CONVERSION AGREEMENT

THIS CONVERSION AGREEMENT (the “Agreement”), dated as of March 31, 2009, is entered into by and between Ray-Carroll County Grain Growers, Inc. , a Missouri cooperative association (“Ray-Carroll”); and Show Me Ethanol, LLC (“SME”).

WHEREAS, Ray-Carroll is the owner of one hundred percent (100%) of the issued and outstanding Class B membership interests in SME.  Pursuant to that certain Grain Supply Agreement dated March 7, 2007 by and between the SME and Ray-Carroll (the “Grain Supply Agreement”), SME entered into forward purchase contracts of corn, as provided on Exhibit A attached hereto with Ray-Carroll (the “Forward Contracts”).

WHEREAS, Ray-Carroll simultaneously entered into corresponding back-to-back transactions related to the Forward Contracts.  However, SME failed to enter into forward ethanol sales contracts.  Due to reductions in the price of corn since the entry of the Forward Contracts, SME now owes approximately $15,500,000 more thereon than the current market price of the corn covered thereby.  The parties have agreed to fix SME’s liability with respect to the Forward Contracts at $15,500,000 (the “Contract Liability”) regardless of any change in the liability that may have been relevant due to changes in corn prices.

WHEREAS, SME does not possess the financial resources to satisfy the Contract Liability in a lump sum payment.  In addition, SME demands that the Contractual Liability be liquidated and converted to a fixed promissory note indebtedness to prevent additional loss to SME should corn market prices decline further.

WHEREAS, the parties have entered into this Agreement to liquidate the Contract Liability and provide for its repayment through the means more particularly set forth herein.  In addition, the parties have resolved various operating issues that exist with respect to the ethanol operations of SME and its company governance.

WHEREAS, in consideration of the mutual promises and undertaking made and exchanged herein, the sufficiency and receipt of which is hereby acknowledged by SME and Ray-Carroll, the parties agree as follows:

SECTION 1.01.   Representations and Warranties .  Ray-Carroll hereby represents and warrants to SME that this Agreement has been duly executed and delivered by Ray-Carroll, and is the valid and binding obligation of Ray-Carroll, enforceable against it in accordance with its terms.

SECTION 2.01.   Representations and Warranties .  SME hereby represents and warrants to Ray-Carroll that this Agreement has been duly executed and delivered by SME through a representative duly authorized by SME to enter this Agreement and is the valid and binding obligation of SME, enforceable against it in accordance with its terms.

SECTION 3.01.   Payment Of Earmarked Funds.   SME has raised approximately $4,000,000 in cash through contributions of capital from existing owners of equity in SME (the “Escrow”), of which $1,500,000 of the Escrow has been earmarked and dedicated by SME for delivery to Ray-Carroll in partial satisfaction of the Contractual Liability.  The Escrow is held pursuant to that certain Escrow Agreement between SME and State Bank of Slater (the “Escrow Agreement”) dated as of January 26, 2009.  SME shall direct the Escrow Agent, as designated under the Escrow Agreement, to deliver $1,500,000 from the Escrow to Ray-Carroll or, in the alternative, to immediately deliver $1,500,000 received from the Escrow to Ray-Carroll in reduction of the Contract Liability.

SECTION 4.01.   Levered Forward Contract Cancellation .  Ray-Carroll shall satisfy its voluntary capital contribution to SME by, in lieu of cash, cancelling $2,000,000 of the Contract Liability.  SME acknowledges this reduction has been accounted for in addition to credit for receipt of $1,500,000 from the Escrow Agreement in determining that $12,000,000 shall remain owing on the Contract Liability and be converted to indebtedness under the Subordinated Note (as defined below).

SECTION 5.01.   Promissory Note .  In consideration of the cancellation of the remaining $12,000,000 Contract Liability owed to Ray-Carroll after credit for (a) the $1,500,000 in cash to be paid from the Escrow to Ray-Carroll and (b) the $2,000,000 cancellation of such contractual liability as Ray-Carroll’s additional capital contribution, SME agrees to execute a promissory note in the form attached hereto as Exhibit B (the “Subordinate Note”).

SECTION 5.02.   Subordinate Deed of Trust .  In consideration of the foregoing and to secure repayment of the Subordinate Note, SME agrees to execute and consents to the recording of a subordinate deed of trust, assignment of rents, security agreement in the form attached hereto as Exhibit C (the “Deed of Trust”).

SECTION 5.03.   Financing Statement .  SME further consents to Ray-Carroll filing a financing statement in the Office of the Secretary of State of Missouri and any other location necessary to further perfect the liens granted in the Deed of Trust.

SECTION 5.04.   Lien Subordination .  Ray-Carroll acknowledges that the liens granted by the Deed of Trust are expressly subordinate and junior to the liens securing repayment of the SME’s obligations to FCS Financial, PCA, for itself and as administrative agent (“FCS”) and the various 9% Subordinated Secured Promissory Notes from SME dated as of June 5, 2008, in the cumulative original principal sum of $3,590,000 (the “Slater Debt”) as stated in the Deed of Trust and the Intercreditor Agreement between SME, Ray-Carroll and FCS of even date herewith.

SECTION 5.05.   Cancellation Of Contract Liability .  In consideration of the foregoing, Ray-Carroll cancels the Forward Contracts and hereby releases SME from liability for payment of any amount remaining owing pursuant to the Contract Liability, save and except as provided herein.

SECTION 6.01.   Waiver of Setoff Rights .  Ray-Carroll agrees that it will not assert the right to setoff any amount owing by Ray-Carroll to SME on account of sale of Distillers’ Grains by Ray-Carroll pursuant to and as defined in that certain Distillers’ Grains Marketing Agreement (the “DDG Contract”).  Upon sale of these Distillers’ Grains, Ray-Carroll shall pay the amount owing pursuant to the DDG Contract to SME without setoff against any amount owed by SME to Ray-Carroll under the Subordinated Note, or otherwise.

SECTION 7.01.   Setoff Against Subordinated Note Payments .  SME agrees that it shall not be entitled to setoff against any payment due to Ray-Carroll on the Subordinated Note or Grain Supply Agreement any amount claimed by SME to be owed by Ray-Carroll for any claim or cause of action that is not the subject of a final judgment entered in favor of SME against Ray-Carroll by a court of competent jurisdiction which is no longer subject to appeal.

SECTION 7.02.   Effect Of Default Under Subordinated Note On Grain Supply Agreement .  SME acknowledges that the Subordinated Note represents the obligation owed to Ray-Carroll for unpaid amounts incurred under the Grain Supply Agreement.  Ray-Carroll agrees that it may not cease performance under the Grain Supply Agreement by virtue of the non-payment of the Forward Contracts due to their substitution by the Subordinated Note. Similarly, SME acknowledges that a default under the Subordinated Note constitutes a default under the Grain Supply Agreement and shall entitle, but not obligate, Ray-Carroll to cease performance under the Grain Supply Agreement.

SECTION 8.01.   Deferral Of Maturity Date.   Ray-Carroll is the holder of that certain 9% Subordinated Secured Promissory Note in the original principal sum of $1,000,000 dated as of June 5, 2008 (the “Slater Note”) issued pursuant to that Loan and Security Agreement of even date therewith between SME and State Bank of Slater (the “Loan Agreement”).  The maturity date of the Slater Note is June 5, 2010.  Ray-Carroll agrees that the maturity date of the Slater Note is hereby deferred to June 5, 2011 if SME does not have Excess Quarterly Cash in excess of $12,000,000 as defined in the Subordinate Note on that date.  In addition, Ray-Carroll shall further use its best efforts to persuade other holders of promissory notes issued under the Loan Agreement to defer the maturity dates of those respective obligations; provided, however, that a default by SME in the payment of any other promissory note or indebtedness owing under the Loan Agreement shall constitute a cross-default of the Slater Note notwithstanding deferral of the maturity date of the Slater Note.

SECTION 8.02.   Amendment To Promissory Note. Ray-Carroll shall execute the Amendment of Promissory Note attached hereto as Exhibit D to evidence the foregoing.

SECTION 8.03.   No Interim Equity Distributions. SME shall not make distributions on account of ownership of member interests in SME prior to the satisfaction of the Slater Note.

SECTION 9.01.   Amendments to Operating Agreement .  Ray-Carroll shall vote its member interests in SME in favor of an amendment to the Operating Agreement of Show Me Ethanol, LLC, dated as of January 24, 2006, to (1) change the definition of “Super Majority Interest” therein from 81% to 70% of the Percentage Interests held by all Members or in the case of Managers, from at least 9 votes to 8 votes if no more than 10 Managers are currently designated or elected; provided, however, that the figure shall remain at 9 votes if 11 Managers are designated or elected.

SECTION 10.01.  SME shall remove the construction tent located on Ray-Carroll real property on or before August 1, 2009, at the sole expense of SME and in such a manner as to avoid damage to the Ray-Carroll real property on which such personal property is located or across which such personal property is transported. SME shall remove any other personal property of SME’s located on Ray-Carroll real estate unless SME agrees not to assert adverse possession by virtue of such usage. In consideration of the mutual promises exchanged herein, the sufficiency of which is hereby acknowledged, SME hereby assigns and conveys to Ray-Carroll any personal property remaining on Ray-Carroll real property on or after August 1, 2009, which is not excused pursuant to this provision.

SECTION 11.01.   Amendments, etc.   No amendment of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by SME and Ray-Carroll.

SECTION 11.02.   Waiver. Any waiver of a right provided under this Agreement or a breach of this Agreement must be express and written.  The waiver by either of SME or Ray-Carroll of any breach of any provision hereof by the other party shall not be construed to be a waiver of any succeeding breach of such provision or a waiver of the provision itself.  Selection by SME or Ray-Carroll of a specific remedy does not constitute, and shall not be interpreted to constitute, a waiver of any other remedy of such party, and failure to select a specific remedy does not constitute, and shall not be interpreted to constitute, a waiver of such remedy.  Either party’s failure at any time to enforce any of the terms, provisions or conditions of this Agreement shall not constitute or be construed as a waiver of the same and any single or partial exercise by such party of any right under this Agreement shall not preclude any further or other exercise of the same or any other right.

SECTION 11.03 Expenses .  In the event of any action by either SME or Ray-Carroll to enforce any provision of this Agreement, or on account of any default under or breach of this Agreement, the prevailing party, as determined by a court of competent jurisdiction, in such action will be entitled to recover, in addition to all other relief, from the other party all legal fees incurred by the prevailing party, in connection with such action (including, but not limited to, any appeal thereof).

SECTION 11.04.   Addresses for Notices .  All notices and other communications provided for under this Agreement shall be in writing  and mailed, faxed, or delivered at the addresses set forth below, or at such other address as such party may specify by written notice to the other parties hereto:

SECTION 11.05.   Governing Law .  This Agreement shall be governed by, and construed in accordance with, federal law, and to the extent applicable, the internal laws of the State of Missouri.

SECTION 11.06. CONSENT TO JURISDICTION .  BY EXECUTION OF THIS AGREEMENT, THE PARTIES HERETO CONSENT TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF CARROLL, MISSOURI AND WAIVE ANY OBJECTION WHICH THAT PARTY MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT.  EACH PARTY FURTHER COVENANTS AND AGREES THAT AT ALL TIMES IT SHALL HAVE AT LEAST ONE REGISTERED AGENT WITHIN THE CONTINENTAL UNITED STATES OF AMERICA, WHICH AGENT SHALL ACCEPT ANY AND ALL SERVICE OF PROCESS UPON THAT PARTY, AND THAT IN THE EVENT THAT PARTY FAILS AT ANY TIME TO HAVE SUCH A REGISTERED AGENT, OR SUCH REGISTERED AGENT REFUSES SUCH SERVICE OF PROCESS FOR ANY REASON WHATSOEVER, THEN SERVICE OF ANY AND ALL SUCH PROCESS UPON THAT PARTY MAY BE MADE BY MAIL OR MESSENGER DIRECTED TO THAT PARTY’S ADDRESS SET FORTH IN SECTION 7.04 .  SERVICE SO MADE SHALL BE DEEMED TO CONSTITUTE PERSONAL SERVICE UPON THAT PARTY, AND SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO THAT PARTY’S ADDRESS.  FURTHERMORE, EACH PARTY HERETO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED BY APPLICABLE LAW. NOTHING IN THIS PARAGRAPH SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE PARTIES HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST THE OTHER PARTIES OR THAT PARTY’S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.”

SECTION 11.07.     Multiple Counterparts .  This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

IN WITNESS WHEREOF, Ray-Carroll and SME have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.