------------------------------------------------------------------------------------------------
Daniel J. Miller 28 Class I Director 2004
- -----------------------------------------------------------------------------------------------------
Gene L. Thomas 56 Class II Director 2005
- -----------------------------------------------------------------------------------------------------
Darrel D. Dageforde 63 Class III Director 2006
- -----------------------------------------------------------------------------------------------------

Our Operating Agreement currently provides that the initial Board of Directors
shall be comprised of nine (9) members who shall be elected at the annual
meeting of the members. Our Operating Agreement further provides for a staggered
Board of Directors where each director is elected for a term of three (3) years.
Class I directors' terms expire at OTEC's 2004 annual meeting. Class II
directors' terms expire at OTEC's 2005 annual meeting. Class III directors'
terms expire at OTEC's 2006 annual meeting. The initial classification of the
board members was determined by random selection through a lottery.

All directors and officers have been elected to serve until the next succeeding
annual meeting and until their successors have been elected and qualified. Our
annual meeting has been scheduled for the period between January and June each
year commencing in the year 2003. However, at our initial annual meeting in 2003
our members will not vote for any directors under our Operating Agreement which
provides that Class 1 directors (the first class to come up for re-election)
serve until the annual meeting in 2004.

The Board reserves the right, in its sole discretion and in accordance with the
terms of the Operating Agreement, to increase the size of the Board and appoint
new directors to fill the newly created director seats at the request of
investors who make significant investments to OTEC in this offering and desire
representation on the Board.

Business Experience of Directors and Officers

The following is a brief description of the business experience and background
of the above-named officers and directors of OTEC.

Mark L. Jagels has been a farmer and rancher in Davenport, Nebraska since
January 1984. Mr. Jagels also owns 50% of J & J Trucking, Inc. and is a current
Director of the Nebraska Corn Board.

Michael Schardt is currently the Vice President of Edgar & Allen Schardt, Inc.
which is a family farm corporation involved in crop and livestock production in
Carleton, Nebraska.

Kent D. Hummel has been a self-employed farmer since 1960 and received a
Bachelor of Science degree in agronomy from the University of Nebraska. Mr.
Hummel is the sole owner of Hummel Farms, Inc. which is a 2,350 acre grain farm
located in Daykin, Nebraska which is also a Dekalb and Asgrow seed dealer. Mr.
Hummel also served as Chairman of the Board and was a member of the steering
committee of the Swan Creek Watershed District.

Pamela Maynard holds a Masters in Public Administration and has extensive
experience in sales management, sales, project management, administrative
services and human resources in the telecommunications and data communications
industry. Ms. Maynard is currently employed by South Central Public Power
District as a Communication/Economic Development Specialist. She is also
involved in various community development events and activities. Between 1997
and 1999, she worked at Lucent Technologies, Inc. as an Inside Sales Manager.
Ms. Maynard worked at US West, Inc. from 1984 to 1996 as an Account Consultant,
Sales Manager, Project Manager and Account Executive. Prior to joining US West,
Inc., she worked for AT & T/Northwestern Bell as an Account Executive.

Todd Fangmeier has been a self-employed farmer in Hebron, Nebraska since May
1991. Prior to commencing his farming operations, Mr. Fangmeier received an
Associates Degree in Applied Science for architectural design.

Brian Nedrow has been a self-employed farmer in Geneva, Nebraska since 1989. Mr.
Nedrow is also a farm hand employee at Nedrow Farms, Inc. and serves as a
director on the Nedrow Farms, Inc. Board of Directors.

Daniel J. Miller is currently the Co-Manager and Secretary/Treasurer of a A.B.
Miller Farms, Inc., a family farm corporation, located in Carleton, Nebraska
which products corn, soybeans and feeder cattle. A.B. Miller Farms, Inc. also
operates a Mobil Oil and Garst/AgriPro Seed dealership. Mr. Miller received a

Bachelor of Science degree in agronomy in December of 1996. He assumed his
position with A.B. Miller Farms, Inc. in January 1997.

Gene L. Thomas has been a lifetime resident of Jefferson County and has been
involved in grain and livestock production south and east of Daykin, Nebraska
for more than forty years. Mr. Thomas currently owns and manages a 3,200 acre
operation located in Fairbury, Nebraska. He also serves as a director on the
Little Blue NRD Board of Directors and serves on its executive committee.

Darrel D. Dageforde and his wife, Rosemary Dageforde are currently the owner of
Dageforde Agency, a real estate and insurance firm located in Hebron, Nebraska.
Mr. Dageforde and his wife own and operate an 880 acre farm in Thayer County,
Nebraska through Dageforde Farms, a partnership, and own and operate D & D Farms
which is a 733 acre grain and grade A dairy operation. Mr. Dageforde and his
wife are also the majority partners in a grain and calf/cow and cattle feeding
operation located in Thayer County, Nebraska.

Nominating Committee and Director Nomination Procedure

Our Board of Directors established a standing nominating committee to be elected
from its members. The nominating committee consists of Brian Nedrow, chairman,
Pamela Maynard and Jerry Miller. The principal duty of the nominating committee
is to recommend to our Board prior to the annual members' meetings nominees for
election to the Board of Directors for whom OTEC will solicit proxies. Also, in
the event of a vacancy, the nominating committee shall recommend to the Board a
nominee to fill such vacancy. While the nominating committee will consider
nominees recommended by members, it has not actively solicited recommendations
from the Company's members for nominees. Although OTEC has established formal
procedures with respect to making nominations with respect to the election of
directors, as described below, there are not any formal procedures for the
purpose of making recommendations to the nominating committee.

Our Board of Directors amended the Operating Agreement to establish a deadline
for nominations with respect to the election of directors at OTEC's annual
membership meetings, commencing with the 2004 Annual Meeting. Nominations for
election to our Board of Directors may be made by the Board of Directors, the
nominating committee, or by any member entitled to vote for the election of
directors.

Nominations, other than those made by or on behalf of the existing management of
OTEC, must be made in writing and delivered or mailed to the Secretary of OTEC
or to the chairman of the nominating committee, no earlier than the first day of
the October preceding the annual meeting and no later than the last day of the
March preceding the annual meeting. In the event of a special meeting of
members, not later than the close of the fifteenth day following the day on
which notice of the meeting is first mailed to members.

Each nomination must contain such information about the nominee which shall be
deemed appropriate, from time to time, by the nominating committee. Each
nomination shall be accompanied by the written consent of each nominee to serve
as a director of OTEC if elected by the members. At the meeting of members, our
Chairman of the Board shall declare out of order and disregard any nomination
not presented in accordance with this section.

Nominations for election to the Board to be considered at the 2004 Annual
Meeting must be submitted in writing to the Chairman of the Board or Corporate
Secretary at the OTEC's principal office, Box 267, Davenport, Nebraska 68335 no
earlier than October 1, 2003 and no later than March 31, 2004.

Director and Officer Compensation

All of our directors and officers and employees will be entitled to and may
receive reimbursement for expenses incurred by them for and on behalf of OTEC.
We may also pay directors fees to directors for attendance at the Board of
Directors meetings, although currently no such fees are being paid by OTEC.

Committees of the Board of Directors

Our Operating Agreement permits the Board to establish committees having the
authority of the Board of Directors. A committee may consist of one or more
persons that need not be directors. The Board has established the following
committees:

Grant Writing: Todd Fangmeier, Dan Poppe and Rosemary
Dageforde

Environmental and Permitting: Brian Nedrow, Jerry Grove and Dan
Miller.

Legislative Committee: Michael Schardt, Mark Jagels and Jerry
Miller

Financing/Investment: Kent Hummel, Darrel Dageforde, Ken
Else, Mike Schardt and Rob Schardt

Ethanol/DDG Marketing: Dan Miller, Steve Gebers and Brian
Nedrow

Construction and Design: Rosemary Dageforde, Todd Fangmeier and
Gene Thomas

Public Relations: Rosemary Dageforder and Jeanette Else

Nominating Committee: Brian Nedrow, Pamela Maynard and Jerry
Miller

EXECUTIVE COMPENSATION

Mark Jagels is currently serving as our President and Michael Schardt is
currently serving as our Vice President and neither has received any
compensation from us. Neither Mr. Jagels nor Mr. Schardt is under any written
contract to provide services to us. We reimburse our officers for expenses
incurred relating to services rendered on our behalf. The current officers of
OTEC will continue to serve without remuneration. OTEC may hire a business
manager to assist us in organizational business matters and we intend to recruit
and hire permanent employees who will be compensated on a regular basis pursuant
to agreed upon salaries. We expect to offer typical health and other employee
benefits.

Employment Agreements

We have no employment agreements with any executive officer or director. We may
in the future enter into employment agreements with our executive officers or
other employees that we may hire.

Reimbursement of Expenses

We do not pay our officers and directors any fees or salaries for their services
to us. We reimburse our officers for expenses incurred in connection with their
service to us. Our reimbursement policy is to reimburse our officers for
out-of-pocket expenses.

CERTAIN TRANSACTIONS AND CONFLICTS OF INTEREST

Conflicts of interest may arise in the future as a result of the relationships
between and among our members, officers, directors and their affiliates,
although our officers and directors have fiduciary duties to us. We do not have
a committee of independent directors or members or an otherwise disinterested
body to consider transactions or arrangements that result from conflicts of
interest. Our Operating Agreement permits OTEC to enter into agreements with
directors, officers, members and their affiliates, provided that any such
transactions are on terms no more favorable to the directors, officers, members
(or their affiliates) than generally afforded to non-affiliated parties in a
similar transaction. As of the date of this prospectus, OTEC had not entered
into any agreements with any of its directors, officers, members or their
affiliates.

Our Board has adopted an Affiliated Transactions Policy which provides that all
material affiliated transactions and loans must be made on terms that are no
less favorable to us than those that can be obtained from unaffiliated third
parties, and that all material affiliated transactions and loans, or any
forgiveness of loans, must be approved by:

(a) a majority of the independent directors who do not have an
interest in the transaction; or

(b) the affirmative vote of members holding a majority of the
outstanding membership interests, excluding the membership
interests of members having an interest in the transaction.

The policy permits sales of corn and other feedstock by directors, officers,
members or other affiliated parties to OTEC, and all purchases of ethanol,
distillers' grains and other co-products by directors, officers, members or
other affiliated parties from OTEC without the required approvals if purchase or
sale price is substantially equal to the then current market price and the
transaction is on terms no less favorable to OTEC than those that can be
obtained from unaffiliated third parties.

Conflicts of interest could arise in the situations described below:

.. We will engage in transactions with our directors or their affiliates
with respect to the purchase of corn and the sale of distillers grains
although such transactions will be on the same terms and conditions as
with non-affiliated persons or entities. Members will have no right to
individually enforce the obligations of our directors or their
affiliates in our favor.

.. Our directors' decisions regarding various matters, including
expenditures that we make for our business, reserves for accrued
expenses, including officers salaries and reimbursement of director's
expenses, loan covenants, capital improvements and contingencies will
affect the amount of cash available for distribution to members.

.. We will reimburse our directors for out-of-pocket expenses relating to
our business. We do not have a reimbursement policy or guideline for
determining what expenses will be reimbursed. We will review and
reimburse all reasonable expenses that directors submit to us.

.. We have retained counsel that has assisted us in various aspects of our
formation and development. We have not retained separate counsel on
behalf of unit holders.

The directors of OTEC are the founders of the company and are its sole
promoters. Each member of our Board of Directors purchased his original
membership two membership units for $500 per unit to capitalize the company upon
its organization.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

As permitted by the Nebraska Limited Liability Company Act, OTEC's Operating
Agreement provides that no director will be personally liable to OTEC or its
members for monetary damages for any action taken in good faith and reasonably
believed by them to be in the best interest of OTEC, or in reliance on the
Operating Agreement or Articles of Organization, or for food faith errors of
judgement. Directors are liable only for misconduct or negligence in the
performance of their duties as directors.

OTEC's Operating Agreement also provides that OTEC must indemnify its directors
and officers to the fullest extent permitted by law; provided, that directors
and officers are not entitled to indemnification under the Operating Agreement
if a court determines that the losses or liability resulted primarily from the
negligence or misconduct of such director or officer.

There is no pending litigation or proceeding involving a director, officer,
employee or agent of OTEC as to which indemnification is being sought. We are
not aware of any other threatened litigation that may result in claims for
indemnification by any director, officer, employee or agent.

DESCRIPTION OF MEMBERSHIP UNITS

Membership Units

Ownership rights in OTEC are evidenced by membership units. Each membership unit
represents ownership interest in OTEC's capital, profits, losses and
distributions on a per membership unit basis as adjusted from time to time, and
the right to vote and participate in the management of OTEC, all as provided in
the Operating Agreement as such may be amended from time to time. OTEC maintains
a membership register setting forth the name, address, capital contributions and
number of units held by each member at its principal office. There are no limits
under our Articles of Organization or our Operating Agreement on the total
amount of membership units that the Board of Directors may issue.

Maximum Ownership Percentage

Under our Operating Agreement, no member can own more than 49% of the total
issued and outstanding membership units. The calculation of your 49% limitation
includes the number of membership units owned by you and your spouse, children,
parents, brothers and sisters, and any membership units owned by any
corporation, partnership or other entity in which you or your family members
owns or controls a majority of the voting power.

Cumulative Voting for Election of Directors

Each membership unit is entitled to one vote per unit except that voting is
cumulative in the election of directors. With cumulative voting, each member is
entitled to as many votes as the total number of units held of record by such
member multiplied by the number of directors to be elected at the meeting. Each
member is then entitled to cumulate his votes and cast all of them for one
nominee or distribute them among any or all of the nominees in such proportion
as the member may desire. The nominees receiving the highest number of votes on
the foregoing basis, up to the total number of directors to be elected at the
meeting, will be elected.

No Preemptive Rights

Our Operating Agreement denies preemptive rights to members of OTEC. If we
decide to issue additional membership units in the future, we could do so
without first offering the additional units to you which would dilute your
percentage of membership interests in OTEC. If we sell additional membership
units, the sale price may be higher or lower than what you are paying in this
offering and depending on the value of the units at the time of issuance, may
dilute the value of your membership units. Our annual meeting has been scheduled
for the period between January and June of each year with the exact date to
determined by the Board of Directors. The first annual meeting will be held in
the year 2003; however, at our initial annual meeting in 2003, our members will
not vote for any directors. Our Operating Agreement provides that Class I
directors (the first class to come up for re-election) serve until the annual
meeting in 2004. Class II directors serve until the 2005 annual meeting, and the
Class III directors serve until the 2006 annual meeting.

Change of Control Limitations

There are limitations on the acquisition of our membership units and changes in
control of OTEC. Our Operating Agreement contains certain provisions that could
delay, defer or prevent a change in control of OTEC, including the following:

. Ownership Limit. Under our Operating Agreement, no member can own more
than 49% of the total issued and outstanding membership units. This
limitation may have the effect of precluding a change in control of
OTEC by a third party, even if the change of control would be at a
premium price for our members, or otherwise be in their best
interests.

. Staggered Board. Our Board of Directors consists of 9 members, which
are divided into three classes of directors, with each class serving
staggered three-year terms. The classification of the Board of
Directors into three classes will make it more difficult for members
to change the composition of the Board of Directors because only a
minority of the Directors can be elected at once. The staggered Board
could also discourage a third party from attempting to obtain control
of OTEC, even though this attempt might be beneficial to our members.
Our first annual meeting will be scheduled by the Board of Directors
and will be held between January and June commencing in the year 2003.
However, at our initial annual meeting in 2003 our members will not
vote for any directors based on classes under our Operating Agreement
which provides that Class 1 directors (the first class to come up for
re-election) serve until the annual meeting in 2004.

. Limitations on Amending the Operating Agreement. Our Operating
Agreement may be amended only upon an affirmative vote of two-thirds
of the members of our Board of directors, or upon an affirmative vote
of two-thirds majority in interest of the members. These supermajority
voting requirements for amending our Operating Agreement make it more
difficult to change the restrictions noted above which impede or
prevent a change of control of OTEC.

. Restrictions on Calling a Special Meeting of Members. Our Operating
Agreement permits a special meeting of members to be called by the
Chairman of the Board, or by any three directors. If neither the
Chairman nor three directors will call a special meeting, our
Operating Agreement requires written demand by members holding 10% of
our outstanding membership interests to call a special meeting. This
requirement may make it more difficult for members holding small
amounts of membership interests to effect the call of a special
meeting of members.

Restrictive Legend on Membership Certificate

We will place on your membership certificate or any other document evidencing
ownership of our membership units, restrictive legends similar to the following:

The sale, pledge, hypothecation, assignment or transfer of the ownership
interest represented by this CERTIFICATE OF OWNERSHIP is subject to the
terms and conditions of the Operating Agreement of Oregon Trail Ethanol
Coalition, L.L.C., as amended from time to time. Copies of the Operating
Agreement may be obtained upon written request to the Board of Directors of
Oregon Trail Ethanol Coalition, L.L.C.

Corporate Law Comparison

The following table compares certain of your rights as a member of OTEC under
our Operating Agreement to your rights under the Nebraska Limited Liability
Company Act and limited liability company law and to the rights of a shareholder
of a corporation under the Nebraska Business Corporations Act.

- -------------------------------------------------------------------------------------------------------------------------
Nebraska Limited Nebraska
Liability Corporate Law Operating Agreement
Company Act
- -------------------------------------------------------------------------------------------------------------------------

Under the Nebraska Business Section 11.5 of our Operating Agreement is based
Corporation Act, upon five on Nebraska corporate law and provides the
days written notice, a following:
shareholder can inspect and
copy: (a) a corporation's Upon five days written notice to OTEC, you have
Articles of Incorporation and the right to inspect and copy during regular
all amendments; (b) the business hours at OTEC's principal office the
Member Access bylaws of the corporation; following records:
to Records (c) resolutions passed by the
directors creating a new (1) Articles or Restated Articles of
series or class of stock and Organization and all amendments thereto
setting the related rights currently in effect; (2) our Operating
and preferences; and (d) Agreement and all restatements and amendments
minutes of the shareholders currently in effect; (3) minutes of all member
meeting and all written meetings and records of all action taken by
The Nebraska LLC communications to the members without a meeting for the past 3 years;
Act and Nebraska shareholders for the past (4) all written communications to the members
LLC law is silent. three years. generally within the past three years; (5)
annual financial statements that include a
Upon five days notice, a balance sheet as of the end of the fiscal year,
shareholder can also inspect an income statement for that year and a
the records identified below statement of changes in members' equity for
if (a) the shareholder's that year unless such information appears
demand to inspect and copy elsewhere in the financial statements, along
the records is made in good with the accountant's report if the annual
faith and for a proper financial statements are reported upon by a
purpose; (b) the shareholder public accountant; (6) a list of the names and
describes with reasonable business addresses of OTEC's current directors
particularity his or her and officers; and (7) the most recent annual
purpose and the records he or report delivered by OTEC to the Nebraska
she desires to inspect; and Secretary of State.
(c) the records are directly
connected with the (2) Upon five days prior written notice to
shareholder's purpose: OTEC, you also have the right to inspect and
copy during regular business hours at a
(1) excerpts from minutes reasonable location specified by OTEC any of
of any meeting of the board the following records if (a) your demand is
of directors, records of any made in good faith and for a proper purpose;
action of a committee of the (b) you describe with reasonable particularity
board of directors while your purpose and the records you desire to
acting in place of the board inspect; and (c) the records are directly
of directors on behalf of the connected with your purpose:
corporation, minutes of any
meeting of the shareholders, (1) excerpts from minutes of any meeting of
and records of action taken the Board of Directors, records of any action
by the shareholders or board of a committee of the Board of Directors while
of directors without a acting in place of the Board of Directors on
meeting, behalf of OTEC, minutes of any meeting of the
(2) accounting records of members, and records of action taken by the
the corporation; and members or Board of Directors without a
(3) the shareholders meeting;
record. (2) accounting records of OTEC; and
(3) the membership register.

- -------------------------------------------------------------------------------------------------------------------------

Nebraska corporate law
provides that no shareholder
The Nebraska LLC may commence or maintain a
Act and Nebraska derivative proceeding unless
LLC law is silent. he or she (1) was a
Right to File a shareholder of the
Derivative In the absence of corporation at the time of Our Operating Agreement is silent, and members
Lawsuit statutory the act or omission would be subject to court interpretations of
provisions, courts complained of or became a the Nebraska LLC Act and LLC law.
may look to shareholder through transfer
corporate law to by operation of law from one
decide if a who was a shareholder at such
derivative suit time; and (2) fairly and
can be maintained. adequately represents the
interests of the corporation
in enforcing the right of the
corporation.
- -------------------------------------------------------------------------------------------------------------------------
Voting on The Nebraska LLC Unless the Articles of Our Operating Agreement requires members
Mergers and Act requires the Incorporation require a holding more than 2/3 of the membership
Sale of Assets approval of any greater vote, the Nebraska interests to approve: (a) the sale, exchange,
merger or Business Corporation Act lease, mortgage, pledge or other transfer of
consolidation by requires the approval of a all or substantially all of the assets of OTEC
at least a two-thirds majority of the other than in the ordinary course of business;
majority in shareholders of any merger. and (b) the merger or consolidation of OTEC
interest of the with another entity.
members unless the
Operating
Agreement requires
a greater vote.
- -------------------------------------------------------------------------------------------------------------------------
Voting on The Nebraska LLC Unless the Articles of Our Operating Agreement requires unanimous
Dissolution Act requires the Incorporation require a written approval of the members to dissolve
unanimous written greater vote, the Nebraska OTEC in accordance with the Nebraska LLC Act.
agreement of all Business Corporation Act
members to requires the approval of a
dissolve a limited two-thirds majority of the
liability company. shareholders to dissolve a
corporation.
- -------------------------------------------------------------------------------------------------------------------------

RESTRICTIONS ON TRANSFER OF UNITS

For the reasons described below, investment in OTEC should be undertaken only by
those investors who can afford an illiquid investment and who do not intend to
resell or transfer their membership units.

All transfers are subject to a determination that the transfer will not cause
OTEC to be deemed a publicly traded partnership.

We have restricted your ability to transfer your membership units to ensure that
OTEC is not deemed a "publicly traded partnership" and thus taxed as a
corporation. Under the Operating Agreement, no transfers may occur without the
approval of the Board of Directors. The Board of Directors will only permit
transfers that fall within "safe harbors" contained in the publicly traded
partnership rules under the Internal Revenue Code. These include:

. transfers by gift,
. transfers upon the death of a member,
. intra-family transfers and
. other transfers during the tax year that in the aggregate do not
exceed 2% of the total outstanding membership units.

Any transfer in violation of the publicly traded partnership requirements or
without the prior consent of the Board will be null and void.

SUMMARY OF AMENDED AND RESTATED
OPERATING AGREEMENT

Your rights and obligations as a member of OTEC will be governed by the Amended
and Restated Operating Agreement. A copy of the Amended and Restated Operating
Agreement is attached hereto as Exhibit B. Before buying any membership units
you should carefully study the Operating Agreement in its entirety. The
following is a summary of the material terms and provisions of the Operating
Agreement which govern OTEC and its members. This summary is qualified in its
entirety by reference to the full text of the Operating Agreement, and in the
event of a conflict or apparent conflict between this summary and the full text
of the Operating Agreement, the Operating Agreement shall control.

Organization and Duration

We were organized on August 16, 2001 as a Nebraska limited liability company. We
will continue to operate until our members or a court determines that we should
dissolve, liquidate and wind up our business.

Purpose

Our purpose is to construct, own and operate an ethanol plant. In addition, we
may engage in any other business or activity as long as our directors approve
the activity, and it does not violate Nebraska law. We may engage in any
transactions that are necessary, appropriate and proper to further our purpose.

Meetings

Under the Operating Agreement, the annual meeting of Members must be held
between January and June each year to transact business which comes before the
meeting. Starting in 2003, OTEC currently intends to hold annual meetings of the
members in the second calendar quarter of the year. Special meetings of the
members may be called:

. by the Chairman of the Board,
. by any 3 directors, or
. by member(s) holding 10% of the outstanding membership interests.

Special meetings will be held at the principal place of business of OTEC, or
elsewhere as the notice of such meeting shall direct. You may attend any meeting
in person or by proxy. Written notice to all members stating the date, time and
place of the meeting and a description of the purpose(s) of the meeting must be
mailed, not fewer than 10 nor more than 60 calendar days before the date of the
meeting. Members holding at least a majority in interest represented in person
or by proxy constitutes a quorum at any meeting of members.

Rights and Obligations of Members

The dissolution and winding up of OTEC requires the approval of members required
under the Nebraska Limited Liability Company Act, as amended from time to time.
Nebraska law currently requires unanimous consent of all members to dissolve and
wind up a Nebraska limited liability company; therefore, the dissolution and
winding up of OTEC currently requires the unanimous approval of the members.

The members shall further have the right, by the affirmative vote of members
holding at least a two-thirds majority in interest, to approve the following
actions:

. the sale, exchange or other disposition of all, or substantially
all, of OTEC's assets (other than in the ordinary course of
OTEC's business) which is to occur as part of a single
transaction or plan; and

. the merger or consolidation of OTEC with another entity.

Individual members do not have the authority or power to act for or on behalf of
OTEC, to do any act that would be binding on OTEC or to incur any expenditures
on behalf of OTEC.

You do not have the right to withdraw from OTEC as a member except as permitted
in the Operating Agreement under Article 10 covering transfers of membership
interests. You do not have preemptive rights to acquire any additional
membership units or other interest in OTEC.

Access to Books and Records

Upon five days written notice to OTEC, you have the right to inspect and copy
during regular business hours at OTEC's principal office the following records:

(i) Articles or Restated Articles of Organization and all amendments
thereto currently in effect;

(ii) Operating Agreement and all restatements and amendments thereto
currently in effect;

(iii) Minutes of all member meetings and records of all action taken by
members without a meeting for the past three years;

(iv) All written communications to the members generally within the past
three years;

(v) Annual financial statements that include a balance sheet as of the
end of the fiscal year, an income statement for that year and a
statement of changes in members' equity for that year unless such
information appears elsewhere in the financial statements, along with
the accountant's report if the annual financial statements are
reported upon by a public accountant;

(vi) A list of the names and business addresses of OTEC's current
directors and officers; and

(vii) The most recent annual report delivered by OTEC to the Nebraska
Secretary of State.

Upon five days prior written notice to OTEC, you also have the right to inspect
and copy during regular business hours at a reasonable location specified by
OTEC any of the following records if (a) your demand is made in good faith and
for a proper purpose; (b) you describe with reasonable particularity your
purpose and the records you desire to inspect; and (c) the records are directly
connected with your purpose:

(i) Excerpts from minutes of any meeting of the Board of Directors,
records of any action of a committee of the Board of Directors while
acting in place of the Board of Directors on behalf of OTEC, minutes
of any meeting of the members, and records of action taken by the
members or Board of Directors without a meeting, to the extent not
subject to inspection as described above;

(ii) Accounting records of OTEC; and

(iii) The membership register.

Member Liability to OTEC

Your liability will be limited as set forth in the Operating Agreement, the
Nebraska Limited Liability Company Act and other applicable law. You will not be
personally liable for any debts or losses of OTEC beyond your respective capital
contributions as set forth in the Operating Agreement, except, if you receive a
distribution made by OTEC which is either:

(1) in violation of the Operating Agreement, or
(2) made when OTEC's liabilities exceed its assets (after giving effect to
the distribution),

you remain liable to OTEC for a period of 6 years after such distribution for
the amount of the distribution.

Management of OTEC

The Board of Directors manages, directs and controls the business and affairs of
OTEC. Except for situations in which the approval of the members is required by
the Operating Agreement or by applicable law, the Board has the full and
complete authority, power and discretion to manage and control the business,
affairs and properties of OTEC, to make all decisions regarding those matters
and to perform any and all other acts or activities customary or incident to the
management of OTEC's business.

The Board of Directors has 9 directors who are elected at the annual meeting of
the members. The Operating Agreement provides for a staggered Board of Directors
where each director is elected for a term of 3 years.

. Class I directors' terms expire at the 2004 annual meeting.
. Class II directors' terms expire at the 2005 annual meeting.
. Class III directors' terms expire at the 2006 annual meeting.

The initial classification of the board members was determined by random
selection through a lottery. Each director shall hold office for his respective
term until his successor shall have been elected and qualified. Directors do not
need to be residents of the State of Nebraska, but must be members of OTEC or
affiliated with a member.

The Board's power and authority includes, but is not limited to, the right to
take the following actions on behalf of OTEC:

(a) expend company funds in connection with the operation of OTEC's
business or otherwise pursuant to the Operating Agreement;

(b) employ and dismiss from employment any and all employees, agents,
independent contractors, attorneys and accountants;

(c) prosecute, settle or compromise all claims against third parties,
compromise, settle or accept judgment on, claims against OTEC and
execute all documents and make all representations, admissions and
waivers in connection therewith;

(d) borrow money on behalf of OTEC from any person, issue promissory
notes, drafts and other negotiable and nonnegotiable instruments and
evidences of indebtedness, secure payment of the principal of any such
indebtedness and the interest thereon by mortgage, pledge, property of
OTEC, whether at the time owned or thereafter acquired;

(e) hold, receive, mortgage, pledge, lease, transfer, exchange, otherwise
dispose of, grant options with respect to, and otherwise deal in, and
exercise all rights, powers, privileges and other incidents of
ownership or possession with respect to all property of whatever
nature held or owned by, or licensed to, OTEC;

(f) lend any of OTEC property with or without security;

(g) have and maintain one or more offices within or without the State of
Nebraska;

(h) open, maintain and close bank accounts and money market mutual funds
accounts, and draw checks and other orders for the payment of monies;

(i) engage accountants, custodians, consultants and attorneys and any and
all other agents and assistants (professional and nonprofessional) and
pay such compensation in connection with such engagement that the
Board of Directors determines is appropriate;

(j) enter into, execute, make, amend, supplement, acknowledge, deliver and
perform any and all contracts, agreements, licenses, and other
instruments, undertakings and understandings that the Board determines
is necessary, appropriate or incidental to carrying out the business
of OTEC;

(k) file a petition in bankruptcy on behalf of OTEC;

(l) delegate to the Chairman, President and other Officers such
responsibility and authority as the Board deems necessary or
appropriate from time to time; and

(m) admit new Members, accept additional Capital Contributions from new
and existing Members and issue additional membership units to new and
existing Members.

The Operating Agreement requires the affirmative vote of a majority of the Board
of Directors for:

. incurring any indebtedness or expense in excess of $50,000 other than
in the ordinary course of business;

. pledging, mortgaging, encumbering or granting any lien on any assets
of OTEC other than in the ordinary course of business; and

. purchasing any asset or making capital expenditures in excess of
$50,000.

Members of the Board must perform their duties as directors in good faith, in a
manner he or she reasonably believes to be in the best interests of OTEC. Each
member of the Board must use such care as an ordinarily prudent person in a like
position would use under similar circumstances.

The Board does not, in any way, guarantee the return of your capital
contributions or a profit for you from the operations of OTEC. Members of the
Board shall not be liable to OTEC or to any member for any loss or damage
sustained by OTEC or its members, unless the loss or damage shall have been the
result of negligence or misconduct in the performance of their duties as
directors.

A director may resign at any time by giving written notice to the members of
OTEC. The resignation of any director shall take effect upon receipt of notice
thereof or at such later time as shall be specified in such notice; and, unless,
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. The resignation of a director who is also a
member shall not affect the director's rights as a member and shall not
constitute a withdrawal of a member.

At a meeting called expressly for that purpose, a director may be removed at any
time, with or without cause, by the affirmative vote of members holding more
than 50% of the percentage interests, except that a director may not be removed
if the number of votes sufficient to elect him or her under cumulative voting is
voted against his or her removal. The removal of a director who is also a member
shall not affect the director's rights as a member and shall not constitute a
withdrawal of a member.

Allocations of Profits and Losses

We will allocate OTEC's profits and losses to you according to your membership
units, as provided in the Operating Agreement, as amended from time to time. The
Board will determine whether to distribute or retain the profits. The Board may
agree to distribute cash to the members irrespective of profits. The Board may
agree to distribute in kind property held by OTEC.

Capital Accounts and Distributions

You will have a capital account on the books of OTEC. We will credit your
capital account with the following:

(i) the cash and the fair market value of any property other than cash
contributed by you to the capital of OTEC;

(ii) your allocable share of profits and any items of income or gain which
are specially allocated to you; and

(iii) the amount of any company liabilities assumed by you which are
secured by any property of OTEC distributed to you.

We will debit your capital account for the following:

(i) the cash and the fair market value of any property other than cash
distributed to you;

(ii) your allocable share of losses and any items of expense or loss which
are specially allocated to you; and

(iii) the amount of any of your liabilities assumed by OTEC or which are
secured by any property contributed by you to OTEC.

OTEC will distribute information regarding individual members' capital accounts
on an annual basis in connection with the distribution of tax reporting
information. In addition, OTEC will distribute annual reports to you in
accordance with state and federal laws and will file annual and quarterly
reports with the SEC as required under applicable laws. You may request, in
writing, copies of OTEC's annual and quarterly reports.

Transfer of Interests in OTEC

You may not transfer all or any portion of your interest under any circumstance
without the prior written consent of the Board of Directors which consent may be
withheld in the sole discretion of the Board of Directors. The Board will not
approve any transfer if the Board determines the transfer would cause OTEC to be
treated as a "publicly traded partnership". Transfers that violate any
restrictions of the Operating Agreement or applicable law are null and void with
no force or effect whatsoever, and the intended transferee will not acquire any
rights in the membership unit. You must submit a written request to transfer
your membership units to the Board of Directors describing the terms of the
proposed transfer. Notwithstanding the receipt of such request, the Board of
Directors cannot guarantee that the request will be honored by the requested
transfer date, if at all.

Subject to the 49% maximum ownership limitation set forth in the Operating
Agreement and subject to Board approval, the following transfers are "permitted
transfers":

(a) a "block transfer", which is a transfer by a member and any related
persons (as defined in the Internal Revenue Code) in one or more
transactions during any 30 calendar day period of interests
representing in the aggregate more than 2% of the total interests in
company; or

(b) a transfer or series of related transfers by one or more members
(acting together) which involves the transfer of 50% or more of the
outstanding units; or

(d) a transfer by gift or bequest only to a spouse or child of such
transferring member, or to a trust established for the benefit of such
spouse or child, or to an existing member of OTEC upon 10 days' prior
written notice to OTEC of such gift or bequest.

No sales or transfers, including permitted transfers, may be made without prior
Board approval.

The Board of Directors, in its sole discretion, may also require the following
prior to the approval of any transfer of membership units,

. an opinion of counsel (whose fees and expenses shall be borne by the
transferor) satisfactory in form and substance to the Board that such
transfer may be lawfully made without registration or qualification
under applicable state and federal securities laws, or such transfer
is properly registered or qualified under applicable state and federal
securities laws, and if requested by OTEC, that the transfer will not
cause OTEC to be treated as a publicly traded partnership;

. such documents and instruments of conveyance executed by the
transferor and transferee as may be necessary or appropriate in the
opinion of counsel to OTEC to effect such transfer, except that in the
case of a transfer of units involuntarily by operation of law, the
transfer shall be confirmed by presentation of legal evidence of such
transfer, in form and substance satisfactory to OTEC;

. the transferor's membership certificate;

. the transferee's taxpayer identification number and sufficient
information to determine the transferee's initial tax basis in the
interest transferred, and any other information reasonably necessary
to permit OTEC to file all required federal and state tax returns and
other legally required information statements or returns;

. evidence satisfactory in form and substance to the Board that the
transferee meets the maximum unit ownership limitations; and

. other conditions on the transfer of units adopted by the Board from
time to time as it deems appropriate.

Fair Market Value

Fair market value of a membership interest on any date will be equal to the most
recent fair market valuation determination of the per membership unit value by
the Board in good faith; provided, that the valuation will be calculated on a
basis as consistent as practicable from period to period. The Board may, in its
sole discretion, employ the advice of independent and qualified professionals in
the determination of the fair market value, but is not under any obligation to
do so. The fair market value of OTEC's membership units shall be determined at

least annually. Valuations shall generally be performed, at the discretion of
the Board, as of the end of each fiscal year of OTEC's operations at the annual
meeting of the Board; however, the Board, in its sole discretion, may have fair
market valuations of OTEC performed at any time or from time to time during any
year. Except as otherwise specifically provided in the Operating Agreement, the
Board will use the results of the most recent valuation in determining the fair
market value of a membership interest. No member or any party other than the
Board shall have the right to require or request that a new or more recent
valuation be performed for purposes of determining the fair market value of OTEC
or a membership interest.

The Board will not establish the fair market value more than 4 times during
OTEC's taxable year.

Transfer Upon Death of a Member

If you die, your estate or personal representative may request that OTEC
repurchase your interest within 120 days after your death. OTEC is not obligated
to repurchase your membership units and we cannot assure you that OTEC would
have sufficient liquidity to agree with any request for redemption, or that the
Board of Directors in its discretion would agree to use OTEC's cash on hand for
such purpose. The purchase price will be the fair market value of your interest
in effect as of the date of receipt of notification of your death. Your estate
or personal representative may exercise this right by providing written notice
to OTEC within 120 days after the date of your death; provided, however, OTEC
will not repurchase such interest earlier than 60 days after OTEC receives
notice of the repurchase request. Transfers upon death are subject to a
determination by the Board that the transfer will not cause OTEC to be deemed a
publicly traded partnership.

Payment Terms

If the purchase price for an interest transferred due to death exceeds $5,000,
OTEC or the purchasing member has the right to pay for the interest purchased by
paying $5,000 at closing and executing a promissory note for the balance of the
purchase price. OTEC must pay the promissory note in 5 equal annual installments
due on the anniversary date of the closing and the promissory note will accrue
interest at a rate determined by the Board which will not be less than the then
current prime rate established by a major bank selected by the Board for loans
to such bank's most creditworthy commercial borrowers. OTEC may prepay the
promissory note, in whole or in part, at any time without penalty or premium.
OTEC may increase or decrease the purchase price by an amount equal to any
indebtedness owed the selling member by OTEC, or the deduction of any
indebtedness owed OTEC by the selling member, or both. Upon the sale of an
interest by a member, all rights of the member with respect to the interest,
including the right to vote such interest and to receive distributions, shall
terminate except for the member's right to receive payment therefor.

Effective Date of Transfers

The effective date for any transfer of membership unit will be the day of the
month and year:

(i) in which the transfer occurs (as reflected by the form of
assignment); and

(ii) the transferee's name and address and the nature and extent of the
transfer are reflected in the records of OTEC;

provided, however, the effective date of a transfer for purposes of allocation
of profits and losses and for distributions shall be determined as set forth
below. The Board may establish interim periods in which transfers may occur for
purposes of making allocations of profits and losses, and distributions;
provided, however, the Board shall provide members reasonable notice of the
interim transfer periods and advance notice of any change to the interim
transfer periods.

Members may transfer their membership interests at any time not just within the
interim transfer periods subject to the prior written approval of the Board for
all transfers. However, with respect to the allocations of profits and losses
and distributions, the Board currently intends to use the interim transfer
periods as the

effective date for adjusting capital accounts and/or making distributions. For
purposes of making allocations of profits and losses, and distributions, OTEC
intends to use the interim closing of the books method (rather than a daily
proration of profit or loss for the entire period) and recognize the transfer as
of the first day following the close of interim transfer period in which the
member complied with the notice, documentation and information requirements of
Article 10 of the Operating Agreement . All distributions on or before the end
of the applicable interim transfer period in which such requirements have been
substantially complied with shall be made to the transferor and all
distributions thereafter shall be made to the transferee. The Board has the
authority to adopt other reasonable methods and/or conventions with respect to
allocations and distributions.

Redemption of a Member

You may request a repurchase of your membership units by OTEC upon 60 calendar
days' prior written notice to the Board of Directors. The redemption price will
be the fair market value of your interest in effect as of the date of receipt of
your request for redemption. OTEC is not obligated to repurchase your membership
units and we cannot assure you that OTEC would have sufficient liquidity to
agree with any request for redemption, or that the Board of Directors in its
discretion would agree to use OTEC's cash on hand for such purpose. The
redemption must be approved by the Board and the redemption must comply with all
applicable IRS regulations. Upon any redemption which is approved, you will
receive a payment equal to the fair market value of your interest in OTEC as of
the effective date of the redemption. But, if the remaining members of OTEC
agree to dissolve OTEC, you will receive your share of the assets of OTEC
instead of a redemption payment. Redemption transfers are subject to a
determination by the Board that the transfer will not cause OTEC to be deemed a
publicly traded partnership.

Dissolution and Winding Up

OTEC may also be dissolved and its affairs wound up as otherwise required or
permitted by the Nebraska Limited Liability Company Act.

The Board is responsible for winding up OTEC's affairs if dissolved. Unless
prohibited by Nebraska law, if OTEC dissolves, the Board will distribute OTEC's
assets as set forth below unless otherwise prohibited by applicable law. The
Board is authorized to do all acts authorized by law to wind up OTEC's affairs,
including, the right to sell OTEC's assets or to distribute the assets in kind
to the members.

The fair market value of OTEC's assets will be determined, including the value
of any real or personal property held by OTEC in accordance with the terms of
the Operating Agreement.

The Board will distribute OTEC's assets in the following manner and order:

(1) to the claims of all creditors of OTEC, including members who are
creditors, to the extent permitted by law, in satisfaction of
liabilities of OTEC, other than liabilities for distributions to
members;

(2) to members and former members in satisfaction of liabilities for
distribution, pursuant to Section 21-1625(1)(b) of the Nebraska
Limited Liability Company Act, and

(3) to the members with positive capital account balances in accordance
with their percentage interests, as set forth in the Operating
Agreement.

If you are entitled to a distribution of any of OTEC's assets upon dissolution,
you will receive your share of such assets in cash or in kind, and the portion
of such share that is received in cash may vary from member to member. If OTEC
cannot return the full amount of your capital contribution, you have no recourse
against the Board of Directors, OTEC or against any other member.

In the discretion of the Board, a pro rata portion of the distributions that
would otherwise be made to the members upon dissolution may be:

. distributed to a trust established for the benefit of the members for
the purposes of liquidating company assets, collecting amounts owed to
OTEC, and paying any contingent or unforeseen liabilities or obligations
of OTEC or of the members arising out of or in connection with OTEC. The
assets of any such trust shall be distributed to the members from time
to time, in the reasonable discretion of the Board, in the same
proportions as the amount distributed to such trust by OTEC would
otherwise have been distributed to the members; or

. withheld to provide a reasonable reserve for company liabilities
(contingent or otherwise) and to reflect the unrealized portion of any
installment obligations owed to OTEC, provided that such withheld
amounts shall be distributed to the members as soon a practicable.

You will have no liability to OTEC, to the other members, or to the creditors of
OTEC on account of any deficit balance in your capital account balance except to
the extent such deficit arises from your failure to contribute the full amount
of your agreed upon capital contribution or any additional agreed upon capital
contribution.

Amendments

Amendments to the Operating Agreement may be adopted upon the affirmative vote
of two-thirds of the members of the Board. The Operating Agreement may also be
amended upon an affirmative vote of two-thirds majority in interest of the
members. If the Board materially modifies or amends the Operating Agreement, the
Board will send notice to the members of the material change within a reasonable
period of time after the effective date of the modification or amendment.

INCOME TAX CONSIDERATIONS
OF OWNING OUR MEMBERSHIP UNITS

The following description of the material federal income tax considerations
relating to the tax treatment of OTEC and its members is based on current law
and is not tax advice. The description is not intended to represent a detailed
description of the federal income tax consequences applicable to you. The
description is based on current provisions of the Internal Revenue Code, current
and proposed Treasury Regulations, court decisions, and other administrative
rulings and interpretations. These sources are subject to change, and these
changes may be applied retroactively. We cannot provide any assurance that any
such change, future provisions of the Internal Revenue Code or other legal
authorities will not alter significantly the tax considerations we describe in
this description.

You are urged to consult your own tax advisor regarding the federal, state, and
local tax consequences to you on the purchase, ownership and sale of the
membership units. This section is not to be construed as a substitute for
careful tax planning.

We are not making any tax representations to you. We cannot make any
representations or warranties of any kind that any federal income tax advantages
of an investment in OTEC will be available to you. We do not intend to request
any ruling from the IRS with respect to any of the projected tax consequences
set forth in this memorandum. You are strongly urged to consult your own tax
advisor prior to your investment in OTEC.

Tax Status of OTEC

Single-tax treatment and the ability to make cash distributions to members
without incurring an entity level federal income tax depends on the treatment of
OTEC as a partnership for income tax purposes. We expect to be taxed as a
partnership for federal income tax purposes. This means that OTEC will pay no
federal income tax and members will pay tax on their share of OTEC's net income.
Under Treasury Regulations known as the "check-the-box" regulations, a
non-corporate entity such as a limited liability company will be taxed as a
partnership unless the entity is considered a "publicly traded partnership" or
the entity affirmatively elects to be taxed as a corporation. We will not elect
to be taxed as a corporation and will endeavor to take such steps as are
feasible and advisable to avoid classification as a publicly traded partnership.

If we fail to qualify for partnership taxation for whatever reason, OTEC will
treated as a "C corporation" for federal income tax purposes. As a "C
corporation," OTEC will be taxed on its taxable income at corporate rates,
distributions would generally be taxed again to members as corporate dividends,
and the members will not be required or allowed to report their share of OTEC's
income, gains, losses or deductions on their tax returns. Because a tax would be
imposed upon OTEC as an entity, the cash available for distribution to members
would be reduced by the amount of tax paid which could cause a reduction in the
value of the membership units.

Publicly Traded Partnership Rules

To qualify for taxation as a partnership, OTEC cannot be a "publicly traded
partnership" as defined under Section 7704 of the Internal Revenue Code.
Generally, the Internal Revenue Code provides that a publicly traded partnership
will be taxed as a corporation.

The Internal Revenue Code defines a publicly traded partnership as a partnership
whose interests are traded on an established securities market, or are readily
tradable on a secondary market (or the substantial equivalent thereof). Although
there is no legal authority on whether a limited liability company is subject to
the publicly traded partnership rules, it is probable that OTEC is subject to
the publicly traded partnership rules because it has elected to be classified
and taxed as a partnership. We will attempt to avoid treatment as a publicly
traded partnership.

Under Section 1.7704-1(d) of the Treasury Regulations, interests in a
partnership are not considered traded on an established securities market or
readily tradable on a secondary market unless:

. the partnership participates in the establishment of the market or the
inclusion of its interests thereon, or

. the partnership recognizes any transfers made on the market by redeeming
the transferor partner or admitting the transferee as a partner.

We do not intend to list the membership units on any stock exchange or the
NASDAQ Stock Market. In addition, the Operating Agreement prohibits any transfer
of membership units without the approval of the Board. The Board will only
approve transfers that will not cause OTEC to be classified as a publicly traded
partnership. The IRS has adopted Treasury Regulations establishing certain safe
harbor provisions with respect to publicly traded partnership status. These safe
harbor provisions generally provide that interests will not be treated as
readily tradable on a secondary market (or the substantial equivalent thereof)
if the interests are transferred: (1) in "private transfers"; (2) in qualified
redemptions and repurchases; (3) pursuant to a qualified matching service; or
(4) in limited amounts that satisfy a 2% test.

Private transfers include, among others:

. transfers such as gifts in which the transferee's tax basis is
determined by reference to the transferor's tax basis in the interests
transferred,

. transfers at death, including transfers from an estate or testamentary
trust,

. transfers between members of a family (as defined in Section 267(c)(4)
of the Internal Revenue Code),

. transfers from retirement plans qualified under Section 401(a) of the
Internal Revenue Code or an IRA, and

. "block transfers", which are transfers by a member and any related
persons (as defined in the Internal Revenue Code) in one or more
transactions during any 30 calendar day period of interests
representing in the aggregate more than 2% of the total interests in
partnership capital or profits.

Transfers pursuant to a qualified redemption or repurchase are disregarded in
determining whether interests are readily tradable on a secondary market if all
of the following conditions are met:

(1) the redemption or repurchase cannot occur until at least 60 days after
the partnership receives written notice of the member's intent to
exercise the redemption or repurchase right;

(2) either the purchase price is not established until at least 60 days
after receipt of such notification, or the purchase price is
established not more than four times during the entity's tax year; and

(3) the sum of the interests in capital or profits transferred during the
year (other than in private transfers) cannot exceed 10% of the total
interests in partnership capital or profits.

Transfers through a qualified matching service also are disregarded in
determining whether interests are readily tradable. A matching service is
qualified only if:

(1) it consists of a computerized or printed system that lists customers'
bid and/or ask prices in order to match members who want to sell with
persons who want to buy,

(2) matching occurs either by matching the list of interested buyers with
the list of interested sellers or through a bid and ask process that
allows interested buyers to bid on the listed interest,

(3) the seller cannot enter into a binding agreement to sell the interest
until the 15/th/ calendar day after his interest is listed (which date
must be confirmable by maintenance of contemporaneous records),

(4) the closing of a sale effected through the matching service does not
occur prior to the 45/th/ calendar day after the interest is listed,

(5) the matching service displays only quotes that do not commit any
person to buy or sell an interest at the quoted price (non firm price
quotes) or quotes that express an interest in acquiring an interest
without an accompanying price (nonbinding indications of interest) and
does not display quotes at which any person is committed to buy or
sell a interest at the quoted price (firm quotes),

(6) the seller's information is removed within 120 days of its
listing and is not reentered into the system for at least 60 days
after its deletion, and

(7) the sum of the percentage interests transferred during the
entity's tax year (excluding private transfers) cannot exceed 10%
of the total interests in partnership capital or profits.

In addition, interests are not treated as readily tradable if the sum of the
percentage interests transferred during the entity's tax year (excluding private
transfers, qualified redemptions and qualified matching service transfers) do
not exceed 2% of the total interests in partnership capital or profits.

Flow-Through Of Taxable Income -- Use Of Calendar Year

Based on our intent to be taxed as a partnership, we do not anticipate that OTEC
will pay any federal income tax. Instead, you will be required to report on your
income tax return your allocable share of OTEC's income, gains, losses and
deductions. You must report these amounts regardless of whether you received any
corresponding cash distributions.

Because OTEC will be taxed as a partnership, it will have its own taxable year
separate from the taxable years of its members. Unless a business purpose can be
established to support a different taxable year, a partnership must use the
"majority interest taxable year" which is the taxable year that conforms to the
taxable year of the holders of more than 50% of its interests.

In OTEC's case, the majority interest taxable year is the calendar year.
Establishing a valid business purpose for a nonconforming taxable year is
difficult. The IRS has ruled that, in determining whether a partnership has
established a sufficient business purpose to justify consent to use a
nonconforming taxable year, both tax factors and nontax factors must be
considered. Moreover, the ruling states that, where the use by a partnership of
a nonconforming year results in deferral or distortion of income, the nontax
factors must be "compelling." The examples in the ruling indicate that the IRS
is not likely to view many nontax factors as compelling. Although we may explore
the possibility of applying for a nonconforming taxable year, members should
assume that OTEC will be required to use the calendar year.

Flow-Through Of Taxable Income Or Loss

You must report your share of OTEC's income, gains, losses and deductions on
your income tax return for your taxable year with which or within which ends
OTEC's taxable year regardless of whether you received any cash distributions.
To illustrate:

. If you are a calendar year member, you will include your share
of OTEC's 2002 taxable income or loss on your 2002 income tax
return.

. If you are a member with a June 30 fiscal year, you will report
your share of OTEC's 2002 taxable income or loss on your income
tax return for the fiscal year ending June 30, 2003.

Tax Treatment Of Distributions

Distributions to you generally will not be taxable to you for federal income tax
purposes as long as distributions do not exceed your basis in your membership
units immediately before the distribution. Cash distributions in excess of your
membership unit basis (which are considered unlikely) are treated as gain from
the sale or exchange of the membership units under the rules for membership unit
dispositions.

Initial Tax Basis Of Membership Units And Periodic Basis Adjustments

Your basis in your membership units will increase to reflect:

. the amount of cash you contribute or the adjusted basis in any
property you contribute;
. the amount of any depletions (not likely to be relevant);
. your distributive share of OTEC's taxable income and tax-exempt
income; and
. increase in your share of OTEC's debt.

Your basis in your membership unit basis will decrease (but not below zero) to
reflect:

. the amount of any cash distributed to you or the basis of any
property distributed to you;
. the amount of certain depletion deductions;
. your distributive share of company losses and nondeductible
expenditures that are "not properly chargeable to capital
account"; and
. any reduction in your share of company's debt.

The membership unit basis calculations are complex. You are only required to
compute your membership unit basis if the computation is necessary to determine
your tax liability but accurate records should be maintained. Typically, basis
computations are necessary at the following times:

(1) The end of a taxable year during which OTEC suffered a loss, for
the purpose of determining the deductibility of your share of the
loss;

(2) Upon the liquidation or disposition of your membership interest,
and

(3) Upon the nonliquidating distribution of cash or property to you,
in order to ascertain the basis of distributed property or the
taxability of cash distributed.

Except in the case of a taxable sale of a membership unit or liquidation of
OTEC, exact computations usually are not necessary. For example, if you
regularly receive cash distributions that are less than or equal to your share
of OTEC's taxable income, you will have a positive membership unit basis at all
times. Consequently, no computations are necessary to demonstrate that cash
distributions are not taxable to you under Internal Revenue Code Section 731(a)
(1). The purpose of the basis adjustments is to keep track of your "tax
investment" in OTEC, with a view toward preventing double taxation or exclusion
from taxation of income items upon ultimate disposition of the membership units.

Deductibility Of Losses; Passive Loss Limitations

In general, you may deduct losses allocated to you, subject to a number of
restrictions. Those restrictions include a general rule that losses cannot be
deducted if (1) they exceed your basis in your membership units, or (2) to the
extent they exceed your at-risk amount. These specific restrictions are not
likely to impact you. However, if OTEC incurs a taxable loss or if taxable
income is insufficient to cover interest expense on OTEC related borrowing, the
passive activity loss deduction rules are likely to have widespread effect.
Internal Revenue Code Section 469 substantially restricts the ability of
taxpayers to deduct losses from passive activities.

Passive activities include activities conducted by pass-through entities, such
as OTEC and other partnerships, limited liability companies or "S" corporations,
in which the taxpayer does not materially participate. Losses from passive
activities are deductible only to the extent of the taxpayer's income from other
passive activities. Passive activity losses that are not deductible because of
these rules may be carried forward and deducted against future passive activity
income or may be deducted in full upon disposition of a member's entire interest
in OTEC to an unrelated party in a fully taxable transaction. It is important to
note that "passive activities" do not include dividends and interest income that
normally are considered to be "passive"

in nature. If you are considered a material participant in the operations of
OTEC you will not be subject to the passive loss rules described above with
respect to your investment in us. A material participant is a taxpayer who is
involved in the operations of OTEC on a regular, continuous and substantial
basis. Participation in OTEC as an investor only will not result in you being
treated as a material participant.

Your ability to deduct any losses we allocate to you, is determined by applying
the following three limitations dealing with basis, at-risk amounts and passive
losses.

(1) Basis. You may deduct an amount not to exceed your adjusted basis
in your units pursuant to Internal Revenue Code Section 704(d).
If your share of our losses exceeds your basis in your units at
the end of any taxable year, such excess losses, to the extent
they exceed your adjusted basis, may be carried over indefinitely
and deducted to the extent that at the end of any succeeding year
your adjusted basis in your units exceeds zero.

(2) At-Risk Rules. Under the "at-risk" provisions of Section 465 of
the Internal Revenue Code, if you are an individual taxpayer
(including an individual partner in a partnership) or a
closely-held corporation, you may deduct losses from a trade or
business activity, and thereby reduce your taxable income from
other sources, only to the extent you are considered "at risk"
with respect to that particular activity. The amount you are
considered to have "at risk" includes money contributed to the
activity and certain amounts borrowed with respect to the
activity for which you may be liable.

(3) Passive Loss Rules. Section 469 of the Internal Revenue Code may
substantially restrict your ability to deduct losses and tax
credits from passive activities. Passive activities include
activities conducted by pass-through entities, such as our
limited liability company, certain partnerships, and S
corporations, in which the taxpayer does not materially
participate. Losses from passive activities are deductible only
to the extent of the taxpayer's income from other passive
activities. Passive activity losses that are not deductible may
be carried forward and deducted against future passive activity
income or may be deducted in full upon disposition of a member's
entire interest in OTEC to an unrelated party in a fully taxable
transaction. It is important to note that "passive activities" do
not include dividends and interest income that normally are
considered to be "passive" in nature. A material participant is a
taxpayer who is involved in the operations of OTEC on a regular,
continuous and substantial basis. Participation in OTEC as an
investor only will not result in you being treated as a material
participant.

For members who borrow money to purchase their units, interest expense
attributable to the amount borrowed will be aggregated with other items of
income and loss from passive activities and subjected to the passive activity
loss limitation. To illustrate, if a member's only passive activity is our
limited liability company, and if we incur a net loss, no interest expense on
the related borrowing would be deductible. If that member's share of our taxable
income is less than the related interest expense, the excess would be
nondeductible. In both instances, the disallowed interest would be suspended and
would be deductible against future passive activity income or upon disposition
of the member's entire interest in our limited liability company to an unrelated
party in a fully taxable transaction.

Alternative Minimum Tax

If OTEC adopts accelerated methods of depreciation, it is possible that taxable
income for alternative minimum tax purposes might exceed regular taxable income
passed through to the members. We cannot guarantee whether you are likely to be
adversely affected by such excess alternative minimum taxable income.

Allocation of Income and Losses

Your distributive share of our income, gain, loss, or deduction for federal
income tax purposes generally is determined in accordance with our Operating
Agreement. Under Section 704(b) of the Internal Revenue code, however, an
allocation, or portion thereof, will be respected only if it either has
"substantial economic effect" or is in accordance with the "partner's interest
in the partnership." If the allocation or portion thereof contained in our
operating agreement does not meet either test, the IRS may make a reallocation
of such items in accordance with their determination of each member's economic
interest in us. Treasury Regulations contain guidelines as to whether
partnership allocations have substantial economic effect. The allocations
contained in the Operating Agreement are intended to comply with the Treasury
Regulations' test for having substantial economic effect.

Tax Consequences Of Disposition Of Membership Units -- Recognition Of Gain Or
Loss

You will recognize gain or loss on a sale of your membership units equal to the
difference between the amount realized and your basis in the membership units
sold. Amount realized includes cash and the fair market value of other property
received plus your share of OTEC's debt. Because of the inclusion of debt in
basis, it is possible that you could have a tax liability on the sale that
exceeds your actual proceeds of the sale.

Gain or loss recognized by you on the sale or exchange of a membership unit held
for more than one year generally will be taxed as long-term capital gain or
loss. A portion of this gain or loss, however, will be separately computed and
taxed as ordinary income or loss under Internal Revenue Code Section 751 to the
extent attributable to depreciation recapture or other "unrealized receivables"
or "substantially appreciated inventory" owned by OTEC.

Allocations And Distributions Following Membership Unit Transfers

The Board, in its sole discretion, may establish interim periods in which
transfers may occur; provided, however, the Board will provide members
reasonable notice of the interim transfer periods and advance notice of any
change to the interim transfer periods.

For purposes of making allocations of profits and losses, and distributions,
OTEC will use the interim closing of the books method (rather than a daily
proration of profit or loss for the entire period) and recognize the transfer as
of the first day following the close of interim transfer period in which the
member complied with the notice, documentation and information requirements of
Article 10 of the Operating Agreement. All distributions on or before the end of
the applicable interim transfer period in which such requirements have been
substantially complied with shall be made to the transferor and all
distributions thereafter shall be made to the transferee. The Board has the
authority to adopt other reasonable methods and/or conventions.

Our Dissolution and Liquidation May Be Taxable to You, Unless Our Properties are
Distributed In-Kind

Our dissolution and liquidation will involve the distribution to you of the
assets, if any, remaining after payment of all of our debts and liabilities.
Upon dissolution, your units may be liquidated by one or more distributions of
cash or other property. If you receive only cash upon the dissolution, gain
would be recognized by you to the extent, if any, that the amount of cash
received exceeds your adjusted basis in your units. No gain or loss will be
recognized if we distribute our own property in a dissolution. However, since
our primary asset likely be the ethanol plant, it is unlikely that we will make
a distribution in kind.

Reporting Requirement

Article 10 of the Operating Agreement contains the requirements for a valid
transfer of membership units, including proper documentation and Board approval.
In addition, the IRS requires a taxpayer who sells or exchanges a membership
unit to notify OTEC in writing within thirty days or, for transfers occurring on
or after December 16 of any year, by January 15 of the following year. Although
the IRS reporting requirement is limited to "Section 751(a) exchanges," which is
the sale or exchange of a member's interest in OTEC, part or all of such
interest being attributable to (1) unrecognized receivables of OTEC, or (2)
inventory items of OTEC, it is likely that any transfer of a OTEC membership
unit will constitute a Section 751(a) exchange because of the likelihood that at
least part of the transferred interest will be attributable to unrealized
receivables or inventory items. The written notice required by the IRS must
include the names and addresses of both parties to the exchange, the identifying
numbers of the transferor and, if known, of the transferee and the exchange
date. Currently the IRS imposes a penalty of $50 for failure to file the written
notice unless reasonable cause can be shown.

Tax Information To Members; Consistent Reporting

OTEC will be required to provide each member with a Schedule K-1(or authorized
substitute therefore) on an annual basis. Harsh penalties are provided for
failure to do so unless reasonable cause for the failure is established. Each
member's Schedule K-1 will set out the holder's distributive share of each item
of income, gain, loss, deduction or credit that is required to be separately
stated. Each member must report all items consistently with Schedule K-1 or, if
an inconsistent position is reported, must notify the IRS of any inconsistency
by filing Form 8062, "Notice of Inconsistent Treatment or Administrative
Adjustment Request" with the original or amended return in which the
inconsistent position is taken.

IRS Audit Procedures

Prior to 1982, regardless of the size of a partnership, adjustments to a
partnership's items of income, gain, loss, deduction, or credit had to be made
in separate proceedings with respect to each partner individually. Because a
large partnership sometimes had many partners located in different audit
districts, adjustments to items of income, gains, losses, deductions, or credits
of the partnership had to be made in numerous actions in several jurisdictions,
sometimes with conflicting outcomes. The Tax Equity and Fiscal Responsibility
Act of 1982 (TEFRA) established unified audit rules applicable to all but
certain small partnerships. These rules require the tax treatment of all
"partnership items" to be determined at the partnership, rather than the
partner, level. Partnership items are those items that are more appropriately
determined at the partnership level than at the partner level, as provided by
regulations. Since OTEC will be taxed as a partnership, the TEFRA rules are
applicable to it and its members.

The IRS may challenge the reporting position of a partnership by conducting a
single administrative proceeding to resolve the issue with respect to all
partners. But the IRS must still assess any resulting deficiency against each of
the taxpayers who were partners in the year in which the understatement of tax
liability arose. Any partner of a partnership can request an administrative
adjustment or a refund for his own separate tax liability. Any partner also has
the right to participate in partnership-level administrative proceedings. A
settlement agreement with respect to partnership items binds all parties to the
settlement. The TEFRA rules establish the "Tax Matters Member" as the primary
representative of a partnership in dealings with the IRS. The Tax Matters Member
must be a "member-manager" which is defined as an company member who, alone or
together with others, is vested with the continuing exclusive authority to make
the management decisions necessary to conduct the business for which the
organization was formed. In OTEC's case, this would be a member of the Board of
Directors who is also a member of OTEC. Section 11.4 of the Operating Agreement
provides for Board designation of the Tax Matters Member and for default
designations if it fails to do so. The IRS generally is required to give notice
of the beginning of partnership-level administrative proceedings and any
resulting administrative adjustment to all partners whose names and addresses
are furnished to the IRS.

Interest on Underpayment of Taxes; Accuracy-Related Penalties; Negligence
Penalties

If we incorrectly report your distributive share of our net income, such
incorrect reporting may cause you to underpay your taxes. If it is determined
that you underpaid your taxes for any taxable year, you must pay the amount of
taxes you underpaid plus interest on the underpayment and possibly certain
penalties from the date the tax was originally due. Under recent law changes,
the accrual of interest and penalties may be suspended for certain qualifying
individual taxpayers if the IRS does not notify you of amounts owing within 18
months of the date you filed your income tax return. The suspension period ends
21 days after the IRS sends the required notice. The rate of interest is
compounded daily and is adjusted quarterly.

Under Section 6662 of the Internal Revenue Code, penalties may be imposed
relating to the accuracy of tax returns that are filed. A 20% penalty is imposed
with respect to any "substantial understatement of income tax" and with respect
to the portion of any underpayment of tax attributable to a "substantial
valuation misstatement" or to "negligence." All of those penalties are subject
to an exception to the extent a taxpayer had reasonable cause for a position and
acted in good faith.

The IRS may impose a 20% penalty with respect to any underpayment of tax
attributable to negligence. An underpayment of taxes is attributable to
negligence if such underpayment results from any failure to make a reasonable
attempt to comply with the provisions of the Code, or any careless, reckless, or
intentional disregard of the federal income tax rules or regulations. In
addition, regulations provide that the failure by a taxpayer to include on a tax
return any amount shown on an information return is strong evidence of
negligence. The disclosure of a position on the taxpayer's return will not
necessarily prevent the imposition of the negligence penalty.

State Income Taxes

Members generally are subject to tax in their state of residence as well as in
those states in which the entity does business if their share of income exceeds
the minimum filing requirements. OTEC anticipates doing business in several
states which could create a substantial reporting burden for the members. Most
states, however, allow "composite reporting" by partnerships and limited
liability companies which means that the entity pays income taxes to the various
states and the individual members are relieved of the reporting responsibility
in states other than their state of residence. OTEC will pay the required income
tax to the various states that allow "composite reporting" by OTEC. Members'
states of residence generally will allow a tax credit for state income taxes
paid by the entity for the benefit of the member. For example, a member who is a
resident of Nebraska will report his entire share of OTEC's income but will
receive credit on his Nebraska return for taxes paid to Nebraska and other
states on his behalf. The Nebraska resident member generally will not have to
file individually in other states.

This memorandum makes no attempt to summarize the state and local tax
consequences to an investor. You should consult your own tax advisor regarding
your state and local tax obligations.

SUBSCRIPTION TO MEMBERSHIP UNITS

The Offer

We are hereby offering a maximum of 24,000 and a minimum of 20,000 membership
units of Oregon Trail Ethanol Coalition, L.L.C. at an offering price of $1,000
per unit. We intend to use the proceeds of this offering to construct an ethanol
plant and to operate the plant as a going concern. A minimum purchase of 5
membership units (minimum investment of $5,000) is required.

Offering Price

The $1,000 per unit purchase price has been determined by OTEC without an
independent valuation of the membership units. We established the offering price
based on our estimate of capital and expense

requirements, not based on perceived market value, book value, or other
established criteria. We did not obtain an independent appraisal opinion on the
valuation of the membership units. The membership units may have a value
significantly less than the offering price and there is no guarantee that the
units will ever obtain a value equal to or greater than the offering price.

Suitability

Investing in our membership units is highly speculative and very risky. Our
membership units are suitable only as a long-term investment and only if you can
bear a complete loss of your investment. Our membership units are suitable only
for persons of adequate financial means. You can only invest if you can
represent on your subscription application and agreement to OTEC that you meet
one of the following suitability tests:

(1) You have annual income from whatever source of at least $30,000 and a
net worth of at least $30,000, exclusive of home, furnishings and
automobiles; or

(2) You have a net worth of at least $75,000, exclusive of home,
furnishings and automobiles.

We do not expect any public market to develop for the units, which means that it
will be difficult to sell them. In addition, our Operating Agreement
significantly restricts the transferability of membership units and prohibits
any sale or transfer without the consent of our Board of Directors. You should
not buy these membership units if you need to quickly sell them in the future.

Method of Subscribing

In order to purchase our units investors must complete the subscription
application and agreement and deliver an executed copy of the signature page to
our Operating Agreement. In the subscription application and agreement, each
investor must represent to us, among other things, that, he or she has:

. received our prospectus and any supplements,
. agrees to be bound by the Operating Agreement, and
. understands that the membership units are subject to significant
transfer restrictions.

The subscription application and agreement also requires information about the
nature of ownership of the units, the investor's state of residence and taxpayer
identification or social security number.

Payment in full of this subscription price for all membership units must be made
by certified check, bank draft or money order payable to the order of Midwest
Bank, N.A. - Escrow Agent for Oregon Trail Ethanol Coalition, L.L.C., upon
submission of the subscription application and agreement. We will provide
assistance, if desired, in wire-transfer of funds to the escrow agent.

You should deliver to us by mail or in person the completed required documents
and check as follows:

By Mail: By Hand Delivery:
- --------------------------------------- ----------------------------------------

Oregon Trail Ethanol Coalition, L.L.C Oregon Trail Ethanol Coalition, L.L.C.
Box 267 426 Lincoln Avenue
Davenport, Nebraska 68335 Hebron, Nebraska 68730

All subscriptions are subject to acceptance by OTEC and may be rejected by OTEC
in its sole discretion. Upon our receipt of the required documents, we will
accept or reject your subscription. Our Board of Directors reserves the right to
reject any subscription. If we reject your subscription, we will return your
application, check and signature page within 30 days. If we accept your
application, your check will be deposited in our escrow account at Midwest Bank,
N.A We will hold your signature page to the Operating Agreement, and return it
to you at either closing of the offering, or when the offering is terminated by
the Board of Directors. In its discretion, the Board of Directors may agree in
writing with a subscriber to amend the subscription application and agreement
regarding payment and escrow of fund terms.

Investors that may be deemed the beneficial owners of 5% or more and 10% or more
of our issued and outstanding units may have reporting obligations under Section
13 and Section 16 of the Securities Exchange Act. Each investor who may become
the beneficial owner of 5% or more of our units should consult their own counsel
to determine what filing and reporting obligations he or she may have under the
federal securities laws.

Escrow Procedures and Conditions to Closing

All proceeds from subscriptions for the units will be deposited in an escrow
account that we have established with Midwest Bank, N.A. as escrow agent under a
written escrow agreement. We will not close on the offering until the specific
conditions to closing the offering are satisfied. The closing of the offering is
subject to certain conditions, and we will return your investment including your
pro rata portion of accrued interest within 30 days under the following
scenarios:

. If we determine in our sole discretion to terminate the offering prior
to January 15, 2003;

. If we do not raise the $20,000,000 minimum by February 15, 2003; or

. If as of February 15, 2003 we do not have binding written agreements
with a lender or lenders for between $34,000,000 and $38,000,000 of
debt financing (actual amount of debt financing depends on the amount
of equity raised and project costs) or such amount as the Board of
Directors deems sufficient to complete construction and start-up of
the plant.

Unless we return your funds in accordance with these conditions, you will not be
able to access your funds in the escrow account. Unless we return your funds in
accordance with these conditions, all interest earned on the escrow account will
belong to us. Once your funds are deposited in the escrow, you will not be able
to retrieve them unless we do not close on the offering in accordance with the
provisions described above. We will invest all funds in the escrow account in
either short-term certificates of deposit issued by a bank, short-term
securities issued and guaranteed by the United States Government, or money
market funds, including funds available through the escrow agent. None of the
funds will be invested in corporate equity or debt securities, repurchase
agreements, bankers' acceptances, commercial papers, or municipal securities.

Delivery of Certificates

If we satisfy all offering conditions, upon closing of the offering, we will
issue certificates for the membership units subscribed for in this offering.
Unless otherwise specifically provided in the subscription application and
agreement, we will issue certificates for any subscription signed by more than
one subscriber as joint tenants, with full rights of survivorship. We will
imprint the certificates with a conspicuous legend referring to the restrictions
on transferability and sale of the units.

Plan of Distribution

We will not begin offering any membership units to potential investors until the
SEC and, with respect to any particular state, the respective state securities
regulatory authority declare our Registration Statement effective. We have no
underwriter and we are selling the membership units directly to investors. We
have not obtained the services of any placement agent or broker-dealer for this
offering, although we reserve the

right to pay a finder's fee or placement agent fee to a registered broker-dealer
in connection with the sale of membership units in accordance with applicable
laws , and any such payment would increase our offering costs materially. We
currently do not intend to pay any such fees unless it is necessary to do so in
order to raise at least the aggregate minimum of $20,000,000.

Subject to the requirements of the Securities Act and applicable blue sky laws,
we plan to promote the offering by issuing a press release, and advertising in
newspapers or other media in Nebraska, Kansas and South Dakota. We may also mail
our press release and prospectuses to certain bankers and grain elevators and
cooperatives in the same states.

We also plan to hold one or more informational meetings for potential investors
at various locations in or near Davenport and Southcentral Nebraska, as well as
surrounding states. Attendance at the meeting will not be required to purchase
the membership units offered in the prospectus. The informational meeting is
intended to give investors an opportunity to ask questions of OTEC and, if they
choose, to bring their legal or financial advisors to ask questions and obtain
information about our business. All attendees at the informational meeting will
receive a prospectus.

We intend to offer and sell the membership units in Nebraska, Kansas and South
Dakota. We may also sell to certain investors in Minnesota, California, Iowa,
North Dakota, Michigan, Illinois, Wisconsin and selected other states. We must
obtain approval or rely on an exemption from these state securities' regulatory
authorities, and from the authorities in any other state that we may offer or
sell the membership units. We are registered as an Issuer-Dealer in the State of
Nebraska and we will sell our membership units within the State of Nebraska and
the State of South Dakota through our Board of Directors who will be the
principal persons involved in selling the units.

We will not pay our directors any commissions or other remuneration in
connection with any sales. Our directors have no relationship to any
broker-dealer. We consider these individuals not to be brokers under the
Securities Exchange Act of 1934 because they have not been, and will not be in
the business of effecting transactions in securities for the accounts of others.
Their participation in our offering of securities is limited to this
transaction, and not part of a general business of effecting securities
transactions. Each of these individuals has substantial operational
responsibilities. They have not, and will not receive any compensation or
commissions on account of their participation in the sales of our securities. We
also believe our directors are not brokers or associated persons of brokers
under Rule 3a4-1 of the Exchange Act for the following reasons:

. Each performs substantial duties for us, and will continue to do so
after the offering;

. Each is not subject to a statutory disqualification under the Exchange
Act at the time of his participation in the sale of our securities;

. Each will not be compensated for his participation in the sale of our
securities by the payment of a commission or other remuneration based
either directly or indirectly on transactions in securities;

. Each has not been, for the past twelve months, and is not presently an
associated person of a broker or dealer; and

. Each has not participated in the offering of securities for any issuer
more than once every 12 months.

Summary of Promotional and Sales Material.

In addition to and apart from this prospectus, we will use certain sales
material in connection with this offering. The material may include a brochure,
question-and-answer booklet, a speech for public seminars, invitations to
seminars, news articles, public advertisements and audio-visual materials. In
certain jurisdictions, such sales materials may not be available. Other than as
described herein, we have not

authorized the use of any other sales material. This offering is made only by
means of this prospectus. Although the information contained in such sales
materials does not conflict with any of the information contained in this
prospectus, such material does not purport to be complete and should not be
considered as a part of this prospectus or of the Registration Statement of
which this prospectus is a part, or as incorporated in this prospectus or the
Registration Statement by reference.

Purchases by Directors and Officers.

As of the date of this prospectus, at least 5 members of our Board of Directors
have expressed an interest in purchasing additional membership units in this
offering. All directors and officers electing to purchase additional membership
units will be required to purchase the units in accordance with the terms of
this prospectus. We do not anticipate the directors and officers as a group
purchasing membership units representing more than 5% of the offered units. It
is not the intent of the directors and officers, as a group, to own membership
units comprising a majority of the outstanding membership units. The decision of
the individual director or officer to purchase membership units in this
offering, and the amount purchased, if any, will depend on his individual
economic circumstances. OTEC will not loan any director or officer money to fund
a purchase of membership units in this offering. Directors and officers who want
to purchase additional membership units of OTEC in this offering will be subject
to all of the terms of the offering set forth in this prospectus and therefore,
any purchase of membership units by directors or officers of OTEC will be
counted towards the $20 million aggregate minimum offering amount. All directors
and officers of OTEC who elect to purchase membership units in this offering are
purchasing the securities for investment and not for resale.

LEGAL MATTERS

The legality of the membership units offered by OTEC and certain tax matters
will be passed upon for OTEC by Baird, Holm, McEachen, Pedersen, Hamann &
Strasheim, which has acted as counsel to OTEC in connection with this offering.

EXPERTS

The financial statements of Oregon Trail Ethanol Coalition, L.L.C. as of June
30, 2002 and December 31, 2001 and the related statements of operations,
members' equity (deficit), and cash flows for the six-month period ended June
30, 2002, and the period August 16, 2001 (inception) through June 30, 2002,
appearing in this prospectus and registration statement have been audited by
BKD, LLP, independent certified public accountants, as set forth in their report
thereon appearing elsewhere herein, and are included in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.

TRANSFER AGENT

OTEC will serve as its own transfer agent and registrar.

ADDITIONAL INFORMATION

OTEC has filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act with respect to the membership
units offered hereby. This prospectus does not contain all of the information
set forth in the registration statement and the exhibits thereto. For further
information with respect to Oregon Trail Ethanol Coalition, L.L.C. and the
membership units offered hereby, reference is made to the registration statement
and the exhibits thereto. Statements contained in this prospectus regarding the
contents of any contract or any other document to which reference is made are
not necessarily complete,

and, in each instance where a copy of such contract or other document has been
filed as an exhibit to the registration statement, reference is made to the copy
so filed, each such statement being qualified in all respects by such reference.
A copy of the registration statement and the exhibits thereto may be inspected
without charge at the Public Reference Room of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W, Washington, D.C. 20549, and copies of all or any
part of the registration statement may be obtained from the Public Reference
Section of the Commission upon the payment of the fees prescribed by the
Commission. The public may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. The Commission also
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.

We intend to provide our members with annual reports containing financial
statements audited by an independent accounting firm and make available upon
request quarterly reports containing unaudited financial data for the first
three quarters of each fiscal year.

You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. This prospectus is an offer to sell, or a
solicitation of offers to buy, shares of membership units only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or any sale of membership units.

INDEX TO FINANCIAL STATEMENTS

Independent Accountants' Report .................................. F-1

Financial Statements

Balance Sheets ............................................... F-2

Statements of Operations ..................................... F-3

Statements of Members' Equity (Deficit) ...................... F-4

Statements of Cash Flows ..................................... F-5

Notes to Financial Statements .................................... F-6

Independent Accountants' Report

Board of Directors
Oregon Trail Ethanol Coalition, LLC
Hebron, Nebraska

We have audited the accompanying balance sheets of Oregon Trail Ethanol
Coalition, LLC (a development stage limited liability company) as of June 30,
2002 and December 31, 2001 and the related statements of operations, members'
equity (deficit), and cash flows for the six-month period ended June 30, 2002,
and the period August 16, 2001 (inception) through June 30, 2002. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Oregon Trail Ethanol Coalition,
LLC as of June 30, 2002 and December 31, 2001, and the results of its operations
and its cash flows for the six-month period ended June 30, 2002, and the period
August 16, 2001 (inception) through June 30, 2002, in conformity with accounting
principles generally accepted in the United States of America.

/s/ BKD, LLP

July 30, 2002
Omaha, Nebraska

F-1

Oregon Trail Ethanol Coalition, LLC
(A Development Stage Enterprise)
Balance Sheets
June 30, 2002 and December 31, 2001

Assets

June 30, December 31,
2002 2001
---------------------------------------

Current Assets
Cash and cash equivalents $ 101,296 $ 51,611
Securities
United States Treasury bill 495,796 -
Repurchase agreement 340,000 -
Other 4,000 -
-------------- -------------

Total current assets 941,092 51,611

Property and Equipment, at cost
Site development 17,353 -

Deferred Offering Costs 10,744 -
-------------- -------------

$ 969,189 $ 51,611
============== =============

Liabilities and Members' Equity (Deficit)

Current Liabilities
Accounts payable $ 33,702 $ 157
Deferred grant income - 75,000
-------------- -------------

Total current liabilities 33,702 75,157
-------------- -------------

Members' Equity (Deficit)
Membership units, issued and outstanding June 30, 2002 - 1,988
units, December 31, 2001 - 22 units 955,401 11,000
Deficit accumulated during the development stage (19,914) (34,546)
-------------- -------------

935,487 (23,546)
-------------- -------------

$ 969,189 $ 51,611
============== =============

See Notes to Financial Statements

F-2

Oregon Trail Ethanol Coalition, LLC
(A Development Stage Enterprise)
Statements of Operations

August 16, 2001
Six Months (Inception)
Ended June 30, through
2002 June 30, 2002
--------------------------------------

Revenue $ - $ -

Operating Expenses
General and administrative 62,907 130,543
------------- -------------

Operating Loss (62,907) (130,543)
------------- -------------

Other Income
Non-member contributions 1,000 33,600
Grant 75,000 75,000
Interest and other income 1,539 2,029
------------- -------------

77,539 110,629
------------- -------------

Net Income (Loss) $ 14,632 $ (19,914)
============= =============

Basic and Diluted Earnings (Loss) Per Membership Unit $ 28.05 $ (64.74)
============= =============

Weighted Average Membership Units Outstanding 521.6 307.6
============= =============

See Notes to Financial Statements

F-3

Oregon Trail Ethanol Coalition, LLC
(A Development Stage Enterprise)
Statements of Members' Equity (Deficit)

Deficit
Accumulated
During Members'
Membership Units Development Equity
Number Amount Stage (Deficit)
------------------------------------------------

Initial member cash
contributions 22 $ 11,000 $ - $ 11,000

Net loss - - (34,546) (34,546)
--------- --------- --------- ---------

Balance, December 31, 2001 22 11,000 (34,546) (23,546)

Additional initial member
cash contributions 14 7,000 - 7,000

Member cash contributions
from private offering,
net of offering costs of
$38,599 1,952 937,401 - 937,401

Net income - - 14,632 14,632
--------- --------- --------- ---------

Balance, June 30, 2002 1,988 $ 955,401 $ (19,914) $ 935,487
========= ========= ========= =========

See Notes to Financial Statements

F-4

Oregon Trail Ethanol Coalition, LLC
(A Development Stage Enterprise)
Statements of Cash Flows

August 16, 2001
Six Months (Inception)
Ended June 30, through
2002 June 30, 2002
---------------------------------------

Operating Activities
Net income (loss) $ 14,632 $ (19,914)
Changes in
Accounts payable and accrued expenses 33,545 33,702
Deferred grant income (75,000) -
------------- -------------

Net cash provided by (used in) operating activities (26,823) 13,788
------------- -------------

Investing Activities
Site development (17,353) (17,353)
Purchase of United States Treasury bill (495,796) (495,796)
Purchase of repurchase agreement (340,000) (340,000)
Other (4,000) (4,000)
------------- -------------

Net cash used in investing activities (857,149) (857,149)
------------- -------------

Financing Activities
Gross proceeds from issuance of membership units 983,000 994,000
Offering costs paid (49,343) (49,343)
------------- -------------

Net cash provided by financing activities 933,657 944,657
------------- -------------

Increase in Cash and Cash Equivalents 49,685 101,296

Cash and Cash Equivalents, Beginning of Period 51,611 -
------------- -------------

Cash and Cash Equivalents, End of Period $ 101,296 $ 101,296
============= =============

See Notes to Financial Statements

F-5

Oregon Trail Ethanol Coalition, LLC
(A Development Stage Enterprise)
Notes to Financial Statements
June 30, 2002 and December 31, 2001

Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Oregon Trail Ethanol Coalition, LLC (the Company), a Nebraska Limited
Liability Company, was formed August 16, 2001 and is presently located in
Davenport, Nebraska. The Company has been organized to obtain equity
investors and debt financing to construct, own and operate an ethanol plant
with an annual production capacity of 40 million gallons in Thayer County,
Nebraska. Construction is planned to begin in early 2003 and operations are
expected to commence by June 30, 2004. The Company's products will include
fuel grade ethanol and distiller grains. The Company expects to sell
ethanol in limited markets throughout the United States and distiller
grains in the surrounding counties in which it plans to operate.

Since inception, the Company has devoted substantially all its efforts to
organization, project feasibility and financing activities. Accordingly,
the Company is in the development stage as it has not commenced operations
and generated revenues.

The Company is subject to the risks and uncertainties encountered by
development stage enterprises. The Company's success will depend on
management's ability to implement the Company's business plan. Even if the
Company successfully implements its business plan, it may not succeed
financially due to numerous other factors.

Fiscal Reporting Period

The Company has adopted a fiscal year ending December 31 for financial
reporting.

Non-Member Contributions and Grant

The Company received certain non-recurring contributions from various local
businesses and individuals in the surrounding communities to assist the
Company in paying for its costs during the development stage. These
contributions represent unconditional transfers from non-members and do not
obligate the Company in any manner or give the contributors any future
investment rights. Accordingly, such non-member contributions have been
recognized as income by the Company.

In September 2001, the Company received a $75,000 grant from the Nebraska
Department of Agriculture to assist the Company in paying for development
stage expenses. The Company has recognized this amount as income during the
six-month period ending June 30, 2002 upon meeting the conditions of the
grant, which included incurring qualified expenditures equal to or
exceeding the amount of the grant. The amount is included in other income
on the accompanying statement of operations.

F-6

Oregon Trail Ethanol Coalition, LLC
(A Development Stage Enterprise)
Notes to Financial Statements
June 30, 2002 and December 31, 2001

Note 1: Nature of Operations and Summary of Significant Accounting Policies
(Continued)

Income Taxes

The Company, as a limited liability company, is treated as a partnership
for federal and state income tax purposes and does not incur income taxes.
Under this type of organization, the Company's income and losses are passed
through to the members based on their respective percentage of membership
interest, and are taxed at the member level. Accordingly, no income tax
provision has been reflected in this financial statement.

Differences between the financial statement bases of assets and tax bases
of assets of approximately $51,000 and $68,000 at June 30, 2002 and
December 31, 2001, respectively, are related to capitalization and
amortization of organization and start up costs for tax purposes, whereas
these costs are expensed for financial statement purposes. There are no
differences between the financial statement bases and tax bases of the
Company's liabilities.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all investments with original maturities of three
months or less to be cash equivalents. At June 30, 2002 and December 31,
2001, cash equivalents consisted primarily of a money market account.

The Company maintains its cash accounts at one financial institution. At
times throughout the periods and at June 30, 2002, the Company's cash
balances at individual institutions exceeded federally insured limits. The
Company believes it is not exposed to any significant credit risk on cash.

Property and Equipment

Property and equipment are recorded at cost. The Company has and will
continue to incur plant development costs that will be capitalized and
depreciated if the project becomes viable. Depreciation will be computed
using the straight-line method over the estimated useful lives of property
and equipment from the date the assets are placed in service. Office
equipment will be depreciated using the straight-line method.

F-7

Oregon Trail Ethanol Coalition, LLC
(A Development Stage Enterprise)
Notes to Financial Statements
June 30, 2002 and December 31, 2001

Note 1: Nature of Operations and Summary of Significant Accounting Policies
(Continued)

Offering Costs

During the six months ended June 30, 2002, the Company incurred certain
costs directly related to efforts to raise equity financing. These costs
were netted against the proceeds received as a result of the offerings.
Total offering costs netted against member contribution proceeds amounted
to $38,599 during the six months ended June 30, 2002.

The Company defers the costs incurred to raise equity financing until the
financing occurs. At such time that the issuance of new membership units
occurs, these costs are netted against the proceeds received; or if the
equity financing does not occur, they will be expensed. Amounts totaling
$10,744 relate to future equity financing activities and are included in
other assets at June 30, 2002.

Securities

At June 30, 2002, the Company held investments in a repurchase agreement
with a bank amounting to $340,000. This agreement is collateralized by a
FHLB debt instrument maturing in 2007. The agreement calls for the
repurchase of the instrument on December 26, 2002. Therefore, the
instrument is included in current assets in the accompanying balance sheet.

Additionally, the Company has an investment in a United States Treasury
bill amounting to $495,796 at June 30, 2002. This Treasury bill matures on
June 27, 2002 and is included in current assets in the accompanying balance
sheet.

Both of the above securities are classified as held to maturity and are
recorded at unamortized cost, which approximates fair market value.

Earnings Per Membership Unit

For purposes of calculating basic earnings per membership unit, units
subscribed and issued by the Company are considered outstanding on the
effective date of issue. For purposes of calculating diluted earnings per
membership unit, units subscribed for but not issued by the Company are
also included in the computation of outstanding membership units.

Effective July 3, 2002, the Board of Directors authorized a
2-for-1-membership unit split. All membership unit and per membership unit
amounts presented in these financial statements have been restated to give
effect to the stock split retroactively.

Disclosure Regarding Fair Value of Financial Instruments

For all financial instruments held by the Company, including cash,
securities, interest receivable and accounts payable, the carrying amounts
are reasonable estimates of fair value.

F-8

Oregon Trail Ethanol Coalition, LLC
(A Development Stage Enterprise)
Notes to Financial Statements
June 30, 2002 and December 31, 2001

Note 2: Members' Equity

During May 2002, the Company completed a private offering of 1,952
membership units to accredited investors for $500 per unit, taking into
consideration the 2-for-1 membership unit split as described in Note 1. In
total, the Company sold 1,952 units and realized net proceeds of $937,401,
net of offering costs of $38,599.

The Company is using the net proceeds of the private offering in part to
pay for costs associated with obtaining debt financing and a public equity
offering. The Company intends to raise up to $24 million dollars through
the public offering of membership units and estimates total capital
expenditures for the construction of the ethanol plant of approximately $58
million dollars. The remaining funds for the construction project would be
attained through debt financing. The purpose of these capital-raising
activities is to raise sufficient capital to build the ethanol plant and
commence operations.

There are significant transfer restrictions on transferability of
membership units. The Company's operating agreement, as well as relevant
portions of the Nebraska Limited Liability Company Act and regulations of
the Internal Revenue Service (IRS) significantly restricts the transfer of
the membership units. Unit holders cannot assign or transfer a membership
unit without approval from the Company's Board of Directors and the
transfer or assignment must comply with applicable Nebraska laws and IRS
regulations.

The Board of Directors will not approve transfers if the Board determines
the transfer would cause the Company to be treated as a "publicly traded
partnership." Any transfers of membership units in violation of the
publicly traded partnership rules or without the prior consent of the Board
of Directors will be null and void.

Note 3: Commitment

On February 4, 2002, the Company entered into a memorandum of understanding
(MOU) with a design-build firm under which the Company expects to enter
into a formal design-build agreement for construction of the ethanol plant
described in Note 1. As set forth in the MOU, the parties are entering into
a design build contract amounting to approximately $44.5 million dollars.
The agreement sets forth the general nature and terms of the construction
project, establishing the responsibilities of the parties involved, and
includes a provision under which the general contractor would provide up to
$4,000,000 of subordinated debt to the Company. The MOU is effective
through February 4, 2003.

F-9

Oregon Trail Ethanol Coalition, LLC
(A Development Stage Enterprise)
Notes to Financial Statements
June 30, 2002 and December 31, 2001

Note 4: Site Development and Real Estate Options

The Board of Directors has selected a site east of Davenport, Nebraska for
the construction of the proposed ethanol plant. In connection with this
site selection, the Company paid $1,000 to each of the four owners of the
property in consideration for an option to purchase the land. The total
exercise price under the agreement is $365,000. Among other things, the
agreement also provides for potential liquidated damages amounting to
$130,000 if the core physical ethanol plant intrudes beyond a certain part
of the property.

Additionally, the Company has agreed to pay certain residents near the site
a total of $40,000 for relocation expenses if the purchase option is
exercised.

The Company intends to enter into an option agreement for a portion of the
land to the immediate north of the site property.

The options for the above-described real estate expire on June 30, 2003.

F-10

Appendix A

AMENDED

and

RESTATED

OPERATING AGREEMENT

OREGON TRAIL ETHANOL COALITION, L.L.C.
a Nebraska limited liability company

THIS OPERATING AGREEMENT
CONTAINS RESTRICTIONS ON TRANSFERABILITY OF
MEMBERSHIP INTERESTS

A-11

Oregon Trail Ethanol Coalition, L.L.C.

AMENDED
and
RESTATED
OPERATING AGREEMENT

THIS AMENDED AND RESTATED OPERATING AGREEMENT (this "Agreement") is made and
entered into as of February 5, 2002 by Oregon Trail Ethanol Coalition, L.L.C.
(the "Company"), a Nebraska limited liability company.

In consideration of the mutual covenants contained herein, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

ARTICLE 1
DEFINITIONS

As used in this Agreement, the following terms shall have the following
meanings:

1.1 "Act" shall mean the Nebraska Limited Liability Company Act, as amended from
time to time.

1.2 "Affiliate" shall mean, in the case of any Person (the "Specified -
Person"), any other Person (a) that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with the
Specified Person, or (b) that is an officer, director, manager, or serves in a
similar capacity with respect to, the Specified Person or an Affiliate of the
Specified Person, or (c) of which the Specified Person is an officer, director,
manager, or serves in a similar capacity.

1.3 "Agreement" shall mean this Operating Agreement, as originally executed or
as amended, modified, supplemented or restated from time to time.

1.4 "Capital Account Balance" shall have the meaning set forth in Section 5.1.

1.5 "Capital Contribution" shall mean, in the case of any Member as of any date
of determination, the aggregate amount of cash, property, or services rendered,
or a promissory note or other binding obligation to contribute cash or property
or to perform services that such Member shall have contributed to the Company on
or prior to such date and a Member's share of any of the Company's liabilities
as determined in accordance with the Code and Treasury Regulations (or, if such
Member is not the original holder of the Interest of such Member, the Capital
Contribution with respect to the Interest). In the event that any capital is
returned to a Member, such Member's Capital Contribution shall be adjusted to
reflect such return.

1.6 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time and any successor statute or subsequent codification or recodification of
the federal income tax laws of the United States.

1.7 "Company" shall mean Oregon Trail Ethanol Coalition, L.L.C., a Nebraska
limited liability company, as such limited liability company may from time to
time be constituted, or any successor in interest for such limited liability
company.

1.8 "Distribution" shall mean any distribution pursuant to Section 5.8 by the
Company of cash to the Members or any Distribution in Kind.

1.9 "Distribution in Kind" shall have the meaning set forth in paragraph (b) of
Section 5.8.

A-1

1.10 "Interest" shall mean, in the case of any Member at any time, such Member's
share of the Profits and Losses of the Company at such time and the right of
such Member to receive distributions of Company assets to which such Member may
be entitled as provided in this Agreement and applicable law, and the right of
such Member to vote and participate in the management of the Company as provided
in this Agreement.

1.11 "Losses" shall mean the net losses and deductions of the Company determined
in accordance with accounting principles consistently applied from year to year
employed under the method of accounting adopted by the Company and as reported
separately or in the aggregate, as appropriate, on the tax return of the Company
filed for federal income tax purposes.

1.12 "Director" shall mean one or more Persons elected by the Members to be
members of the Board of Directors. The "Board of Directors" or "Board" shall
manage the Company as provided in Article 6.

1.13 "Majority in Interest" or "Majority Vote" shall mean the affirmative vote
of those Members holding more than fifty percent (50%) of the Percentage
Interests. With respect to the Board, "Majority of the Board" or "Majority Vote"
shall mean the affirmative vote of more than fifty percent (50%) of the
Directors.

1.14 "Member" shall mean any Person who, at the time referenced, owns an
Interest in the Company.

1.15 "Officer" shall mean a Member or other Person designated by the Board or
Members as provided in Section 6.11.

1.16 "Person" shall mean an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an estate, an unincorporated
organization or any other entity or a government or any department or agency
thereof.

1.17 "Percentage Interest" means the percentage figure calculated by dividing
the number of Units owned by the Member by the total number of Units
outstanding.

1.18 "Pro Rata" means the ratio computed by dividing the Units of each Member to
whom a particular provision of this Agreement is stated to apply by the
aggregate of the Units of all Members to whom that provision is stated to apply.

1.19 "Profits" shall mean the net income and gains of the Company determined in
accordance with accounting principles consistently applied from year to year
employed under the method of accounting adopted by the Company and as reported
separately or in the aggregate, as appropriate, on the tax return of the Company
filed for federal income tax purposes. Profits includes taxable income, capital
gain, and income exempt from taxation.

1.20 "Publicly Traded Partnership" shall mean a partnership whose interests are
traded on an established securities market, or are readily tradable on a
secondary market (or the substantial equivalent thereof).

1.21 "Qualified Matching Service Program" shall mean a matching service that
satisfies the requirements of a qualified matching service within the meaning of
Treasury Regulation Section 1.7704-1(g)(2), as amended from time to time, during
limited time periods specified and approved by Board from time to time, in its
sole discretion.

1.22 "Super-Majority Vote" or "Two-Thirds Majority" shall mean the affirmative
vote of those Members holding more than Two-Thirds (2/3) of the Percentage
Interests. With respect to the Board, "Super-Majority Vote" or "Two-Thirds
Majority" shall mean the affirmative vote of more than two-thirds (2/3) of the
Directors.

1.23 "Transfer" or derivations thereof, of a Unit or Interest means, as a noun,
the sale, assignment, exchange, pledge, hypothecation or other disposition of a
Unit or Interest, or any part thereof, directly or indirectly, or the

A-2

sale, assignment, exchange, pledge, hypothecation, or other disposition of a
controlling interest in the equity securities of a Member, and as a verb,
voluntarily to transfer, sell, assign, exchange, pledge, hypothecate or
otherwise dispose of.

1.24 "Treasury Regulations" shall mean the regulations of the United States
Department of the Treasury pertaining to the income tax, as from time to time in
force.

1.25 "Units" means equal units of the entire ownership interest of all Members
of the Company, and all rights and liabilities associated therewith, at any
particular time, including, without limitation, rights to distributions
(liquidating or otherwise), allocations, information, and consent or approve.

1.26 "Value" shall mean, with respect to any Distributions, if cash, the amount
of such cash, or if not cash, the value of such Distribution calculated pursuant
to paragraph (e) of Section 5.8.

ARTICLE II
STRUCTURE OF THE COMPANY

2.1 Formation. The parties to this Agreement have organized a limited liability
company under the provisions of the Act by delivering Articles of Organization
to the Secretary of State of the State of Nebraska for filing. The Board may
take such further actions as it deems necessary or advisable to permit the
Company to conduct business as a limited liability company in any jurisdiction.
The rights and liabilities of the Members under this Agreement shall be as
provided by Nebraska law.

2.2 Name. The name of the Company shall be Oregon Trail Ethanol Coalition,
L.L.C., or any other name permitted by the Act as the Members shall afterwards
designate by appropriate amendment to the Company's Articles of Organization.

2.3 Principal Office. The principal office of the Company shall be at 426
Lincoln Avenue, Hebron, Nebraska 68370 or such place as the Board may, from time
to time, designate by appropriate amendment to the Company's Articles of
Organization. The Board may establish additional places of business for the
Company when and where required by the business of the Company.

2.4 Initial Members. The names, addresses, Capital Contributions and number of
Units held by the initial Members of the Company are set forth on Appendix A.

2.5 Membership Units. Ownership rights in the Company are evidenced by Units.
Upon the Super-Majority Vote of the Board, the Board may create different
classes of Units or groups of Members that have different rights, powers and
duties. Upon the creation of such different classes of Units or groups of
Members, the Board shall amend this Agreement to reflect the different rights,
powers and duties of such new class or group and the Membership Register to
reflect the issuance of any class of Units to existing or new Members.

2.6 New Members. New Members of the Company may be admitted upon: (a) the
Majority Vote of the Board approving: (i) the admission of the new Member, and
(ii) the amount of the Capital Contribution to be made by the new Member; (b)
payment of such Capital Contribution to the Company; and (c) the new Member's
signing an Addendum to this Agreement agreeing to be bound to its terms. Upon
admission of a new Member, the Membership Register will be amended to reflect
the additional Member.

2.7 Membership Register. The Company shall maintain a membership register (the
"Membership Register") at its principal office or by a duly appointed agent of
the Company setting forth the name, address, Capital Contributions, number of
Units held by and Percentage Interest of each Member which shall be modified
from time to time as Transfers occur or as additional Units are issued pursuant
to the provisions of this Agreement.

A-3

2.8 Fiscal Year. The fiscal year of the Company shall begin on January 1 and
end on December 31 of each year. The Board may change the Company's fiscal year
upon the affirmative vote of a Majority of the Board. The fiscal year in which
the Company shall terminate shall end on the date of termination of the Company.

2.9 No Partnership. The Directors and the Members intend that as a result of
this Agreement: (i) the Company not be a partnership (including, without
limitation, a limited partnership) or joint venture for any purposes other than
federal and state tax purposes, (ii) no Member or Director be a partner or joint
venturer of any other Member, for any purposes other than federal and state tax
purposes, and (iii) this Agreement may not be construed to suggest otherwise.
This Section 2.9 does not prohibit any Member or Director, in his individual or
independent capacity, from being associated with another Member or another
Person.

2.10 Intent of this Agreement.

(a) The parties to this Agreement have reached an understanding concerning
various aspects of (i) their business relationship with each other and (ii) the
organization and operation of the Company and its business. They wish to use
rights created by statute to record and bind themselves to that understanding.

(b) The parties intend for this Agreement to control, to the extent stated
or fairly implied, the business and affairs of the Company, including the
Company's governance structure and the Company's dissolution and winding up, as
well as the relations among the Company's Members.

2.11 Advice of Counsel. Each Person signing this Agreement: (a) understands that
this Agreement contains legally binding provisions; (b) has had the opportunity
to consult with that Person's own lawyer; and (c) has either consulted that
lawyer or consciously decided not to consult a lawyer.

ARTICLE III
BUSINESS OF THE COMPANY

The Company may engage in any lawful business, other than banking or insurance.
The Agreement shall be construed in light of such purpose.

ARTICLE IV
CAPITAL CONTRIBUTIONS

4.1 Initial Paid-In Capital. The initial Members listed on Appendix A shall
have contributed the cash to the capital of the Company as set forth therein.
Capital Contributions for new Members accepted by the Board, from time to time,
shall be made by each new Member as determined by the Board in its sole
discretion.

4.2 Additional Capital Contributions. No Member shall be required to make any
additional contributions to the capital of the Company. No Member shall be
obligated to satisfy any negative Capital Account Balance, except to the extent
expressly set forth in this Agreement or in the Articles of Organization. No
Member shall be paid interest on any Capital Contribution.

4.3 Maximum Ownership. No Member together with its Affiliates shall own
Percentage Interests in the Company in excess of forty-nine percent (49%).

4.4 Withdrawal or Reduction of Members' Capital Contributions. The withdrawal
or reduction of Members' contributions to the capital of the Company shall be
governed by Section 21-2619 of the Act, as amended from time to time; provided,
however:

A-4

(a) No Member has the right to withdraw all or any part of his Capital
Contribution or to receive any return on any portion of his Capital
Contribution, except as may be otherwise specifically provided in this
Agreement. Under circumstances involving a return of any Capital Contribution,
no Member has the right to receive property other than cash.

(b) No Member shall have priority over any other Members, either as to the
return of Capital Contributions or as to Losses and Profits, or distributions,
except as otherwise provided herein.

4.5 Loans from Directors and Members. The Company may borrow money from and
enter into other transactions with any Director or Member. Borrowing from or
engaging in other transactions with one or more Directors or Members does not
obligate the Company to provide comparable opportunities to other Directors or
Members. Any loan made by a Director or Member to the Company shall be evidenced
by a promissory note made payable from the Company to such Director or Member.
Loans by a Director or Member to the Company shall not be considered Capital
Contributions and shall be repaid pursuant to Section 5.8(a) below.

4.6 Loans by Company to Directors or Members. Unless otherwise approved by the
Board of Directors, the Company will not make any loans to Directors or Members.

ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS

5.1 Capital Accounts. A "Capital Account" shall be established for each Member
on the books of the Company and maintained in accordance with Section
1.704-1(b)(2) of the Treasury Regulations, as amended from time to time.

(a) To each Member's Capital Account there shall be credited:

(i) the cash and the Value of any property other than cash
contributed by such Member to the capital of the Company;

(ii) such Member's allocable share of Profits, and any items of income
or gain which are specially allocated to the Member; and

(iii) the amount of any Company liabilities assumed by such Member of
which are secured by any property of the Company distributed to such
Member.

The principal amount of a promissory note which is not readily traded on an
established securities market and which is contributed to the Company by the
maker of the note shall not be credited to the Capital Account of any Member
until the Company makes a taxable disposition of the note or until (and only to
the extent) principal payments are made on the note.

(b) To each Member's Capital Account there shall be debited:

(i) the amount of cash and the Value of any property other than cash
distributed to such Member pursuant to Section 5.8;

(ii) such Member's allocable share of Losses and any items of expense
or loss which are specially allocated to the Member; and

(iii) the amount of any liabilities of such Member assumed by the
Company or which are secured by any property contributed by such Member to
the Company.

A-5

Provided; however, all of the foregoing to be determined in accordance with the
rules set forth in Section 1.704-1(b)(2)(iv) of the Treasury Regulations, as
amended from time to time.

5.2 Allocations and Distributions. Except as may be required by section 704
(b) and (c) of the Code and the applicable Treasury Regulations or under Section
5.5 below, all items of income, gain, loss, deduction, and credit of the Company
shall be allocated among the Members, and distributions shall be made, in
accordance with this Article 5.

5.3 Allocations of Income, Gain, Loss, Deductions, and Credits. All items
of income, gain, loss, deductions, and credits for a fiscal year shall be
allocated to the Members ratably in proportion to their Percentage Interests.

5.4 Allocation of Gain or Loss Upon the Sale of All or Substantially All of
the Company's Assets.

(a) Allocation of Gain. Any income or gain from the sale or exchange of
all or substantially all of the Company's assets shall be allocated, first, to
those Members with capital account balances less than the amounts of their
respective Capital Contributions that have not previously been distributed, that
amount of income or gain, if any, necessary to increase their capital account
balances to the amount of their Capital Contributions not previously
distributed; and thereafter, the remaining income or gain, if any, shall be
allocated to the Members, ratably in proportion to their Percentage Interests.

(b) Allocation of Loss. Any loss from the sale or exchange of all or
substantially all of the Company's assets shall be allocated, first, so as to
equalize the capital account balances of all Members holding the same number of
Units, and thereafter, the remaining losses shall be allocated to the Members,
ratably in proportion to their Percentage Interests.

5.5 Regulatory Allocations and Allocation Limitations. Notwithstanding the
preceding provisions for allocating income, gains, losses, deductions and
credits, the following limitations, regulatory allocations and contingent
reallocations are intended to comply with applicable income tax Treasury
Regulations under Section 704(b) of the Code and shall be so construed when
applied. The defined terms used below shall have the meaning set forth in the
applicable section of the Code or Treasury Regulations and the terms "Member"
and "Company" shall mean "partner" and "partnership" with respect to this
application of such definitions to this section.

(a) Company Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 5.5, if there is a net decrease in Company Minimum
Gain during any Company fiscal year, each Member shall be specially allocated
items of Company income and gain for such year (and, if necessary, for
subsequent years) in accordance with Section 1.704-2(f)(1) of the Treasury
Regulations in an amount equal to such Member's share of the net decrease in
Company Minimum Gain (determined in accordance with Section 1.704-2(g)(2) of the
Treasury Regulations). This Section 5.5(a) is intended to comply with the
minimum gain chargeback requirement in the Treasury Regulations and shall be
interpreted consistently therewith.

(b) Member Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Treasury Regulations, notwithstanding any other
provision of this Section 5.5, if there is a net decrease in Member Nonrecourse
Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Company
fiscal year, each Member who has a share of the Member Nonrecourse Debt Minimum
Gain attributable to such Member Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(5) of the Treasury Regulations, shall be specially allocated
items of Company income and gain for such year (and, if necessary, for
subsequent years) in an amount equal to such Member's share of the net decrease
in Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse
Debt, determined in accordance with Section 1.704-2(i)(4) of the Treasury
Regulations. Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto.

A-6

The items to be so allocated shall be determined in accordance with Sections
1.704-2(i)(4) and 1.704-2(j)(2) of the Treasury Regulations. This Section 5.5(b)
is intended to comply with the minimum gain chargeback requirements in Section
1.704-2(i)(4) of the Treasury Regulations and shall be interpreted consistently
therewith.

(c) Qualified Income Offset. In the event a deficit balance in a
Member's capital account in excess of the sum of (i) the amount such Member is
obligated to restore or contribute to the Company pursuant to any provision of
this Operating Agreement and (ii) the amount such Member is deemed to be
obligated to contribute pursuant to the penultimate sentences of Section
1.704-2(g)(1)(ii) and 1.704-2(i)(5) of the Treasury Regulations, is caused or
increased because a Member receives an adjustment, allocation, or distribution
described in Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations, such
Member will be allocated items of Company income and gain in an amount and
manner sufficient to eliminate such deficit balance or such increase in the
deficit balance, as quickly as possible, to the extent required in the Treasury
Regulations. This Section 5.5(c) is intended, and shall be so construed, to
provide a "qualified income offset" within the meaning of Section
1.704-1(b)(2)(ii)(d) of the Treasury Regulations.

(d) Gross Income Allocations. In the event that a deficit balance in a
Member's Capital Account at the end of any fiscal year is in excess of the sum
of (i) the amount such Member is obligated to restore or contribute to the
Company under this Operating Agreement and (ii) the amount such Member is deemed
to be obligated to restore pursuant to the penultimate sentences of Treasury
Regulations ss.ss. 1.704-2(g)(1)(ii) and 1.704-2(i)(5), the Member shall be
specially allocated items of Company income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 5.5(d) shall be made only if and to the extent that the Member would
have a deficit balance in its Capital Account in excess of such sum after all
other allocations provided for in this Section have been made as if Section
5.5(c) and this Section 5.5(d) were not in this Operating Agreement.

(e) Nonrecourse Deductions. Nonrecourse Deductions shall be specially
allocated to the Members in proportion to the allocation of Losses under
Section 5.4.

(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
for any fiscal year shall be specially allocated to the Member who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to which such
Member Nonrecourse Deductions are attributable in accordance with Section
1.704-2(i)(1) of the Treasury Regulations.

(g) Members' Shares of Excess Nonrecourse Debt. The Members' shares of
excess Company Nonrecourse Debt within the meaning of Section 1.752-3(a)(3) of
the Treasury Regulations shall be determined in accordance with the manner in
which it is reasonably expected that the deductions attributable to such Company
Nonrecourse Debt will be allocated.

(h) Curative Allocations. The allocations set forth in subsections (a),
(b), (d), and (d) (the "Regulatory Allocations") are intended to comply with
certain requirements of the Treasury Regulations under Section 704(b).
Notwithstanding any other provision of this Article 5 (other than the Regulatory
Allocations), the Regulatory Allocations shall be taken into account in
allocating other items of income, gain or loss among the Members so that, to the
extent possible, the net amount of allocations of such items of income, gain or
loss and the Regulatory Allocations to each Member shall be equal to the net
amount that would have been allocated to such Member if the Regulatory
Allocations had not occurred. For this purpose, future Regulatory Allocations
under Section 5.5(a) and (b) shall be taken into account that, although not yet
made, are likely to offset other Regulatory Allocations made under Section
5.5(f) and (g).

5.6 Proration of Allocations. All income, gains, losses, deductions and
credits for a fiscal year allocable with respect to any Members whose Units may
have been transferred, forfeited, reduced or changed during such year should be
allocated based upon the varying interests of the Members throughout the year.
The precise manner in which such allocations are made shall be determined by the
Board of Directors in its sole discretion and shall be a manner of allocation,
including an interim closing of the books, permitted to be used

A-7

for federal income tax purposes.

5.7 Consent to Allocation. Each Member expressly consents to the methods
provided herein for allocation of the Company's income, gains, losses,
deductions and credits.

5.8 Distributions.

(a) The Board of Directors shall determine, in its sole discretion,
whether to distribute or retain all or any portion of the Profits. The Directors
may distribute cash to the Members irrespective of Profits. All cash
distributions shall be made to the Members in accordance with paragraph (c) of
this Section 5.8. Provided, however, no Member has a right to any distribution
prior to the dissolution of the Company without the approval of the Board.

(b) The Board may agree to distribute to the Members in kind any
property held by the Company. Any such distribution of property shall be
referred to herein as a "Distribution in Kind." The value of any such
Distribution in Kind at the time of such distribution shall be determined in
accordance with paragraph (d) of this Section 5.8 and such distribution shall be
made to the Members in accordance with paragraph (c) of this Section 5.8.
Distributions in Kind, made pursuant to this paragraph (b), shall be subject to
such restrictions and conditions as the Board shall have determined are
necessary or appropriate in order for such distributions to be made in
accordance with applicable law.

(c) Any distribution of Profits in accordance with this Section 5.8,
and any distribution, other than Profits, of cash pursuant to paragraph (a) of
this Section 5.8 or Distribution in Kind pursuant to paragraph (b) of Section
5.8, shall be made to the Members according to their Percentage Interests.

(d) The Value of any Distribution in Kind as of any date of
determination (or in the event such date is a holiday or other day that is not a
business day, as of the next preceding business day) shall be the estimated fair
market value of any property distributed, as determined by the Board of
Directors in its sole discretion.

(e) All distributions are subject to set-off by the Company for any
past-due obligation of the Members to the Company.

(f) Members shall not receive salaries or compensation from the Company
solely in their capacities as Members or for the use of their capital.

5.9 Other Allocation Rules. For purposes of determining the Profits,
Losses, or any other items allocable to any period, Profits, Losses and any such
other items shall be determined on a daily, monthly, or other basis, as
determined by the Board, using any permissible method under Section 706 of the
Code and the Treasury Regulations thereunder.

5.10 Compliance with Section 704(b) of the Code. The provisions of this
Article as they relate to the maintenance of Capital Accounts are intended, and
shall be construed, and, if necessary, modified to cause the allocations of
profits, losses, income, gain and credit pursuant to Article V to have
substantial economic effect under the Treasury Regulations promulgated under
Section 704(b) of the Code, in light of the distributions made pursuant to
Articles V and XI and the contributions made pursuant to Article IV.
Notwithstanding anything herein to the contrary, this Agreement shall not be
construed as creating a deficit restoration obligation or otherwise personally
obligate any Member or Transferee to make a contribution in excess of the
initial contribution or additional contribution agreed to by a Majority in
Interest of the Members of the Company.

5.11 Transfer of Capital Accounts. In the event all or a portion of an
Interest in the Company is Transferred in accordance with the terms of the
Articles of Organization and this Agreement, the transferee shall succeed to
that portion of the Capital Account of the transferor which is allocable to the
transferred Interest.

A-8

5.12 Income Tax Consequences. The Members are aware of the income tax
consequences of the allocations made by this Article 5 and hereby agree to be
bound by the provisions of this Article 5 in reporting their shares of Company
income and loss for income tax purposes.

ARTICLE VI
MANAGEMENT OF THE COMPANY

6.1 Management.

(a) The Company shall be managed by a Board of Directors elected by the
Members (in accordance with Section 6.1(c)). All powers of the Company shall be
exercised by or under the authority of, and the business affairs of the Company
managed under the direction of the Board of Directors in accordance with this
Agreement. Individual Directors or Officers designated by the Board from time to
time may act for or on behalf of the Company and execute all agreements on
behalf of the Company and otherwise bind the Company as to third parties without
the consent of the Members or remainder of the Board of Directors; provided,
however, that with respect to those issues requiring approval of the Members
under the Act or as set forth in this Agreement, such approval must first be
obtained; provided, further, that the affirmative vote of a Majority of the
Board shall be required for (a) incurring any indebtedness or expense in excess
of $50,000 other than in the ordinary course of business; (b) pledging,
mortgaging, encumbering or granting any lien on any assets of the Company other
than in the ordinary course of business; or (c) purchasing any asset or making
capital expenditures in excess of $50,000.

(b) The salaries and other compensation, if any, of the Directors for
management services shall be fixed annually by a Super Majority Vote of the
Board. A Board decision on this matter may be changed by a Super Majority Vote
of the Members at any duly-called annual or special meeting.

(c) The initial Board of Directors shall be comprised of nine (9)
members who shall be elected at the annual meeting of the Members by the Members
in accordance with Section 8.2 of this Agreement. The Board of Directors shall
be divided into three classes, Class I, Class II, and Class III, with each class
consisting of three (3) directors. Duly elected and qualified Class I directors
shall serve until the 2004 annual meeting of Members and, thereafter, the terms
of the Class I directors shall extend until the third succeeding annual meeting
after each election of such directors. Duly elected and qualified Class II
directors shall serve until the 2005 annual meeting of Members and, thereafter,
the terms of Class II directors shall extend until the third succeeding annual
meeting after each election of such directors. Duly elected and qualified Class
III directors shall serve until the 2006 annual meeting of Members and
thereafter, the terms of Class III directors shall extend until the third
succeeding annual meeting after each election of such directors. Each Director
shall be a Member or an Affiliate of a Member. Directors need not be residents
of the State of Nebraska.

(d) Nominations for election to the Board of Directors may be made by
the Board of Directors, the nominating committee, or by any Member entitled to
vote for the election of Directors. Nominations, other than those made by or on
behalf of the Board of Directors or the nominating committee, shall be made in
writing and shall be delivered or mailed to the Secretary of the Company or to
the chairman of the nominating committee, no earlier than the first day of the
October preceding the annual meeting and no later than the last day of the March
preceding the annual meeting; or, in the event of a special meeting of Members,
not later than the close of the fifteenth day following the day on which notice
of the meeting is first mailed to Members. Each nomination shall contain such
information about the nominee which shall be deemed appropriate, from time to
time, by the nominating committee. Each nomination shall be accompanied by the
written consent of each nominee to serve as a Director of the Company if so
elected. At the meeting of Members, the Chairman of the Board shall declare out
of order and disregard any nomination not presented in accordance with this
section.

6.2 Authority of the Board of Directors. In addition to and not in
limitation of any rights and powers conferred by law or other provisions of this
Agreement, and except as limited, restricted or prohibited by the express
provisions of this Agreement, the Board of Directors shall have and may exercise
on behalf of the

A-9

Company, all powers and rights necessary, proper, convenient or advisable to
effectuate and carry out the purposes, business and objectives of the Company.
Such powers shall include, without limitation, the power to:

(a) expend Company funds in connection with the operation of the
Company's business or otherwise pursuant to this Agreement;

(b) employ and dismiss from employment any and all employees, agents,
independent contractors, attorneys and accountants;

(c) prosecute, settle or compromise all claims against third parties,
compromise, settle or accept judgment on, claims against the Company and execute
all documents and make all representations, admissions and waivers in connection
therewith;

(d) borrow money on behalf of the Company from any Person, issue
promissory notes; drafts and other negotiable and nonnegotiable instruments and
evidences of indebtedness, secure payment of the principal of any such
indebtedness and the interest thereon by mortgage, pledge, property of the
Company, whether at the time owned or thereafter acquired;

(e) hold, receive, mortgage, pledge, lease, transfer, exchange,
otherwise dispose of, grant options with respect to, and otherwise deal in the
exercise all rights, powers, privileges and other incidents of ownership or
possession with respect to all property of whatever nature held or owned by, or
licensed to, the Company;

(f) lend any of the Company property with or without security;

(g) have and maintain one or more offices within or without the State
of Nebraska;

(h) open, maintain and close bank accounts and money market and other
mutual funds accounts, and draw checks and other orders for the payment of
monies;

(i) engage accountants, custodians, consultants and attorneys and any
and all other agents and assistants (professional and nonprofessional) and pay
such compensation in connection with such engagement that the Board of Directors
determines is appropriate;

(j) enter into, execute, make, amend, supplement, acknowledge, deliver
and perform any and all contracts, agreements, licenses, and other instruments,
undertakings and understandings that the Board determines is necessary,
appropriate or incidental to carrying out the business of the Company;

(k) file a petition in bankruptcy on behalf of the Company;

(l) delegate to the Chairman, President and other Officers such
responsibility and authority as the Board deems necessary or appropriate from
time to time; and

(m) admit new Members, accept additional Capital Contributions from new
and existing Members and issue additional Units to new and existing Members.

In exercising its powers, the Board of Directors may (i) rely upon and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, or document believed by him or her to be
genuine and to have been signed or presented by the proper party or parties;
(ii) consult with counsel, accountants, and other experts selected by him or her
and any opinion of an independent counsel, accountant or expert shall be
necessary and sufficient authorization and protection in respect of any action
taken or suffered or omitted by the Board of Directors in good faith and in
accordance with such opinion; and (iii) execute any of his or her powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys.

A-10

6.3 Obligations of the Board of Directors. The Board of Directors shall:

(a) devote to the Company and apply to the accomplishment of Company
purposes so much of the Board of Directors' time and attention as they determine
to be necessary or advisable to manage properly the affairs of the Company;

(b) maintain accounting records from which a Company Capital Account
Balance can be determined for each Member;

(c) execute, file, record or publish all certificates, statements and
other documents and do all things appropriate for the formation, qualification
and operation of the Company and for the conduct of its business in all
appropriate jurisdictions;

(d) employ attorneys to represent the Company when necessary or
appropriate;

(e) use their best efforts to maintain the status of the Company as a
"limited liability company" for state law purposes, and as a "partnership" for
federal income tax purposes;

(f) have fiduciary responsibility for the safekeeping and use of all
funds and assets of the Company, and not employ or permit others to employ such
funds or assets (including any interest earned thereon) in any manner except for
the benefit of the Company; and

(g) maintain a current list of the names, last known addresses and
Percentage Interest of each Member at the Company's principal office.

6.4 Resignation of Director. Any Director may resign as Director of the
Company upon written notice to the Board of Directors.

6.5 Removal of a Director. Any Director may be removed from time to time
with or without cause by the affirmative vote of Members holding a Majority in
Interest; provided, however, a Director may not be removed if the number of
votes sufficient to elect him or her under cumulative voting is voted against
his or her removal. A Director may only be removed by the Members at a meeting
called for the purpose of removing the Director and the meeting notice shall
state the purpose or one of the purposes of the meeting is removal of the
Director.

6.6 Vacancies. Any vacancy occurring in the position of Director may be
filled for the remainder of the term of such vacancy by the affirmative vote of
a Majority of the Board based on the remaining Directors.

6.7 Meetings of the Board. Meetings of the Board may be called by the
Chairman of the Board or any two (2) Directors and shall be held at the
principal place of business of the Company, or elsewhere as the notice of such
meeting shall direct. Except as otherwise expressly provided in this Agreement,
the Articles, or the Act, the affirmative vote of a majority of the Directors
present at a duly convened meeting of the Board at which a quorum is present
shall constitute the act of the Board.

6.8 Place of Meeting. The Board may designate any place, either in or out
of the State of Nebraska, as the place of meeting for any meeting. If no
designation is made, the place of meeting shall be the Company's principal
office. Directors may attend any such meeting in person or by telephonic or
video conference call.

6.9 Notice of Meetings. Written or oral notice of every meeting of the
Board, stating the place, date and hour of the meeting, and the purpose or
purposes for which the meeting is called, shall be given by the Secretary of the
Company to each other Director at least twenty-four (24) hours prior to the
meeting, unless such notice is waived in accordance with Article 9 hereof.

6.10 Quorum. The presence of a Majority in Interest of the Directors shall
constitute a quorum for the transaction of business. If a quorum is not present
at a meeting, a majority of the Directors represented may

A-11

adjourn the meeting from time to time without further notice.

6.11 Officers.

(a) The Board may elect a Chairman, Vice Chairman, President, one or
more Vice Presidents, Treasurer, and Secretary from among its Directors. Any two
(2) or more offices may be held by the same person and any office may be held by
two (2) persons.

(b) The Officers of the Company shall be elected annually by the Board
at the first meeting of the Board held after each annual meeting of Members. If
the election of Officers shall not be held at such meeting, such election shall
be held as soon thereafter as conveniently may be. Vacancies may be filled or
new offices created and filled at any meeting of the Board. Each Officer shall
hold office until his or her successor shall have been duly elected and
qualified or until his or her death, or until he or she shall resign or shall
have been removed in the manner hereinafter provided. Election or appointment of
an Officer or agent shall not of itself create contract rights.

(c) Any Officer or agent may be removed by the Board at any time with
or without cause, but such removal does not affect the contract rights, if any,
with the Company of the person so removed.

(d) A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Board for the unexpired
portion of the term. An Officer may resign at any time by delivering notice to
the Company. A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date and the Company accepts the future effective date, the Board may fill
the pending vacancy before the effective date if the Board provides that the
successor does not take office until the effective date.

6.12 Liabilities of Directors. In carrying out their duties hereunder, the
Directors shall not be liable to the Company or to any Member for any actions
taken in good faith and reasonably believed by them to be in the best interest
of the Company or in reliance on the provisions of this Agreement or the
Articles, or for good faith errors of judgment, but shall only be liable for
misconduct or negligence in the performance of their duties as Directors. The
Directors shall not be expected to devote their full time and attention to the
affairs of the Company, but shall devote such amounts of time and attention as
are reasonable and appropriate in their good faith judgment under the
circumstances prevailing from time to time.

6.13 Indemnification of the Directors, their Affiliates and Control Persons.

(a) Neither the Directors nor any Officer shall be liable to the
Company or any Member for any act or omission based upon errors of judgment or
other fault in connection with the business or affairs of the Company if the
Board determines that such course of conduct was in the best interest of the
Company and did not result from the negligence or misconduct of such Director or
Officer.

(b) To the fullest extent permitted by law, the Directors and Officers
(each such person being referred to herein as an "Indemnitee"), shall be
indemnified and held harmless by the Company from and against any and all
losses, claims, damages, settlements and other amounts arising from any and all
claims (including attorneys' fees and expenses, as such fees and expenses are
incurred), demands, actions, suits or proceedings (civil, criminal,
administrative or investigative), in which they may be involved, as a party or
otherwise, by reason of their management of the affairs of the Company, whether
or not they continue to be such at the time any such liability or expense is
paid or incurred; provided that Indemnitee shall not be entitled to the
foregoing indemnification if a court of competent jurisdiction shall have
determined that such losses, claims, damages, liabilities, expenses or such
other amounts resulted primarily from the negligence or misconduct of such
Indemnitee. The termination of a proceeding by judgment, order, settlement or
conviction upon a plea of nolo contenders, or its equivalent, shall not, of
itself, create any presumption that such losses, claims, damages, liabilities,
expenses or such other amounts resulted primarily from the negligence or
misconduct of any Indemnitee or that the conduct giving rise to such liability,
was not in the best interest of the Company. The

A-12

Company shall also indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action by
or in the right of the Company to procure a judgment in its favor by reason of
the fact that such Indemnitee is or was an agent of the Company, against any
losses, claims, damages, liabilities, expenses or any other amounts incurred by
such Indemnitee in connection with the defense or settlement of such action;
provided that no Indemnitee shall be entitled to the foregoing indemnification
if a court of competent jurisdiction shall have determined that any such losses,
claims, damages, liabilities, expenses or such other amounts resulted from the
negligence or misconduct of such Indemnitee. The Company may advance any
Indemnitee any expenses (including, without limitation, attorneys' fees and
expenses) incurred as a result of any demand, action, suit or proceeding
referred to in this paragraph (b) provided that (i) the legal action relates to
the performance of duties or services by the Indemnitee on behalf of the
Company; and (ii) the Indemnitee gives a full recourse promissory note to the
Company for the amounts of such advances payable in the event that the
Indemnitee is determined to be not entitled to indemnification hereunder.

(c) The indemnification provided by paragraph (b) of this Section 6.13
shall not be deemed to be exclusive of any other rights to which any Indemnitee
may be entitled under any agreement, as a matter of law, in equity or otherwise,
and shall continue as to an Indemnitee who has ceased to have an official
capacity and shall inure to the benefit of the heirs, successors and
administrators of such Indemnitee.

(d) Any indemnification pursuant to this section will be payable only
from the Company's assets.

6.14 Transactions with the Directors or their Affiliates. The Company may
enter into contracts with the Directors, Officers or Members (or their
Affiliates), provided that any such transactions shall be on terms no more
favorable to the Directors, Officers, Members (or their Affiliates) than
generally afforded to non-affiliated parties in a similar transaction.

6.15 Conflicts of Interest. Subject to the other express provisions of this
Agreement, the Directors at any time and from time to time may engage in and
possess interests in other business ventures of any and every type and
description, independently or with others, including ones in competition with
the Company, with no obligation to offer to the Company or any other Member the
right to participate therein.

ARTICLE VII
RIGHTS AND OBLIGATIONS OF MEMBERS

7.1 Limitation of Liability. Each Member's liability shall be limited as
set forth in this Agreement, the Act and other applicable law.

7.2 Company Debt Liability. A Member will not be personally liable for any
debts or losses of the Company beyond his or her respective Capital
Contributions except as provided in Section 7.5 or as otherwise required by law.

7.3 Liability to Third Parties. No Member or Director is liable for the
debts, obligations or liabilities of the Company, whether arising in contract,
tort or otherwise, including under a judgment, decree or order of a court.

7.4 Lack of Authority. No Member (other than a Director or an Officer as
provided under Article VI) has the authority or power to act for or on behalf of
the Company, to do any act that would be binding on the Company or to incur any
expenditures on behalf of the Company.

7.5 Member Liability to the Company.

(a) A Member who rightfully receives the return in whole or in part of
its Capital Contribution is nevertheless liable to the Company to the extent now
or hereafter provided by the Act.

A-13

(b) A Member who receives a Distribution made by the Company: (i) which
is either in violation of this Agreement, or (ii) when the Company's liabilities
exceed its assets (after giving effect to the Distribution), is liable to the
Company for a period of six (6) years after such Distribution for the amount of
the Distribution.

7.6 Representations and Warranties. Each Member hereby represents and
warrants to the Company that: (i) the Member has full power and authority to
execute and agree to this Agreement and to perform the Member's obligations
hereunder, and that all actions necessary for the due authorization, execution,
delivery and performance of this Agreement by that Member have been duly taken;
(ii) the Member has duly executed and delivered this Agreement; and (iii) the
Member's authorization, execution, delivery, and performance of this Agreement
do not conflict with any other agreement or arrangement to which the Member is a
party or by which the Member is bound.

7.7 Member Information

(a) In addition to the other rights specifically set forth in this
Agreement, each Member is entitled to the information to which that Member is
entitled to have access pursuant to the Act, under the circumstances therein
stated.

(b) The Members acknowledge that, from time to time, they may receive
information from or concerning the Company in the nature of trade secrets or
that otherwise is confidential, the release of which may damage the Company or
Persons with which it does business. Each Member shall hold in strict confidence
any information that it receives concerning the Company that is identified as
being confidential (and if that information is provided in writing, that is so
marked) and may not disclose it to any Person other than another Member or the
Director, except for disclosures (i) compelled by law (but the Member must
notify the Director promptly of any request for that information, before
disclosing it, if legal and practicable); (ii) to Persons to whom that Member's
Interest may be transferred as permitted by this Agreement, but only if the
recipients have agreed to be bound by the provisions of this Section 7.7; or
(iii) of information that the Member also has received from a source independent
of the Company and the Member reasonably believes that source obtained the
information without breach of any obligation of confidentiality. The Members
acknowledge that breach of the provisions of this Section 7.7 may cause
irreparable injury to the Company for which monetary damages are inadequate,
difficult to compute, or both. Accordingly, the Members agree that the
provisions of this Section 7.7 may be enforced by specific performance.

7.8 Membership Certificates. "Membership Certificates" in the form
determined by the Board may be delivered representing all Interests to which
Members are entitled. If issued, such Membership Certificates shall be
consecutively numbered, and shall be entered in the books of the Company and on
the Membership Register, as they are issued. Each Membership Certificate shall
state on the face thereof the holder's name, the Interests and such other
matters as may be required by applicable laws. Each such Membership Certificate
shall be signed by a Director or Officer of the Company and may be sealed with
the seal of the Company or a facsimile thereof if adopted. The signature of the
Director or Officer upon the Membership Certificates may be facsimile. Subject
to Article 10, upon surrender to the Company of a Membership Certificate for
Interests duly endorsed or accompanied by proper evidence of succession,
assignment or authority to Transfer, it shall be the duty of the Company to
issue a new Membership Certificate to the person entitled thereto, cancel the
old Membership Certificate and record the transaction upon its books and records
and the Membership Register. Each Member hereby agrees that the following
legend, as the same may be amended by the Board in its sole discretion, may be
placed upon any counterpart of this Agreement, the Articles, or any other
document or instrument evidencing ownership of Units:

The sale, pledge, hypothecation, assignment or transfer of the
ownership interest represented by this CERTIFICATE OF OWNERSHIP is
subject to the terms and conditions of the Operating Agreement of
Oregon Trail Ethanol Coalition, L.L.C., as amended from time to time.
Copies of the Operating Agreement may be obtained upon written request
to the Board of Directors of Oregon Trail Ethanol Coalition, L.L.C.

A-14

ARTICLE VIII
MEETINGS OF MEMBERS

8.1 Voting Power. The affirmative vote of Members holding a Majority in
Interest at a meeting at which there is a quorum present shall be the act of the
Members; provided, however, that the dissolution and winding up of the Company
requires the approval of Members required under Section 21-2622 of the Act, as
amended from time to time. Provided, further, that a Super-Majority Vote of the
Members shall be required for approval of the following actions: (a) the sale,
exchange, lease, mortgage, pledge or other transfer of all or substantially all
of the assets of the Company other than in the ordinary course of business; and
(b) the merger or consolidation of the Company with another entity.

8.2 Cumulative Voting. At each election for Directors, every Member entitled
to vote at such election shall have the right to vote, in person or by proxy,
the number of Units owned by him or her for as many persons as there are
Directors to be elected and for whose election he or she has a right to vote, or
to cumulate his or her votes by giving one candidate as many votes as the number
of such Directors multiplied by the number of his or her Units, or by
distributing such votes on the same principle among any number of candidates.

8.3 Annual Meetings of Members. The annual meeting of Members shall be held on
such date as the Board shall by resolution specify within a period commencing on
January 1 and ending on June 30 in each year, beginning with 2003. At each
annual meeting, Members shall conduct such business as may be properly presented
to such meeting. If the day fixed for the annual meeting shall be a legal
holiday, such meeting shall be held on the next succeeding business day. Members
may attend any such meeting in person or by proxy.

8.4 Special Meetings of Members. Special meetings of Members of the Company
may be called by the Chairman of the Board, by any three (3) Directors, or upon
the written demand of Members holding at least a ten percent (10%) Percentage
Interest and shall be held at the principal place of business of the Company, or
elsewhere as the notice of such meeting shall direct. Members may attend any
such meeting in person or by proxy.

8.5 Place of Meeting. The Board of Directors may designate any place, either
in or out of the State of Nebraska, as the place of meeting for any meeting. If
no designation is made, the place of meeting shall be the Company's principal
office.

8.6 Notice of Meetings. Written notice stating the date time and place of the
meeting and a description of the purpose or purposes for which the meeting is
called, shall be mailed, unless oral notice is reasonable under the
circumstances, not fewer than ten (10) nor more than sixty (60) calendar days
before the date of the meeting, by or at the direction of the Board of Directors
to each Member of record entitled to vote at the meeting. If mailed, such notice
is effective when mailed addressed to the Member's address shown in the
Company's current record of Members, with postage prepaid.

8.7 Quorum. The presence of Members holding a Majority in Interest in person
or by proxy shall constitute a quorum for the transaction of business. If a
quorum is not present at a meeting, a majority of the Percentage Interests
represented may adjourn the meeting from time to time without further notice.

ARTICLE IX
WAIVER AND CONSENT

A-15

9.1 Written Waiver. Whenever any notice whatsoever is required to be given
under the provisions of this Agreement or under the provisions of the Articles
or the Act, waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.

9.2 Waiver by Attendance. A Member's or Director's attendance at a meeting of
the Members or Directors, respectively: (i) waives objection to lack of notice
or defective notice of the meeting, unless the Member or Director at the
beginning of the meeting or promptly upon the Member's or Director's arrival
objects to holding the meeting or transacting business at the meeting, and (ii)
waives objection to consideration of a particular matter at the meeting that is
not within the purpose or purposes described in the meeting notice, unless the
Member or Director objects to considering the matter when it is presented.

9.3 Consent to Action Without Meeting.

(a) Any action that may be taken at a meeting of the Board may be taken
without a meeting if a consent in writing, setting forth the action to be taken,
shall be signed and dated by all of the Directors. A facsimile, telegram, telex,
cablegram or similar transmission by the Manager or a photographic, photostatic,
facsimile or similar reproduction of a writing executed by the Manager shall be
treated as an execution in writing for purposes of this Section 9.3.

(b) Any action that may be taken at a meeting of the Members may be taken
without a meeting if a consent in writing, setting forth the action to be taken,
shall be signed and dated by Members holding the Percentage Interests required
to approve such action under the Act, the Articles of Organization or this
Agreement. A facsimile, telegram, telex, cablegram or similar transmission by
the Member or a photographic, photostatic, facsimile or similar reproduction of
a writing executed by the Member shall be treated as an execution in writing for
purposes of this Section 9.3.

ARTICLE X
TRANSFER OF MEMBERSHIP INTERESTS

10.1 Restrictions on Transfer. No Member shall Transfer all or any portion of an
Interest without the prior written consent of the Board of Directors which
consent may be withheld in the sole discretion of the Board. Notwithstanding
anything contained herein to the contrary, no Member shall Transfer any Unit if,
in the determination of the Board, such Transfer would cause the Company to be
treated as a Publicly Traded Partnership, and any Transfer of Unit(s) not
approved by the Board of Directors or that would result in a violation of the
restrictions in this Agreement or applicable law shall be null and void with no
force or effect whatsoever, and the intended transferee shall acquire no rights
in such Unit.

10.2 Permitted Transfers. Subject to Section 10.1 above and the limits on total
maximum ownership set forth in Section 4.3 of this Agreement, any Transfer of
Units made in accordance with the following provisions will constitute a
"Permitted Transfer" for purposes of this Agreement:

(a) A Transfer by a Member and any related persons (as defined in the Code)
in one or more transactions during any thirty (30) calendar day period of
Interests representing in the aggregate more than two percent (2%) of the total
Interests in Company;

(b) A Transfer or series of related Transfers by one or more Members
(acting together) which involves the Transfer of fifty percent (50%) or more of
the outstanding Units; or

A-16

(d) A Transfer by gift or bequest only to a spouse or child of such
transferring Member, or to a trust established for the benefit of such spouse or
child, or to an existing Member of the Company upon ten (10) days' prior written
notice to the Company of such gift or bequest.

10.3 Conditions Precedent to Transfers. The Board of Directors, in its sole
discretion, may elect not to recognize any Transfer of Units unless and until
the Company has received:

(a) an opinion of counsel (whose fees and expenses shall be borne by the
transferor) satisfactory in form and substance to the Board that such Transfer
may be lawfully made without registration or qualification under applicable
state and federal securities laws, or such Transfer is properly registered or
qualified under applicable state and federal securities laws and if, requested
by the Company that such Transfer will not cause the Company to be treated as a
Publicly Traded Partnership;

(b) such documents and instruments of conveyance executed by the transferor
and transferee as may be necessary or appropriate in the opinion of counsel to
the Company to effect such Transfer, except that in the case of a Transfer of
Units involuntarily by operation of law, the Transfer shall be confirmed by
presentation of legal evidence of such Transfer, in form and substance
satisfactory to the Company;

(d) the transferee's taxpayer identification number and sufficient
information to determine the transferee's initial tax basis in the interest
transferred, and any other information reasonably necessary to permit the
Company to file all required federal and state tax returns and other legally
required information statements or returns;

(e) evidence satisfactory in form and substance to the Board that the
transferee meets the maximum Unit ownership limitation set forth in Section 4.3
of this Agreement; and

(f) other conditions on the Transfer of Units adopted by the Board from
time to time as it deems appropriate, in its sole discretion.

10.4 Death of Member.

(a) Upon the death of any Member, the estate or personal representative of
the deceased Member shall have the right and option to request the Company
repurchase the deceased Member's Interest subject to and in accordance with the
applicable Code and Treasury Regulations regarding Publicly Traded Partnerships.
If the estate or personal representative exercises such right and option the
Company shall, subject to Section 10.4(b) below, purchase the deceased Member's
Interest at the Fair Market Value of such Interest in effect at the date of
death as determined in accordance with Section 10.10 below, and on the terms and
conditions set forth in Section 10.5 and Section 10.6 below. This right and
option may be exercised by the deceased Member's estate or personal
representative by providing written notice to the Company within one hundred
twenty (120) days after the date of your death; provided, however, the Company
will not repurchase such interest earlier than sixty (60) days after receipt of
the written notice from the estate or personal representative requesting the
purchase.

(b) Any Transfer pursuant to this Section 10.4 shall be subject to a
determination by the Board that such Transfer shall not cause the Company to be
deemed a Publicly Traded Partnership, and such Transfer shall be affected in
accordance with this Agreement, the Code and applicable Treasury Regulations,
and shall be further subject to the prior approval of the Board which may be
withheld in its sole discretion.

10.5 Payment Terms. If the purchase price for an Interest transferred pursuant
to Section 10.4 above exceeds five thousand dollars ($5,000.00), the Company
shall have the option to pay for the Interest purchased by paying five thousand
dollars ($5,000) at Closing (as defined below) and executing a promissory note
for the

A-17

balance of the purchase price. The promissory note shall be paid in five (5)
equal annual installments due on the anniversary date of the Closing and shall
accrue interest per annum at a rate determined by the Board which shall not be
less than the then current prime rate established by any major bank selected by
the Board for loans to the bank's most creditworthy commercial borrowers. The
Company may prepay the promissory note, in whole or in part, at any time without
penalty or premium.

10.6 Events in Connection with the Sale of Interests.

(a) If there is a sale of Interest under Section 10.4 of this Agreement to
the Company, the closing ("Closing") shall occur at a time mutually agreeable to
the parties and in accordance with the time periods set forth in the applicable
provision of this Agreement; provided, however, the Closing shall not occur
until at least sixty (60) days after the Company's receipt of notice from the
estate or personal representative requesting the Company repurchase the deceased
Member's Interest, but in no event later than one hundred twenty (120) days
after the date of the Company's receipt of such notice.

(b) In the event of a sale of Interest under Section 10.4 of this
Agreement to the Company, the purchase price shall be increased or decreased, as
the case may be, by an amount equal to any indebtedness owed the deceased Member
by the Company, or the deduction of any indebtedness owed the Company by the
deceased Member, or both.

(c) In the event of the sale of Interests under this Agreement by a
Member, all rights of the Member with respect to the Interest, including the
right to vote such Interest and to receive distributions, shall terminate at
Closing, except for the Member's right to receive payment therefor.

10.7 Redemption of Interests.

(a) A Member (the "Requesting Member") may request redemption of his or
her Interest upon not less than sixty (60) calendar days' prior written notice
to the Board of Directors. The Board, in its sole discretion, shall determine
whether to redeem such Interest and the Board is under no obligation to redeem
any Interest of any Requesting Member.

(b) Notwithstanding anything contained herein to the contrary, any
redemption pursuant to this Section 10.7 shall be subject to a determination by
the Board, in its sole discretion, that such redemption shall not cause the
Company to be deemed a Publicly Traded Partnership, and such redemption shall be
affected in accordance with this Agreement, the Code and applicable Treasury
Regulations, and shall be further subject to the prior approval of the Board
which may be withheld in its sole discretion.

10.8 Redemption Payment.

(a) Upon the redemption of a Member under Section 10.7, the Requesting
Member shall be entitled to a payment equal to the Fair Market Value of such
Member's Interest in the Company as of the effective date of the (the
"Redemption Payment"); provided, however, if the remaining Members of the
Company agree to dissolve the Company in accordance with Section 13.1 of this
Agreement, then in no event shall such Member be entitled to a Redemption
Payment, but such Member will be entitled to such Member's share of the assets
of the Company pursuant to Section 13.3 below.

(b) The Redemption Payment shall not be paid until at least sixty (60)
days after the Company's receipt of the notice from the Requesting Member
required under Section 10.7(a) above. The Redemption Payment shall be paid in
cash, or if the Redemption Payment exceeds five thousand dollars ($5,000), the
Company shall have the option to pay the Redemption Payment by paying five
thousand dollars ($5,000) upon the effective date of the redemption and
executing a promissory note for the balance of the Redemption Payment. Such note
shall be dated and delivered on the effective date of the withdrawal and shall
be paid in five (5) equal annual installments due on the anniversary date of the
withdrawal and shall accrue interest per annum at a rate determined by the Board
which shall not be less than the then current prime rate established by any
major bank selected by the Board for loans to the bank's most creditworthy
commercial borrowers. The

A-18

Company may prepay the promissory note, in whole or in part, at any time without
penalty or premium.

(c) The Redemption Payment shall be increased or decreased, as the case
may be, by an amount equal to any indebtedness owed the Requesting Member by the
Company, or the deduction of any indebtedness owed the Company by the Requesting
Member, or both. All rights of the Member with respect to the Interest,
including the right to vote such Interest and to receive distributions, shall
terminate at Closing, except for the Member's right to receive payment therefor
upon the effective date of the redemption which shall be determined in
accordance with Section 10.9 below.

10.9 Effective Date of Transfer.

(a) Any Transfer of a Unit shall be deemed effective as of the day of the
month and year: (i) which the Transfer occurs (as reflected by the form of
assignment); and (ii) the transferee's name and address and the nature and
extent of the Transfer are reflected in the records of the Company; provided,
however, the effective date of a Transfer for purposes of allocation of Profits
and Losses and for Distributions shall be determined pursuant to Section 10.9(b)
below. Any transferee of a Unit shall take subject to the restrictions on
Transfer imposed by this Agreement.

(b) The Board, in its sole discretion, may establish interim periods in
which Transfers may occur (the "Interim Transfer Periods"); provided, however,
the Board shall provide Members reasonable notice of the Interim Transfer
Periods and advance notice of any change to the Interim Transfer Periods. For
purposes of making allocations of Profits and Losses, and Distributions, the
Company will use the interim closing of the books method (rather than a daily
proration of profit or loss for the entire period) and recognize the Transfer as
of the first day following the close of Interim Transfer Period in which the
Member complied with the notice, documentation and information requirements of
Article 10. All Distributions on or before the end of the applicable Interim
Transfer Period in which such requirements have been substantially complied with
shall be made to the transferor and all Distributions thereafter shall be made
to the transferee. The Board the authority to adopt other reasonable methods
and/or conventions.

(c) The Board shall have the power and authority to adopt another
reasonable method and/or convention with respect to such allocations and
distributions; provided, neither the Company, the Board, any Director nor any
Member shall incur any liability for making allocations and distributions in
accordance with the provisions of this Section 10.9 (other than tax liabilities
which may be incurred by Members), whether or not the Board or any Director or
the Company or any Member has knowledge of any Transfer of ownership of any
Interest in the Company.

10.10 Fair Market Value. Upon the Transfer of any Interest pursuant to Section
10.4, or the redemption of an Interest pursuant to Section 10.7, the purchase
price or Redemption Payment shall be equal to the Fair Market Value of the
Interest. "Fair Market Value" of an Interest on any date shall, unless otherwise
specifically provided in this Agreement, be equal to the most recent fair market
valuation determination of the per Unit value of the Company by the Board in
good faith; provided, that such valuation shall be calculated on a basis as
consistent as practicable from period to period. The Board may, in its sole
discretion, employ the advice of independent and qualified professionals in the
determination of the Fair Market Value, but is not under any obligation to do
so. The Fair Market Value of the Company shall be determined at least annually.
Valuations shall generally be performed, at the discretion of the Board, as of
the end of each fiscal year of the Company's operations at the annual meeting of
the Board; however, the Board, in its sole discretion, may have fair market
valuations of the Company performed at any time or from time to time during any
year and, except as otherwise specifically provided in this Agreement, shall
utilize the results of the most recent valuation in determining the Fair Market
Value of an Interest for purposes of this Agreement. No Member or any party
other than the Board shall have the right to require or request that a new or
more recent valuation be performed for purposes of determining the Fair Market
Value of the Company or an Interest hereunder. The Company shall not establish
the Fair Market Value more than four (4) times during the Company's taxable year

A-19

10.11. Pledged Units. Subject to Section 10.1 above and the limits on total
maximum ownership set forth in Section 4.3 of this Agreement, in the event that
any Member pledges or otherwise encumbers any part of its Units as security for
the payment of a debt, any such pledge or hypothecation shall be made pursuant
to a pledge or hypothecation agreement that requires the pledgee or secured
party to be bound by all of the terms and conditions of this Article 10. In the
event such pledgee or secured party becomes a Member hereunder pursuant to the
exercise of such party's rights under such pledge or hypothecation agreement,
such pledgee or secured party shall be bound by all of the terms and conditions
of this Agreement. In such case, such pledgee or secured party, and any
transferee or purchaser of the Units held by such pledgee or secured party,
shall not have any voting rights associated with such Units unless and until the
Directors have approved in writing and admitted as a Member hereunder, such
pledgee, secured party, transferee or purchaser of such Units.

10.12 Expenses. Except as otherwise expressly provided herein, all expenses of
the Company incident to the admission of the transferee to the Company as a
Member shall be charged to and paid by the transferring Member.

ARTICLE XI
RECORDS, FINANCIAL AND TAX REPORTING

11.1 Records and Accounting. The books of account and other records of the
Company shall be maintained at the Company's principal place of business. The
Company shall prepare its financial statements using generally accepted
accounting principles, consistently applied.

11.2 Tax Information. The Board will use its best efforts to cause to be
delivered, as soon as practical after the end of each fiscal year of the
Company, to the Members and Persons who were Members during such fiscal year all
information concerning the Company necessary to enable such Member or Person to
prepare such Member's (or Person's) Federal and state income tax returns for
such fiscal year, including a statement indicating such Member's (or Person's)
share of Profits, Losses, deductions and credits for such fiscal year for
Federal and state income tax purposes, and the amount of any Distribution made
to or for the account of such Member or Person during such fiscal year pursuant
to this Agreement.

11.3 Tax Returns. The Board shall cause income tax returns for the Company
to be prepared and timely filed in accordance with applicable law.

11.4 Tax Matter Member. Kent Hummel is hereby appointed and authorized to
perform all duties imposed by Sections 6221 and 6232 of the Code as "tax matter
partner" of the Company. The Company shall indemnify, to the full extent
permitted by law, the tax matter partner from and against any damages and losses
(including attorneys' fees) arising out of or incurred in connection with any
action taken or omitted to be taken by in carrying out responsibilities as tax
matter partner, provided such action taken or omitted to be taken does not
constitute fraud, gross negligence or willful misconduct.

11.5 Access to Books and Records.

(a) A Member of the Company shall be entitled to inspect and copy
during regular business hours at the Company's principal office the following
records if he or she gives the Company written notice of his or her demand at
least five business days before the date on which he or she wishes to inspect
and copy:

(i) Articles or Restated Articles of Organization and all
amendments thereto currently in effect;

(ii) Operating Agreement and all restatements and amendments
thereto currently in effect;

(iii) Minutes of all Member meetings and records of all action
taken by Members without

A-20

a meeting for the past three years;

(iv) All written communications to the Members generally
within the past three years;

(v) Annual financial statements that include a balance sheet
as of the end of the fiscal year, an income statement for that year
and a statement of changes in Members' equity for that year unless
such information appears elsewhere in the financial statements, along
with the accountant's report if the annual financial statements are
reported upon by a public accountant;

(vi) A list of the names and business addresses of the
Company's current directors and officers; and

(vii) The most recent annual report delivered by the Company
to the Nebraska Secretary of State.

(b) A Member shall be entitled to inspect and copy during regular
business hours at a reasonable location specified by the Company any of the
following records of the Company if the Member meets the requirements of Section
11.5(c) below and gives the Company written notice of his or her demand at least
five business days before the date on which he or she wishes to inspect and
copy:

(i) Excerpts from minutes of any meeting of the Board of
Directors, records of any action of a committee of the Board of
Directors while acting in place of the Board of Directors on behalf of
the Company, minutes of any meeting of the Members, and records of
action taken by the Members or Board of Directors without a meeting,
to the extent not subject to inspection under subsection (1) of this
section;

(ii) Accounting records of the Company; and

(iii) The Membership Register.

(c) A Member may inspect and copy the records described in Section
11.5(b) above only if: (i) the Member's demand is made in good faith and for a
proper purpose; (ii) the Member describes with reasonable particularity his or
her purpose and the records he or she desires to inspect; and (iii) the records
are directly connected with the Member's purpose.

ARTICLE XII
FISCAL AFFAIRS

12.1 Elections.
---------

(a) The Board of Directors may elect to adjust the basis of the
assets of the Company for federal income tax purposes in accordance with Section
754 of the Code in the event of a distribution of Company property as described
in Section 734 of the Code or a transfer by any Member of the Interest of such
Member in the Company as described in Section 743 of the Code.

(b) The Board of Directors, at any time and from time to time, may
also make such other tax elections as it deems necessary or desirable, in its
discretion.

12.2 Interim Closing of the Books. There shall be an interim closing of the
books of account of the Company (i) at any time a taxable year of the Company
shall end pursuant to the Code, and (ii) at any other time determined by the
Board of Directors to be required for good accounting practice or otherwise
appropriate under the circumstances.

A-21

ARTICLE XIII
TERMINATION AND DISSOLUTION

13.1 Events Requiring Termination and Dissolution. The Company shall be
dissolved upon the occurrence of any event which would make unlawful the
continuing existence of the Company or approval of the Members as required
pursuant to Section 8.1 of this Agreement. (each a "Liquidating Event").

13.2 Winding Up Period. Upon the occurrence of a Liquidating Event, the
Company shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Members. No Member shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up the Company's
business and affairs. To the extent not inconsistent with the foregoing, all
covenants and obligations in this Agreement shall continue in full force and
effect until such time as the assets of the Company have been distributed
pursuant to this Section and the Company has terminated. The Board shall be
responsible for overseeing the winding up and liquidation of the Company, shall
take full account of the Company's liabilities and assets, shall cause the
assets to be liquidated as promptly as is consistent with obtaining the Value
thereof, and shall cause the proceeds therefrom, to the extent sufficient
therefor, to be applied and distributed in the manner required by the Act.
Without limiting the generality of the foregoing, the Board of Directors, in
carrying out such winding up and distribution, shall have full power and
authority to sell the Company's assets, or any part thereof, or to distribute
the same in kind to the Members.

13.3 Distribution.

(a) Upon the occurrence of a Liquidating Event and the dissolution
of the Company, the affairs of the Company shall be wound up in accordance with
Section 13.2 above. The fair market value of the assets of the Company shall be
determined, with the Value of any real or personal property held by the Company
being determined in accordance with paragraph (e) of Section 5.8 and the fair
market value of any other assets held by the Company (other than cash) being
determined by an independent appraiser selected by the Board. Thereupon, the
assets of the Company shall be distributed in the following manner and order:
(i) to the claims of all creditors of the Company, including Members who are
creditors, to the extent permitted by law, in satisfaction of liabilities of the
Company, other than liabilities for distributions to Members; (ii) to Members
and former Members in satisfaction of liabilities for distribution, pursuant to
Section 21-2625(1)(b) of the Act, and (iii) to the Members with positive Capital
Account Balances in accordance with their Percentage Interests. Each such Member
entitled to a distribution of any assets of the Company, pursuant to clause
(iii) of this paragraph (a), shall receive such Member's share of such assets in
cash or in kind, and the portion of such share that is received in cash may vary
from Member to Member, all as the Board of Directors in their discretion may
decide. If distributions to any Member upon termination of the Company are
insufficient to return to such Member the full amount of such Member's Capital
Contribution, such Member shall have no recourse against the Board of Directors,
the Company or against any other Member.

(b) In the discretion of the Board, a Pro Rata portion of the
distributions that would otherwise be made to the Members pursuant to Section
13.3(a) hereof may be:

(i) distributed to a trust established for the benefit of
the Members for the purposes of liquidating Company assets, collecting
amounts owed to the Company, and paying any contingent or unforeseen
liabilities or obligations of the Company or of the Members arising
out of or in connection with the Company. The assets of any such trust
shall be distributed to the Members from time to time, in the
reasonable discretion of the Board, in the same proportions as the
amount distributed to such trust by the Company would otherwise have
been distributed to the Members pursuant to Section 13.3(a) hereof; or

(ii) withheld to provide a reasonable reserve for Company
liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Company,

A-22

provided that such withheld amounts shall be distributed to the
Members as soon apracticable.

13.4. Deficit Capital Account Balance. The Members shall have no liability
to the Company, to the other Members, or to the creditors of the Company on
account of any deficit balance in such Member's Capital Account Balance except
to the extent such deficit arises from the failure of the Member to contribute
the full amount of its Capital Contribution. The Company shall be solely
responsible for payment of liabilities to its creditors.

ARTICLE XIV
MISCELLANEOUS

14.1 Notices. All Notices or other communications under this Agreement
shall be in writing (unless otherwise expressly provided herein) and shall be
considered properly given if delivered by hand or mailed by first class United
States Mail, postage prepaid, addressed in care of the respective Members or
Directors at their last-known address. Notice may also be delivered by means of
a confirmed telecopy, provided the original of the notice is also promptly
deposited in the United States Mail, first class postage prepaid, addressed to
the Members or Directors at such address. Notice of change of address shall be
given to the Company by hand or first class united States Mail, after the date
of receipt of which notice, the change of address shall be effective. Unless
actual receipt of a notice is required by an express provision hereof, any such
notice shall be deemed to be effective as of the earliest of (a) the date of
delivery or confirmed telecopy, or (b) the third business day following the date
of deposit with the United States Post Office or in a regularly maintained
receptacle for the deposit of United States Mail. Any refusal to accept delivery
of any such communication shall be considered successful delivery thereof.

14.2 Insurance. The Company may purchase and maintain insurance on behalf
of any person who is or was a Director, Member, employee or agent of the Company
or is or was serving at the request of the Company as a Director, member,
officer, director, employee or agent of another limited liability company,
corporation, partnership, joint venture, trust, or other enterprise, against any
liability asserted against such person and incurred in any such capacity or
arising out of his or her status as such.

14.3 Successors. This Agreement and all of the terms and provisions thereof
shall be binding upon the Directors and all Members and their respective legal
representatives, heirs, successors and permitted assigns.

14.4 Applicable Law. This Agreement and the rights and obligations of the
Members thereunder shall be construed and interpreted under the laws of the
State of Nebraska without regard to its conflict of law principals.

14.5 Amendments. This Agreement may not be modified or amended except upon
the Super-Majority Vote of the Board or upon an affirmative vote of Two-Thirds
(2/3) Majority of the Members. Upon the modification or amendment of this
Agreement, the Board shall promptly execute such amendments or other documents
as the Company deems appropriate to reflect such amendments under the law of the
State of Nebraska. In the event the Board materially modifies or amends this
Agreement pursuant to this Section 14.5, the Board shall send notice to the
Members of the material modification or amendment within a reasonable period of
time after the effective date of such modification or amendment.

14.6 Waiver of Partition. Each of the Members of the Company irrevocably
waives any right to maintain any action for partition with respect to the
property of the Company.

14.7 Company Property. The legal title to any real or personal property or
interest therein now or hereafter acquired by the Company shall be owned, held
or operated in the name of the Company, and no Member, individually, shall have
any ownership interest in such property.

14.8 Acceptance of Prior Acts by New Members. Each Person becoming a
Member, by becoming a

A-23

Member, ratifies all action duly taken by the Company, pursuant to the terms of
this Agreement, prior to the date such person becomes a Member.

14.9 Section Headings. The division of this Agreement into sections,
subsections and exhibits is for convenience of reference only and shall not
affect the interpretation or construction of this Agreement.

14.10 Severability. In the event that one or more of the provisions
contained in this Agreement or any portions thereof are unenforceable or are
declared invalid for any reason whatsoever, such enforceability or invalidity
shall not affect the enforceability or validity of the remaining terms or
portions of this Agreement, and each such unenforceable or invalid portion
hereof shall be severable from the remainder of this Agreement and the remainder
of this Agreement shall be interpreted as if such unenforceable or invalid
provision or portion thereof had not been included as a part thereof.

14.11 Agreement for Further Execution. At any time or times, upon the
request of the Board, the Members agree to sign and swear to any certificate
required by the Act, to sign and swear to any amendment to or cancellation of
such certificate whenever such amendment or cancellation is required by law or
by this Agreement, and to cause the filing of any of the same of record wherever
such filing is required by law.

14.12 Time. Time is an essential element to the performance of this
Agreement by each Member.

14.13 Copies Reliable and Admissible. This Agreement shall be considered to
have been executed by a person if there exists a photocopy, facsimile copy, or a
photocopy of a facsimile copy of an original hereof or of a counterpart hereof
which has been signed by such person. Any photocopy, facsimile copy, or
photocopy of facsimile copy of this Agreement or a counterpart hereof shall be
admissible into evidence in any proceeding as though the same were an original.

14.14 Entire Agreement. This Agreement is the sole operating agreement of
the Company and constitutes the entire agreement among the parties; it
supersedes any prior agreements or understandings among the parties, oral or
written, all of which are hereby canceled.

14.15 Gender. Whenever the context shall require, each term stated in either
the singular or plural shall include the singular and the plural, and masculine
or neuter pronouns shall include the masculine, the feminine and the neuter.

14.16 No Waiver. No failure or delay on the part of any Member in exercising
any rights under this Agreement, or in insisting on strict performance of any
covenant or condition contained in this Agreement, shall operate as a waiver of
any of such Member's rights hereunder.

14.17 Submission to Jurisdiction. Each of the parties to this Agreement
hereby submits to the jurisdiction of and agrees that suit will only be brought
in the state or federal court sitting in Nebraska (the "Nebraska Court") in any
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. Each party also agrees not to bring any action
or proceeding arising out of or relating to this Agreement or the transactions
contemplated thereby in any other court except as may be necessary to enforce
any judgment or order of the Nebraska Court. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety or other security that might be required of
any other party with respect thereto.

14.18 Specific Performance. Each of the parties acknowledges and agrees that
the other party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that the other
parties shall be entitled, without posting a bond or other collateral, to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in the Nebraska Court, in addition to
any other remedy to which it may be entitled, at law or in equity.

A-24

14.19 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.

14.20 Creditors. None of the provisions of this Agreement shall be for the
benefit of or enforceable by any creditors of the Company.

A-25

Appendix B

OREGON TRAIL ETHANOL COALITION, L.L.C.

SUBSCRIPTION APPLICATION AND AGREEMENT
Membership Units
$1,000.00 Per Unit

INSTRUCTIONS TO INVESTORS:

You must complete all items and sign the application and agreement form. You
should read the prospectus in its entirety including financial statements and
appendices for a complete explanation of an investment in OTEC.

If OTEC rejects your subscription, your application and agreement and check will
be returned to you within 30 days of our receipt of your documents. If your
subscription is accepted, your funds will be placed in OTEC's escrow account at
Midwest Bank, N.A., and the funds will be released to OTEC or returned to you in
accordance with the escrow arrangements described in the prospectus.

EVERY SUBSCRIBER MUST:

1. Complete the application and agreement,

2. Sign the Operating Agreement Signature Page Addendum, and

3. Submit the required purchase price.

THE FOLLOWING INSTRUCTIONS ARE SPECIFIC INSTRUCTIONS RELATED TO THE FORM OF
OWNERSHIP:

a. Trust Investors. If you are investing through a trust, you must provide
a copy of the Trust Agreement and all amendments. Also, if there are co-trustees
of the trust, all trustees must sign the Subscription Agreement, Operating
Agreement Addendum and the Accredited Investor Certification, if applicable.

b. Corporate or LLC Investors. If you are investing through a corporation
or limited liability company, you must provide a copy of the appropriate
resolutions authorizing the purchase of the Units.

c. Partnership Investors. If you are investing through a partnership, you
must provide a copy of the partnership agreement, and the Subscription
Agreement, Operating Agreement Addendum and the Accredited Investor
Certification, if applicable, must be signed by a general partner of the
partnership.

d. Joint Tenants and Tenants in Common. If you are investing as joint
tenants with right of survivorship or tenants in common, both signatures must
appear on the Subscription Agreement, the Operating Agreement Addendum and the
Accredited Investor Certification, if applicable.

THE FOLLOWING INSTRUCTIONS RELATED DIRECTLY TO THE SPECIFIC ITEMS OF THE
APPLICATION AND AGREEMENT:

Check the appropriate box to indicate form of ownership. If the
Item 1. investor is a Custodian, Corporation, Partnership or Trust, please
provide the additional information and documents requested.

B-1

Indicate the number of membership units you are purchasing
Item 2. (5 membership units is the minimum) and indicate the dollar
amount of your investment ($5,000 is the minimum investment).
Your ownership interest may not exceed 30% of all of our
outstanding membership units.

Please print the name(s) in which membership units are to be
Item 3. registered and provide your address and telephone numbers. Check
the appropriate box if you are a non-resident alien, an U.S.
Citizen residing outside the United States or subject to back up
withholding. IRAs and KEOGHS should provide the taxpayer
identification number of the account and the social security
number of the accountholder. Trusts should provide their taxpayer
identification number. Custodians should provide the minor's
social security number. All individual investors should provide
their social security number. Other entities should provide their
taxpayer identification number.

Shareholder Report Address. If you would like duplicate copies of
Item 4. shareholder reports sent to an address that is different than the
address identified in Item 3, please complete this section.

Item 5. Please indicate your state of residence.

You cannot invest in OTEC unless you meet one of the suitability
Item 6 tests set forth in Item 6. Please review the suitability tests
and check the box(es) next to the suitability test which you
meet.

Item 7 You must sign Item 7 and the date of signing must be inserted in
the line provided.

After following these instructions, return the subscription application and
agreement and the Operating Agreement signature page together with a check made
payable to "Midwest Bank, N.A. -- Escrow Agent for Oregon Trail Ethanol
Coalition, L.L.C" to:

Oregon Trail Ethanol Coalition, L.L.C.
P.O. Box 267
Davenport, Nebraska 68335

The investor named below, under penalties of perjury, certifies that:

(i) the number shown under Item 3 on this subscription application and
agreement is his, her or its correct taxpayer identification number,

(ii) he, she or it is not subject to back up withholding either because
he, she or it has not been notified by the Internal Revenue Service ("IRS") that
he, she or it is subject to backup withholding as a result of a failure to
report all interest or dividends, or the IRS has notified him, her or it that he
is no longer subject to backup withholding (Note this clause (ii) should be
crossed out if the withholding box in Item 3 is checked), and

(iii) he, she or it meets the suitability standards checked in Item 6 and
that he, she or it is capable of bearing the economic risk of this investment,
including the possible total loss of the investment.

B-2

1. Form of Ownership

Check one Box

( ) Individual

( ) Joint Tenants with Right of Survivorship (Both signatures must appear
in Item 7)

( ) Corporation or Partnership (Corporate Resolutions or Partnership
Agreement must be enclosed)

( ) IRA

( ) KEOGH

( ) Pension or Profit Sharing Plan

( ) Trust (Signature and title pages of Trust Agreement and all
amendments must be enclosed)

Trustee name: ____________________________

Trust date: _______________________________

( ) Other: Provide detailed information below.

2. Purchase Information

A. Number of Units Purchased (minimum 5 membership units)_________*

B. Dollar amount of investment (minimum $5,000 investment)_________

* Subject to a 49% limit on issued and outstanding membership
units.

3. Investor Information

Names and addresses will be recorded exactly as printed below:

Name:______________________________________________________________________

Title (if applicable): ___________________________________________________

Name of Joint Investor: ___________________________________________________

Address: __________________________________________________________________

__________________________________________________________________

__________________________________________________________________
City State Zip Code

( ) Check box if you are a non-resident alien
( ) Check box if you are a U.S. citizen residing outside of the
United States
( ) Check this box if you are subject to backup withholding

B-3

_____________________________ ____________________________________ __________________________
Investor's Social Security No. Joint Investor's Social Security No. Taxpayer Identification No.

4. Shareholder Report Address (fill out if you want duplicate information sent
to another address than that listed in Item 3)

Address: _________________________________________________________________

_________________________________________________________________

_________________________________________________________________
City State Zip Code

5. State of Residence. ______________________________

6. Suitability Standards. Check the box next to the suitability test which
you, as the undersigned investor, meet:

( ) I (We) have annual income from whatever source of at least $30,000
and a net worth of at least $30,000, exclusive of home, furnishings
and automobiles; or

( ) I (We) have a net worth of at least $75,000, exclusive of home,
furnishings and automobiles.

You must meet and check one of the above boxes to be eligible to invest
in this offering. For husbands and wives purchasing jointly, the tests above
will be applied on a joint basis.

7. Signature of Investor. By signing below the subscriber represents and
warrants to OTEC that he, she or it:

(i) has received a copy of and is familiar with OTEC's prospectus dated
___________ , 2002, all modifications or supplements thereto
(collectively the "Prospectus");

(ii) is aware that the Prospectus is a part of OTEC's Registration
Statement on Form SB-2 as filed with the United States Securities and
Exchange Commission, that such Registration Statement contains
important information, materials and exhibits not included with the
Prospectus, that such additional materials are considered to be
material or informative in connection with a decision to acquire the
membership units, and the subscriber has been directed to and has
been informed of the existence of such additional information in the
Registration Statement;

(iii) understands that there is no present market for OTEC's membership
units, that the membership units will not trade on an exchange or
automatic quotation system, that no such market is expected to
develop in the future and that there are significant restrictions on
the transferability of the membership units;

(iv) has received a copy of the OTEC Operating Agreement, and understands
that upon closing the escrow by OTEC, the subscriber will be bound by
the provisions of the Operating Agreement which contains, among other
things, provisions that restrict the transfer of membership units;

B-4

(v) agrees that if the membership units or any part thereof are sold
or distributed in the future, the subscriber shall sell or
distribute them pursuant to the terms of the Operating Agreement,
and the requirements of the Securities Act of 1933, as amended,
and applicable state securities laws;

(vi) meets the suitability test marked in Item 6 above and is capable
of bearing the economic risk of this investment, including the
possible total loss of the investment.; and

(vi) understands that OTEC will place a restrictive legend on any
certificate representing any unit containing substantially the
following language:

The sale, pledge, hypothecation, assignment or transfer of the
ownership interest represented by this CERTIFICATE OF OWNERSHIP
is subject to the terms and conditions of the Operating Agreement
of Oregon Trail Ethanol Coalition, L.L.C., as amended from time
to time. Copies of the Operating Agreement may be obtained upon
written request to the Board of Directors of Oregon Trail Ethanol
Coalition, L.L.C..

And that, to enforce the above legend, OTEC may place a stop
transfer order with its registrar and stock transfer agent (if
any) covering all certificates representing any of the membership
units.

INDIVIDUAL INVESTOR SIGNATURE

________________________ _________________________________________
(Date) (Signature of individual investor)

_________________________________________
(Signature of joint investor)

ENTITY INVESTOR SIGNATURE

________________________ _________________________________________
(Date) (Name of investor)

By:______________________________________
(Authorized signature)

Its:_____________________________________
(Title)

B-5

TRUST INVESTOR SIGNATURE

(If there are co-trustees of the trust, all trustees must sign below)
---

________________________ _________________________________________
(Date) (Name of investor)

By: _____________________________________
(Authorized signature(s))

Its: Trustee
-------------------------------------
(Title)

By: _____________________________________
(Authorized signature(s))

Its: Trustee
-------------------------------------
(Title)

By: _____________________________________
(Authorized signature(s))

Its: Trustee
-------------------------------------

B-6

ADDENDUM TO SIGNATURE PAGE
of
OPERATING AGREEMENT
of
OREGON TRAIL ETHANOL COALITION, L.L.C.

INTENDING TO BE LEGALLY BOUND, the parties hereto have executed and
delivered this Addendum to Operating Agreement in connection with the purchase
of membership units in Oregon Trail Ethanol Coalition, L.L.C. pursuant to the
terms of the private offering set forth in the Prospectus dated _________, 2002.

INDIVIDUAL INVESTOR SIGNATURE

________________________ _________________________________________
(Date) (Signature of individual investor)

_________________________________________
(Signature of joint investor)

ENTITY INVESTOR SIGNATURE

________________________ _________________________________________
(Date) (Name of investor)

By:______________________________________
(Authorized signature)

Its:_____________________________________
(Title)

B-7

TRUST INVESTOR SIGNATURE

(If there are co-trustees of the trust, all trustees must sign below)
---

________________________ _________________________________________
(Date) (Name of investor)

By: _____________________________________
(Authorized signature(s))

Its: Trustee
-------------------------------------
(Title)

By: _____________________________________
(Authorized signature(s))

Its: Trustee
-------------------------------------
(Title)

By: _____________________________________
(Authorized signature(s))

Its: Trustee
-------------------------------------

B-8

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Total $ 500,000*
=========

* All of the above items except the registration fee are estimated.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Directors, officers, employees and agents of Oregon Trail Ethanol Coalition,
L.L.C. (the "Company") may be entitled to benefit from the indemnification
provisions contained in OTEC's Articles of Organization and the Nebraska Limited
Liability Company Act. The general effect of these provisions is summarized
below:

The Articles of Organization and Operating Agreement provide that to the extent
permitted by law, OTEC shall indemnify any directors and officers who was or is
a party, or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative, including any action or suit by or in the right of OTEC to
procure a judgment in its favor, by reason of the fact that such person is or
was a director or officer of OTEC. Such indemnification shall be against
expenses, including attorney fees, and except for actions by or in the right of
OTEC, judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding for
any course of conduct taken in good faith and reasonably believed by them to be
in the best interest of OTEC, or in reliance on the Operating Agreement or
Articles of Organization, or for good faith errors of judgement. Directors are
liable only for misconduct or negligence in the performance of their duties as
directors.

Generally under Nebraska corporate law, any individual who is made a party to a
proceeding because the individual is or was a director may be indemnified if the
individual acted in good faith and had reasonable basis to believe that (1) in
the case of conduct in the individual's official capacity with OTEC, that the
individual's conduct was in OTEC's best interests; (2) in all other cases, that
the individual's conduct was at least not opposed to OTEC's best interest; and
(3) regarding any criminal proceedings, the individual had no reasonable cause
to believe the individual's conduct was unlawful. Nebraska law also extends such
indemnification to officers of OTEC and provides that OTEC may advance expenses
to a director or officer of OTEC. Further, Nebraska law provides that neither a
director or officer is liable for any action taken as a director or officer, or
any failure to take any action, as long as the individual discharged his or her
duties (1) in good faith, (2) with the care of an ordinarily prudent person in a
like position would exercise under similar circumstances, and (3) in a manner
the individual reasonably believes to be in the best interests of OTEC.

The Operating Agreement also provides that to the extent permitted by law, OTEC
has the power to purchase and maintain insurance on behalf of any person who is
or was a director, officer, member, employee or agent of OTEC against any
liability asserted against such person while acting in such capacity or arising
out of his or her status as such, whether or not OTEC would have the power to
indemnify him or her against such liability.

II-1

Nebraska law provides that OTEC may purchase and maintain insurance on behalf of
an individual who is or was a director or officer of OTEC, or who, while a
director or officer of OTEC, serves at OTEC's request as a director, officer,
member of a limited liability company, partner, trustee, employee, or agent of
another domestic or foreign corporation, limited liability company, partnership,
joint venture, trust, employee benefit plan, or other entity, against liability
asserted against or incurred by that individual in that capacity or arising from
the individual's status as a director or officer, whether or not OTEC would have
the power to indemnify or advance expenses under Nebraska law.

The Operating Agreement provides that the indemnity set forth in the Operating
Agreement shall not be deemed to be exclusive of any other rights to which those
indemnified may be otherwise entitled, nor shall the provisions of the Operating
Agreement be deemed to prohibit OTEC from extending its indemnification to cover
other persons or activities to the extent permitted by law or pursuant to any
provisions in the Operating Agreement.

There is no pending litigation or proceeding involving a director, officer,
employee or agent of OTEC as to which indemnification is being sought. OTEC is
not aware of any other threatened litigation that may result in claims for
indemnification by any director, officer, employee or agent.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since OTEC's formation on August 16, 2001, it has issued and sold the following
membership units. Each of these sales were deemed to be exempt from registration
under the Securities Act in reliance on Section 4(2) and Rule 506 of the
Securities Act, as well as Rule 152, as transactions by an issuer not involving
a public offering. OTEC conducted no general solicitation in connection with the
offer or sale of the securities. The recipients of securities in each such
transaction represented their intention to acquire the securities for investment
only and not with a view to, or for sale in connection with, any distribution
thereof, and appropriate legends were affixed to unit certificates and
instruments issued in such transactions. All purchasers (other than the 9
directors in the initial organization and purchase) were provided a private
placement memorandum containing all material information concerning OTEC and the
offering. The following table has been adjusted to reflect the two to one
membership split effected by the Board on July 3, 2002.

TITLE AMT DATE PRICE DISCOUNTS* EXEMPTION
Mark and Suzanne Jagels 2 2/5/02 $500 $0
Kent and Joan Hummel 2 2/5/02 $500 $0
Gene Thomas 2 2/5/02 $500 $0
Steve and Diane Gebers 2 2/5/02 $500 $0
Todd and Crystal Fangmeier 2 2/5/02 $500 $0
D.D.J. Company 2 2/5/02 $500 $0
Ken and Jeanette Else 2 2/5/02 $500 $0
Darrell D. Dageforde 2 2/5/02 $500 $0
Mark Werner 2 2/5/02 $500 $0
Michael and Debra Schardt 2 2/5/02 $500 $0
Dan Poppe 2 2/5/02 $500 $0
Sam and Sonja Shuck 2 2/5/02 $500 $0
Jerry Grove 2 2/5/02 $500 $0

II-2

TITLE AMT DATE PRICE DISCOUNTS* EXEMPTION
Brian Nedrow 2 2/5/02 $500 $0
Dan and Sarah Miller 2 2/5/02 $500 $0
Rosemary Dageforde 2 2/5/02 $500 $0
Pamela Maynard 2 2/5/02 $500 $0
Jefferson County Bancshares, Inc. 2 2/5/02 $500 $0
Alfs Implement & Well Drilling 20 6/24/02 $500 $0
Paul and Shari Bachle 10 6/24/02 $500 $0
William E. Bartels Family Trust 10 6/24/02 $500 $0
Dated August 16, 1991
Gerald and Virginia Brase 24 6/24/02 $500 $0
Bruning Bancshares, Inc. 20 6/24/02 $500 $0
Barbara K. and Thomas S. Bohling 20 6/24/02 $500 $0
Matthew and Leisa Bohling 20 6/24/02 $500 $0
David J. and Denise L. Capek 10 6/24/02 $500 $0
Carlson Irrigation L.L.C. 10 6/24/02 $500 $0
Chaos Farms, Inc. 10 6/24/02 $500 $0
CLC Enterprises Inc. 10 6/24/02 $500 $0
Cornhusker Swine Inc. 10 6/24/02 $500 $0
D.C. Meyer Farms, Inc. 20 6/24/02 $500 $0
D.D.J. Company 42 6/24/02 $500 $0
Darrel D. Dageforde 16 6/24/02 $500 $0
Rosemary Dageforde 20 6/24/02 $500 $0
Kenneth E. and Pamela S. Degenhardt 10 6/24/02 $500 $0
Dennis D. and Nanci D. Dye 10 6/24/02 $500 $0
Gordon Eggers Self-Directed IRA 30 6/24/02 $500 $0
Ken and Jeanette Else 10 6/24/02 $500 $0
Steve and Diane Gebers 10 6/24/02 $500 $0
Ethanol Products, LLC 20 6/24/02 $500 $0
First National Fairbury Corporation 40 6/24/02 $500 $0
Todd A. and Crystal K. Fangmeier 10 6/24/02 $500 $0
G&K Holtmeier Inc. 10 6/24/02 $500 $0
Geneva State Company 20 6/24/02 $500 $0

II-3

TITLE AMT DATE PRICE DISCOUNTS* EXEMPTION
Glenn Elting & Sons 100 6/24/02 $500 $0
Doug and Pam Harms 10 6/24/02 $500 $0
Alvin and Merilee Hein 250 6/24/02 $500 $0
Robert M. Hendrickson 10 6/24/02 $500 $0
Holtzen Farms, Inc. 30 6/24/02 $500 $0
Douglas and Katherine M. Holtzen 10 6/24/02 $500 $0
Marilyn J. Holtzen Trust No. 1 10 6/24/02 $500 $0
Lloyd E. Holtzen Trust No. 1 10 6/24/02 $500 $0
Stanley G. Hueske 18 6/24/02 $500 $0
Robert P. Hunt 10 6/24/02 $500 $0
HRW Farming 10 6/24/02 $500 $0
Kent D. and Joan Hummel 42 6/24/02 $500 $0
Gary Jagels and Kristi Jagels 20 6/24/02 $500 $0
Elliott N. and Eunice Jagels 20 6/24/02 $500 $0
Mark L. and Suzanne K. Jagels 48 6/24/02 $500 $0
Wayne and Anita Jagels 30 6/24/02 $500 $0
Jefferson County Bancshares, Inc. 20 6/24/02 $500 $0
Jennings State Bank 20 6/24/02 $500 $0
Steven G. Johnson 10 6/24/02 $500 $0
Jerry Keim Farms, Inc. 20 6/24/02 $500 $0
Keim Brothers, Inc. 200 6/24/02 $500 $0
Alan R. Kenning 10 6/24/02 $500 $0
Willis and Marilyn Kettelhut 10 6/24/02 $500 $0
Mark Kimbrough 10 6/24/02 $500 $0
Melvin and Elfriede Kleine 10 6/24/02 $500 $0
Howard R. Lefler 10 6/24/02 $500 $0
Ronald and Sharon Lichty 20 6/24/02 $500 $0
Michael L. and Ellen K. Long 10 6/24/02 $500 $0
Jay and Natalie Meyer 10 6/24/02 $500 $0
Daniel J. and Sarah G. Miller 10 6/24/02 $500 $0
Deroy and Mary Lee Miller 10 6/24/02 $500 $0
Gary and Susan Miller 10 6/24/02 $500 $0
Neil and Berneta Miller 20 6/24/02 $500 $0
Myers Bros. 10 6/24/02 $500 $0
Brian Nedrow 30 6/24/02 $500 $0

II-4

TITLE AMT DATE PRICE DISCOUNTS* EXEMPTION

Bruce Nedrow 10 6/24/02 $500 $0
Timothy A. and Lois F. Norder 20 6/24/02 $500 $0
Richard and Alice M. Percival 10 6/24/02 $500 $0
Daniel A. Poppe 10 6/24/02 $500 $0
Reinke Manufacturing Co. Inc. 20 6/24/02 $500 $0
Russell S. and Sharon L. Reinke 20 6/24/02 $500 $0
Mark and Melissa Rohr 10 6/24/02 $500 $0
Saltzman Inc. 10 6/24/02 $500 $0
Edgar and Allen Schardt Inc. 50 6/24/02 $500 $0
Maurice and Jean Schardt 20 6/24/02 $500 $0
Robert W. Schardt 12 6/24/02 $500 $0
Loran Schmit 10 6/24/02 $500 $0
Barry S. and Christine A. Schweer 10 6/24/02 $500 $0
Superior Deshler Inc. 20 6/24/02 $500 $0
Stephen J. Taylor 20 6/24/02 $500 $0
Thayer Agency, Inc. 10 6/24/02 $500 $0
Gene L. and Susan J. Thomas 30 6/24/02 $500 $0
Brian Thurnau 20 6/24/02 $500 $0
Triple A Inc. 10 6/24/02 $500 $0
Gerald W. and Helen Lucile Voigt 20 6/24/02 $500 $0
Mark Werner 20 6/24/02 $500 $0
Todd Werner 20 6/24/02 $500 $0
Lonnie Wiedel 10 6/24/02 $500 $0
Roger G. and Jacqueline J. Wiedel 10 6/24/02 $500 $0
Williams Drilling Co., Inc. 10 6/24/02 $500 $0
Mark A. Wolff 20 6/24/02 $500 $0

II-5

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

EXHIBIT EXHIBIT TITLE
NUMBER

3.1 Articles of Organization, as amended
3.2.1 Amended and Restated Operating Agreement*
4.1 Form of Membership Unit Certificate
4.2 Form of Subscription Application and Agreement**
4.3 Escrow Agreement between Midwest Bank, N.A. and Oregon Trail Ethanol
Coalition, L.L.C./(1)/
5.1 Form of Opinion of Baird, Holm, McEachen, Pedersen, Hamann &
Strasheim LLP as to certain securities matters/(1)/
8.1 Form of Opinion of Baird, Holm, McEachen, Pedersen, Hamann &
Strasheim LLP as to certain tax matters/(1)/
10.1 Memorandum of Understanding by and among Lurgi Inc., ICM, Inc. and
Oregon Trail Ethanol Coalition, L.L.C. dated May 1, 2001
10.2 Agreement with the Nebraska Department of Agriculture
10.3 Option Agreement dated May 15, 2002 between Oregon Trail Ethanol
Coalition, L.L.C. and Lloyd E. and Marilyn J. Holtzen
10.4 Option Agreement dated May 15, 2002 between Oregon Trail Ethanol
Coalition, L.L.C. and Don R. and Beverly K. Holtzen
10.5 Option Agreement dated May 15, 2002 between Oregon Trail Ethanol
Coalition, L.L.C. and Marvin L. and Elsie D. Holtzen
10.6 Option Agreement dated May 15, 2002 between Oregon Trail Ethanol
Coalition, L.L.C. and DuWayne C. Holtzen
10.7 Letter Agreement dated May 15, 2002 between Oregon Trail Ethanol
Coalition, L.L.C. and Rodney and Judy Tegtmeier
10.8 Ethanol Producer Credit Agreement between Oregon Trail Ethanol
Coalition, L.L.C. and the Nebraska Department of Revenue dated
January 15, 2002
23.1 Form of consent of Baird, Holm, McEachen, Pedersen Hamann &
Strasheim LLP/(1)/
23.2 Form of consent of BKD,LLP
24.1 Power of Attorney executed by Mark L. Jagels
24.2 Power of Attorney executed by Michael Schardt
24.3 Power of Attorney executed by Kent D. Hummel
24.4 Power of Attorney executed by Pamela Maynard
24.5 Power of Attorney executed by Todd Fangmeier(1)
24.6 Power of Attorney executed by Brian Nedrow
24.7 Power of Attorney executed by Daniel J. Miller
24.8 Power of Attorney executed by Gene Thomas
24.9 Power of Attorney executed by Darrel D. Dageforde

_____________
* Included as Appendix A to the prospectus.
** Included as Appendix B to the prospectus.
(1) To be filed by amendment.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes:

II-6

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the registration statement is on Form S-3,
Form 5-8 or Form F-3, and the information required to be included in
a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are organized by reference in the
registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Davenport, State of
Nebraska on this 31/st/ day of July, 2002.

OREGON TRAIL ETHANOL COALITION, L.L.C.

By: /s/ MARK L. JAGELS
------------------------------------
Mark L. Jagels, President and
Chairman of the Board (Principal
Executive Officer)

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities of
Oregon Trail Ethanol Coalition, L.L.C. on the 31/st/ day of July, 2002.

Signature Capacity
--------- --------

/s/ Mark L. Jagels Chairman of the Board, President,
-------------------------- Director
Mark L. Jagels

/s/ Michael Schardt Vice Chairman, Vice President,
-------------------------- Director
Michael Schardt

/s/ Pamela Maynard Secretary and Director
--------------------------
Pamela Maynard

/s/ Kent D. Hummel Treasurer and Director
-------------------------- (Principal Accounting Officer)
Kent D. Hummel

/s/ Todd Fangmeier Director
--------------------------
Todd Fangmeier

/s/ Brian Nedrow Director
--------------------------
Brian Nedrow

/s/ Daniel J. Miller Director
--------------------------
Daniel J. Miller

/s/ Gene Thomas Director
--------------------------
Gene Thomas

/s/ Darrel D. Dageforde Director
--------------------------
Darrel D. Dageforde

II-8

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION PAGE

3.1 Articles of Organization, as amended.
3.2.1 Amended and Restated Operating Agreement*
4.1 Form of Membership Unit Certificate
4.2 Form of Subscription Application and Agreement**
4.3 Escrow Agreement between Midwest Bank, N.A. and Oregon Trail Ethanol
Coalition, L.L.C./(1)/
5.1 Form of Opinion of Baird, Holm, McEachen, Pedersen, Hamann &
Strasheim LLP as to certain securities matters/(1)/
8.1 Form of Opinion of Baird, Holm, McEachen, Pedersen, Hamann &
Strasheim LLP as to certain tax matters/(1)/
10.1 Memorandum of Understanding by and among Lurgi Inc., ICM, Inc. and
Oregon Trail Ethanol Coalition, L.L.C. dated May 1, 2001
10.2 Agreement with the Nebraska Department of Agriculture
10.3 Option Agreement dated May 15, 2002 between Oregon Trail Ethanol
Coalition, L.L.C. and Lloyd E. and Marilyn J. Holtzen
10.4 Option Agreement dated May 15, 2002 between Oregon Trail Ethanol
Coalition, L.L.C. and Don R. and Beverly K. Holtzen
10.5 Option Agreement dated May 15, 2002 between Oregon Trail Ethanol
Coalition, L.L.C. and Marvin L. and Elsie D. Holtzen
10.6 Option Agreement dated May 15, 2002 between Oregon Trail Ethanol
Coalition, L.L.C. and DuWayne C. Holtzen
10.7 Letter Agreement dated May 15, 2002 between Oregon Trail Ethanol
Coalition, L.L.C. and Rodney and Judy Tegtmeier
10.8 Ethanol Producer Credit Agreement between Oregon Trail Ethanol
Coalition, L.L.C. and the Nebraska Department of Revenue dated
January 15, 2002.
23.1 Form of consent of Baird, Holm, McEachen, Pedersen Hamann &
Strasheim LLP/(1)/
23.2 Form of consent of BKD, LLP
24.1 Power of Attorney executed by Mark L. Jagels
24.2 Power of Attorney executed by Michael Schardt
24.3 Power of Attorney executed by Kent D. Hummel
24.4 Power of Attorney executed by Pamela Maynard
24.5 Power of Attorney executed by Todd Fangmeier/(1)/
24.6 Power of Attorney executed by Brian Nedrow
24.7 Power of Attorney executed by Daniel J. Miller
24.8 Power of Attorney executed by Gene Thomas
24.9 Power of Attorney executed by Darrel D. Dageforde

_________________
* Included as Appendix A to the prospectus.
** Included as Appendix B to the prospectus.
(1) To be filed by amendment.

II-9