**Exhibit 10.2**

 

**THE ASSOCIATED GENERALCONTRACTORS OF AMERICA**

**AGC DOCUMENT NO. 205**

**STANDARD SHORT FORM AGREEMENT**

**BETWEEN OWNER AND CONTRACTOR**

(Where the Contract Price is a Lump Sum)

 
| This Agreement is made this            | **25th**                                                                                                  | day of | **January**   | ,          | **  2006** | ,  by and  between |   |   |   |   |
|----------------------------------------|-----------------------------------------------------------------------------------------------------------|--------|---------------|------------|----------------------|-------------------------|--------|--------|--------|--------|
|                                   | (Day)                                                                                                     |   |  (Month) | ** ** |  (Year)         |                    |   |   |   |   |
| OWNER,                                 | **  Little Sioux Corn Processors ~ 4808 “F” Avenue ~ Marcus,  Iowa 51035**            | and    |
| (Name and address)                     |
| CONTRACTOR,                            | **  McC Inc. ~ 7900 69th Avenue ~ Greenfield,  Minnesota 55373.**                               |   |
| (Name and address)                     |
| PROJECT:                               | **  100 MGPY Grain Handling Exp. (Phase I) &  Existing Silo Modification (Phase II).** |   |
| (Description of Project and  Location) |
| ARCHITECT/ENGINEER:                    | **  Larson Eng of Wisconsin ~ 1500 N. Casaloma Drive, Suite 302  ~ Appleton, WI 54913.**   |   |
| (Name and address)                     |
|                                        |                                                                                                           |        |               |            |                      |                         |        |        |        |        |  |  |  |  |  |  |  |

 

**1.****             ****THE WORK**Contractor shall furnish constructionadministration and management services and use Contractor’s best efforts to perform theWork in an expeditious manner consistent with the Contract Documents.Contractor shall provide all labor, materials, equipment and services necessaryto complete the Work, as described in Exhibit A, all of which shall beprovided in full accord with and reasonably inferable from the ContractDocuments as being necessary to produce the indicated results

 

**2.****             ****CONTRACT PRICE** As full compensation for performance byContractor of the Work, Owner shall pay Contractor the lump sum price of **Five Million Six Hundred Seventy Three ThousandTwenty Five** Dollars (**$5,673,025.00**).The lump sum price is hereinafter referred to as the Contract price, which shallbe subject to increase or decrease as provided in the Agreement.

 

**3.****             ****INSURANCE** Prior to the start of the Work, Contractorshall purchase and maintain insurance coverage and limits of liability as setforth in Exhibit E, that will protect Contractor from claims arising outof Contractor operations under this Agreement, whether the operations are byContractor, or any of Contractor’s consultants or subcontractors or anyonedirectly or indirectly employed by any of them, or by anyone for whose acts anyof them may be liable.

 

**4.****             ****BONDS**Performance and Payment Bonds **o** are ý arenot required of Contractor. Such bonds shall be issued by a surety licensed inthe state of the location of the Project and must be acceptable to Owner. Thepenal sum of the Payment Bond shall equal the penal sum of the PerformanceBond.

 

**5.****             ****EXHIBITS**the following Exhibits are incorporated byreference and made part of this Agreement:

 

•                  EXHIBIT A:The Work, **McC Inc. Proposal #05048-3, dated 2/07/2006 (4) **page(s).

 

•                  EXHIBIT B:Contract Documents (Attach a complete listing by title, date and number ofpages.)

**Equipment List, Rev C, Dated 2/07/2006 (8) **page(s).

**Process Flow Diagram “F1”, Rev B, Dated 2/7/2006 (1) **page(s).

 

•                  EXHIBIT C:Progress Schedule, ** Complete 100 M Grain Expansion May 1,2007; Complete remodel of existing silos September 1, 2007**pages.

 

•                  EXHIBIT D:Alternates and Unit Prices, include dates when alternates and unit prices nolonger apply,**To be issued thru Change Orders.**

 

•                  EXHIBIT E:Insurance Provisions,                                                                         **(****)** page(s).

 

•                  EXHIBIT F:Warranty, **See McC Inc. Limited Warranty (2) **page(s).

 

**AGC DOCUMENT NO. 205**• STANDARD SHORT FORM AGREEMENT BETWEENOWNER AND CONTRACTOR

(Where the Contract Price is a Lump Sum)

©2000, The Associated General Contractors of America. All rights reserved

 

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**6 CONTRACT’S RESPONSIBLITIES**Contractor shall be responsible for supervision and coordination of theWork, including the construction means, methods, techniques, sequences andprocedures utilized, unless the Contract Documents give other specificinstructions.

 

**6.1**  Owner shall obtain and pay for all necessarypermits, licenses and renewals pertaining to the Work. Contractor will supplynecessary drawings required to obtain any permits required.

 

**6.2** Contractorshall pay all applicable taxes legally enacted when bids are received ornegotiations concluded for the Work provided by Contractor.

 

**6.3**In the event that Owner elects to perform workat the Worksite directly or by others retained by Owner, Contractor and Ownershall coordinate the activities of all forces at the Worksite and shall agreeupon fair and reasonable schedules and operational procedures for Worksiteactivities. Owner shall require each separate contractor to cooperate withContractor and assist with the coordination of activities and the review ofconstruction schedules and operations. The Contract Price and Contract Timeshall be equitably adjusted, as mutually agreed by the parties, for changesmade necessary by the coordination of construction activities, and theconstruction schedule shall be revised accordingly.

 

**6.4**In orderto facilitate its responsibilities for completion of the Work in accordance withand as reasonably inferable from the Contract Documents, prior to commencingthe Work, Contractor shall examine and compare the drawings and specificationswith information furnished by Owner pursuant to Paragraph 7.2; relevant fieldmeasurements made by Contractor; and any visible conditions at the Worksiteaffecting the Work.

 

**6.5  WARRANTY**

 

**~~6.5.1~~**~~TheWork shall be executed in accordance with the Contract Documents in aworkmanlike manner. Contractor warrants that all materials and equipment shallbe new unless otherwise specified, of good quality, in conformance with theContract Documents, and free from defective workmanship and materials.Contractor further warrants that the Work will be free from material defectsnot intrinsic in the design or materials required in the Contract Documents.Contractor’s warranty does not include remedies for defects or damages causedby normal wear and tear during normal usage, use for a purpose for which theProject was not intended, improper or insufficient maintenance, modificationsperformed by Owner or others retained by Owner, or abuse.~~ The Work shall be executed in accordance withthe Contract documents in a workmanlike manner. Contractor warrants that allmaterials and equipment shall be new unless otherwise specified, of goodquality, in conformance with the Contract Documents, and free from defectiveworkmanship and materials. Contractor further warrants that the Work will befree from material defects not intrinsic in the design or materials required inthe Contract Documents. Contractor’s warranty does not include remedies fordefects or damages caused by normal wear and tear during normal usage, use fora purpose for which the Project was not intended, improper or insufficientmaintenance, modifications performed by Owner or others retained by Owner, orabuse.

 

**6.5.2**If,prior to the Date of Substantial Completion and within one year after the dateof Substantial Completion of the Work, any portion of the Work is found to benot in conformance with the Contract Documents (“Defective Work”), Owner shallpromptly notify Contractor in writing. Unless Owner provides written acceptanceof the condition, Contractor shall promptly correct the Defective Work at itsown cost and time and bear the expense of additional services required forcorrection of any Defective Work for which it is responsible.

 

**6.6 SAFETY**Contractorshall have overall responsibility for safety precautions and programs in theperformance of the Work, except that Contractor’s subcontractors shall also beresponsible for the safety of persons or property in the performance of theirwork, and for compliance with the provisions of applicable laws andregulations. Contractor shall seek to avoid injury, loss or damage to personsor property by taking reasonable steps to protect its employees and otherpersons at the Worksite; materials and equipment stored at on-site or off-sitelocations for use in the Work; and property located at the site and adjacent toWork areas, whether or not the property is part of the Work.

 

**6.7 HAZARDOUS MATERIALS**A Hazardous Material is any substance or material identified now or inthe future as hazardous under any federal, state or local law or regulation, orany other substance or material which may be considered hazardous orotherwise subject to statutory or regulatory requirement governing handling,disposal and/or clean-up. Contractor shall not be obligated to commence orcontinue work until any Hazardous Material discovered at the Worksite has beenremoved, or rendered or determined to be harmless by Owner as certified by

 

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anindependent testing laboratory and approved by the appropriate governmentagency. If Contractor incurs additional costs and/or is delayed due to the presenceor remediation of Hazardous Material, Contractor shall be entitled to anequitable adjustment in the Contract Price and/or the Contract Time.

 

**6.8 MATERIALS BROUGHT TO THE WORKSITE**Contractor shall be responsible for the properdelivery, handling, application, storage, removal and disposal of all materialsand substances brought to the Worksite by Contractor in accordance with theContract Documents and used or consumed in the performance of the Work.

 

**6.9 SUBMITTALS**Contractor shall submit to Owner and,if directed, to its Architect/Engineer for review and approval all shopdrawings, samples, product data and similar submittals required by the ContractDocuments. Contractor shall be responsible to Owner for the accuracy andconformity of its submittals to the Contract Documents. Contractor shallprepare and deliver its submittals to Owner in a manner consistent with the Schedule ofthe Work and in such time and sequence so as not to delay the performance ofthe Work or the work of Owner and others retained by Owner. When Contractordelivers its submittals to Owner, Contractor shall identify in writing for eachsubmittal all changes, deviations or substitutions from the requirements of theContract Documents. The approval of any Contractor submittal shall not bedeemed to authorize deviations, substitutions or changes in the requirements ofthe Contact Documents unless express written approval is obtained from Ownerspecifically authorizing such deviation, substitution or change. Further, Ownershall not make any change, deviation or substitution through the submittalprocess without specifically identifying and authorizing such deviation toContractor. Owner shall be responsible for review and approval of submittalswith reasonable promptness to avoid causing delay. Contractor shall perform allWork strictly in accordance with approved submittals. Owner’s approval does notrelieve Contractor from responsibility for Defective Work resulting from errorsor omissions of any kind on the approved Shop Drawings.

 

**6.10 SITE CONDITIONS**If theconditions at the Worksite are (a) subsurface or other physical conditionswhich are materially different from those indicated in the Contract Documents,or (b) unusual or unknown physical conditions which are materially differentfrom conditions ordinarily encountered and generally recognized as inherent inWork provided for in the Contract Documents, Contractor shall stop Work andgive immediate written notice of the condition to Owner and theArchitect/Engineer. Contractor shall not be required to perform any workrelating to the unknown condition without the written mutual agreement of theparties. Any change in the Contract Price and/or Contract Time as a result ofthe unknown condition shall be made by Change Order.

 

**6.11 CUTTING, FITTING AND PATCHING**Contractorshall perform cutting, fitting and patching necessary to coordinate thevarious parts of the Work and to prepare its Work for the work of Owner orothers retained by Owner.

 

**6.12 CLEANING UP**Contractor shall regularly remove debris and waste materials at theWorksite resulting from the Work. Prior to discontinuing Work in an area,Contractor shall clean the area and remove all rubbish and its constructionequipment, tools, machinery, waste and surplus materials. Contractor shallminimize and confine dust and debris resulting from construction activities. Atthe completion of the Work, Contractor shall remove from the Worksite allconstruction equipment, tools, surplus materials, waste materials and debris.

 

**7****OWNER’S RESPONSIBILITIES**Anyinformation or services to be provided by Owner shall be provided in a timelymanner so as not to delay the Work.

 

**7.1 FINANCIAL INFORMATION**Prior tocommencement of the Work and thereafter at the written request of Contractor,Owner shall provide Contractor with evidence of Project financing. Evidence ofsuch financing shall be a condition precedent to Contractor’s commencing orcontinuing the Work. Contractor shall be notified prior to any material changein Project financing.

 

**7.2 WORKSITE INFORMATION**Owner shallprovide at Owner’s expense and with reasonable promptness the following, whichContractor shall be entitled to rely upon for its accuracy and completeness:

 

**.1** informationdescribing the physical characteristics of the site, including surveys, siteevaluations, legal descriptions, data or drawings depicting existingconditions, subsurface and environmental studies, reports and investigations;

 

**.2** tests, inspections and other reports dealingwith environmental matters, hazardous material and other existing conditions,including structural, mechanical and chemical tests, required by the ContractDocuments or by law; and

 

**.3** any other information or services requestedin writing by Contractor that are relevant to Contractor’s performance of theWork and under Owner’s control.

 

The information required by this Paragraph shall be provided in reasonabledetail. Legal descriptions shall include easements, title restrictions,boundaries, and zoning restrictions. Worksite descriptions shall includeexisting buildings and other construction and all other pertinent siteconditions. Adjacent property descriptions shall include structures, streets,sidewalks, allies, and other features relevant to the Work. Utility detailsshall include available services, lines at the Worksite and adjacent theretoand connection points. The information shall include public and privateinformation, subsurface

 

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information, grades, contours, and elevations, drainage data, exactlocations and dimensions, and benchmarks that can be used by Contractor inlaying out the Work.

 

**7.3 BUILDING PERMIT, FEES AND APPROVALS**Except for those required of Contractor pursuant to this Agreement, Ownershall secure and pay for all other permits, approvals, easements, assessmentsand fees required for the development, construction, use or occupancy ofpermanent structures or for permanent changes in existing facilities, includingthe building permit.

 

**8 SUBCONTRACTS**Work not performed by Contractor withits own forces shall be performed by subcontractors. Contractor will provide toOwner a list of all subcontractors/material suppliers prior to the time thatthe subcontractor/material supplier commences work. Contractor agrees to bindevery subcontractor and material supplier (and require every subcontractor toso bind its subcontractors and material suppliers) to all the provisions ofthis Agreement and the Contract Documents as they apply to the subcontractor’sand material supplier’s portions of the Work. Contractor will provide waiversof liens from subcontractors/material suppliers as part of the applicationfor payment under Paragraph 14.2.

 

**9 CONTRACT TIME**

 

**9.1 DATE OF COMMENCEMENT**The Date of Commencement is the date of this Agreement as first writtenon page one of this Agreement, unless otherwise set forth below: *(Insert here any special provisions concerning notices to proceed andthe Date of Commencement.)***Periodic shutdowns will benecessary during construction. Contractor and Owner shall coordinate necessaryshutdowns as not to interfere with construction schedule and minimizeplant operation.**

 

**9.2 TIME** SubstantialCompletion of Phase I shall be achieved in **May 1, 2007, Phase IIby September 30, 2007**. ~~Unless otherwise specified in the Certificate of SubstantialCompletion, the Work shall be finally complete within                 (     ) days after the date of Substantial Completion,subject to adjustments as provided for in the Contract Documents.~~ Time limits stated above are of the essenceof the Agreement.

 

**10  SCHEDULE OF THE WORK**Before submitting the first application forpayment, Contractor shall submit, for review by the Architect/Engineer andapproval by Owner, a Schedule of the Work that shall show the dates on whichContractor plans to begin and to complete various parts of the Work, includingdates on which information and approvals are required from Owner.

 

**11  DELAYS AND EXTENSIONS OF TIME**

 

**11.1**IfContractor is delayed at any time in the commencement or progress of the Workby any cause beyond the control of Contractor, Contractor shall be entitled toan equitable extension of the Contract Time. In addition, if Contractor incursadditional costs as a result of such delay, Contractor shall be entitled to anequitable adjustment in the Contract Price, subject to the mutual waiver ofconsequential damages herein. Examples of causes beyond the control ofContractor include, but are not limited to, the following: acts or omissions ofOwner or others retained by Owner; changes in the Work or the sequencing of theWork ordered by Owner, or arising from decisions of Owner that impact the timeof performance of the Work; labor disputes not involving Contractor; fire;encountering Hazardous Materials; adverse weather conditions not reasonablyanticipated; concealed or unknown conditions; delay authorized by Owner pendingdispute resolution.

 

**11.2**To the extent a delay in the progressof the Work is caused by adverse weather conditions not reasonably anticipated,fire, unusual transportation delays, general labor disputes impacting theProject but not specifically related to the Worksite, governmental agencies, orunavoidable accidents or circumstances, Contractor shall only be entitled toits actual costs without fee and an extension of the Date of SubstantialCompletion and/or Final Completion.

 

**11.3** In the eventdelays to the Work are encountered for any reason, Contractor shall provideprompt written notice to Owner of the cause of such delays after Contractorfirst recognizes the delay. Owner and Contractor agree to undertake reasonablesteps to mitigate the effect of such delays.

 

**11.4 NOTICE OF DELAY CLAIMS**If Contractorrequests an equitable extension of Contract Time and/or an equitable adjustmentin Contract Price as a result of a delay, Contractor shall give Owner writtennotice of the claim. If Contractor causes delay in the completion of the Work,Owner shall be entitled to recover its additional costs, subject to the mutualwaiver of consequential damages herein.

 

**12 ALLOWANCES**All allowances stated in the ContractDocuments shall be included in the Contract Price. While Owner may directthe amounts of, and particular material suppliers or subcontractors for,specific allowance items, if Contractor reasonably objects to a materialsupplier or subcontractor, it shall not be required to contract with them.Owner shall select allowance items in a timely manner so as not to delay theWork. Allowances shall include the costs of materials and equipment deliveredto the Worksite less applicable trade discounts and including requisite taxes,unloading and handling at the Worksite, and labor and installation, unlessspecifically stated otherwise. Contractor’s overhead and profit for theallowances shall be included in the Contract Price, but not in the allowances.The Contract Price shall be adjusted by Change Order to reflect the actualcosts when they are greater than or less

 

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than the allowances.

 

**13  CHANGES**

 

**13.1**Contractor may request and/orOwner may order changes in the Work or the timing or sequencing ofperformance of the Work that impacts the Contract Price or the Contract Time.All such changes in the Work that affect Contract Time or Contract Price shallbe formalized in a Change Order.

 

**13.2**Owner and Contractor shall negotiate ingood faith an appropriate adjustment to the Contract Price and/or the ContractTime and shall conclude these negotiations as expeditiously as possible.Acceptance of the Change Order and any adjustment in the Contract Price and/orContract Time shall not be unreasonably withheld.

 

**13.3 COST OR CREDIT DETERMINATION**

 

**13.3.1**An increase or decrease in the ContractPrice and/or the Contract Time resulting from a change in the Work shall be determinedby one or more of the following methods:

 

**.1 **unit prices set forth in this Agreement or as subsequently agreed;

 

**.2 **a mutuallyaccepted, itemized lump sum;

 

**.3 **costscalculated on a basis agreed upon by Owner and Contractor plus a fee (either a lumpsum or a fee based on a percentage of cost) to which they agree; or

 

**.4 **by the methodprovided below: Change Order (Lump Sum)

 

**13.4 UNIT PRICES**If unit prices are included in the Contract Documents or are subsequentlyagreed to by the parties, but the character or quantity of such unit priceitems as originally contemplated is so different in a proposed Change Orderthat the original unit prices will cause substantial inequity to Owner orContractor, such unit prices shall be equitably adjusted.

 

**13.5 PERFORMANCE OF CHANGED WORK**Contractorshall not be obligated to perform Changed Work until a Change Order hasbeen executed by Owner and Contractor.

 

**14  PAYMENT**

 

**14.1 SCHEDULE OF VALUES**Withintwenty-one (21) days from the date of execution of this Agreement, Contractorshall prepare and submit to Owner, and if directed, its Architect/Engineer, a schedule ofvalues apportioned to the various divisions or phases of the Work. Each lineitem contained in the schedule of values shall be assigned a monetary pricesuch that the total of all items shall equal the Contract Price.

 

**14.2 PROGRESS PAYMENTS**Contractorshall submit to Owner and, if directed, its Architect/Engineer a monthlyapplication for payment no later than the **15th**dayof the calendar month for the preceding thirty (30) days. Contractor’sapplications for payment shall be itemized and supported by Contractor’s schedule ofvalues and any other substantiating data as required by this Agreement. Paymentapplications shall include payment requests on account of properly authorizedChange Orders. Owner shall pay the amount otherwise due on any paymentapplication, less any amounts as set forth below, no later than twenty (20)days after Contractor has submitted a complete and accurate payment application.Owner may deduct, from any progress payment, such amounts as may beretained pursuant to Paragraph 14.4.

 

**14.3 RETAINAGE**Fromeach progress payment made prior to Substantial Completion Owner may retain**Five**percent (**5**%)of the amount otherwise due after deduction of any amounts as provided inParagraph 14.4 of this Agreement.

 

**14.4 ADJUSTMENT OF CONTRACTOR’S PAYMENT APPLICATION**Owner may adjust or reject a payment application or nullify apreviously approved payment application, in whole or in part, as may reasonablybe necessary to protect Owner from loss or damage based upon the following, tothe extent that Contractor is responsible there for under this Agreement:

 

**.1**Contractor’srepeated failure to perform the Work as required by the Contract Documents;

 

**.2** loss or damage for which Owner may beliable arising out of or relating to this Agreement and caused by Contractor toOwner or to others retained by Owner;

 

**.3** Contractor’s failure to properly paySubcontractors for labor, materials or equipment furnished in connection withthe Work following receipt of such payment from Owner

 

**.4**Defective Work not corrected in a timelyfashion;

 

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**.5**reasonable evidence of delay in performance ofthe Work such that the Work will not be completed within the Contract Time, and

 

**.6** reasonable evidence demonstrating that theunpaid balance of the Contract Price is insufficient to fund the cost tocomplete the Work

 

Ownershall give written notice to Contractor at the time of disapproving ornullifying an application for payment of the specific reasons therefor. Whenthe above reasons for disapproving or nullifying an application for payment areremoved, payment shall be made for the amounts previously withheld

 

**14.5 PAYMENT DELAY**If for anyreason not the fault of Contractor, Contractor does not receive a progresspayment from Owner within seven (7) days after the time such payment isdue, Contractor, upon giving seven (7) days’ written notice to Owner, andwithout prejudice to and in addition to any other legal remedies, may stopWork until payment of the full amount owing to Contractor has been received.The Contract Price and Contract Time shall be equitably adjusted by ChangeOrder for reasonable cost and delay resulting from shutdown, delay andstart-up.

 

**14.6 SUBSTANTIAL COMPLETION**When Substantial Completion of the Work or a designated portion thereofis achieved, Contractor shall prepare a Certificate of Substantial Completionthat shall establish the date of Substantial Completion, and the respectiveresponsibilities of Owner and Contractor for interim items such as security,maintenance, utilities, insurance and damage to the Work, and fixing the timefor completion of all items on the list accompanying the Certificate. TheCertificate of Substantial Completion shall be submitted by Contractor to Ownerfor written acceptance of responsibilities assigned in the Certificate. Unlessotherwise provided in the Certificate of Substantial Completion, warrantiesrequired by the Contract Documents shall commence on the date of SubstantialCompletion of the Work or a designated portion.

 

**14.6.1** Upon acceptance by Owner of the Certificate of Substantial Completion,Owner shall pay to Contractor the remaining retainage held by Owner for theWork described in the Certificate of Substantial Completion less a sum equal totwo hundred percent (200%) of the estimated cost of completing or correctingremaining items on that part of the Work, as agreed to by Owner andContractor as necessary to achieve final completion. Uncompleted items shall becompleted by Contractor in a mutually agreed time frame. Owner shall payContractor monthly the amount retained for unfinished items as each item iscompleted.

 

**14.7 FINAL COMPLETION**When final completion has been achieved, Contractor shall prepare forOwner’s acceptance a final application for payment stating that to the best ofContractor’s knowledge, and based on Owner’s inspections, the Work has reachedfinal completion in accordance with the Contract Documents.

 

**14.7.1** Finalpayment of the balance of the Contract Price shall be made to Contractor withintwenty (20) days after Contractor has submitted to the Owner a complete andaccurate application for final payment and the following submissions:

 

**.1**an affidavitdeclaring any indebtedness connected with the Work, e.g. payrolls or invoicesfor materials or equipment, to have been paid, satisfied or to be paid with theproceeds of final payment, so as not to encumber Owner’s property;

 

**.2**as-builtdrawings and Operation / Maintenance manuals.

 

**.3 **release of anyliens, conditioned on final payment being received;

 

**.4**consent of any surety, if applicable; and

 

**.5** a report of any accidents or injuriesexperienced by Contractor or its Subcontractors at the Worksite.

 

**14.8 **Claims not reserved in writing with the makingof final payment shall be waived except for claims relating to liens or similarencumbrances, warranties, Defective Work and latent defects.

 

**14.9   LATE PAYMENT**Payments due but unpaid shall bear interestfrom the date payment is due at the prime rate prevailing at the place of theProject.

 

**15  INDEMNITY**

 

**15.1**To thefullest extent permitted by law, Contractor shall defend, indemnify and holdOwner, Owner’s officers, directors, members, consultants, agents and employeesand the Architect/Engineer harmless from all claims for bodily injury andproperty damage, other than to the Work itself and other property insured underExhibit E, that may arise from the performance of the Work to theextent of the negligence attributed to such acts or omissions by Contractor,subcontractors or anyone employed directly or indirectly by any of them or byanyone for whose acts any of them may be liable. Contractor shall not berequired to defend, indemnify or hold harmless Owner, Architect/Engineer orothers retained by Owner for any acts, omissions or negligence of Owner,Architect/Engineer or others retained by Owner.

 

**15.2**To thefullest extent permitted by law, Owner shall defend, indemnify and holdharmless Contractor, its officers, directors or members, subcontractors oranyone

 

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employeddirectly or indirectly by any of them or anyone for whose acts any of them may beliable from all claims for bodily injury and property damage, other thanproperty insured under Exhibit E, that may arise from the performanceof work by Owner, Architect/Engineer or others retained by Owner, to the extentof the negligence attributed to such acts or omissions by Owner,Architect/Engineer or others retained by Owner.

 

**16  MUTUAL WAIVER OFCONSEQUENTIAL DAMAGES**Ownerand Contractor agree to waive all claims against each other for anyconsequential damages that may arise out of or relate to this Agreement.Owner agrees to waive damages including but not limited to Owner’s loss of useof the Project, any rental expenses incurred, loss of income, profit orfinancing related to the Project, as well as the loss of business, loss offinancing, principal office overhead and expenses, loss of profits not relatedto this Project, or loss of reputation. Contractor agrees to waive damagesincluding but not limited to loss of business, loss of financing, principaloffice overhead and expenses, loss of profits not related to this Project, lossof bonding capacity or loss of reputation. This Paragraph shall not beconstrued to preclude contractual provisions for liquidated damages when suchprovisions relate to direct damages only. The provisions of this Paragraphshall also apply to the termination of this Agreement and shall survive suchtermination.

 

**17  NOTICE TO CURE ANDTERMINATION**

 

**17.1 NOTICE TO CURE A DEFAULT**If Contractor persistently refuses or fails to supply enough properlyskilled workers, proper materials, and/or equipment to maintain the approved Schedule ofthe Work in accordance with Article 6, or fails to make prompt payment toits workers, subcontractors or material suppliers, disregards laws, ordinances,rules, regulations or orders of any public authority having jurisdiction, or isotherwise guilty of a material breach of a provision of this Agreement,Contractor may be deemed in default. If Contractor fails within seven (7) workingdays after written notification to commence and continue satisfactorycorrection of such default with diligence and promptness, then Owner, withoutprejudice to any other rights or remedies, shall have the right to takereasonable steps it deems necessary to correct deficiencies and charge the costto Contractor who shall be liable for such payments including reasonableoverhead, profit and attorneys’ fees.

 

**17.2 TERMINATION BY OWNER**If, within seven (7) days of receipt of a notice to cure pursuantto Paragraph 17.1, Contractor fails to commence and satisfactorily continuecorrection of the default set forth in the notice to cure, Owner may notifyContractor that it intends to terminate this Agreement for default absentappropriate corrective action within fourteen (14) additional days. After theexpiration of the additional fourteen (14) day period, Owner may terminatethis Agreement by written notice absent appropriate corrective action.Termination for default is in addition to any other remedies available to Ownerunder Paragraph 17.1. If Owner’s costs arising out of Contractor’s failure tocure, including the cost of completing the Work and reasonable attorney fees,exceed the unpaid Contract Price, Contractor shall be liable to Owner for suchexcess costs. If Owner’s costs are less than the unpaid Contract Price, Ownershall pay the difference to Contractor. In the event Owner exercises its rightsunder this Paragraph, upon the request of Contractor, Owner shall furnish toContractor a detailed accounting of the costs incurred by Owner.

 

**17.3 TERMINATION BY CONTRACTOR**Upon seven (7) days’ written notice toOwner, Contractor may terminate this Agreement if the Work has beenstopped for a thirty (30) day period through no fault of Contractor for any ofthe following reasons:

 

**.1**under court order or order of othergovernmental authorities having jurisdiction;

 

**.2** as a result of the declaration of a nationalemergency or other governmental act during which, through no act or fault ofContractor, materials are not available; or

 

**17.4 **In addition, upon seven (7) days’ writtennotice to Owner, Contractor may terminate the Agreement if Owner:

 

**.1** fails to furnish reasonable evidence thatsufficient funds are available and committed for the entire cost of the Projectin accordance with Paragraph 7.1, or

 

**.2**assigns this Agreement over Contractor’s reasonableobjection, or

 

**.3** fails to pay Contractor in accordance withthis Agreement and Contractor has complied with the notice provisions ofParagraph 14.5, or

 

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**.4 **otherwisematerially breaches this Agreement

 

**17.5** Upon termination by Contractor pursuant to this Agreement, Contractorshall be entitled to recover from Owner payment for all Work executed and forany proven loss, cost or expense in connection with the Work, including alldemobilization costs plus reasonable overhead and profit.

 

**17.6 OBLIGATIONS ARISING BEFORE TERMINATION**Even after termination the provisions of thisAgreement still apply to any Work performed, payments made, events occurring,costs charged or incurred or obligations arising before the termination date

 

**18  CLAIMS AND DISPUTE RESOLUTION**

 

**18.1  CLAIMS FOR ADDITIONAL COSTOR TIME**Except asprovided in Paragraphs 11.2 and 11.4 for any claim for an increase in theContract Price and/or the Contract Time, Contractor shall give Owner writtennotice of the claim within fourteen (14) days after the occurrence giving riseto the claim or within fourteen (14) days after Contractor first recognizes thecondition giving rise to the claim, whichever is later. Except in an emergency,notice shall be given before proceeding with the Work. Any change in theContract Price and/or the Contract Time resulting from such claim shall beauthorized by Change Order.

 

**18.2 WORK CONTINUANCE AND PAYMENT**Unless otherwise agreed in writing, Contractorshall continue the Work and maintain the Schedule of the Work during anydispute resolution proceedings. If Contractor continues to perform, Owner shallcontinue to make payments in accordance with the Agreement.

 

**18.3 INITIAL DISPUTE RESOLUTION PROCESSES**If a dispute arises out of or relates to this Agreement or its breach, theparties shall endeavor to settle the dispute first through direct discussions.If the dispute cannot be settled through direct discussions, the parties shallendeavor to settle the dispute by mediation under the current ConstructionIndustry Mediation Rules of the American Arbitration Association beforerecourse to any binding dispute resolution procedures.

 
| OWNER:       | LSCP, LLLP         |   |
|--------------|--------------------|--------|
|         |               |   |
| BY:          | /s/ Stephen G. Roe |   |
|         |               |   |
| PRINT NAME:  | Stephen G. Roe     |   |
|         |               |   |
| PRINT TITLE: | President/CEO      |   |
|         |               |   |
| ASSEST:      | /s/ Gary Grotjohn  |   |
|              |                    |        |  |  |  |

 

**18.4   OTHER DISPUTE PROCESSES**If neither direct discussions nor mediation successfully resolve thedispute, the parties agree that the following shall be used to resolve thedispute.

 

*(Check one selection only)*

 

ý**Arbitration**Arbitration shall bepursuant to the Construction Industry Rules of the American ArbitrationAssociation unless the parties mutually agree otherwise. A written demand forarbitration shall be filed with the American Arbitration Association and theother party to the Agreement within a reasonable time after the dispute orclaim has arisen, but in no event after the applicable statute of limitationsfor a legal or equitable proceeding has run. The arbitration award shall befinal. This agreement to arbitrate shall be governed by the Federal ArbitrationAct and judgment upon the award may be confirmed in any court havingjurisdiction.

 

o**Litigation**Action may be filed inthe appropriate state or federal court located in the jurisdiction in which theProject is located.

 

**19 ASSIGNMENT**Neither Owner nor Contractor shallassign its interest in this Agreement without the written consent of the otherexcept as to the assignment of proceeds. The terms and conditions of this Agreementshall be binding upon both parties, their partners, successors, assigns andlegal representatives. Neither party to this Agreement shall assign theAgreement as a whole without written consent of the other.

 

**20 GOVERNING LAW**This Agreement shall be governed by the law in effect at the location ofthe Project.

 

**21 JOINT DRAFTING**The parties expressly agree that this Agreement was jointly drafted, andthat they both had opportunity to negotiate terms and to obtain assistance ofcounsel in reviewing terms prior to execution. This Agreement shall beconstrued neither against nor in favor of either party, but shall be construedin a neutral manner.

 
| CONTRACTOR:  | McC Inc.              |   |
|--------------|-----------------------|--------|
|         |                  |
| BY:          | /s/ Dan  Shefland     |   |
|         |                  |
| PRINT NAME:  | Dan Shefland          |   |
|         |                  |
| PRINT TITLE: | Engineering  Man.     |   |
|         |                  |
| ASSEST:      | /s/ Rick J.  Holthaus |   |
|              |                       |        |  |  |  |  |

 

8

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7900 69th Avenue –Greenfield, Minnesota 55373 ~ Phone: (763) 477-4774 ~ Fax: (763) 477-5174

 

**PROJECT WARRANTY**

 

McC Inc. warrants itsworkmanship and supplied equipment to be free from defts for one (1) yearfrom acceptance of the workmanship. And/or supplied equipment by Owner. [Handwritten initials: DS 2/14/06    SR 2/16/06]

 

**Failed Equipment:**

 

Ifa piece of equipment fails during normal use/operation the owner is to notifyMcC Inc. so a replacement part can be shipped. The failed part is tobe shipped by the owner back to the manufacturer for evaluation of the failedpart.

 

Inall cases labor can be performed by either McC Inc. or plant maintenancecrew(s). Costs for labor, equipment and material will be handled as follows:

 

•                  Ifit is determined by the manufacturer that misuses, modification or impropermaintenance is the cause of failure, the owner (plant) will be responsible topay for all replacement costs (labor, material and equipment).

 

•                  Ifit is determined that the part failed do to a manufacturing defect thencosts for replacement will be provided by McC Inc. If it was necessary forplant maintenance to perform the replacement work then reimbursement forthe actual (no mark-up) costs for labor and equipment will be made to the plantfrom McC Inc.

 

**Workmanship:**

 

McCInc. will correct any installation of equipment which creates a recognizedjobsite hazard or causes undue restriction of equipment capacity. McC Inc. willcorrect any structural deterioration and/or failure.

 

**Maintenance:**

 

Weexpect that all facilities will properly maintain equipment to the recommendedmanufacturers’ specifications. Recommended maintenance for equipment can beobtained from all manufacturers.

 

**Wear Items:**

 

Theconstruction materials provided by McC Inc. are based on project budgets andspecifications. Due to high impact/volume areas it may be necessary toreplace certain items more often. Replacement of these impact/wear areas is theowner’s responsibility.

 

ThisProject Warranty excludes any remedy for damages or defects caused by abuse,modifications not executed by McC, Inc., improper or insufficientmaintenance, improper operation, or normal wear and tear and normal usage.[Handwritten: Beyond the limitsof the contractors insurance coverage. DS 2/14/06  SR 2/16/06]

 

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