**Exhibit 10.24**

*Portions omittedpursuant to a request for confidential treatment and filed separately with theSEC.

**AGREEMENT**

**BETWEEN OWNER AND DESIGN/BUILDER**

**ON THE BASIS OF A STIPULATED PRICE**

THIS AGREEMENT is made and entered into this 14th day of July, 2006 byand between Heartland Grain Fuels, LP, a South Dakota limited partner company(hereinafter called OWNER) and ICM, Inc., a Kansas corporation (hereinaftercalled DESIGN/BUILDER).

OWNER and DESIGN/BUILDER, in consideration of the mutual covenants hereinafterset forth, agree as follows:

Article 1.        THE PROJECT ANDWORK.

1.01.        DESIGN/BUILDER shallcomplete all Work for the Project as specified or indicated in the ContractDocuments. The Project is generally described as the design and construction ofa dry mill fuel-grade ethanol plant to be located in or near Aberdeen, SouthDakota, as described in more detail in Exhibit B to this Agreement.  The Work includes such engineering, labor,materials, and equipment to design, construct, startup and achieve guaranteedperformance criteria of a dry mill ethanol plant capable of producing no lessthan forty (40) million gallons per year of denatured fuel-grade ethanol and noless than two hundred two thousand (202,000) tons per year of wet distillers’grains, as set forth in the Contract Documents. A more detailed described of the Work is set forth in the attachedExhibits (other than OWNER’s responsibilities set forth therein).

Article 2.        CONTRACT TIMES.

2.01.        *Days toAchieve Substantial Completion and Final Payment.*  The Work will be Substantially Completedwithin [*] days after the date when the Contract Times commence to run asprovided in paragraph 2.01.A of the General Conditions, and completed and readyfor final payment in accordance with paragraph 13.08 of the General Conditionswithin one hundred eighty (180) days after Substantial Completion , unlessotherwise provided in the Contract Documents.

Article 3.        CONTRACT PRICE.

3.01.        OWNER shall payDESIGN/BUILDER the Contract Price for completion of the Work in accordance withthe Contract Documents.   The ContractPrice may be adjusted as provided by the General Conditions.  For all Work, OWNER shall pay toDESIGN/BUILDER a price of [*] (the “Contract Price”).

3.02.        The Work to beperformed by DESIGN/BUILDER shall not include those items designated as OWNER’sresponsibilities in the Contract Documents. Those items designated as OWNER’s responsibilities in the ContractDocuments shall include all design, procurement, fabrication, installation andstart-up associated with such items.

3.03         DESIGN/BUILDER shallprovide to OWNER the training described in Exhibit G.

3.04         In accordance withparagraph 5.02 of the General Conditions, DESIGN/BUILDER agrees to maintain theinsurance coverages, limits, and deductibles set forth in Exhibit H.

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Article 4.        PAYMENTPROCEDURES

4.01         DESIGN/BUILDER shallsubmit and OWNER will process Applications for Payment in accordance withArticle 13 of the General Conditions and Sections 5.01.A. through C. below.

A.    *Down Payment*.OWNER shall make a down payment of 10% of CONTRACT PRICE to DESIGN/BUILDER,which shall be applied toward and credited to 10% of each progresspayment.  At the time of execution of theAgreement, OWNER shall pay [*]of such down payment to DESIGN/BUILDER less any portionof such down payment previously paid by OWNER to DESIGN/BUILDER under theletter of intent between the parties, if any. Upon delivery of the Notice to Proceed, OWNER shall pay the remainingbalance of such down payment to DESIGN/BUILDER.

B.     *ProgressPayments; Retainage.*  OWNERshall make progress payments on account of the Contract Price on the basis ofDESIGN/BUILDER’s Applications for Payment, as provided in this Section4.01.B.  Progress payments shall be dueand payable in accordance with 13.04 of the General Conditions.  All such payments will be measured by theacceptable Schedule of Values established under paragraph 2.03.A of the GeneralConditions.

1.     Prior to SubstantialCompletion, such progress payments will be made in an amount equal to thepercentage indicated below, but, in each case, less the aggregate of paymentspreviously made and less such amounts as OWNER may withhold in accordance withparagraph 13.04.B of the General Conditions.

a.   Ninety-five percent (95%) ofWork completed (with the balance being retainage).

b.  Ninety-five percent (95%)(with the balance being retainage) of the cost of materials and equipment notincorporated in the Work (but delivered, suitably stored and accompanied bydocumentation satisfactory to OWNER as provided in paragraph 13.02.A of theGeneral Conditions).

2.     Upon SubstantialCompletion, payment will be made in an amount sufficient to increase totalpayments to DESIGN/BUILDER to One Hundred percent (100%) of the Contract Price,less (i) such amounts as OWNER may withhold in accordance with paragraph13.04.B of the General Conditions, (ii) amounts mutually agreed by the partiesfor completion of Punch List Items, and (iii) [*].  Amounts withheld for Punch List Items shallbe paid by OWNER to DESIGN/BUILDER as such Work is completed.

3.     Upon successful completionof the seven-day performance test described in Exhibit A, OWNER shall payDESIGN/BUILDER the [*] retained pursuant to Section 4.01.B.2.(iii) above.

C.           *FinalPayment.*  OWNER shall pay theremainder of the Contract Price, if any, to DESIGN/BUILDER in accordance withparagraph 13.08 of the General Conditions.

Article 5.        INTEREST.

5.01.        All monies not paidwhen due as provided in Article 13 of the General Conditions shall bearinterest at the rate of Eighteen percent (18%) per annum.  If it is determined that OWNER incorrectlywithheld payment of any disputed payment, then such payment shall bear interestfrom the date such payment would have otherwise been due until the dateactually paid to DESIGN/BUILDER.

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Article 6.        DESIGN/BUILDER’SREPRESENTATIONS.

6.01.        DESIGN/BUILDER makesthe following representations:

A.           DESIGN/BUILDER hasexamined and carefully studied the Contract Documents listed in Sections 7.01.Athrough C, and, to the extent prepared (but not yet approved by OWNER) prior tothe Effective Date, the documents described in Section 7.01.D.3 and .4.

B.           DESIGN/BUILDER isfamiliar with and is satisfied as to all federal, state and local Laws andRegulations in existence on the Effective Date that may affect cost, progress,performance, furnishing, and completion of the Work in accordance with theContract Documents.

C.           DESIGN/BUILDER isfamiliar with the work to be performed by OWNER and others at the Site thatrelates to the Work as indicated in the Contract Documents.

D.           DESIGN/BUILDER hascorrelated the information known to DESIGN/BUILDER, reports and drawingsidentified in the Contract Documents, and all additional examinations,investigations, tests, studies and data with the Contract Documents.

E.            DESIGN/BUILDER hasgiven OWNER written notice of all conflicts, errors, ambiguities ordiscrepancies that DESIGN/BUILDER has discovered in the Contract Documents andthe written resolution thereof by OWNER is acceptable to DESIGN/BUILDER, andthe Contract Documents are sufficient to indicate and convey understanding ofall terms and conditions for performance and furnishing of the Work.

Article 7.        CONTRACTDOCUMENTS.

7.01.        The ContractDocuments which comprise the entire agreement between OWNER and DESIGN/BUILDERconcerning the Work consist of the following:

A.           This Agreement (pages1 to 5, inclusive).

B.           Exhibits to thisAgreement (A to M, inclusive).

C.           General Conditions ofthe Contract Between Owner and Design/Builder (pages 1 to 35, inclusive).

D.           The following whichmay be delivered, prepared, or issued after the Effective Date of thisAgreement and are not attached hereto.

1.             Written Notice toProceed, in the form substantially similar to Exhibit M attached hereto.

2.            All WrittenAmendments and other documents amending, modifying or supplementing theContract Documents pursuant to paragraph 3.03.A of the General Conditions.

3.            Specifications asdefined in paragraph 1.01.A.31 of the General Conditions.

4.            Drawings as definedin paragraph 1.01.A.15 of the General Conditions.

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7.02.        There are no ContractDocuments other than those listed above in this Article 7.  The Contract Documents may only be amended,modified or supplemented as provided in paragraph 3.03.A of the General Conditions.

Article 8.        MISCELLANEOUS.

8.01.        The attached GeneralConditions of the Contract between Owner and Design/Builder are referred toherein as the General Conditions.

8.02.        Terms used in thisAgreement which are defined in Article 1 of the General Conditions will havethe meanings indicated therein.

8.03.        No assignment by aparty hereto of any rights under or interests in the Contract Documents will bebinding on another party hereto without the written consent of the party soughtto be bound, which consent shall not be unreasonably withheld; and,specifically but without limitation, moneys that may become due and moneys thatare due may not be assigned without such consent (except to the extent that theeffect of this restriction may be limited by law), and, unless specificallystated to the contrary in any written consent to an assignment, no assignmentwill release or discharge the assignor from any duty or responsibility underthe Contract Documents.

8.04.        OWNER andDESIGN/BUILDER each binds itself, its successors, assigns and legalrepresentatives to the other party hereto, its successors, permitted assignsand legal representatives in respect to all covenants, agreements andobligations contained in the Contract Documents.

8.05.        Any provision or partof the Contract Documents held to be void or unenforceable under any Law orRegulation shall be deemed stricken, and all remaining provisions shallcontinue to be valid and binding upon OWNER and DESIGN/BUILDER, who agree thatthe Contract Documents shall be reformed to replace such stricken provision orpart thereof with a valid and enforceable provision that comes as close aspossible to expressing the intention of the stricken provision.

8.06.        This Agreement may beexecuted in any number of counterparts, each of which shall be deemed to be anoriginal and all of which shall constitute one agreement that is binding uponall of the parties hereto, notwithstanding that all parties are not signatoriesto the same counterpart.  Facsimilesignatures of the parties hereto shall be binding.

8.07.        This Agreement willbe effective on date first written above. Within ninety (90) days after such effective date, OWNER shall provideto DESIGN/BUILDER the Notice to Proceed and evidence, acceptable to DESIGN/BUILDER,of funding for the Project.

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IN WITNESS WHEREOF, OWNER and DESIGN/BUILDER have signed this Agreementon the date first written above.
| OWNER:**Heartland  Grain Fuels, LP**               | DESIGN/BUILDER: ICM, Inc.                |
|----------------------------------------------------|------------------------------------------|
| ** **                                         |                                     |
| By:_____/s/  Bill Paulson_____________             | By:/s/ Dave VanderGriend                 |
| Title:______General  Manager_________              | Title:_President______________________   |
|                                               |                                     |
| Addresses for  giving notices and representatives: |                                     |
|                                               |                                     |
| Name:______________________________                | Name:_Dave VanderGriend_____________     |
| Title:_______________________________              | Title:_President_______________________  |
| Address:____________________________               | Address:310 N. First Street, Colwich, KS |
| Phone:______________________________               | Phone: 316-796-0900                      |
| Facsimile:___________________________              | Facsimile: 316-796-0570                  |
|                                               |                                     |

** **

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**ExhibitA**

**to**

**AgreementBetween Owner and Design/Builder**

**On the Basis of a Stipulated Price**

# Performance Criteria:

DESIGN/BUILDER represents and warrants to OWNER thatthe completed Project will achieve each of the following performancecriteria.  After DESIGN/BUILDERdetermines the Plant is ready for start-up, DESIGN/BUILDER, with OWNER’s laborforces, will start-up the Plant and conduct a seven-day performance test toestablish compliance with each of the performance criteria except theatmospheric emissions.  Compliance shallbe measured simultaneously for all criteria, and computed on the average overthe seven-day performance test.  If theProject fails to reach any performance criterion, then DESIGN/BUILDER shall (atno additional cost to OWNER) make such changes in design, construction, orequipment as required to meet the criteria, and conduct another seven dayperformance test.  Upon successfulcompletion of a seven-day performance test, the Plant shall be considered tohave achieved the performance criteria listed below (other than the atmosphericemissions criteria) for purposes of the foregoing representation and warrantyof DESIGN/BUILDER.

Table1  ethanol plant criteria  40 MGY capacity

| **Criteria**                                                                                             |   | **Specification**                                                                                                                                      |   | **Testing  Statement**                                                                       |   | **Documentation**                                                              |
|----------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|
| Plant Capacity — fuel-grade ethanol                                                                 |   | Operate at a rate of 40 million gallons per year of  denatured fuel grade ethanol meeting the specifications of ASTM 4806                              |   | Seven-day performance test                                                                   |   | Concurrence of production records and a written  report from DESIGN/BUILDER.   |
|                                                                                                     |   |                                                                                                                                                   |   |                                                                                         |   |                                                                           |
| Wet Distillers Grains OR Dry Distillers Grains                                                           |   | Operate at rate of 202,000 tons per year of  approximately 67% moisture WDGS OR 128,000 tons per year of approx. 11%  moisture DDG.                    |   | Determined by calculation of mass flow from  centrifuge (s) in a seven- day performance test |   | Concurrence of production records and a written  analysis from DESIGN/BUILDER. |
|                                                                                                     |   |                                                                                                                                                   |   |                                                                                         |   |                                                                           |
| Carbon Dioxide                                                                                           |   | Approximately 115,000 tons per year of raw CO2 gas.                                                                                                    |   | Determined as a function of fermented gallons in a  seven-day performance test.              |   | Mass flow calculation by DESIGN/BUILDER.                                       |
|                                                                                                     |   |                                                                                                                                                   |   |                                                                                         |   |                                                                           |
| Grain to Ethanol Conversion ratio; Corn/Sorghum  56#/bu., 16% or less moisture, zero aflatoxin tolerance |   | Not be less than 2.8 denatured gallons (2.67 gallons  undenatured) of ethanol per bushel of ground corn.                                               |   | As determined by meter readings during a seven-day  performance test.                        |   | Concurrence of production records and written  analysis by DESIGN/BUILDER.     |
|                                                                                                     |   |                                                                                                                                                   |   |                                                                                         |   |                                                                           |
| Electrical Energy                                                                                        |   | .75 kWh per denatured gallon of fuel grade ethanol.  Does not include kWh used to operate CO2plant, CO2 gas system, grain handling  system or Chiller. |   | As determined by meter readings during a seven-day  performance test.                        |   | Concurrence of production records and written  analysis by DESIGN/BUILDER.     |

 

 

 

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| Natural Gas             |   | Consumption shall not exceed 34,000 Btu per  denatured gallon of fuel-grade ethanol.                                                                                                        |   | As determined by meter readings during a seven-day  performance test.                                                                                                                                                                                                                                                                                           |   | Concurrence of production records and written  analysis by DESIGN/BUILDER.                                                                                                                                                                                                                                                                                      |
|-------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |   |                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                                                                                                                                                                                                                                            |
| Process Water Discharge |   | zero gallons under normal operations                                                                                                                                                        |   | Process discharge meter readings during seven day  performance test                                                                                                                                                                                                                                                                                             |   | Plant control system reports from DESIGN/BUILDER                                                                                                                                                                                                                                                                                                                |
|                    |   |                                                                                                                                                                                        |   |                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                                                                                                                                                                                                                                            |
| Atmospheric Emissions   |   | As prescribed and approved by the applicable  Department of Environmental Quality or similar agency for the State in which  the Plant is located as of the Effective Date of the Agreement. |   | As determined by written emissions compliance report  from a third party mutually selected by the parties confirming regulatory  compliance of the air emissions performance tests prescribed by the  applicable Department of Environmental Quality or similar agency for the  State in which the Plant is located as of the Effective Date of the  Agreement. |   | As determined by written emissions compliance report  from a third party mutually selected by the parties confirming regulatory  compliance of the air emissions performance tests prescribed by the  applicable Department of Environmental Quality or similar agency for the  State in which the Plant is located as of the Effective Date of the  Agreement. |

 

OWNER’s failure tomaterially comply with the operating procedures issued by DESIGN/BUILDER shallvoid the foregoing performance criteria and all other guarantees and warrantiesset forth in the Contract Documents.

OWNER understandsthat the startup of the plant requires resources and cooperation of OWNER,vendors and other suppliers to the Project. DESIGN/BUILDER disclaims any liability and OWNER indemnifies DESIGN/BUILDERfor non-attainment of the foregoing performance criteria directly or indirectlycaused by the material non-performance or negligence of third parties notretained by DESIGN/BUILDER.

 

 

 

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**Exhibit BtoAgreement Between Owner and Design/BuilderOn the Basis of a Stipulated Price**

General Project Scope:

Construct a no less than forty (40) million gallon peryear (MGY) dry mill fuel-grade ethanol plant located in or near Aberdeen, SouthDakota.  The plant will grindapproximately 14.3 million bushels per year to produce approximately forty (40)MGY of fuel-grade ethanol denatured with five percent gasoline (or a similarproduct).  The plant will also producenot less than 202,000 tons per year of 67% moisture Wet Distillers Grains withSolubles (WDGS), and approximately 115,000 tons per year of raw carbon dioxide(CO2) gas.

OWNER to provide DESIGN/BUILDER a level site and whichshall have a soil load bearing capacity as specified in the attached table.

Ground grain will be mixed in a slurry tank and routedthrough a working system consisting of a hydroheater, cook tube, and flashtank.  The mash will continue throughliquefaction and associated heat exchangers to fermentation.  Simultaneously, propagated yeast will beadded to the mash as the fermenter is filling. After batch fermentation is complete, the beer will be pumped to thebeer well and then to the beer column to vaporize the alcohol from the mash.

Alcohol streams are dehydrated in the distillationcolumn, the side stripper and the molecular sieve system.  Two hundred proof alcohol is pumped to thetank farm shift tanks and blended with five percent denaturant as the productis being pumped into a final storage tank.

Corn mash from the beer stripper is dewatered bydecanter type centrifuge.  Wet cake fromthe centrifuge is conveyed to the wetcake pad or drying system.  Water in the thin stillage can be evaporatedand recycled by the Bio-Methanation system.

Fresh water for the boilers, cooking and otherprocesses will be obtained from area process wells or city water system thatsupply the needs of the plant.  Boilerwater may be conditioned in regenerative softeners will be pumped through adeaerator scrubber and into a deaerator tank. Appropriate boiler chemicals will be added as preheated water is sent tothe boiler.

DESIGN/BUILDER will provide its standard design forthe fire pump house and water treatment space. Procurement and construction of fire protection package will be providedby owner.

The design includes a compressed air system consistingof compressors, a receiver tank, pre-filter, coalescing filter and air dryer.

The design also incorporates the use of aclean-in-place (CIP) system for cleaning cook, fermentation, distillation,evaporation, centrifuges and other systems. Fifty percent caustic soda is received by truck and stored in atank.  The CIP system uses tanks forreceiving, make-up, CIP return and CIP waste which is fed to themethanator.  The CIP system includes aCIP Tank, a 50% Caustic tank, and a Waste CIP tank.  A screen is used to remove the solids.

Under normal operating circumstances, the Plant willnot have any wastewater discharges that have been in contact with corn andsorghum mash, cleaning system or contact process water.  A bio-methanator manufactured byDESIGN/BUILDER/Phoenix will reduce the organic acids in process water allowingcomplete reuse within the Plant and is included in the Contract Price.  The

 

 

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Plant will have blowdown discharges from the coolingtower, water softeners, and Reverse Osmosis system.  OWNER is responsible for all permits,purchase and installation of pumps, waterline construction, sanitary sewerconstruction, necessary to discharge the blowdown from the cooling tower, watersofteners, and Reverse Osmosis system.

Carbon Dioxide (CO2) is a co-product of thefermentation process.  CO2 is allowedunder current Laws and Regulations to be vented to the atmosphere.  Installation of a plant or system to capture,clean and compress the CO2 is not included in the Work.  OWNER, at its cost, may add a blower, certainassociated equipment and a small amount of piping to move the CO2 from thefermenter to a collection point for sale or further processing.

Most of the processes within the Plant will becomputer controlled by a Siemens/Moore APACS distributed control system withgraphical user interface and three workstations all located in the plantcontrol room, which is included in the Contract Price.  No workstation is provided for the administrativebuilding or any other location.  It isestimated that the system will consist of 200 discrete inputs, 200 discreetoutputs, 175 analog inputs and 120 analog outputs.  Programmable logic controllers (PLCs) willcontrol certain process equipment.

*[Optional:  Adescription of the scope of work relating to the grain handling system isattached to the Agreement as Exhibit B-1 and incorporated herein.]

The Work provided by DESIGN/BUILDER will meetspecifications, criteria, and allowances as provided in the Construction Permitand all other applicable Laws and Regulations enacted as of the Effective Date.

 

 

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**[OPTIONAL]Exhibit B-1toAgreement Between Owner and Design/BuilderOn the Basis of a Stipulated Price**

SCOPE OF WORK FORHEARTLAND GRAIN FUELS, LP GRAIN HANDLING SYSTEM

Whole Grain Transfer — (Heartland Grain Scope)

·                  OWNER is responsible for all items required to transfer the whole grainfrom the OWNER’S existing grain facilities to the inlet of the proposedgrinding bin above the hammermills. OWNER shall be responsible for all design, procurement, and installationof any required equipment, structural, electrical, and all other required itemsassociated with the whole grain transfer system.  Transfer rate of whole grain to be mutuallyagreed by OWNER and DESIGN/BUILDER prior to design.

Dust Control System — Whole Grain Transfer system (Heartland Grain Scope)

·                  The dust control system will pick-up dust laden air at the grinder bin,or as required.

·                  One dust filter with fan, sized to meet the air permit requirements, willreceive dust laden air from the ducting at the grain handling system and willdischarge the collected dust into the receiving transfer drag conveyor.

GrindingSystem (ICM scope)

·                  One steel structure will support the grinderbin and related equipment.

·                  One rotary scalper/screener rated at 3000 BPH will receive grain from thereceiving and reclaim legs and discharge to the grinding bin

·                  One 5000 BU steel grinding bin will feed the hammer mills.

·                  Two 1,200 BPH hammer mills will grind thegrain.

·                  One dust filter with fan, sized to meet the air permit requirements, willcollect dust from the hammer mills and discharge to the ground grain conveyor.

GroundGrain Transfer to Plant (ICM scope)

·                  The ground grain will be transferred from thehammer mills to the ethanol plant at 3,000 BPH, using belt or drag conveyors.

DDGTransfer - Dryer to Flat Storage (ICM scope)

·                  DESIGN/BUILDERto provide and install the ductwork and supports required for the transfer ofDDG from the dryer to the existing flat storage cooling cyclone inletflange.  If any additional equipment isrequired to transfer the DDG to the existing flat storage, OWNER will enterinto a Change Order with DESIGN/BUILDER to provide and install the requiredequipment.

DESIGN/BUILDERreserves the right to change, modify, or otherwise re-design any part of theproposed grain handling system at the sole discretion of DESIGN/BUILDER on thebasis of safety, performance, or any other consideration deemed necessary byDESIGN/BUILDER.

 

 

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**Exhibit CtoAgreement Between Owner and Design/BuilderOn the Basis of a Stipulated Price**

**Buildingsand Structures by DESIGN/BUILDER:**

**Constructionof buildings and structures, as listed in Table 2 and Table 3, is included inthe Contract Price.**

**Table 2 Ancillary**Buildings and Structuresby DESIGN/BUILDER 
| Building             | ** ** | **Type**                                         | ** ** | **Preliminary  Dimensions** | ** ** | **Addition Info**                                                        |
|----------------------|------------|--------------------------------------------------|------------|-----------------------------|------------|--------------------------------------------------------------------------|
| MCC Buildings        |       | CMU block wall, insulated, climate controlled    |       | 20’ x 10’         |       | Located near cooling tower and grain storage silos  or milling building. |
| Cooling Tower        |       | Douglas Fir Structure Induced Draft Counter Flow |       | 34’ x 90’         |       | Includes three (3) cooling tower cells                                   |
| Admin Building Scale |       | Above ground, Grain supply trucks                |       | Owners  Responsibility      |       | Located near Admin. Bldg.                                                |
| Wetcake Pad          |       | Cast-in-Place Concrete Structure                 |       | 100’ x 100’       |       |                                                                     |

 

**Table 3**Buildings and Structuresby DESIGN/BUILDER 
| Building        | ** ** | **Type**                                             | ** ** | **Preliminary Dimensions**      | ** ** | **Addition Info**                                          |
|-----------------|------------|------------------------------------------------------|------------|---------------------------------|------------|------------------------------------------------------------|
| Process         |       | Structural steel, steel siding - Insulated           |       | 60’ x 140’ x 35’ |       | Includes laboratory, control room & offices, MCC  room |
| Energy Center   |       | Structural steel, steel siding - Insulated           |       | 90’ x 100’ x30’  |       | Includes centrifuge area, office, MCC room                 |
| Evaporation     |       | Structural steel, steel siding - Insulated           |       | 50’ x 45’ x 35’  |       |                                                       |
| Grain Receiving |       | Structural Steel, steel siding, roof insulation only |       | Owners  Responsibility          |       |                                                       |

 

 

 

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**Exhibit DtoAgreement Between Owner and Design/BuilderOn the Basis of a Stipulated Price**

Administration Buildingby OWNER:

The Contract Price doesnot include the cost of the following additional items:

Table4 Administration Building 
| Description                      | ** ** | **Additional Description**                                                                                                                    | ** ** | **Est. Amount** | ** ** |
|----------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------|------------|
| Administration  Building         |       | Free standing (37’ x  70’ x 10’)                                                                                                    |       | $                    | 300,000    |   |
| Office  Computer System          |       | Microsoft  Windows 2000 network server and five personal computers, one laser printer.  Includes setup, software and labor.                        |       | $                    | 40,000     |   |
| Telephone  System                |       | Digital  phone system with voice mail for office and plant.                                                                                        |       | $                    | 15,000     |   |
| Office  Copier & fax machine |       | Black  & white with sheet feeder and collator. Plain paper fax machine.                                                                        |       | $                    | 10,000     |   |
| Office Furniture                 |       | Office  desks, chair & side chairs, conference room table & chairs, three  four-drawer filing cabinets, and 10 two-drawer filing cabinets. |       | $                    | 25,000     |   |

 

 

 

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**Exhibit EtoAgreement Between Owner and Design/BuilderOn the Basis of a Stipulated Price**

OWNER’S Required Permits and Services List:

**OWNERshall provide all of the permits, authorizations and services, including butnot limited to:**

1)              Land and Grading — Land and Grading — OWNERshall provide the Site near or in Aberdeen, South Dakota.  OWNER shall obtain all legal authority to usethe Site for its intended purpose and perform technical due diligence forDESIGN/BUILDER to perform including but not limited to proper zoning approvals,elevation restrictions, soil tests, and water tests. The Site shall be roughgraded per DESIGN/BUILDER specifications and be within six inches of finalgrade including the rough grading for Site roadways.  The Site soils shall be modified as requiredto provide a minimum allowable soil bearing pressure as specified in theattached table for all foundation elements. The site soils shall be modified as required to provide a minimumallowable soil bearing pressure of 4,500 pounds per square foot in thefermenter area, 6,500 pounds per square foot in the grain storage concretesilos area and 3,000 pounds per square foot for all other foundationelements.  The soils beneath thefoundation elements shall not exceed the total or differential settlements suchthat the Plant is unable to perform its intended purpose.  If the existing soil conditions are such thatover-excavation and re-compaction or pilings are required, OWNER will beresponsible for this work.  OWNER is alsoresponsible for any dewatering required at the site during construction.

**Other items to be providedby the OWNER include, but are not limited to, the following: initial sitesurvey (boundary and topographic) as required by the design engineers, layoutof the property corners including two construction benchmarks, soil borings andsubsequent geotechnical report (the results of which are acceptable toDESIGN/BUILDER and consistent with the specifications set forth herein)describing recommendation for roads, foundations and if required, soilstabilization/remediation, site engineering and detailed drawings (to theextent not provided by DESIGN/BUILDER), land disturbance permit, erosioncontrol permit, site grading as described above with minimum soil standards,placement and maintenance of erosion control measures, access road from a city,county, state or federal road designed to meet city or local county roadstandards (provided that such road must contain a minimum of twelve (12) inchesof crushed rock with geo-fabric and compacted base), storm and sanitary sewers,water main branches, to be within five (5) feet of the designated buildinglocations, roads as specified and designed for the permanent elevations andeffective depth, paving, “construction” grading plan as drawn (including siteretention pond), all site seeding, landscaping, rock, plant water well andassociated permit(s), environmental monitoring, environmental monitoringequipment, environmental testing for both air and water, chemicals, corn orother feedstock, enzymes, a risk management plan, laboratory equipmentspecified by DESIGN/BUILDER, and all start-up supplies, including, but notlimited to hoses, equipment labels, and other items specified byDESIGN/BUILDER,**

2)              Roads — OWNER shall provide or have providedan access road of sufficient quality to withstand semi-truck traffic of 25,000+annual loads with weight of 80,000 lbs each.

 

 

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3)              Air Quality Permit   — A permit for construction shall beobtained from the proper authorities prior to the issuance of the Notice toProceed.  OWNER shall obtain an OperatingPermit in timely manner to allow startup of the Plant as scheduled byDESIGN/BUILDER.

4)              Storm Water Runoff Permit — OWNER shallobtain the permanent industrial storm water runoff permit.  DESIGN/BUILDER shall obtain the constructionstorm water runoff permit.

5)              Natural Gas Supply and Service Agreement —Continuous supply of natural gas of at least 1.2 billion cubic feet per year,at a rate of 135 MMBtu per hour and at a minimum pressure of 60 psig at alocation specified by DESIGN/BUILDER. OWNER shall provide supply meter andregulators to provide burner tip pressures as specified by DESIGN/BUILDER.OWNER will be responsible for the design, procurement, fabrication andinstallation of any and all equipment necessary to deliver the gas to alllocations specified by DESIGN/BUILDER.

6)              Electrical Service — Continuous supply of12,000 kVA, 12,400-volt electrical energy or more to a point immediatelyadjacent to the site.  OWNER shall supplya high voltage switch and, if required, a substation.  OWNER shall supply metering as specified bythe power company.  This electricalcapacity will be sufficient to support the operations of the Plant as specifiedby DESIGN/BUILDER. OWNER will be responsible to design, provide, and installelectricity connections to all locations specified by DESIGN/BUILDER (includingthe high-voltage permanent power loop, transformers and pads).

7)              Water Supply and Service Agreement — Forprocess (contact and non-contact) and sanitary purposes, OWNER shall design,procure, fabricate and install all equipment for the supply of fresh water, andsupply such water to all locations specified by DESIGN/BUILDER.  The water augmentation plan and allassociated fees, forms, permits and incidental requirements is theresponsibility of OWNER. OWNER shall make such water supply available at theSite, and shall provide DESIGN/BUILDER with a water sample from such supply, atleast two (2) months prior to the commencement of Construction.

8)              Wastewater Discharge Permit - For dischargesof cooling tower blowdown, water softening, and RO system blowdown under normaloperating procedures.  Process wastewaterdischarges during emergency failure of wastewater treatment plant to treat allprocess wastewater.

9)              Railroad — OWNER shall design, procure, fabricate and install any railroad tracksiding to the Site, at grades specified by DESIGN/BUILDER, including allnecessary earth work to properly locate the track, preparation of the railroadtrack bed, and track, ties and ballast to railroad company specifications andall required permits.

10)        Regulatory Contingency — Until satisfactoryatmospheric emissions compliance, OWNER shall maintain a fund of no less thanTwo Hundred Fifty Thousand Dollars ($250,000) to cover any unforeseengovernmental regulation changes implemented after the Effective Date of theAgreement.  This contingency is not partof the Contract Price, and its use may be authorized only by agreement of OWNERand DESIGN/BUILDER.

 

 

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11)        Water treatment — OWNER shall design, procure, fabricate andinstall all water treatment equipment as deemed necessary by DESIGN/BUILDER.This might include reverse osmosis, softening equipment, iron removal, sulfateremoval, or other items specified by DESIGN/BUILDER.  OWNER to contract with DESIGN/BUILDER tocomplete water treatment work.  All coststo complete work on water treatment are not included in base contract price,and will be billed to the Owner at cost plus 15%.

12)        Road Paving — After Substantial Completion, OWNER willbe responsible for paving of all roads.

13)        BATFApplication/Misc Permits — OWNERwill be responsible for completing, submitting and obtaining Bureau of AlcoholTobacco and Firearms permitting to produce fuel grade alcohol, tank farmpermits, discharge permits required by hydro testing the Plant, and an SPCCPlan.

14)        Office Equipment — With the exception of the DCS controlsystems, OWNER will be responsible for office furnishings, computers andsoftware to run the day-to-day operations of the Plant.

15)        Construction Power —OWNER will provide and pay forall electricity needed during the Construction, including the permanent powerloop required by DESIGN/BUILDER, by contracting with DESIGN/BUILDER for theinstallation of the same and which will be billed to OWNER as an additionalcost, and not part of, the Contract Price.

16)        Fire water system — OWNER shall beresponsible for the design, procurement, fabrication and installation of thefire water system including, without limitation: fire water pump station, firewater loop with hydrants, deluge systems, fire alarm panels, smoke and heatdetection in any building or MCC room, as required by Laws and Regulations andthe insurance company(ies) which provide insurance pursuant to the ContractDocuments.  OWNER to contract withDESIGN/BUILDER to complete fire water system. All costs to complete work on fire water system are not included in basecontract price, and will be billed to the Owner at cost plus 15%.

17)        Prior to start-up of the Plant, OWNER shallfurnish to DESIGN/BUILDER  the following:

a)             Fully executed copies of all permits required to operatethe Plant;

b)            Fully executed Certificate of Substantial Completion; and

c)             Preliminary Punchlist pursuant to paragraph 13.05 of theGeneral Conditions.

In the event OWNER desires that DESIGN/BUILDER perform all or any partof the foregoing obligations of OWNER, and DESIGN/BUILDER agrees to performsuch obligations, the Contract Price shall be increased by the amountdetermined pursuant to paragraph 10.02 of the General Conditions unlessotherwise agreed by the parties.

 

 

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**Exhibit FtoAgreement Between Owner and Design/BuilderOn the Basis of a Stipulated Price**

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (this “License Agreement”) is entered into andmade effective as of the _____ day of _____________________, 200____ (“EffectiveDate”) by and between Heartland Grain Fuels, LP a South Dakota limited partnercompany (“OWNER”), and ICM, Inc., a Kansas corporation (“ICM”).

WHEREAS, OWNER and ICM haveentered into that certain AGREEMENT BETWEEN OWNER AND DESIGN/BUILDER ON THEBASIS OF A STIPULATED PRICE dated ____________________, 200_____ (the “Contract”),under which ICM is to design and construct forty (40) million gallons per yearethanol plant for OWNER to be located in or near Aberdeen, South Dakota (the “Plant”);

WHEREAS, ICM will use proprietary technology and information of ICM inthe design and construction of the Plant; and

WHEREAS, OWNER desires from ICM, and ICM desires to grant to OWNER, alicense to use such proprietary technology and information in connection withOWNER’s ownership and operation of the Plant, all upon the terms and conditionsset forth herein;

NOW, THEREFORE, the parties, in consideration of the foregoing premisesand the mutual promises contained herein and for other good and valuableconsideration, receipt of which is hereby acknowledged, agree as follows:

1.             Uponsubstantial completion of the Plant by ICM pursuant to the terms of theContract or, if later, payment by OWNER of all amounts due and owing to ICMunder the Contract, ICM agrees to grant to OWNER a limited license to use theProprietary Property (hereinafter defined) solely in connection with theownership, operation, maintenance and repair of the Plant, subject to thelimitations provided herein (the “Purpose”).

2.             The“Proprietary Property” means, without limitation, documents, OperatingProcedures (hereinafter defined), materials and other information that arefurnished by ICM to OWNER in connection with the Purpose whether orally,visually, in writing, or by any other means, whether tangible or intangible,directly or indirectly and in whatever form or medium including, withoutlimitation, the design, arrangement, configuration, and specifications of (i)the combinations of distillation, evaporation, and alcohol dehydrationequipment (including, but not limited to, pumps, vessels, tanks, heatexchangers, piping, valves and associated electronic control equipment) and alldocuments supporting those combinations; (ii) the combination of the distillersgrain drying (DGD), and heat recovery steam generation (HRSG) equipment(including, but not limited to, pumps, vessels, tanks, heat exchangers, pipingand associated electronic control equipment) and all documents supporting thosecombinations; and (iii) the computer system, known as the distributed controlsystem (DCS and/or PLC) (including, but not limited to, the softwareconfiguration, programming, parameters, set points, alarm points, ranges,graphical interface, and system hardware connections) and all documentssupporting that system.  The “OperatingProcedures” means, without limitation, the process equipment and specificationsmanuals, standards of quality, 

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service protocols, data collection methods,construction specifications, training methods, engineering standards and anyother information prescribed by ICM from time to time concerning thePurpose.  Proprietary Property shall notinclude any information or materials that OWNER can demonstrate by writtendocumentation:  (i) was lawfully in thepossession of OWNER prior to disclosure by ICM; (ii) was in the public domainprior to disclosure by ICM; (iii) was disclosed to OWNER by a third partyhaving the legal right to possess and disclose such information or materials;or (iv) after disclosure by ICM comes into the public domain through no faultof OWNER or its members, directors, officers, employees, agents, contractors,consultants or other representatives (hereinafter collectively referred to as “Representatives”).  Information and materials shall not be deemedto be in the public domain merely because such information is embraced by moregeneral disclosures in the public domain, and any combination of features shallnot be deemed to be within the foregoing exceptions merely because individualfeatures are in the public domain if the combination itself and its principlesof operation are not in the public domain.

3.             OWNERshall not use the Proprietary Property for any purpose other than thePurpose.  OWNER shall not use theProprietary Property in connection with any expansion or enlargement of thePlant.  ICM and its Representatives shallhave the express right at any time to enter upon the premises of the Plant toinspect the Plant and its operation to ensure that OWNER is complying with theterms of this License Agreement.

4.             OWNER’sfailure to materially comply with the Operating Procedures shall void allguarantees, representations and warranties, whether expressed or implied, ifany, that were given by ICM to OWNER in the Contract concerning the performanceof the Plant.  OWNER agrees to indemnify,defend and hold harmless ICM and ICM’s Representatives from any and all losses,damages and expenses including, without limitation, reasonable attorneys’ feesresulting from, relating to or arising out of OWNER’s or its Representatives’(i) failure to materially comply with the Operating Procedures or, (ii)negligent use of the Proprietary Property.

5.             Anyand all modifications to the Proprietary Property by OWNER or itsRepresentatives shall be the property of ICM. OWNER shall promptly notify ICM of any such modification and OWNERagrees to assign all of its right, title and interest in such modification toICM; provided, however, OWNER shall retain the right, at no cost, to use suchmodification in connection with the Purpose.

6.             ICMhas the exclusive right and interest in and to the Proprietary Property and thegoodwill associated therewith.  OWNERwill not, directly or indirectly, contest ICM’s ownership of the ProprietaryProperty.  OWNER’s use of the ProprietaryProperty does not give OWNER any ownership interest or other interest in or tothe Proprietary Property except for the limited license granted to OWNERherein.

7.             OWNERshall pay no license fee or royalty to ICM for OWNER’s use of the ProprietaryProperty pursuant to the limited license granted to OWNER, the considerationfor this limited license is included in the amounts payable by OWNER to ICM forthe construction of the Plant under the Contract.

8.             OWNERmay not assign the limited license granted herein, in whole or in part, withoutthe prior written consent of ICM, which will not be unreasonably withheld ordelayed.  Prior to any assignment, OWNERshall obtain from such assignee a written instrument, in form and substancereasonably acceptable to ICM, agreeing to be bound by all the terms and 

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provisions of this License Agreement.  Any assignment of this License Agreementshall not release OWNER from (i) its duties and obligations hereunderconcerning the disclosure and use of the Proprietary Property, or (ii) damagesto ICM resulting from, or arising out of, a breach of such duties orobligations by OWNER or its Representatives. ICM may assign its right, title and interest in the ProprietaryProperty, in whole or part, subject to the limited license granted herein.

9.             TheProprietary Property is confidential and proprietary.  OWNER shall keep the Proprietary Propertyconfidential and shall use all reasonable efforts to maintain the ProprietaryProperty as secret and confidential for the sole use of OWNER and itsRepresentatives for the Purpose.  OWNERshall retain all Proprietary Property at its principal place of business and/orthe Plant.  OWNER shall not at any timewithout ICM’s prior written consent, copy, duplicate, record, or otherwisereproduce the Proprietary Property, in whole or in part, or otherwise make thesame available to any unauthorized person. OWNER shall not disclose the Proprietary Property except to itsRepresentatives who are directly involved with the Purpose, and even then onlyto such extent as is necessary and essential for such Representative’sinvolvement.  OWNER shall inform suchRepresentatives of the confidential and proprietary nature of such informationand, if requested by ICM, OWNER shall obtain from such Representative a writteninstrument, in form and substance reasonably acceptable to ICM, agreeing to bebound by all of the terms and provisions of this License Agreement.  OWNER shall make all reasonable efforts tosafeguard the Proprietary Property from disclosure by its Representatives to anyoneother than permitted hereby.  OWNER shallnotify ICM immediately upon discovery of any unauthorized use or disclosure ofthe Proprietary Property, or any other breach of this License Agreement byOWNER or its Representatives, and shall cooperate with ICM in every reasonableway to help ICM regain possession of the Proprietary Property and prevent itsfurther unauthorized use or disclosure. In the event that OWNER or its Representatives are required by law to disclosethe Proprietary Property, OWNER shall provide ICM with prompt written notice ofsame so that ICM may seek a protective order or other appropriate remedy.  In the event that such protective order orother appropriate remedy is not obtained, OWNER or its Representatives willfurnish only that portion of the Proprietary Property which in the reasonableopinion of its or their legal counsel is legally required and will exercise itsreasonable efforts to obtain reliable assurance that the Proprietary Propertyso disclosed will be accorded confidential treatment.

10.           OWNERagrees to indemnify ICM for any and all damages (including, without limitation,reasonable attorneys’ fees) arising out of or resulting from any unauthorizeddisclosure or use of the Proprietary Property by OWNER or its Representatives.  OWNER agrees that ICM would be irreparablydamaged by reason of a violation of the provisions contained herein and thatany remedy at law for a breach of such provisions would be inadequate.  OWNER agrees that ICM shall be entitled toseek injunctive or other equitable relief in a court of competent jurisdictionagainst OWNER or its Representatives for any unauthorized disclosure or use ofthe Proprietary Property without the necessity of proving actual monetary lossor posting any bond.  It is expresslyunderstood that the remedy described herein shall not be the exclusive remedyof ICM for any breach of such covenants, and ICM shall be entitled to seek suchother relief or remedy, at law or in equity, to which it may be entitled as aconsequence of any breach of such duties or obligations.

11.           Theduties and obligations of OWNER under this License Agreement, and allprovisions relating to the enforcement of such duties and obligations shallsurvive and remain in full 

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force and effect notwithstanding any termination orexpiration of the Contract or this License Agreement.

12.           ICMmay terminate the limited license granted to OWNER herein upon written noticeto OWNER if OWNER willfully or wantonly uses the Proprietary Property for anypurpose, or discloses the Proprietary Property to anyone, other than permittedherein.  Upon termination of the license,OWNER shall cease using the Proprietary Property for any purpose (including thePurpose) and, upon request by ICM, shall promptly return to ICM all documentsor other materials in OWNER’s or its Representatives’ possession that containProprietary Property in whatever format, whether written or electronic,including any and all copies or reproductions of the Proprietary Property.  OWNER shall permanently delete all suchProprietary Property from its computer hard drives and any other electronicstorage medium (including any backup or archive system).  OWNER shall deliver to ICM a writtencertificate which certifies that all electronic copies or reproductions of theProprietary Property have been permanently deleted.

13.           Thelaws of the State of Kansas, United States of America, shall govern thevalidity of the provisions contained herein, the construction of suchprovisions, and the interpretation of the rights and duties of theparties.  Any legal action brought toenforce or construe the provisions of this License Agreement shall be broughtin the federal or state courts located in Kansas, and the parties agree to andhereby submit to the exclusive jurisdiction of such courts and agree that theywill not invoke the doctrine of forum non conveniens or other similar defensesin any such action brought in such courts. Notwithstanding the foregoing, nothing in this License Agreement willaffect any right ICM may otherwise have to bring any action or proceedingrelating to this Agreement against OWNER or its properties in the courts of anyjurisdiction.

14.           OWNERhereby agrees to waive all claims against ICM and ICM’s Representatives for anyconsequential damages that may arise out of or relate to this LicenseAgreement, the Contract or the Proprietary Property whether arising incontract, warranty, tort (including negligence), strict liability or otherwise,including but not limited to losses of use, profits, business, reputation orfinancing.  OWNER agrees that theaggregate amount OWNER (and anyone claiming by or through OWNER) maycollectively recover from ICM (and its Representatives), for the Plant as awhole under the Contract and this License Agreement shall be limited to OneMillion Dollars ($1,000,000.00)

15.           Theterms and conditions of this License Agreement constitute the entire agreementbetween the parties with respect to the subject matter hereof and supersede anyprior understandings, agreements or representations by or between the parties,written or oral.  Any rule ofconstruction to the effect that any ambiguity is to be resolved against thedrafting party shall not be applicable in the interpretation of this LicenseAgreement.  This License Agreement maynot be modified or amended at any time without the written consent of theparties.

16.           Allnotices, requests, demands, reports, statements or other communications (hereinreferred to collectively as “Notices”) required to be given hereunder orrelating to this License Agreement shall be in writing and shall be deemed tohave been duly given if transmitted by personal delivery or mailed by certifiedmail, return receipt requested, postage prepaid, to the address of the party asset forth below.  Any such Notice shallbe deemed to be delivered and received as of the date so delivered, ifdelivered personally, or as of the third business day following the day sent,if sent by certified mail.  Any partymay, at any time, designate a different address to which Notices shall bedirected by providing written notice in the manner 

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set forth in this paragraph.

17.           Inthe event that any of the terms, conditions, covenants or agreements containedin this License Agreement, or the application of any thereof, shall be held bya court of competent jurisdiction to be invalid, illegal or unenforceable, suchterm, condition, covenant or agreement shall be deemed void ab initio and shallbe deemed severed from this License Agreement. In such event, and except if such determination by a court of competentjurisdiction materially changes the rights, benefits and obligations of theparties under this License Agreement, the remaining provisions of this LicenseAgreement shall remain unchanged unaffected and unimpaired thereby and, to theextent possible, such remaining provisions shall be construed such that thepurpose of this License Agreement and the intent of the parties can be achievedin a lawful manner.

18.           Theduties and obligations herein contained shall bind, and the benefits andadvantages shall inure to, the respective successors and permitted assigns ofthe parties hereto.

19.           Thewaiver by any party hereto of the breach of any term, covenant, agreement orcondition herein contained shall not be deemed a waiver of any subsequentbreach of the same or any other term, covenant, agreement or condition herein,nor shall any custom, practice or course of dealings arising among the partieshereto in the administration hereof be construed as a waiver or diminution ofthe right of any party hereto to insist upon the strict performance by anyother party of the terms, covenants, agreement and conditions herein contained.

20.           Inthis License Agreement, where applicable, (i) references to the singular shallinclude the plural and references to the plural shall include the singular, and(ii) references to the male, female, or neuter gender shall include referencesto all other such genders where the context so requires.

IN WITNESS WHEREOF, the parties hereto have executed this LicenseAgreement, the Effective Date of which is indicated on page 1 of this LicenseAgreement.
| OWNER:                            |   | ICM:                                  |
|-----------------------------------|--------|---------------------------------------|
|                              |   |                                  |
|  Heartland Grain Fuels, LP   |   | ICM, Inc.                             |
|  By:                         |   | Dave  VanderGriend By:                |
|                              |   |                                  |
|  Title:                      |   | Title: President                      |
|                              |   |                                  |
|  Date Signed:                |   | Date Signed:                          |
|                              |   |                                  |
|  Address for giving notices: |   | Address for giving notices:           |
|                              |   |                                  |
|                              |   | 301 N First Street  Colwich, KS 67030 |

 

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**Exhibit GtoAgreement Between Owner and Design/BuilderOn the Basis of a Stipulated Price**

## ICM Training:

The Contract Price includes a commitment by DESIGN/BUILDER to performcertain training for certain personnel of OWNER at OWNER’s ethanol plant, whichis located in Aberdeen, South Dakota.

Employee training will be coordinated by operational personnel ofDESIGN/BUILDER with the support of personnel of OWNER on location at OWNER’sethanol plant. Vendor training will also occur in conjunction with this training.The specific schedule, attendees and training detail will be provided as Plantstart up date is determined.

Such personnel of OWNER will have the opportunity to operate theethanol plant under the supervision of operators of DESIGN/BUILDER. It is anticipatedthat personnel participating in such training will include the plant manager,laboratory manager and shift supervisors who will work at the Plant for aperiod of 1-3 weeks. DESIGN/BUILDER will not charge any fee to OWNER for thisstartup training and DESIGN/BUILDER will provide all training materials.  Expenses for OWNER’s employees such astravel, salaries, rooms and meals of the participants will be theresponsibility of OWNER.

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**Exhibit HtoAgreement Between Owner and Design/BuilderOn the Basis of a Stipulated Price**

INSURANCE

DESIGN/BUILDER’S Employers’ Liability, Business Automobile Liability,and Commercial General Liability policies, as required in General Conditionsparagraph 5.02 shall be written with at least the following limits of liability:

1.             Employers’ Liability Insurance

a.     $1,000,000 

Bodily Injury by Accident

Each Accident

b.              $1,000,000 

BodilyInjury by Disease

Policy Limit

c.               $1,000,000 

Bodily Injury by Disease

Each Employee

2.             BusinessAutomobile Liability Insurance

a.               $1,000,000

EachAccident

3.             CommercialGeneral Liability Insurance

       a.      $1,000,000

EachOccurrence

b.              $2,000,000

General Aggregate

c.               $2,000,000

 Products/Completed

                Operations Aggregate

       d.      $1,000,000

                Personal and Advertising

                InjuryLimit

4.             LiabilityUmbrella policy:  $10,000,000 (inaddition to the underlying limits).

5.             ProfessionalErrors & Omissions policy. $1,000,000 per policy year.

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*Portions omitted pursuant to a request forconfidential treatment and filed separately with the SEC.

**Exhibit I****to****Agreement Between Owner andDesign/Builder****On the Basis of a StipulatedPrice**

EquipmentWarranty:

The warranty for Plant production rates, product quality, efficienciesand emissions standards is covered in Exhibit A.  This Exhibit I specifically definesDESIGN/BUILDER’s operating warranty for Plant equipment inside the batterylimit**.**

DESIGN/BUILDER reserves the right at its own discretion, to void anyand all warranty if the operation of the Plant and/or its subsystems, exceedsnameplate capacity by [*] or more.

DESIGN/BUILDER is OWNER’s first point of contact for any claim ofwarranty by OWNER against DESIGN/BUILDER concerning Plant equipment, during thewarranty period.

The cost of labor performed by vendors other than DESIGN/BUILDER tosettle a warranty claim situation, without written permission fromDESIGN/BUILDER, will not be covered under any warranty expressed or implied byDESIGN/BUILDER.

Whatis furnished under the warranty:

The warranty will furnish replacement consumables and parts coveredunder the warranty.  Labor will only befurnished by DESIGN/BUILDER to repair items warranted for workmanship andoriginally designed and built by DESIGN/BUILDER.

Whatis covered by the warranty:

Workmanship and materials on all plant equipment including pumps,instruments, controls, DCS, switchgear, wiring, conveyors, gearboxes, augerflighting, valves 2” size and above, valve actuators, tanks, vessels, aircompressors, boilers, cooling towers, motors, couplers, belts, sheaves, chains,sprockets, heat exchangers, agitators, centrifuges, fans, blowers, Hvac units,and other related equipment.

Warranty will cover failures of seals for lack of coolant flush duringthe seven (7) day performance test described in Exhibit A.

Warranty will cover failure of seals and couplers caused bymisalignment during the seven (7) day performance test described in Exhibit A.

Warranty will cover failure of pump seals caused by productmisapplication.

Warranty will cover labor and parts to repair all leakage from pipes,exchangers and valves during the seven (7) day performance test described inExhibit A.

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Whatis not covered by the warranty:

Warrantydoes not cover damage to process equipment of any kind, from, impropermaintenance, improper operation, operator negligence or abuse.

Warranty does not cover catastrophic failures of the critical pathequipment by chain reaction, from improper operation, abuse or neglect of otherequipment or procedures in the process equipment critical path and/or acts ofGod, whether upstream or downstream.

Warranty does not cover damage caused by customer modification ofequipment included in the warranty list during the warranty period, without thewritten consent of DESIGN/BUILDER.

Warranty does not cover pipe gaskets, sight glasses, valves under 2” insize, door knobs, walk in doors and closers, pipe and border painting, man-waygaskets, countertops and window glasses after the seven (7) day performancetest described in Exhibit A.

Warranty does not cover pump seals, pump motors and bearings that failfor lack of coolant flush after the seven (7) day performance test described inExhibit A.

Warranty does not cover pump seals or couplers after the seven (7) dayperformance test described in Exhibit A that fail from misalignment.

Warranty will not cover failure of any size valve when failure isdetermined to be a result of owner welding on or near the valve.

Warranty will not cover failure of any equipment due to impropergrounding of welding equipment.

Warranty will not cover any equipment damaged by lightning strikes,power surges, power outages or poor quality power from the electricitysupplier.

Warranty will not cover leaking plate and frame exchangers after theseven (7) day performance test described in Exhibit A.

Procedurefor warranty claim:

DESIGN/BUILDER does not expect OWNER to remain out of service withequipment that has failed during the warranty period while trying to settle thewarranty claim.  Whether covered bywarranty or not the plant must operate.

Consumable items such as motors, gearboxes, seals, switchgear andsimilar equipment should be replaced and the damaged unit returned toDESIGN/BUILDER or made available for inspection by DESIGN/BUILDER.DESIGN/BUILDER reserves the right to return the item to the manufacturer forevaluation before settling a warranty issue.

Failureto return or produce for inspection the damaged parts or equipment will voidany warranty expressed or implied.

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1.               The first step by OWNER to satisfy a warrantyquestion is to call DESIGN/BUILDER’s project manager (or the delegatedalternate) and notify that person of the claim. Provide the following information:

A.            Item nomenclature

B.              Equipment or part number

C.              Description of failure

D.             Corrective action taken

E.               Location and disposition of failed item

2.               Fill out the electronic form provided byDESIGN/BUILDER and send the form by mail or email to the Project manager or hisdesignate.

3.               Project manager or delegate will respondwithin one (1) working day to acknowledge the claim and documentation, by phoneand follow up with email.

4.               Determination of settlement will be made inforty-five (45) days or less by DESIGN/BUILDER. If conflict arises from the determination between OWNER andDESIGN/BUILDER, such conflict will be resolved under the dispute resolutionprocedure set forth in Article 15 of the General Conditions.

WarrantyPeriod:

The warranty period isthe twelve (12) month period commencing on the date of SubstantialCompletion**and ending on the date that is 12months immediately thereafter.  In orderfor OWNER to make a warranty claim the deficiency must be discovered, and OWNERmust notify DESIGN/BUILDER in writing of such deficiency within this warrantyperiod.

 

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***Portions omitted pursuant to a request for confidentialtreatment and filed separately with the SEC.**

**Exhibit J****to****Agreement Between Ownerand Design/Builder****On the Basis of aStipulated Price**

## ** **

## **[*]**

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***Portions omitted pursuant to a request for confidential treatmentand filed separately with the SEC.**

**Exhibit KtoAgreement Between Owner and Design/BuilderOn the Basis of a Stipulated Price**

** **

**[*]**

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***Portions omitted pursuant to a request for confidentialtreatment and filed separately with the SEC.**

**Exhibit LtoAgreement Between Owner and Design/BuilderOn the Basis of a Stipulated Price**

** **

**[*]**

 

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**GENERAL CONDITIONS OF THE****CONTRACT BETWEEN****OWNER AND DESIGN/BUILDER**

ARTICLE 1—DEFINITIONS

*1.01       Defined Terms*

A.  Wherever used in these GeneralConditions or in the other Contract Documents the following terms have themeanings indicated which are applicable to both the singular and pluralthereof:

1.*      Agreement—*TheAgreement Between Owner and Design/Builder on the Basis of a Stipulated Pricecovering the Work.  Other ContractDocuments are incorporated into the Agreement and made a part thereof asprovided therein.

2.*      Applicationfor Payment—*The form that is substantially similar to Exhibit Jwhich is to be used by DESIGN/BUILDER in requesting progress or final paymentsand which is to be accompanied by such supporting documentation as is requiredby the Contract Documents.

3.*      Asbestos—*Anymaterial that contains more than one percent (1%) asbestos and is friable or isreleasing asbestos fibers into the air above current action levels establishedby the United States Occupational Safety and Health Administration.

4.*      Bond—*Performanceor payment bond or other instrument of security.

5.*      ChangeOrder—*A written order which is signed by DESIGN/BUILDER and OWNERwhich authorizes an addition, deletion or revision in the Work, or anadjustment in the Contract Price or the Contract Times, issued on or after theEffective Date of the Agreement.

6.      *Construction*—Theperforming or furnishing of labor, the furnishing and incorporating ofmaterials and equipment into the Work and the furnishing of services (otherthan Design Professional Services) and documents, all as required by theContract Documents.  Constructionincludes the materials and equipment incorporated into the Project.

7.      *ConstructionSubagreement*—A written agreement between DESIGN/BUILDER and aconstruction contractor for provision of Construction.

8.      *ContractDocuments*—The Agreement and related exhibits, the Notice to Proceed,these General Conditions, the Specifications and the Drawings together with allChange Orders, and Written Amendments, issued on or after the Effective Date ofthe Agreement.

9.*    ContractPrice—*The moneys payable by OWNER to DESIGN/BUILDER for completionof the Work in accordance with the Contract Documents.

10.    *ContractTimes*—The number of days or the dates stated in the Agreement (i) toachieve Substantial Completion, and (ii) to complete the Work so that it isready for final payment in accordance with paragraph 13.08.

11.    *defective*—Anadjective which when modifying the term Construction refers to Constructionthat is unsatisfactory, faulty or deficient, in that it does not conform to the

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Contract Documents, or does not meet the requirements of anyinspection, reference standard, test or approval referred to in the ContractDocuments, or has been damaged prior to OWNER’s final payment.

12.*    DESIGN/BUILDER—*ICM,Inc., a Kansas corporation.

13.*    DesignSubagreement—*A written agreement between DESIGN/BUILDER and a designprofessional for provision of Design Professional Services.

14.*    DesignProfessional Services—*Services provided by or for licensed designprofessionals during Construction, or operational phases of the Project,including the development of drawings, Specifications, and other designsubmittals specified by the Contract Documents and required to be performed bylicensed design professionals.

15.*    Drawings—*Thoseportions of the Contract Documents prepared by or for DESIGN/BUILDER andapproved by OWNER consisting of drawings, diagrams, illustrations, schedulesand other data which show the scope, extent, and character of the Work.

16.*    EffectiveDate of the Agreement—*The date indicated in the Agreement on whichit becomes effective, but if no such date is indicated it means the date onwhich the Agreement is signed and delivered by the last of the two parties tosign and deliver.

17.*    Engineer—*Aduly licensed individual or entity designated by DESIGN/BUILDER to perform orfurnish specified Design Professional Services in connection with the Work.

18.    *HazardousCondition*—The presence at the Site of Asbestos, Hazardous Waste, PCB’s,Petroleum Products or Radioactive Materials in such quantities or circumstancesthat there is a danger to persons or property.

19.    *HazardousWaste*—The term Hazardous Waste shall have the meaning provided inSection 1004 of the Solid Waste Disposal Act (42 USC Section 6903).

20.    *Laws andRegulations; Laws or Regulations*—Any and all applicable laws, rules,regulations, ordinances, codes, permits, and orders of any and all governmentalbodies, agencies, authorities and courts having jurisdiction.

21.    *Liens*—Charges,security interests or encumbrances upon real property or personal property.

22. *Notice to Proceed*—A written notice givenby OWNER to DESIGN/BUILDER fixing the date on which the Contract Times willcommence to run in accordance with paragraph 2.01.

23.*  OWNER—*Thepublic body, or authority, individual or entity with whom DESIGN/BUILDER hasentered into the Agreement and for whom the Work is to be provided.

24.*    PCBs—*Polychlorinatedbiphenyls.

25.*    Petroleum—*Petroleum,including crude oil or any fraction thereof which is liquid at standardconditions of temperature and pressure (60 degrees Fahrenheit and 14.7 poundsper 

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square inch absolute), such as oil, petroleum, fuel oil, oil sludge,oil refuse, gasoline, kerosene, and oil mixed with other non-Hazardous Wastes andcrude oils.

26.    *Project*—TheConstruction to be provided under the Contract Documents as provided inparagraph 1.01 of the Agreement.

27.    *Punch ListItems—* Themiscellaneous items in the scope of the Project that are not required for theProject to be operational and that remain to be completed by DESIGN/BUILDERafter Substantial Completion and before Final Completion.

28.    Radioactive Material—Source,special nuclear, or byproduct material as defined by the Atomic Energy Act of1954 (42 USC Section 2011 et seq.) as amended from time to time.

29.    *Schedule ofValues*—A schedule prepared by DESIGN/BUILDER indicating that portionof the Contract Price to be paid for each major component of the Work.

30.    *Site*—Landsor other areas designated in the Contract Documents as being furnished by OWNERfor the performance of the Construction, storage, or access.

31.    *Specifications*—Thoseportions of the Contract Documents prepared by or for DESIGN/BUILDER andapproved by OWNER consisting of written technical descriptions of materials,equipment, construction systems, standards and workmanship as applied to theConstruction and certain administrative details applicable thereto.

32.    *Subcontractor*—Anindividual or entity other than a Supplier or Engineer having a direct contractwith DESIGN/BUILDER or with any other Subcontractor for the performance of apart of the Work.

33.    *SubstantialCompletion*—The time at which the Construction (or a specified part)has progressed to the point where it is sufficiently complete, in accordancewith the Contract Documents, so that corn can be ground and the ethanolproduction process may begin, as reasonably determined by DESIGN/BUILDER.  The terms “substantially complete” and “substantiallycompleted” as applied to the Construction refer to Substantial Completion ofConstruction.

34.   *Supplier*—Amanufacturer, fabricator, supplier, distributor, materialman or vendor having adirect contract with DESIGN/BUILDER or with any Subcontractor to furnishmaterials or equipment to be incorporated in the Work by DESIGN/BUILDER or anySubcontractor.

35.    *Work*—Theentire completed construction or the various separately identifiable partsthereof required to be performed or furnished under the ContractDocuments.  Work includes and is theresult of performing or furnishing Design Professional Services andConstruction required by the Contract Documents.

36.    *WrittenAmendment*—A written amendment of the Contract Documents, signed byOWNER and DESIGN/BUILDER on or after the Effective Date of the Agreement.

 

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ARTICLE 2—PRELIMINARY MATTERS

*2.01     Commencement of ContractTimes; Notice to Proceed*

**A.  TheContract Times will commence to run on the day indicated in the Notice toProceed; provided, however, in no case shall the Contract Times commence to runbefore the later of the date (i) Notice to Proceed is delivered pursuant toparagraph 8.07 of the Agreement, (ii) the entire amount of the down payment ispaid pursuant to paragraph 4.01A of the Agreement, (iii) all necessaryunderground utilities have been installed at the Site, and (iv) all fillmaterial is placed and a level, buildable Site is delivered toDESIGN/BUILDER.  A Notice to Proceed maybe given at any time within the period of time set forth in Section 8.07 of theAgreement.**

*2.02     Starting the Work*

A.  DESIGN/BUILDER shall start toperform the Work on the date when the Contract Times commence to run.

*2.03     Preliminary Schedules andProof of Insurance*

A.  A preliminary progressschedule indicating the times (number of days or dates) for starting andcompleting the various stages in the design and construction of the Work isattached as Exhibit K.  A preliminarySchedule of Values for all of the Work, which includes quantities and prices ofitems aggregating the Contract Price, subdivides the Work into component partsto serve as the basis for progress payments during performance of the Workand  includes a pro rata amount ofoverhead and profit applicable to each item of Work is attached hereto asExhibit L.

B.   Before any Work is started,DESIGN/BUILDER and OWNER shall each deliver to the other, with copies to eachadditional insured, certificates of insurance (and other evidence of insurancewhich either of them or any additional insured may reasonably request) whichDESIGN/BUILDER and OWNER respectively are required to purchase and maintain inaccordance with paragraphs 5.02.A, 5.04.A and 5.04.B.

ARTICLE 3—CONTRACT DOCUMENTS: INTENT, AMENDING, REUSE

*3.01     Intent*

A.  The Contract Documentscomprise the entire agreement between OWNER and DESIGN/BUILDER concerning theWork.  The Contract Documents arecomplementary; what is called for by one is as binding as if called for byall.  The Contract Documents will beconstrued in accordance with the laws of the State of Kansas.  Except as otherwise required by applicable Lawsand Regulations, the Contract Documents shall govern the obligations of theparties regarding the Work and Project.

B.  It is the intent of theContract Documents to describe a functionally complete Project to be designedand constructed in accordance with the Contract Documents.  Any Work, materials or equipment that mayreasonably be inferred from the Contract Documents or from prevailing custom ortrade usage as being required to produce the intended result will be furnishedand performed whether or not specifically called for.  When words or phrases which have a well-knowntechnical or construction industry or trade meaning are used to describe work,materials or equipment, such words or phrases shall be interpreted inaccordance with that meaning.

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*3.02     References*

A.  Reference to standards,specifications, manuals or codes of any technical society, organization orassociation, or to the Laws or Regulations of any governmental authority,whether such reference be specific or by implication, shall mean the lateststandard, specification, manual, code or Laws or Regulations in effect on theEffective Date of the Agreement except as may be otherwise specifically statedin the Contract Documents.

B.   No provision of any standard,specification, manual, code or instruction shall be effective to change theduties and responsibilities of OWNER, DESIGN/BUILDER or any of theirsubcontractors, consultants, agents, or employees from those set forth in theContract Documents, nor shall it be effective to assign to OWNER any duty orauthority to supervise or direct the furnishing or performance of the Work orany duty or authority to undertake responsibility inconsistent with theprovisions of Article 8 or any other provision of the Contract Documents.

C.             Title headings contained in the ContractDocuments are for convenience and reference only and are not to be construed aslimiting or extending the meaning of any of its provisions.  All dollar figures shall mean the lawful currencyof the United States of America, unless expressly stated otherwise.  Words importing the singular, include theplural, and vice versa.  Words importingthe masculine gender, include the feminine and neuter, and vice versa.  Words importing persons, include firms orcorporations, and vice versa, as the context or reference requires.  Any and all measurements including, but notlimited to, dimensions, calculations, volumes and weights shall be in U.S.units of measurement.

*3.03**                    **Amending and SupplementingContract Documents*

A.  The Contract Documents may beamended to provide for additions, deletions and revisions in the Work or tomodify the terms and conditions thereof in one or more of the following ways:

1.   A Change Order; or

2.   A formal Written Amendment.

*3.04** **Reuse of Documents*

A.   All documents includingDrawings and Specifications prepared or furnished by DESIGN/BUILDER pursuant tothe Contract Documents are instruments of service in respect of the Project andDESIGN/BUILDER shall retain an ownership and property interest therein whether ornot the Project is completed.  OWNER maymake and retain copies for information and reference in connection with the useand occupancy of the Project by OWNER and others; however, such documents arenot intended or represented to be suitable for reuse by OWNER or others onextensions of the Project or on any other project.  Any reuse without written verification oradaptation by DESIGN/BUILDER for the specific purpose intended will be at OWNER’ssole risk and without liability or legal exposure to DESIGN/BUILDER, and OWNERshall indemnify and hold harmless DESIGN/BUILDER, Subcontractors, and Engineerfrom all claims, damages, losses and expenses including attorneys’ fees arisingout of or resulting therefrom.  Any suchverification or adaptation will entitle DESIGN/BUILDER to further compensationat rates to be agreed upon by OWNER and DESIGN/BUILDER.

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B.  All documents includingDrawings and Specifications prepared or furnished by DESIGN/BUILDER pursuant tothe Contract Documents are also subject to the use and disclosure restrictionsset forth in the License Agreement attached to the Agreement as Exhibit F.  The parties shall execute and deliver suchLicense Agreement in connection with the execution and delivery of theAgreement.  Nothing contained in paragraph3.04.A. shall be construed or interpreted as granting OWNER any rights orinterest in the Proprietary Property of DESIGN/BUILDER (as defined in ExhibitF) except as provided in Exhibit F attached to the Agreement.

ARTICLE 4—AVAILABILITY OF LANDS; DIFFERING SITE CONDITIONS; REFERENCEPOINTS; HAZARDOUS CONDITIONS

*4.01     Availability of Lands*

A.  OWNER shall furnish the Siteupon which the Construction is to be performed, and rights-of-way and easementsfor access thereto.

B.   Upon reasonable writtenrequest, OWNER shall furnish DESIGN/BUILDER with a correct statement of recordlegal title and legal description of the Site upon which the Construction is tobe performed and OWNER’s interest therein. OWNER shall identify any encumbrances or restrictions not of generalapplication but specifically related to use of the Site so furnished with whichDESIGN/BUILDER will have to comply in performing the Work.  Any and all easements necessary for the Workwill be obtained and paid for by OWNER.

C.   OWNER shall provide suchlands and access thereto that may be reasonably required by DESIGN/BUILDER fortemporary construction facilities or storage of materials and equipment.

*4.02       Differing SiteConditions*

A.  DESIGN/BUILDER shall promptly,and before the conditions are disturbed, give a written notice to OWNER of (i)subsurface or latent physical conditions at the Site which differ materiallyfrom those indicated in the OWNER’s geotechnical report for the Project site orthe land and grading specifications listed in Exhibit E, or (ii) unknownphysical conditions at the Site, of an unusual nature, which differ materiallyfrom those ordinarily encountered and generally recognized as inhering in workof the character called for by the Contract Documents.

B.   OWNER will investigate thesite conditions promptly after receiving the notice.  If the conditions do materially so differ andcause an increase in the DESIGN/BUILDER’s cost of or time in performing anypart of the Work, an equitable adjustment shall be made under this clause andthe Contract Times and/or Contract Price modified in writing by Change Order inaccordance with Article 9.

C.   No request by DESIGN/BUILDERfor an equitable adjustment under this paragraph 4.02 shall be allowed unlessDESIGN/BUILDER has given the written notice required; provided that the timeprescribed in paragraph 9.02.A for giving written notice may be extended byOWNER.

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*4.03       Reference Points*

A.  DESIGN/BUILDER shall beresponsible for laying out the Construction and shall protect and preserve thereference points established by OWNER pursuant to paragraph 8.01.A.6.e andshall make no changes or relocations without the prior written approval ofOWNER.  DESIGN/BUILDER shall report toOWNER whenever any reference point or property monument is lost or destroyed orrequires relocation because of necessary changes in grades or locations, andshall be responsible for the accurate replacement or relocation of suchreference points or property monuments by professionally qualified personnel.

*4.04     Hazardous Conditions*

A.  OWNER represents and warrantsthat there is no Hazardous Condition or materials that could create a HazardousCondition existing at the Site as of the Effective Date of the Agreement thathas not been disclosed in writing to DESIGN/BUILDER and that OWNER or OWNER’sofficers, directors, employees, agents, other consultants or subcontractorsshall not bring to the Site during the term of the Agreement any materialscreating a Hazardous Condition.  OWNERwill be responsible for any Hazardous Condition encountered at the Site whichwas not identified in the Contract Documents to be within the scope of theWork.  OWNER shall not be responsible formaterials creating a Hazardous Condition brought to the Site by DESIGN/BUILDER,Subcontractors, Suppliers or anyone else for whom DESIGN/BUILDER isresponsible.

B.  DESIGN/BUILDER and anyaffected Subcontractor shall immediately (i) stop all Construction inconnection with such Hazardous Condition and in any area affected thereby(except in an emergency as required by paragraph 6.15), and (ii) notify OWNER(and thereafter confirm such notice in writing).  OWNER shall promptly determine the necessityof retaining a qualified expert to evaluate such Hazardous Condition or takecorrective action, if any.  DESIGN/BUILDERshall not be required to resume Construction in connection with such HazardousCondition or in any such affected area until after OWNER has obtained anyrequired permits related thereto and delivered to DESIGN/BUILDER specialwritten notice (i) specifying that such Hazardous Condition and any affectedarea is or has been rendered safe for the resumption of Construction, or (ii)specifying any special conditions under which such Construction may be resumedsafely.  If OWNER and DESIGN/BUILDERcannot agree as to entitlement to or the amount or extent of an adjustment, ifany, in the Contract Times and/or Contract Price as a result of suchConstruction stoppage or such special conditions under which Construction isagreed by DESIGN/BUILDER to be resumed, either party may make a claim thereforas provided in Article 9.

C.  To the fullest extentpermitted by Laws and Regulations, OWNER shall indemnify and hold harmlessDESIGN/BUILDER, Subcontractors, Suppliers, Engineers and the officers,directors, employees, agents, other consultants and subcontractors of each andany of them from and against all claims, costs, losses and damages (includingbut not limited to all reasonable fees and charges of engineers, architects,attorneys and other professionals and all court or arbitration or other disputeresolution costs) arising out of or resulting from such HazardousCondition.  Nothing in this paragraph4.04.C shall obligate OWNER to indemnify any individual or any entity, includingDESIGN/BUILDER, from and against the consequences of that individual’s orentity’s own negligence or willful misconduct. OWNER shall not be obligated to indemnify or hold harmlessDESIGN/BUILDER, Subcontractors, Suppliers or any other individual or any entityfor any such claim, cost, loss or damage arising out of or resulting frommaterials creating a Hazardous Condition brought to the Site by DESIGN/BUILDER,Subcontractors, Suppliers or any other party for whom DESIGN/BUILDER isresponsible.

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ARTICLE 5—BONDS AND INSURANCE

*5.01       Performance, Payment orOther Bond*

A.  DESIGN/BUILDER shall not berequired to furnish a performance, payment or any other Bond.

*5.02     DESIGN/BUILDER’sLiability Insurance*

A.  DESIGN/BUILDER shall purchaseand maintain such Commercial General Liability (subject to customary exclusionsin respect of professional liability), Automobile Liability and Worker’sCompensation insurance as is appropriate for the Work being performed andfurnished and as will provide protection from claims set forth below which mayarise out of or result from DESIGN/BUILDER’s performance and furnishing of theWork and DESIGN/BUILDER’s other obligations under the Contract Documents,whether it is to be performed or furnished by DESIGN/BUILDER, any Subcontractoror Supplier, or by anyone directly or indirectly employed by any of them toperform or furnish any of the Work, or by anyone for whose acts any of them maybe liable:

1.       Claims under workers’compensation, disability benefits and other similar employee benefit acts;

2.       Claims for damages becauseof bodily injury, occupational sickness or disease, or death of DESIGN/BUILDER’semployees;

3.       Claims for damagesbecause of bodily injury, sickness or disease, or death of any person otherthan DESIGN/BUILDER’s employees;

4.       Claims for damages insuredby customary personal injury liability coverage which are sustained (i) by anyperson as a result of an offense directly or indirectly related to theemployment of such person by DESIGN/BUILDER, or (ii) by any other person forany other reason;

5.       Claims for damages, otherthan to the Work itself, because of injury to or destruction of tangibleproperty wherever located other than claims under paragraph 5.02.A.7. below,including loss of use resulting therefrom;

6.       Claims for damagesbecause of bodily injury or death of any person or property damage arising outof the ownership, maintenance or use of any motor vehicle; and

7.       Claims for professionalerrors and omissions arising from the Design Professional Services provided forthe Project.

B.      The policies of insurancerequired by paragraph 5.02.A shall:

1.       With respect to insurancerequired by paragraphs 5.02.A.3 through 5.02.A.6 inclusive, include asadditional insureds OWNER and any other persons or entities identified inwriting by OWNER, all of whom shall be listed as additional insureds, andinclude coverage for the respective officers and employees of all suchadditional insureds;

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2.       Include at least thespecific coverages and be written for not less than the limits of liability setforth in Exhibit H or required by Laws or Regulations, whichever is greater;

3.       Include completedoperations insurance;

4.       Include contractualliability insurance covering DESIGN/BUILDER’s indemnity obligations underparagraphs 6.10 and 6.18;

5.       Contain a provision orendorsement that the coverage afforded will not be cancelled, materiallychanged or renewal refused until at least thirty (30) days prior written noticehas been given to OWNER and each other additional insured to whom a certificateof insurance has been issued (and the certificates of insurance furnished byDESIGN/BUILDER pursuant to paragraph 5.08.B will so provide);

6.       Remain in effect at leastuntil final payment and at all times thereafter when DESIGN/BUILDER may becorrecting, removing or replacing defective Construction in accordance withparagraphs 12.06 and 12.07;

7.       With respect to completedoperations insurance, remain in effect for at least one year after finalpayment (and DESIGN/BUILDER shall furnish OWNER and each other additionalinsured to whom a certificate of insurance has been issued evidencesatisfactory to OWNER and any such additional insured of continuation of suchinsurance at final payment); and

8.       DESIGN/BUILDER shallmaintain in effect all insurance coverage required under this paragraph atDESIGN/BUILDER’S sole expense with insurance companies (and policies) approvedby OWNER.  If DESIGN/BUILDER fails toobtain or maintain any insurance coverage required under this Agreement, theOWNER may purchase such coverage and charge the expense to DESIGN/BUILDER, orterminate this Agreement for cause in accordance with paragraph 14.02 below.

*5.03     OWNER’s LiabilityInsurance*

A.  In addition to the insurancerequired to be provided by DESIGN/BUILDER under paragraph 5.02, OWNER, at OWNER’soption, may purchase and maintain at OWNER’s expense OWNER’s own liabilityinsurance as will protect OWNER against claims which may arise from operationsunder the Contract Documents.

*5.04     Property Insurance*

A.   OWNER shall purchase andmaintain property insurance upon the Construction at the Site in the amount ofthe full replacement cost thereof at OWNER’s sole expense with insurancecompanies (and policies) approved by DESIGN/BUILDER.  This insurance will:

1.       Include the interests ofOWNER, DESIGN/BUILDER, Subcontractors, and any other persons or entities listedas an insured or additional insured;

2.     Be writtenon a Builder’s Risk “all-risk” or equivalent policy form that shall at leastinclude insurance for physical loss and damage to the Construction, temporarybuildings, falsework and all materials and equipment in transit, and shallinsure against at least the following perils or causes of loss:  fire, lightning, extended coverage, theft,vandalism and malicious mischief, earthquake, collapse, debris removal, demolitionoccasioned by 

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enforcement of Laws andRegulations, water damage, flood, system testing, and such other perils orcauses of loss as may be agreed in writing by DESIGN/BUILDER and OWNER;

3.       Include expenses incurredin the repair or replacement of any insured property (including but not limitedto fees and charges of engineers and architects);

4.       Cover materials andequipment stored at the Site or at another location that was agreed to inwriting by OWNER prior to being incorporated in the Construction, provided thatsuch materials and equipment have been included in an Application for Paymentapproved by OWNER;

5.       Be maintained in effectuntil final payment is made unless otherwise agreed to in writing by OWNER andDESIGN/BUILDER with thirty (30) days written notice to each other additionalinsured to whom a certificate of insurance has been issued; and

6.       Have a deductible peroccurrence of not more than ____________________ Dollars ($_______________).

B.     OWNER shall purchase andmaintain such boiler and machinery insurance or additional property insuranceas DESIGN/BUILDER may reasonably require or required by Laws and Regulationswhich will include the interests of OWNER, DESIGN/BUILDER, Subcontractors, andother individuals and entities listed as an insured or additional insured.

C.     All the policies ofinsurance (and the certificates or other evidence thereof) required to bepurchased and maintained by OWNER in accordance with paragraph 5.04 willcontain a provision or endorsement that the coverage afforded will not becancelled or materially changed or renewal refused until at least thirty (30)days prior written notice has been given to DESIGN/BUILDER and to each otheradditional insured to whom a certificate of insurance has been issued.

D.     OWNER shall not beresponsible for purchasing and maintaining any property insurance to protectthe interests of DESIGN/BUILDER, Subcontractors, Suppliers, Engineers or othersin the Work to the extent of the deductible amounts.  The risk of loss within such deductibleamounts will be borne by the party at fault for such loss and ifDESIGN/BUILDER, Subcontractor or others wishes property insurance coveragewithin the limits of such deductible amount, each may purchase and maintain itat it’s own expense.

E.     If DESIGN/BUILDER requestsin writing that other special insurance be included in the property insurancepolicies provided under paragraph 5.04, OWNER shall, if possible, include suchinsurance, and the cost thereof will be charged to DESIGN/BUILDER by appropriateChange Order or Written Amendment.  Priorto commencement of the Work at the Site, OWNER shall in writing adviseDESIGN/BUILDER whether or not such other insurance has been procured by OWNER.

*5.05        Waiver of SubrogationRights*

A.    OWNER and DESIGN/BUILDERintend that all policies purchased in accordance with paragraph 5.04 willprotect OWNER, DESIGN/BUILDER, Engineers, Subcontractors, others who may have afinancial interest in the Project, and all other individuals or entities listedas insureds or additional insureds in such policies and will provide primarycoverage for all losses and damages caused by the perils or causes of losscovered thereby.  All such policies shall

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contain provisions to the effect that in the event of payment of anyloss or damage the insurers will have no rights of recovery against any of theinsureds or additional insureds thereunder. Each party waives all rights against the other party and its officers,directors, employees, members, and agents for all losses and damages caused by,arising out of or resulting from any of the perils or causes of loss covered bysuch policies and any other property insurance applicable to the Work.

*5.06       Receipt and Applicationof Proceeds*

A.    Any insured loss under thepolicies of insurance required by paragraph 5.04 will be adjusted with OWNERand made payable to OWNER as fiduciary for the benefit of insureds, as theirinterests may appear, subject to the requirements of paragraph 5.06.B.  OWNER shall deposit in a separate account anymoney so received, and shall distribute it in accordance with such agreement asthe parties in interest may reach.  If noother special agreement is reached the damaged Work shall be repaired orreplaced, the moneys so received applied on account thereof and the Work andthe cost thereof covered by an appropriate Change Order or Written Amendment.

B.     OWNER as fiduciary shallhave power to adjust and settle any loss with the insurers unless one of theparties in interest shall object in writing within fifteen (15) days after theoccurrence of loss to OWNER’s exercise of this power.  If such objection be made, OWNER as fiduciaryshall make settlement with the insurers in accordance with such agreement asthe parties in interest may reach.  If nosuch agreement among the parties in interest is reached, OWNER as fiduciaryshall adjust and settle the loss with the insurers and, if required in writingby any party in interest, OWNER as fiduciary shall give Bond for the properperformance of such duties.

*5.07       Acceptance ofInsurance; Option to Replace*

A.    If either party has anyobjection to the coverage afforded by or other provisions of the insurancerequired to be purchased and maintained by the other party in accordance withthis Article 5 on the basis of the other party not complying with theContract Documents, the objecting party shall so notify the other party inwriting within thirty (30) days after receipt of the certificates (or otherevidence requested) required by paragraph 2.03.B.  OWNER and DESIGN/BUILDER shall each provideto the other such additional information in respect of insurance provided asthe other may reasonably request.  Ifeither party does not purchase or maintain all of the insurance required ofsuch party by the Contract Documents, such party shall notify the other partyin writing of such failure to purchase prior to the start of the Work, or ofsuch failure to maintain prior to any change in the required coverage.  Without prejudice to any other right orremedy, the other party may elect to obtain equivalent insurance to protectsuch other party’s interests at the expense of the party who was supposed toprovide such coverage, and a Change Order or Written Amendment shall be issuedto adjust the Contract Price accordingly.

*5.08**              **Licensed Sureties and Insurers;Certificates of Insurance*

A.    All insurance required bythe Contract Documents to be purchased and maintained by OWNER orDESIGN/BUILDER shall be obtained from insurance companies that are dulylicensed or authorized in the jurisdiction in which the Project is located toissue insurance policies for the limits and coverages so required.  Such insurance companies shall also meet suchadditional requirements and qualifications as may be agreed in writing byDESIGN/BUILDER and OWNER.

 

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ARTICLE 6—DESIGN/BUILDER’S RESPONSIBILITIES

*6.01       Design ProfessionalServices*

A.*  Standard ofCare:*  DESIGN/BUILDER shallperform or furnish Design Professional Services and related services in allphases of the Project.  The standard ofcare for all such services performed or furnished under this Agreement will bethe care and skill ordinarily used by members of the engineering professionpracticing under similar conditions at the same time and locality.

B.*   PreliminaryDesign Phase:*  During thepreliminary design phase, DESIGN/BUILDER shall:

1.    Consult with OWNER tounderstand OWNER’s requirements for the Project and review available data.

2.    Advise OWNER as to thenecessity of OWNER providing or obtaining from others additional reports, dataor services of the types provided in paragraph 8.01.A.6.a-g and assist OWNER inobtaining such reports, data, or services.

3.    Identify and analyze requirements ofgovernmental authorities having jurisdiction to approve the portions of theProject designed or specified by DESIGN/BUILDER with whom consultation is to beundertaken in connection with the Project.

4.    Obtain such additionalgeotechnical and related information which it deems necessary for performanceof the Work.

C.*  Final DesignPhase:*  During the finaldesign phase, DESIGN/BUILDER shall:

1.    Prepare final Drawingsshowing the scope, extent, and character of the Construction to be performedand furnished by DESIGN/BUILDER and Specifications.

2.    Provide technical criteria,written descriptions and design data required for obtaining approvals of suchgovernmental authorities as have jurisdiction to review or approve the finaldesign of the Project, and assist OWNER in consultations with appropriateauthorities.

D.  *ConstructionPhase*.  During Construction,DESIGN/BUILDER shall provide Engineering and Design Professional Services asnecessary to complete the Project.

E.*   OperationalPhase:*  During the operationalphase, DESIGN/BUILDER shall:

1.    Provide assistance inconnection with the start-up, testing, refining and adjusting of any equipmentor system included in the Work.

2.    Assist OWNER in trainingstaff to operate and maintain the Project as provided in Exhibit G.

Other than assistance normally provided in the industry after finalpayment, nothing in this paragraph 6.01.E. shall be interpreted or construed asobligating DESIGN/BUILDER to perform or provide such assistance to OWNER afterfinal payment and acceptance of the Work under paragraph 13.08 below.

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*6.02     Supervision andSuperintendence of Construction*

A.  DESIGN/BUILDER shallsupervise, inspect and direct the Construction competently and efficiently,devoting such attention thereto and applying such skills and expertise as maybe necessary to provide the Construction in accordance with the ContractDocuments.  DESIGN/BUILDER shall besolely responsible for the means, methods, techniques, sequences and proceduresemployed for the provision of Construction. DESIGN/BUILDER shall be responsible to see that the completed Constructioncomplies accurately with the Contract Documents and shall keep OWNER advised asto the quality and progress of the Construction.

B.   DESIGN/BUILDER shall keep onthe Site at such times as DESIGN/BUILDER determines are reasonably necessary tocomplete the Work a competent superintendent. The superintendent will be DESIGN/BUILDER’s representative at the Siteand shall have authority to act on behalf of DESIGN/BUILDER.

*6.03       Labor, Materials andEquipment*

A.  DESIGN/BUILDER shall providecompetent, suitably qualified personnel to survey and lay out the Constructionand perform Construction as required by the Contract Documents. DESIGN/BUILDERshall at all times maintain good discipline and order at the Site.

B.  Unless otherwise specified inthe Contract Documents, DESIGN/BUILDER shall furnish or cause to be furnishedand assume full responsibility for materials, equipment, labor, transportation,construction equipment and machinery, tools, appliances, fuel, heat, telephone,sanitary facilities, and all other facilities and incidentals necessary for thefurnishing, performance, testing, start-up and completion of the Work,excluding, specifically, power, light, water, temporary facilities and allother items designated as OWNER’s responsibility.  DESIGN/BUILDER will direct the checkout ofutilities and operations of systems and equipment.

C.  All materials and equipmentincorporated into the Work shall be of good quality and new.  All warranties and guarantees specificallycalled for by the Contract Documents shall expressly run to the benefit of OWNER.  If reasonably required by OWNER,DESIGN/BUILDER shall furnish satisfactory evidence (including reports ofrequired tests) as to the kind and quality of materials and equipment.  All materials and equipment shall be applied,installed, connected, erected, used, cleaned and conditioned in accordance withinstructions of the applicable Supplier.

*6.04     Progress Schedule*

A.  DESIGN/BUILDER shall adhere tothe progress schedule discussed in paragraph 2.03.A as it may be adjusted fromtime to time.

1.    DESIGN/BUILDER shall submitto OWNER for acceptance proposed adjustments in the progress schedule that willnot change the Contract Times.  Suchadjustments will conform generally to the progress schedule then in effect.

2.    Proposed adjustments in theprogress schedule that will change the Contract Times shall be submitted inaccordance with the requirements of Article 11. Such adjustments may only be made by a Change Order or WrittenAmendment.

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*6.05 Concerning Subcontractors, Suppliers and Others*

A.  DESIGN/BUILDER shall notemploy any Subcontractor, Engineer, Supplier or other individual or entityagainst whom OWNER may have reasonable objection.  DESIGN/BUILDER shall not be required toemploy any Subcontractor, Engineer, Supplier or other individual or entity to furnishor perform any of the Work against whom DESIGN/BUILDER has reasonableobjection.

B.   DESIGN/BUILDER shall be fullyresponsible to OWNER for all acts and omissions of the Subcontractors,Engineers, Suppliers and other individuals or entities performing or furnishingany of the Work under a direct or indirect contract with DESIGN/BUILDER.  Nothing in the Contract Documents shallcreate for the benefit of any such Subcontractor, Engineer, Supplier or otherindividual or entity any contractual relationship between OWNER and any suchSubcontractor, Engineer, Supplier or other individual or entity, nor shall itcreate any obligation on the part of OWNER to pay or to see to the payment ofany moneys due any such Subcontractor, Engineer, Supplier or other individualor entity except as may otherwise be required by Laws and Regulations.

C.   DESIGN/BUILDER shall besolely responsible for scheduling and coordinating Subcontractors, Engineers,Suppliers and other individuals and entities performing or furnishing any ofthe Work under a direct or indirect contract with DESIGN/BUILDER.  DESIGN/BUILDER shall require allSubcontractors, Engineers, Suppliers and such other individuals and entitiesperforming or furnishing any of the Work to communicate with the OWNER throughDESIGN/BUILDER.

D.  All services performed orprovided to and material and equipment supplied to DESIGN/BUILDER by aSubcontractor or Supplier will be pursuant to an appropriate DesignSubagreement or Construction Subagreement between DESIGN/BUILDER and theSubcontractor, Engineer or Supplier which specifically binds the Subcontractor,Engineer or Supplier to the applicable terms and conditions of the ContractDocuments for the benefit of OWNER. Whenever any such agreement is with a Subcontractor, Engineer orSupplier who is listed as an additional insured on the property insuranceprovided in paragraph 5.04.A or 5.04.B, the agreement between theDESIGN/BUILDER and the Subcontractor, Engineer or Supplier will containprovisions whereby the Subcontractor, Engineer or Supplier waives all rightsagainst OWNER, DESIGN/BUILDER, and all other additional insureds for all lossesand damages caused by any of the perils or causes of loss covered by suchpolicies and any other property insurance applicable to the Work.  If the insurers on any such policies requireseparate waiver forms to be signed by any Subcontractor, Engineer or Supplier,DESIGN/BUILDER will obtain the same.

*6.06       Patent Fees andRoyalties*

A.  DESIGN/BUILDER shall pay alllicense fees and royalties and assume all costs incident to the use in theperformance of the Work or the incorporation in the Work of any invention,design, process, product or device (other than any increased license fees,royalties and costs arising out of or resulting from a Change Order) which isthe subject of patent rights or copyrights held by others.  To the fullest extent permitted by Laws andRegulations,  DESIGN/BUILDER shallindemnify and hold harmless OWNER, from and against all claims, costs, lossesand damages (including but not limited to all reasonable fees and charges ofengineers, architects, attorneys and other professionals and all court orarbitration or other dispute 

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resolution costs) arising out of or resulting from any infringement ofpatent rights or copyrights incident to the use in the performance of the Workor resulting from the incorporation in the Work of any invention, design,process, product or device. DESIGN/BUILDER shall, at its sole expense, have theright to defend against any such claim. OWNER shall promptly notifyDESIGN/BUILDER upon becoming aware of any such claim. DESIGN/BUILDER, in orderto avoid such claim, shall have the right at its sole expense to substitutenon-infringing invention, design, process, product or device or to modify suchinfringing invention, design, process, product or device so they becomenon-infringing, or to obtain at its sole expense the necessary licenses to usethe infringing invention, design, process, product or device provided that suchsubstituted and modified invention, design, process, product or device shallmeet all the requirements of the Contract Documents.

*6.07     Permits*

A.  OWNER shall obtain and pay forall necessary permits and licenses. DESIGN/BUILDER shall assist OWNER, when necessary, in obtaining suchpermits and licenses.  OWNER shall payall governmental charges and inspection fees necessary for the prosecution ofthe Construction.  OWNER shall pay allcharges of utility owners for connections that are necessary for the Work, andOWNER shall pay all charges of such utility owners for capital costs relatedthereto.

*6.08     Laws and Regulations*

A.  DESIGN/BUILDER shall give allnotices and comply with all Laws and Regulations of the place of the Projectwhich are applicable to furnishing and performance of the Work.  OWNER shall not be responsible for monitoringDESIGN/BUILDER’s compliance with any Laws or Regulations.

B.   If DESIGN/BUILDER performsany Work knowing or having reason to know that it is contrary to Laws orRegulations, DESIGN/BUILDER shall bear all costs arising therefrom.

C.   If changes in Laws andRegulations after the Effective Date of the Agreement cause an increase in theDESIGN/BUILDER’s cost of or time in performing any part of the Work,DESIGN/BUILDER may make a claim under Article 9 for a modification to theContract Times and/or Contract Price..

*6.09       Taxes*

A.  OWNER shall pay toDESIGN/BUILDER all sales, consumer, use, gross receipts and other similar taxeswhich are applicable during the performance of the Work and are either paid by DESIGN/BUILDERor are required to be reimbursed by DESIGN/BUILDER to its Subcontractors,Suppliers, or Engineers.

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*6.10       Use of Site and OtherAreas*

A.  DESIGN/BUILDER shall confineconstruction equipment, the storage of materials and equipment and the operationsof construction workers to those lands and areas permitted by the OWNER andother land and areas permitted by Laws and Regulations, rights-of-way, permitsand easements, and shall not unreasonably encumber the premises withconstruction equipment or other materials or equipment.  DESIGN/BUILDER shall be responsible for anydamage to any such land or area, or to the owner or occupant thereof or of anyadjacent land or areas, resulting from the performance of the Construction.  Should any claim be made by any such owner oroccupant because of the performance of the Construction, DESIGN/BUILDER shallpromptly settle with such other party by negotiation or otherwise resolve theclaim by arbitration or other dispute resolution proceeding or at law.  DESIGN/BUILDER shall, to the fullest extentpermitted by Laws and Regulations, indemnify and hold harmless OWNER and anyonedirectly or indirectly employed by OWNER from and against all claims, costs,losses and damages (including, but not limited to, all reasonable fees ofengineers, architects, attorneys and other professionals and court andarbitration or other dispute resolution costs) arising out of or resulting fromany claim or action, legal or equitable, brought by any such owner or occupantagainst OWNER, or any other party indemnified hereunder to the extent caused byor based upon DESIGN/BUILDER’s performance of the Construction.

B.  During the performance of theConstruction, DESIGN/BUILDER shall keep the premises free from accumulations ofwaste materials, rubbish and other debris resulting from the Construction.  At the completion of the Construction,DESIGN/BUILDER shall remove all waste materials, rubbish and debris from andabout the premises as well as all tools, appliances, construction equipment, temporaryconstruction and machinery and surplus materials.  DESIGN/BUILDER shall leave the Site clean andready for occupancy by OWNER at Substantial Completion.  DESIGN/BUILDER shall restore to originalcondition all property not designated for alteration by the Contract Documents.

C.  DESIGN/BUILDER shall not loadnor permit any part of any structure to be loaded in any manner that willendanger the structure, nor shall DESIGN/ BUILDER subject any part of the Workor adjacent property to stresses or pressures that will endanger it.

*6.11     Record Documents*

A.  DESIGN/BUILDER shall maintainin a safe place at the Site one record copy of all Drawings, Specifications,Written Amendments, and Change Orders, in good order and annotated to show allchanges made during Construction.  Theserecord documents will be available to OWNER for reference.  Upon completion of the Work, these recorddocuments and Submittals, including a reproducible set of record drawings, willbe delivered to OWNER.

6.12   *Safety and Protection*

A.  DESIGN/BUILDER shall beresponsible for initiating, maintaining and supervising all safety precautionsand programs in connection with the Construction.  DESIGN/BUILDER shall take necessaryprecautions for the safety of, and shall provide the necessary protection toprevent damage, injury or loss to:

1.   All persons on the Site orwho may be affected by the Construction;

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2.   All Work and materials andequipment to be incorporated therein, whether in storage on or off the Site;and

3.    Other property at the Siteor adjacent thereto, including trees, shrubs, lawns, walks, pavements,roadways, structures, utilities and underground facilities not designated forremoval, relocation or replacement in the course of the Construction.

B.   DESIGN/BUILDER shall complywith applicable Laws and Regulations of any public body having jurisdiction forsafety of persons or property or to protect them from damage, injury or loss;and shall erect and maintain all necessary safeguards for such safety andprotection.  DESIGN/BUILDER shall notifyowners of adjacent property and of underground facilities and utility ownerswhen prosecution of the Work may affect them, and shall cooperate with them inthe protection, removal, relocation and replacement of their property.  All damage, injury or loss to any propertycaused, directly or indirectly, in whole or in part, by DESIGN/BUILDER, anySubcontractor, Supplier or any other individual or entity directly orindirectly employed by any of them to perform or furnish any of the Work or anyonefor whose acts any of them may be liable, shall be remedied byDESIGN/BUILDER.  DESIGN/BUILDER’s dutiesand responsibilities for safety and for protection of the construction shallcontinue until (i) such time as all the Work is completed and OWNER has issueda notice to DESIGN/BUILDER in accordance with paragraph 13.09 that the Work isacceptable or, (ii) in the event DESIGN/BUILDER is excluded from the Site underparagraph 13.05.B. after Substantial Completion, the date DESIGN/BUILDER isexcluded from the Site.

*6.13       Safety Representative*

A.  DESIGN/BUILDER shall designatea qualified and experienced safety representative whose duties andresponsibilities shall be the prevention of accidents and the maintaining andsupervising of safety precautions and programs in connection with theperformance of the Work.

*6.14       Hazard CommunicationPrograms*

A.  DESIGN/BUILDER shall beresponsible for coordinating any exchange of material safety data sheets orother hazard communication information required to be made available to orexchanged between or among Subcontractors at the Site in accordance with Lawsor Regulations.

*6.15     Emergencies*

A.  In emergencies affecting thesafety or protection of persons or the Construction or property at the Site oradjacent thereto, DESIGN/BUILDER, without special instruction or authorizationfrom OWNER, is obligated to act to prevent threatened damage, injury orloss.  DESIGN/BUILDER shall give OWNERprompt written notice if DESIGN/BUILDER believes that any significant changesin the Construction or variations from the Contract Documents have been causedthereby.  If a change in the ContractDocuments is required because of the action taken by DESIGN/BUILDER in responseto such an emergency, a Change Order will be issued to document theconsequences of such action.

*6.16       Continuing the Work*

A.  DESIGN/BUILDER shall carry onthe Work and adhere to the progress schedule during all disputes ordisagreements with OWNER.  No Work shallbe delayed or postponed pending 

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resolution of any disputes or disagreements, except as DESIGN/BUILDERand OWNER may otherwise agree in writing or as otherwise provided in theContract Documents.

*6.17**                    **DESIGN/BUILDER’s General Warrantyand Guarantee*

A.  DESIGN/BUILDER warrants andguarantees to OWNER that all Construction will be in accordance with theContract Documents and will not be *defective*.DESIGN/BUILDER’s warranty and guarantee hereunder excludes defects or damagecaused by:

1.    Abuse, modification orimproper maintenance or operation by persons other than DESIGN/BUILDER,Subcontractors or Suppliers; or

2.    Normal wear and tear undernormal usage.

The warranty set forth in Exhibit I and not this paragraph 6.17 shallapply to the items set forth in such Exhibit.

B.   DESIGN/BUILDER’s obligationto perform and complete the Work in accordance with the Contract Documentsshall be absolute.  Except as provided inparagraph 12.08, no action by OWNER will constitute an acceptance of Work thatis not in accordance with the Contract Documents or a release of DESIGN­/BUILDER’sobligation to perform the Work in accordance with the Contract Documents,including but not limited to the following:

1.    Observations by OWNER;

2.    The making of any progressor final pay­ment;

3.   The issuance of a certificateof Substantial Completion;

4.   Use or occupancy of the Workor any part thereof by OWNER;

5.   Any acceptance by OWNER orany failure to do so;

6.   Any inspection, test orapproval by others; or

7.   Any correction of *defective* Construction by OWNER.

C.          DESIGN/BUILDER shall,at final completion, assign to OWNER all manufacturer’s warranties formaterials and equipment incorporated into the Project; provided, however, inthe event of a claim by OWNER against DESIGN/BUILDER, OWNER shall use its bestefforts to cooperate with DESIGN/BUILDER in the enforcement of any applicablewarranty.

6.18      *Indemnification*

**OWNER and DESIGN/BUILDER are and will be throughoutthe term of this Agreement be independent contractors as to each other.  Each party recognizes that it shall be solelyresponsible for its own conduct, including without limitation its own fault, asto any aspect of the Agreement.  In theevent any claim is made or any action is filed by a third party arising out ofthis Agreement or the services to be performed under it, the parties anticipatethat each will diligently defend said claim or action on its own behalf, andwill pay, settle, or otherwise promptly dispose of any demand or judgmentagainst it consistent with the provisions of the**

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**Kansas comparativenegligence statute, K.S.A. §60-258a, in effect on the date of thisAgreement.  In the event either party ismade to respond in damages for the fault of the other party, then the otherparty agrees to indemnify and hold harmless the first party (including itsofficers, directors, employees, and agents) from any payment that it has tomake, including without limitation the payment of reasonable attorneys’ feesincurred in resisting, settling, or otherwise disposing of the demand, onaccount of the other party’s fault.  Inregard to the indemnity obligation in this paragraph 6.18 or any otherprovision of the General Conditions, neither party shall make a payment forwhich indemnity will be sought from the other party without first providingsuch other party written notice of the claim and an opportunity to assume thedefense.**

ARTICLE 7—OTHER CONSTRUCTION

*7.01       Related Construction atSite*

A.  OWNER may perform other workrelated to the Project at the Site by OWNER’s own forces, or let other directcontracts therefor or have other work performed by utility owners.  Written notice thereof will be given toDESIGN/BUILDER prior to starting any such other work.  OWNER shall be responsible for such otherwork including, without limitation, maintaining and supervising safetyprecautions and programs in connection with such other work.

B.  DESIGN/BUILDER shall affordeach other contractor who is a party to such a direct contract and each utilityowner (and OWNER, if OWNER is performing the additional work with OWNER’semployees) proper and safe access to the Site and a reasonable opportunity forthe introduction and storage of materials and equipment and the execution ofsuch other work and shall properly connect and coordinate the Construction withtheirs.  DESIGN/BUILDER shall do allcutting, fitting and patching of the Work that may be required to make itsseveral parts come together properly and integrate with such other work.  DESIGN/BUILDER shall not endanger any work ofothers by cutting, excavating or otherwise altering their work and will onlycut or alter their work with the written consent of OWNER and the others whosework will be affected.

C.  If the proper execution orresults of any part of DESIGN/BUILDER’s Work depends upon work performed orservices provided by others under this Article 7, DESIGN/BUILDER shall inspectsuch other work and appropriate instruments of service and promptly report toOWNER in writing any delays, defects or deficiencies in such other work orservices that render it unavailable or unsuitable for the proper execution andresults of DESIGN/BUILDER’s Work. DESIGN/BUILDER’s failure so to report will constitute an acceptance ofsuch other work as fit and proper for integration with DESIGN/BUILDER’s Workexcept for latent or nonapparent defects and deficiencies in such other work.

ARTICLE 8—OWNER’S RESPONSIBILITIES

*8.01     General*

A.  OWNER shall do the followingin a timely manner so as not to delay the services of DESIGN/BUILDER.

1.    Designate in writing aperson to act as OWNER’s representative with respect to the services to berendered under the Agreement.

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2.    Provide such legal servicesas OWNER may require with regard to land use and governmental permitting issuespertaining to the Project including any such land use or governmentalpermitting issues that may be raised by DESIGN/BUILDER.

3.    If requested in writing byDESIGN/BUILDER, furnish reasonable evidence satisfactory to DESIGN/BUILDER,that sufficient funds are available and committed for the entire cost of theProject.  Unless such reasonable evi­denceis furnished, DESIGN/BUILDER is not required to commence or continue any Work,or may, if such evidence is not presented within a reasonable time, stop Workupon fifteen (15) days’ notice to the OWNER.

4.    Make payments toDESIGN/BUILDER promptly when they are due as provided in Article 13.

5.    Furnish lands and easementsas set forth in paragraph 4.01.

6.    Furnish to DESIGN/BUILDER,as re­quired for performance of DESIGN/BUILDER’s services the following, all ofwhich DESIGN/BUILDER may use and rely upon in performing services under thisAgreement:

a.   Environmental assessment andimpact statements;

b.   Property, boundary, easement,right-of-way, topographic and utility surveys;

c.    Property descriptions;

d.   Zoning, deed and other landuse re­strictions;

e.   Engineering surveys toestablish refer­ence points for design and construction which in DESIGN/BUILDER’sjudgment are necessary to enable DESIGN/BUILDER to proceed with the Work;

f.     Assistance in filingdocuments required to obtain necessary approvals of governmental authoritieshaving jurisdiction over the Project; and

g.    Subsurface data.

7.   Provide information known toor in the possession of OWNER relating to the presence of materials andsubstances at the site which could create a Hazardous Condition.

8.   Perform all other itemsdesignated as OWNER’s responsibilities in the Contract Documents.

*8.02** **  Scope of OWNER’s Safety and Hazardous Waste Responsibilities*

A.  OWNER shall not supervise,direct or have control or authority over, nor be responsible for,DESIGN/BUILDER’s means, methods, techniques, sequences or procedures ofConstruction or the safety precautions and programs incident thereto, or forany failure of DESIGN/BUILDER to comply with Laws and Regulations applicable tothe furnishing or perfor­mance of the Work. OWNER will not be responsible for DESIGN/BUILDER’s failure to perform orfurnish the Work in accordance with the Contract Documents.

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ARTICLE 9—CHANGES IN THE WORK; CLAIMS

*9.01**                    **General—Rights and Obligations*

A.  Without invalidating theAgreement, OWNER may, at any time or from time to time, request additions,deletions or revisions in the Work within the general scope of the contract by aWritten Amendment or a Change Order.  IfDESIGN/BUILDER agrees to such Written Amendment or Change Order, whichagreement shall not be unreasonably withheld, DESIGN/BUILDER shall promptlyproceed with the Work involved which will be performed under the applicableprovisions of the Contract Documents (except as otherwise specifi­callyprovided).

*9.02       Notice of Intent toMake Claim*

A.  If OWNER and DESIGN/BUILDERare unable to agree as to the extent, if any, of an adjust­ment in the ContractPrice or an adjustment of the Contract Times that should be allowed as a resultof any order of OWNER pursuant to paragraph 9.01.A or other occurrence forwhich the Contract Documents provide that such adjustment(s) may be made, aclaim may be made therefor.  Written noticeof intent to make such a claim shall be submitted to the other party promptlyand in no event more than thirty (30) days after the start of the occurrence orevent giving rise to the claim.

*9.03       Claim Documentation*

A.  Substantiating documentationshall be submitted by the claiming party within thirty (30) days after deliveryof the notice required by paragraph 9.02.A.

*9.04       Decision*

A.  The other party shall render adecision on the claim no more than thirty (30) days after the receipt of thesubstantiating documentation required by paragraph 9.03.A.   This decision will be final and bindingunless the claiming party gives notice of intention to exercise its rightsunder Article 15 within thirty (30) days of receipt of the decision andexercises such rights within thirty (30) days of giving the notice of intent.

*9.05       Time Limit Extension*

A.  The time limits of paragraphs9.03.A and 9.04.A may be extended by mutual agreement.

*9.06       Exceptions*

A.  DESIGN/BUILDER shall not beentitled to an increase in the Contract Price with respect to any Workperformed that is not contemplated by the Contract Documents as amended,modified and supplemented as provided in paragraph 3.03.

*9.07     Execution of ChangeOrders*

      A.      OWNER and DESIGN/BUILDER shall execute appropriate ChangeOrders or Written Amendments covering:

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1.    changes in the Work whichare (i) ordered by OWNER pursuant to paragraph 9.01, (ii) required because ofacceptance of *defective* Construction underparagraph 12.08 or correcting *defective* Workunder paragraph 12.09 or (iii) agreed to by the parties; and

2.    changes in the ContractPrice or Contract Times which are agreed to by the parties.

ARTICLE 10—CHANGE OF CONTRACT PRICE

*10.01   General*

A.  The Contract Price constitutesthe total com­pensation (subject to authorized adjustments) payable toDESIGN/BUILDER for performing the Work.

B.   The Contract Price may onlybe changed by a Change Order or by a Written Amendment.  Any claim for an adjustment in the ContractPrice shall be based on written notice delivered by the party making the claimto the other party promptly in accordance with paragraph 9.02.A.

C.   The value of any Work coveredby a Change Order or of any claim for an increase or decrease in the ContractPrice will be determined as follows:

1.      By a mutually agreed lumpsum (which may include an allowance for overhead and profit not necessari­ly inaccordance with paragraph 10.02); or

2.      Where agreement to a lumpsum is not reached under paragraph 10.01.C.1, on the basis of the Cost of theWork (determined as provided in paragraph 10.02) plus a DESIGN/BUILDER’s Feefor over­head and profit (determined as provided in para­graph 10.02.C).

*10.02     Cost of the Work*

A.*  CostsIncluded:*  The term Cost ofthe Work means the sum of all costs necessarily incurred and paid byDESIGN/BUILDER in the proper perfor­mance of work authorized only by a ChangeOrder or Written Amendment (together “Change Order Work”).  Except as otherwise may be agreed to inwriting by OWNER, such costs shall be in amounts no higher than those prevailingin the locality of the Project, shall include only the following items andshall not include any of the costs itemized in paragraph 10.02.B:

1.      Payroll costs foremployees in the direct employ of DESIGN/BUILDER in the performance of theChange Order Work under the then current schedule of job classifications andhourly rates of DESIGN/BUILDER.

2.    Cost of all materials andequipment fur­nished and incorporated in the Change Order Work, including costsof transportation and storage thereof, and Suppliers’ field services requiredin connection therewith.

3.    Payments made byDESIGN/BUILDER to Subcontractors for Change Order Work performed or furnishedby Subcontractors.

4.    Payments made byDESIGN/BUILDER to Engineers (not employees of DESIGN/BUILDER or its affiliates)for Design Professional Services provid­ed or furnished by Engineers under aDesign Subagreement for Change Order Work.

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5.    Costs of special consultants(including but not limited to testing laboratories and surveyors, but excludingemployees of DESIGN/BUILDER or its affiliates) employed for servicesspecifically related to Change Order Work.

6.    Supplemental costs includingthe following items:

a. The proportion of necessary transportation, travel and subsistenceexpenses of DE­SIGN/BUILDER’s employees incurred in discharge of dutiesconnected with Change Order Work.

b. Cost, including transportation and maintenance, of all materials,supplies, equip­ment, machinery, appliances, office and tempo­rary facilitiesat the Site and hand tools not owned by the workers, which are consumed in theperformance of Change Order Work, and cost less market value of such items usedbut not con­sumed which remain the property of DESIGN/BUILDER.

c. Rentals of all Work equipment and machinery and the parts thereofwhether rented from DESIGN/BUILDER or others in accordance with rentalagreements approved by OWNER, and the costs of transportation, loading,unloading, installation, dismantling and removal thereof—all in accordance withthe terms of said rental agreements.  Therental of any such equipment, machinery or parts shall cease when the usethereof is no longer neces­sary for Change Order Work.

d. Sales, consumer, use or similar taxes related to Change Order Work,paid by DESIGN/BUILDER or required to be reimbursed by DESIGN/BUILDER to itsSubcontractors, Suppliers, or Engineers.

B.*   CostsExcluded:*  The term Cost ofthe Work shall not include any of the following:

1. Payroll costs and other compensation of DESIGN/BUILDER’s officers,executives, princi­pals (of partnerships and sole proprietorships), generalmanagers, engineers, architects, estimators, attorneys, auditors, accountants,purchasing and contracting agents, expediters, timekeepers, clerks and otherpersonnel employed by DESIGN/BUILDER whether at the Site or in DESIGN/BUILDER’sprincipal or a branch office for general administration of the Work and notspecifically included in the then current schedule of job classificationsreferred to in paragraph 10.02.A.1 — all of which are to be considered administrativecosts covered by the DESIGN/BUILDER’s fee.

2. Expenses of DESIGN/BUILDER’s princi­pal and branch offices otherthan DESIGN/BUILDER’s office at the Site.

3. Any part of DESIGN/BUILDER’s capital expenses, including interest onDESIGN/BUILDER’s capital employed for the Work and charges againstDESIGN/BUILDER for delinquent payments.

4. Costs due to the negligence of DESIGN/BUILDER, any Subcontractor, oranyone directly or indirectly employed by any of them or for whose acts any ofthem may be liable, including but not limited to, the correction of *defective* Work, disposal of materials or equipment wronglysup­plied and making good any damage to property.

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5. Other overhead or general expense costs of any kind and the costs ofany item not specifically and expressly included in paragraph 10.02.A.

C.*  Fee:*

1. A mutually agreed fee or, in the event the parties can not agreeupon a fee, DESIGN/BUILDER’s fee for overhead and profit on Change Orderspriced by paragraph 10.01.C.2 (whether additive or deductive) shall be fifteenpercent (15%) of the Cost of the Change Order Work for subcontracts, materialsand equipment.

2. When both additions and credits are involved in any one change, theadjustment in DESIGN/BUILDER’s fee shall be computed on the basis of the netchange in accordance with paragraph 10.02.C.1 above.

D.*** ****Documentation:*  Wheneverthe cost of any Work is to be determined pursuant to paragraphs 10.02.A and10.02.B, DESIGN/BUILDER will estab­lish and maintain records thereof inaccordance with generally accepted accounting practices and submit in a formacceptable to OWNER an itemized cost breakdown together with supporting data.

ARTICLE 11—CHANGE OF CONTRACT TIMES

*11.01     General*

A.   The Contract Times may onlybe changed by a Change Order or a Written Amendment.  Any claim for an adjustment of the ContractTimes shall be based on written notice pursuant to paragraph 9.02.

B.   All Contract Times are of theessence of the Agreement.

*11.02**              **TimeExtensions*

A.   Where DESIGN/BUILDER isprevented from completing any part of the Work within the Contract Times due todelay beyond the control of DESIGN/BUILDER, the Contract Times will be extendedin an amount equal to the time lost due to such delay if a claim is madetherefor as provided in Article 9. Delays beyond the control of DESIGN/BUILDER shall include, but not belimited to, acts or neglect by OWNER, governmental agencies, acts or neglect ofutility owners or other contractors performing other construction work ascontemplated by Article 7, fires, floods, epidemics, abnormal weatherconditions, acts of God, strikes, lockouts or other circumstances beyond thecontrol of DESIGN/BUILDER that give rise to a shortage of labor, materials,equipment, transportation or utilities. Delays attributable to and within the control of a Subcontractor orSupplier shall be deemed to be delays within the control of DESIGN/BUILDER.

B.   Nothing in this paragraph11.02 bars a change in Contract Price pursuant to Article 10 to compensate forthe direct costs incurred by DESIGN/BUILDER due to delay, interference, ordisruption directly attributable to actions or inactions of OWNER.  However, OWNER shall not be liable toDESIGN/BUILDER for costs or damages arising out of or resulting from (i) delayscaused by or within the control of DESIGN/BUILDER, or (ii) delays beyond thecontrol of both parties including but not limited to fires, floods, epidemics,abnormal weather conditions, acts of God or acts or neglect by governmentalagencies, utility owners, or other contractors performing other work ascontemplated by Article 7.

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ARTICLE 12—TESTS AND INSPECTIONS; CORRECTION, REMOVAL OR ACCEPTANCE OF *DEFECTIVE* CONSTRUCTION

*12.01**    **Noticeof Defects*

A.  Each party shall give theother prompt written notice of all *defective*Construction of which such party has actual knowledge.  All *defective*Construction may be rejected, corrected or accepted as provided in this Article12.

*12.02     Access to Construction*

A.  Upon reasonable notice toDESIGN/BUILDER, OWNER, other representatives and personnel of OWNER,independent testing laboratories and governmental agencies with jurisdictionalinterests will have access to the Construction at the Site at reasonable timesfor their observation, inspecting and testing. DESIGN/BUILDER shall provide them proper and safe conditions for suchaccess and advise them of DESIGN/BUILDER’s Site safety procedures and programsso that they may comply therewith as applicable.

*12.03   Tests and Inspections*

A.  If the Contract Documents orLaws or Regulations of any public body having jurisdiction require any part ofthe Construction specifically to be inspected, tested or approved,DESIGN/BUILDER shall assume full responsibility for arranging and obtainingsuch inspections, tests or approvals, pay all costs in connection therewith, andfurnish OWNER the required certificates of inspection or approval.  DESIGN/BUILDER shall also be responsible forarranging and obtaining and shall pay all costs in connection with anyinspections, tests or approvals required for OWNER’s acceptance of materials orequipment to be incorporated in the Construction or of materials, mix designs,or equipment submitted for approval prior to DESIGN/BUILDER’s purchase thereoffor incorporation in the Construction. Nothing in this paragraph shall be interpreted or construed asobligating DESIGN/BUILDER to obtain, furnish or pay the costs of any permit,inspection, test or approval required by the applicable State or the UnitedStates Environmental Protection Agency for the construction or operation of theProject (including, without limitation, any atmospheric emissions compliancereports), all of which shall be the responsibility of OWNER.

B.  DESIGN/BUILDER shall giveOWNER reasonable notice of the planned schedule for all required inspections,tests or approvals if requested in writing by OWNER.

C.  If any Construction (or theconstruction work of others) that is required to be inspected, tested orapproved is covered by DESIGN/BUILDER without written concurrence of OWNER, itmust, if requested by OWNER, be uncovered for observation at DESIGN/BUILDER’sexpense unless DESIGN/BUILDER has given OWNER timely notice of DESIGN/BUILDER’sintention to cover the same and OWNER has not acted with reasonable promptnessin response to such notice.

*12.04   Uncovering Construction*

A.  If any Construction is coveredcontrary to the written request of OWNER, it must, if requested by OWNER, beuncovered for OWNER’s observation and recovered at DESIGN/BUILDER’s expense.

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B.   If OWNER considers itnecessary or advisable that covered Construction be observed by OWNER orinspected or tested by others, DESIGN/BUILDER, at OWNER’s request, shalluncover, expose or otherwise make available for observation, inspection ortesting as OWNER may require, that portion of the Construction in question, furnishingall necessary labor, material and equipment. If it is found that such Construction is *defective*,DESIGN/BUILDER shall pay all costs caused by or resulting from such uncovering,exposure, observation, inspection and testing (including but not limited to allreasonable fees and charges of engineers and other professionals) and OWNERshall be entitled to an appropriate decrease in the Contract Price, and, if theparties are unable to agree as to the amount thereof, may make a claim thereforas provided in Article 9.  Ifhowever, such Construction is not found to be *defective*,DESIGN/BUILDER shall be allowed an increase in the Contract Price directlyattributable to such uncovering, exposure, observation, inspection, testing,replacement and rework; and, if the parties are unable to agree as to theamount or extent thereof, DESIGN/BUILDER may make a claim therefor as providedin Article 9.

*12.05**       **OWNER May Stop the Construction*

A.  If the Construction is *defective*, or DESIGN/BUILDER fails to supply sufficientskilled workers or suitable materials or equipment, or fails to furnish orperform the Construction in such a way that the completed Construction willconform to the Contract Documents, OWNER may order DESIGN/BUILDER to stopConstruction or any portion thereof, until the cause for such order has beeneliminated; however, this right of OWNER to stop Construction will not giverise to any duty on the part of OWNER to exercise this right for the benefit ofDESIGN/BUILDER or any other party.

*12.06**       **Correction or Removal ofDefective Construction*

A.  Prior to acceptance and finalpayment under paragraph 13.09, OWNER will have authority to disapprove orreject *defective* Construction and will haveauthority to require special inspection or testing of the Construction whetheror not the Construction is fabricated, installed or completed.  DESIGN/BUILDER shall promptly, either correctall *defective* Construction, whether or notfabricated, installed or completed, or, if the Construction has been rejectedby OWNER, remove it from the Site and replace it with non-defectiveConstruction.  DESIGN/BUILDER shall bearall costs of such correction or removal (including but not limited toreasonable fees and charges of engineers, architects, attorneys and otherprofessionals, all court or arbitration or other dispute resolution costs, andall costs of repair or replacement of work of others) made necessarythereby.  Nothing in this paragraph shallbe interpreted or construed as requiring DESIGN/BUILDER to correct or removeand replace defective Construction accepted by OWNER pursuant to paragraph12.08 below.

*12.07   Correction Period*

A.  If within one (1) year afterthe date of Substantial Completion or such longer period of time as may beprescribed by Laws or Regulations or by the terms of any applicable specialguarantee required by the Contract Documents or by any specific provision ofthe Contract Documents, any Construction is found to be *defective*,DESIGN/BUILDER shall promptly, without cost to OWNER and in accordance with OWNER’swritten instructions, (i) correct such *defective*Construction, or, if it has been rejected by OWNER, remove it from the Site andreplace it with Construction that is not *defective*, and(ii) satisfactorily correct or remove and replace any damage to otherConstruction or the work of others resulting therefrom.  If DESIGN/BUILDER does not promptly complywith the terms of such instructions, or in an emergency where delay 

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would cause serious risk of loss or damage, OWNER may have the *defective* Construction corrected or the rejectedConstruction removed and replaced, and all costs and damages caused by orresulting from such removal and replacement (including but not limited to allreasonable fees and charges of engineers, architects, attorneys and otherprofessionals, all court or arbitration or other dispute resolution costs, andall costs of repair or replacement of work of others) will be paid byDESIGN/BUILDER subject to the provisions of paragraph 16.06 below.  Nothing in this paragraph shall be interpretedor construed as requiring DESIGN/BUILDER to correct or remove and replacedefective Construction accepted by OWNER pursuant to paragraph 12.08below.  *Defective*equipment or parts thereof shall be covered by the warranty set forth inExhibit I attached hereto and not the provisions of this paragraph 12.07.

B.  Where *defective*Construction (and damage to other Construction resulting therefrom) has beencorrected, removed or replaced under this paragraph 12.07, the correctionperiod hereunder with respect to such Construction will be extended for anadditional period of one (1) year after such correction or removal andreplacement has been satisfactorily completed.

*12.08**           **Acceptance of DefectiveConstruction*

A.  If, instead of requiringcorrection or removal and replacement of *defective*Construction, OWNER prefers to accept it, OWNER may do so.  If any such acceptance occurs prior to finalpayment, a Change Order will be issued incorporating the necessary revisions inthe Contract Documents with respect to the Construction; and OWNER shall beentitled to an appropriate decrease in the Contract Price, and, if the partiesare unable to agree as to the amount thereof, OWNER may make a claim thereforas provided in Article 15, subject to the provisions of paragraph 16.06below.  If the acceptance occurs afterfinal payment, an appropriate amount will be paid by DESIGN/BUILDER to OWNER,and, if the parties are unable to agree as to the amount thereof, OWNER maymake a claim therefor as provided in Article 15, subject to the provisions ofparagraph 16.06 below.  Notwithstandingthe foregoing, any defective Construction known by OWNER and not disclosed toDESIGN/BUILDER at the time of acceptance and final payment under paragraph13.09 shall be deemed to be accepted by OWNER and DESIGN/BUILDER shall have noobligation to correct, or remove and replace such defect, or make any paymentto OWNER with respect thereto.

*12.09**             **Identification of Punch ListItems*

A.  OWNER shall identify inwriting to DESIGN/BUILDER, on or before the date that is thirty (30) days afterSubstantial Completion, any and all Punch List Items to be completed orcorrected by DESIGN/BUILDER. DESIGN/BUILDER shall not be required to complete or correct any PunchList Items identified by OWNER after such thirty (30) day period.

ARTICLE 13—PAYMENTS TO DESIGN/BUILDER AND COMPLETION

*13.01   Schedule of Values*

A.  The Schedule of Valuesestablished as provided in paragraph 2.03 will serve as the basis for progresspayments and the form of Application for Payment will be substantially similarto Exhibit J.

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*13.02   Application for ProgressPayment*

A.  By the tenth day of each monthduring the Work DESIGN/BUILDER shall submit to OWNER for review and approval anApplication for Payment filled out and signed by DESIGN/BUILDER covering theWork completed as of the date of the Application and accompanied by suchsupporting documentation as is required by the Contract Documents.  If payment is requested on the basis ofmaterials and equipment not incorporated in the Work but delivered and suitablystored at the Site or at another location agreed to in writing, the Applicationfor Payment shall also be accompanied by a bill of sale, invoice or otherdocumentation warranting that OWNER has received the materials and equipmentfree and clear of all Liens and evidence that the materials and equipment arecovered by appropriate property insurance and other arrangements to protectOWNER’s interest therein.  The amount ofretainage with respect to progress payments will be as stipulated in theAgreement.

B.   With each Application forPayment, DESIGNBUILDER shall submit interim lien waivers for all subcontractorsand first tier suppliers with a contract value in excess of $5,000.00.  The interim lien waivers shall be effectivethrough the immediately preceding payment. OWNER may withhold from any progress payment the amount applicable toany lien waivers not received for any preceding Application for Payment forwhich payment was made by OWNER.

*13.03     DESIGN/BUILDER’sWarranty of Title*

A.  DESIGN/BUILDER warrants andguarantees that title to all construction materials and equipment covered byany Application for Payment, whether incorporated in the Project or not, willpass to OWNER no later than the time of payment free and clear of allLiens.  This paragraph 13.03.A does notapply to any documents covered by paragraph 3.04.

*13.04**       **Progress Payments*

A.  Progress payments shall bemade by the OWNER to DESIGN/BUILDER according to the following procedure:

1.    OWNER will, within ten (10)days of receipt of each Application for Payment, either indicate in writing itsacceptance of the Application and state that the Application is being processedfor payment, or return the Application to DESIGN/BUILDER indicating in writingits reasons for refusing to accept the Application and the exact amount(s) indispute.  All undisputed amounts willbecome due and be paid by OWNER to DESIGN/BUILDER not more than ten (10) daysafter OWNER’s acceptance or rejection of such Application, as the case may be.

2.    If OWNER should fail to payDESIGN/BUILDER at the time the payment of any amount becomes due, thenDESIGN/BUILDER may, at any time thereafter, upon serving written notice thatDESIGN/BUILDER will stop the Work within seven (7) days after receipt of the noticeby OWNER, and after such seven (7) day period, stop the Work until payment ofthe amount owing has been received, including interest thereon

3.    Payments due but unpaidshall bear interest at the rate specified in the Agreement.  If OWNER pays to DESIGN/BUILDER any disputedamount pursuant to paragraph 13.04.A.2 

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and it is determined pursuant to Article 15 that such amount was notdue and payable, then DESIGN/BUILDER shall refund such amount to OWNER withinterest thereon at the rate specified in the Agreement.

4.    No Progress Payment nor anypartial or entire use or occupancy of the Project by the OWNER shall constitutean acceptance of any Work not in accordance with the Contract Documents.

B.  Unless payment of suchdisputed amount is requested by DESIGN/BUILDER as provided in paragraph13.04.A.1., OWNER may refuse to make the whole or any part of any such paymentor, because of subsequently discovered evidence or the results of subsequentinspections or tests, nullify any previous payment, to the extent that isreasonably necessary to protect OWNER from loss because:

1.    The Work is *defective*, or completed Work has been damaged, requiringcorrection or replacement;

2.    The Contract Price has beenreduced by Written Amendment or Change Order;

3.    OWNER has been required tocorrect defective Work or complete Work in accordance with paragraph 12.07.A;

4.    OWNER has actual knowledgeof the occurrence of any of the events enumerated in paragraphs 14.02.A.1through A.3 inclusive;

5.    Claims have been madeagainst OWNER on account of DESIGN/BUILDER’s performance or furnishing of theWork;

6.    The provisions of paragraph13.02.B are applicable; or

7.    Liens have been filed inconnection with the Work, except where DESIGN/BUILDER has delivered a specificBond satisfactory to OWNER to secure the satisfaction and discharge of suchLiens.

*13.05   Substantial Completion*

A.  When DESIGN/BUILDER considersthe Construction ready for its intended use DESIGN/BUILDER shall notify OWNERin writing that the Construction is substantially complete (except for itemsspecifically listed by DESIGN/BUILDER as incomplete).  Within a reasonable time thereafter, OWNERwill prepare and deliver to DESIGN/BUILDER a certificate of SubstantialCompletion.  There shall be attached tothe certificate a list of Punch List Items to be completed or corrected beforefinal payment.  At the time of deliveryof the certificate of Substantial Completion OWNER will deliver toDESIGN/BUILDER (i) a written determination as to division of responsibilitiespending final payment between OWNER and DESIGN/BUILDER with respect tosecurity, operation, safety, maintenance, heat, utilities, insurance andwarranties and guarantees, and (ii) the payment required by section 4.01.B.2.of the Agreement.

B.   OWNER will have the right toexclude DESIGN/BUILDER from the Site after the date of Substantial Completion,but OWNER will allow DESIGN/BUILDER reasonable access to 

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complete or correct items on the list of Punch List Items to becompleted and the seven-day performance test described in Exhibit A.

*13.06     Final Inspection*

A.  Upon written notice fromDESIGN/BUILDER that the entire Construction or an agreed portion thereof iscomplete, OWNER will make a final inspection with DESIGN/BUILDER and willnotify DESIGN/BUILDER in writing of all particulars in which this inspectionreveals that the Construction is incomplete or *defective*.  DESIGN/BUILDER shall immediately take suchmeasures as are necessary to complete such Construction or remedy suchdeficiencies.

* 13.07    FinalApplication for Payment*

A.  After DESIGN/BUILDER hascompleted all such corrections to the satisfaction of OWNER and delivered inaccordance with the Contract Documents all interim maintenance and operatinginstructions and as-built drawings (with final copies of each document to bedelivered within ninety (90) days after final payment), schedules, guarantees,certificates or other evidence of insurance required by paragraph 5.02.B,certificates of inspection, marked-up record documents (as provided inparagraph 6.11) and other documents, DESIGN/BUILDER may make application forfinal payment following the procedure for progress payments.  The final Application for Payment shall beaccompanied (unless previously delivered) by: (i) all documentation called for in the Contract Documents, includingbut not limited to the evidence of insurance required by subparagraph 5.02.B.7,and (ii) complete and legally effective releases or waivers of all Liensarising out of or filed in connection with the Work.  In lieu of such releases or waivers of Liensand as approved by OWNER, DESIGN/BUILDER may furnish receipts or releases infull and an affidavit of DESIGN/BUILDER that: (i) the releases andreceipts include all labor, services, material and equipment for which a Liencould be filed, and (ii) all payrolls, material and equipment bills andother indebtedness connected with the Work for which OWNER or the Site might inany way be responsible have been paid or otherwise satisfied.  If any Subcontractor or Supplier fails tofurnish such a release or receipt in full, DESIGN/BUILDER may furnish a Bond orother collateral satisfactory to OWNER to indemnify OWNER against any Lien.

* 13.08    FinalPayment and Acceptance*

A.  If OWNER is satisfied that theWork has been completed and DESIGN/BUILDER’s other obligations under theContract Documents have been fulfilled, OWNER will, within ten (10) days afterreceipt of the final Application for Payment, give written notice toDESIGN/BUILDER that the Work is acceptable. Otherwise, OWNER will return the Application to DESIGN/BUILDER,indicating in writing the reasons for refusing to process final payment, inwhich case DESIGN/BUILDER shall make the necessary corrections and resubmit theApplication.  Thirty (30) days after thepresentation to OWNER of the acceptable Application and accompanyingdocumentation, in appropriate form and substance and with OWNER’s notice ofacceptability, the amount will become due and will be paid by OWNER toDESIGN/BUILDER.

B.   If, through no fault ofDESIGN/BUILDER, final completion of the Work is significantly delayed, OWNERshall, upon receipt of DESIGN/BUILDER’s final Application for Payment, andwithout terminating the Agreement, make payment of the balance due for thatportion of the Work fully completed and accepted.  Such payment shall be made under the termsand conditions governing final payment, except that it shall not constitute awaiver of claims.

 

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*13.09   Waiver of Claims*

A.  The making and acceptance offinal payment will constitute:

1.    A waiver of all claims byOWNER against DESIGN/BUILDER, except claims arising from unsettled Liens, from *defective* Construction appearing after final inspectionpursuant to paragraph 13.06, from failure to comply with the Contract Documentsor the terms of any special guarantees specified therein, or fromDESIGN/BUILDER’s continuing obligations under the Contract Documents; and

2.    a waiver of all claims byDESIGN/BUILDER against OWNER other than those previously made in writing andstill unsettled.

ARTICLE 14—SUSPENSION OF WORK AND TERMINATION

*14.01   Owner May Suspend Work*

A.  At any time and without cause,OWNER may suspend the Work or any portion thereof for a period of not more thanninety (90) days by notice in writing to DESIGN/BUILDER which will fix the dateon which Work will be resumed. DESIGN/BUILDER shall resume the Work on the date so fixed.  DESIGN/BUILDER may be allowed an adjustmentin the Contract Price or an extension of the Contract Times, or both, directlyattributable to any such suspension if DESIGN/BUILDER makes a claim therefor asprovided in Article 9.

*14.02   Owner May Terminate forCause*

A.  The occurrence of any one ormore of the following events justifies termination for cause:

1.    DESIGN/BUILDER persistentlyfails to perform the Work in accordance with the Contract Documents (including,but not limited to, failure to supply sufficient skilled workers or suitablematerials or equipment or failure to adhere to the progress scheduleestablished under paragraph 2.03.A as revised from time to time.)

2.    DESIGN/BUILDER intentionallyor willfully disregards Laws or Regulations of any public body havingjurisdiction.

3.    DESIGN/BUILDER otherwisebreaches or violates in any material way any provisions of the ContractDocuments.

B.   OWNER may, after givingDESIGN/BUILDER written notice of the occurrence of an event in paragraph14.02.A and twenty (20)  days therefromto remedy such event (or, if such event is not capable of being remedied withinsuch twenty (20) days, such number of days as is reasonably needed to remedysuch event), and to the extent permitted by Laws and Regulations, terminate theservices of DESIGN/BUILDER, exclude DESIGN/BUILDER from the Site and takepossession of the Work incorporate in the Work all materials and equipmentstored at the Site or elsewhere for which OWNER has paid DESIGN/BUILDER andfinish the Work as OWNER may deem expedient. In such case DESIGN/BUILDER shall not be entitled to receive any furtherpayment other than reimbursement for DESIGN/BUILDER’s payments toSubcontractors and Suppliers for labor, services, equipment and materials priorto the date of termination, but only to the extent not previously paid byOWNER.  If the unpaid balance of theContract Price exceeds all reasonable costs incurred by OWNER resulting fromcompleting the 

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Work (including but not limited to all reasonable fees and charges ofengineers, architects, attorneys and other professionals and all court orarbitration or other dispute resolution costs) such excess will be paid toDESIGN/BUILDER.  If all reasonable costsincurred by OWNER to complete the Work (including but not limited to allreasonable fees and charges of engineers, architects, attorneys and otherprofessionals and all court or arbitration or other dispute resolution costs)exceed the unpaid balance of the Contract Price, DESIGN/BUILDER shall pay thedifference to OWNER subject to the provisions of paragraph 16.06 below.  When exercising any rights or remedies underthis paragraph OWNER shall be required to obtain a reasonable price for theWork performed.

C.   Where DESIGN/BUILDER’sservices have been so terminated by OWNER, the termination will not affect anyrights or remedies of OWNER against DESIGN/BUILDER then existing or which maythereafter accrue.  Any payment toDESIGN/BUILDER by OWNER will not release DESIGN/BUILDER from liability.

D.  Nothing in this paragraphshall be interpreted or construed as requiring DESIGN/BUILDER to perform anyadditional services after such termination including, without limitation, thecreation of any drawings, specifications or any other document necessary tocomplete the Work.

*14.03**           **DESIGN/BUILDER May Stop Work orTerminate*

A.  If, through no act or fault ofDESIGN/BUILDER, the Work is suspended for a period of more than ninety (90)days by OWNER or under an order of court or other public authority, or OWNERfails to pay DESIGN/BUILDER any amount due under the Contract Documents, thenDESIGN/BUILDER may, upon seven (7) days written notice to OWNER, and providedOWNER does not remedy such suspension or failure within that time, terminatethe Agreement and recover from OWNER payment of all amounts due and owing fromOWNER to DESIGN/BUILDER under the Contract Documents for Work performed throughthe date of such termination (including any profit thereon) and all cost andexpenses incurred by DESIGN/BUILDER due to such termination (including, withoutlimitation, any costs incurred to cancel contracts with Subcontractors and thereasonable demobilization costs of DESIGN/BUILDER).  In lieu of terminating the Agreement andwithout prejudice to any other right or remedy, DESIGN/BUILDER may upon seven(7) days written notice to OWNER stop the Work until payment is made of allamounts due DESIGN/BUILDER, including interest thereon.  The provisions of this paragraph 14.03.A arenot intended to preclude DESIGN/BUILDER from making claim under Article 9 foran increase in Contract Price or Contract Times or otherwise for expenses ordamage attributable to such suspension or failure.

ARTICLE 15—DISPUTE RESOLUTION

*15.01  Dispute ResolutionAgreement*

     A.  OWNER and DESIGN/BUILDER agree that they willfirst submit any and all unsettled claims, counterclaims, disputes and othermatters in question between them arising out of or relating to the ContractDocuments or the breach thereof (“disputes”), to mediation by a mutuallyagreeable, impartial mediator, or if the parties cannot so agree, a mediatordesignated by the American Arbitration Association (“AAA”) pursuant to itsConstruction Industry Mediation Rules, prior to either of them initiatingagainst the other a demand for arbitration pursuant to paragraph 15.01.Bthrough 15.01.E, unless delay in initiating arbitration would irrevocablyprejudice one of the parties.  Any timelimits within which to file a demand for arbitration shall 

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be suspended with respect to a dispute submitted to mediation withinthose same applicable time limits and shall remain suspended until 10 daysafter the termination of the mediation. The mediator of any dispute submitted to mediation under this Agreementshall not serve as arbitrator of such dispute unless otherwise agreed.

B. All claims, disputes and othermatters in question between OWNER and DESIGN/BUILDER arising out of or relatingto the Contract Documents or the breach thereof (except for claims which havebeen waived by the making or acceptance of final payment as provided byparagraph 13.09) will be decided by binding arbitration in accordance with theConstruction Industry Arbitration Rules of the AAA then in effect, subject tothe limitations of this paragraph 15.01. The arbitrator shall have the discretion to award reasonable attorneys’fees and costs to the prevailing party. This agreement so to arbitrate and any other agreement or consent toarbitrate entered into in accordance herewith as provided in this paragraph15.01 will be specifically enforceable under the prevailing law of any courthaving jurisdiction.

C.          Notice of the demandfor arbitration will be filed in writing with the other party to the Agreementand with the designated arbitration entity. The demand for arbitration will be made within a reasonable time afterthe claim, dispute or other matter in question has arisen, and in no eventshall any such demand be made after the date when institution of legal orequitable proceedings based on such claim, dispute or other matter in questionwould be barred by the applicable statute of limitations.

D.         Except as provided inparagraph 15.01.E below, no arbitration arising out of or relating to theContract Documents shall include by consolidation, joinder or in any othermanner any other individual or` entity who is not a party to this contractunless:

1.   the inclusion of such otherindividual or entity is necessary if complete relief is to be afforded amongthose who are already parties to the arbitration, and

2.   such other individual orentity is substantially involved in a question of law or fact which is commonto those who are already parties to the arbitration and which will arise insuch proceedings, and

3.   the written consent of theother individual or entity sought to be included and of OWNER andDESIGN/BUILDER has been obtained for such inclusion, which consent shall makespecific reference to this paragraph; but no such consent shall constituteconsent to arbitration of any dispute not specifically described in suchconsent or to arbitration with any party not specifically identified in suchconsent.

E.          Notwithstandingparagraph 15.01.D, if a claim, dispute or other matter in question betweenOWNER and DESIGN/BUILDER involves the Work of a Subcontractor, Supplier orEngineer either OWNER or DESIGN/BUILDER may join such entity as a party to thearbitration between OWNER and DESIGN/BUILDER hereunder.  DESIGN/BUILDER shall include in allsubcontracts required by paragraph 6.05.D a specific provision whereby theSubcontractor consents to being joined in any arbitration between OWNER andDESIGN/BUILDER involving the Work of such Subcontractor.  Nothing in this paragraph 15.01.E or in theprovision of such subcontract consenting to joinder shall create any claim,right or cause of action in favor of Subcontractor, Supplier or Engineer againstOWNER.

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F.          Notwithstanding the foregoing,the provisions of this Article 15 shall not apply to any claim byDESIGN/BUILDER of any breach or threatened breach of any provision of theLicense Agreement attached as Exhibit F.

ARTICLE 16—MISCELLANEOUS

*16.01     Giving Notice*

A.  Whenever any provision of theContract Documents requires the giving of written notice, it will be deemed tohave been validly given:

1.    If delivered in person tothe individual or to a member of the firm or to an officer of the corporationfor whom it is intended;

2.    If delivered at or sent byregistered or certified mail, postage prepaid, to the last business addressknown to the giver of the notice; or

3.   If transmitted by facsimile,the time at which a machine generated confirmation states the notice wasreceived at the facsimile telephone number of the intended recipient last knownby the sender.

*16.02   Computation of Times*

A.  When any period of time isreferred to in the Contract Documents by days, it will be computed to excludethe first and include the last day of such period.  If the last day of any such period falls on aSaturday or Sunday or on a day made a legal holiday by the law of theapplicable jurisdiction, such day will be omitted from the computation.

B.  A calendar day of twenty-fourhours measured from midnight to the next midnight will constitute a day.

*16.03   Notice of Claim*

A.  Should OWNER or DESIGN/BUILDERsuffer injury or damage to person or property because of any error, omission oract of the other party or of any of the other party’s employees or agents orothers for whose acts the other party is legally liable, claim will be made inwriting to the other party within a reasonable time of the first observance ofsuch injury or damage.  The provisions ofthis paragraph 16.03.A shall not be construed as a substitute for or a waiverof the provisions of any applicable statute of limitations or repose.

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*16.04   Cumulative Remedies*

A.  Except as provided inparagraph 16.06, the duties and obligations imposed by these General Conditionsand the rights and remedies available hereunder to the parties hereto, and, inparticular but without limitation, any general or specific warranties,guarantees and indemnities imposed upon a party and all of the rights andremedies available to the other party thereunder, are in addition to, and arenot to be construed in any way as a limitation of, any rights and remediesavailable to any or all of them which are otherwise imposed or available byLaws or Regulations, by special warranty or guarantee or by other provisions ofthe Contract Documents, and the provisions of this paragraph will be aseffective as if repeated specifically in the Contract Documents in connectionwith each particular duty, obligation, right and remedy to which they apply.

*16.05     Survival of Obligations*

A.  All representations,indemnifications, warranties and guarantees made in, required by or given inaccordance with the Contract Documents, as well as all continuing obligationsindicated in the Contract Documents, will survive final payment, completion andacceptance of the Work and termination or completion of the Agreement.

*16.06**Limitation on OWNER’sRecovery of Damages and Mutual Waiver of Consequential Damages*

A.            Notwithstanding any other provision of the ContractDocuments, OWNER agrees that the aggregate amount OWNER (and anyone claiming byor through OWNER) may recover collectively from DESIGN/BUILDER and its employee’sand agents, for the Project as a whole under the Contract Documents (includingthe License Agreement attached as Exhibit F), including, without limitationdamages from DESIGN/BUILDER for OWNER’s correction of *defective*Construction under paragraph 12.07.A, acceptance of *defective*Construction under paragraph 12.08, correction of any *defective*equipmentor part thereof under Exhibit I and/or termination for cause under paragraph14.02, shall be limited to One Million Dollars ($1,000,000.00).

B.            OWNER hereby waives all claims against DESIGN/BUILDER andDESIGN/BUILDER’s employees and agents for any consequential damages that mayarise out of or relate to a breach of the Contract Documents (including theLicense Agreement attached as Exhibit F) or the performance of the Work whetherarising in contract, warranty, tort (including negligence), strict liability orotherwise, including but not limited to losses of use, profits, business,reputation or financing.

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