Exhibit 10.10


 


LICENSE OF TECHNOLOGY


BETWEEN


DELTA-T CORPORATION


AND


 


OTTER TAIL AG ENTERPRISES, LLC


 






 


THIS AGREEMENT (hereinafter called LICENSE OF TECHNOLOGY or this “License”) made this
24th day of October, 2006 by and between Delta-T Corporation, a Virginia
corporation, (“Delta-T”), and Otter Tail Ag Enterprises, LLC, a Minnesota limited liability company, ( “Owner”),
each of which may be referred to individually as a “Party,” or jointly as the
“Parties.”


 


WITNESSETH:


 


WHEREAS, Owner is building a 55 million gallon per year undenatured fuel
ethanol plant using corn feedstock to be located in the State of Minnesota,
County of Otter Tail, near the City of Fergus Falls, (the “Plant”), and


 


WHEREAS, Owner and Harris Mechanical Contracting Company, (“Prime Contractor”),
have entered into an equipment, procurement and construction contract for
construction of the Plant (the “Prime Contract”), and


 


WHEREAS, Delta-T has agreed to provide engineering and services related to
construction of the Plant based on Delta-T’s proprietary technology under a
subcontract with Prime Contractor (the “Subcontract”), but only on the
condition that Owner enter into a license agreement with Delta-T for the use of
the technology embodied therein, on the terms and conditions set forth herein,


 


NOW, THEREFORE, in consideration of the mutual covenants and conditions contained
herein, the Parties agree as follows:


 


1.  DELTA-T TECHNOLOGY


 


As
used in this License, “Delta-T Technology” shall mean all data,
technical information, trade secrets, inventions (whether patented or not and
whether issued before or after the date of this License), know-how, procedures,
processes, drawings, designs, methodology, models, inventions, specifications,
Plant or equipment test and/or operating data, or other technical information
and copyrights  embodied in the Plant,
used in the operation of the Plant, in equipment or in drawings, or included in
any documents, drawings or other materials delivered electronically or
otherwise by Delta-T to Prime Contractor or Owner under this License Agreement
or the Subcontract.  Delta-T Technology
also includes, specifically but without limitation, the items listed on Exhibit A.


 


Confidential Information


 


1

















 


2.  GRANT OF LICENSE


 


2.1  License Grant:  Owner
acknowledges that Delta-T is and shall remain the sole owner of the Delta-T
Technology.  Delta-T hereby grants to
Owner, subject to the conditions of this License, a non-exclusive, paid-up,
non-transferable right to use in perpetuity the Delta-T Technology, without
right to grant such rights to others except as otherwise set forth herein,
solely for the purposes of:


 


A.            construction and operation of the Plant, and


 


B.            maintenance and optimization or enhancement
of the Plant.


 


Owner
agrees that it shall not use the Delta-T Technology for any other purpose.
Optimization and enhancement (“Modification”), for this purpose, shall
include de-bottlenecking, but shall not include expanding the physical
dimensions of the distillation columns or molsieve vessels included in the
Delta-T Technology, or adding to the original number of distillation columns or
molsieve vessels specified in such design. Owner may not disclose any of the
Delta-T Technology to (i) any third party that is listed on Exhibit B,
or (ii) to any individual, group or company that is in the business
of designing alcohol plants or parts thereof and that is not listed on Exhibit B
(“Designers”), for the purpose of making any Modification, except that Owner may make such disclosure
to any Designer to the extent, and only to the extent, necessary to permit such
Designer to enable a Modification that was created without the disclosure
of any Delta-T Technology by or on behalf of Owner, to interface with portions
of the Plant designed by Delta-T.


 


2.2     Restriction on Assignment: This License is not assignable or otherwise
transferable in any way, and any attempt to assign it in violation of this
provision shall be null and void, except that (i) Owner may assign this
License to a purchaser of substantially all of the assets of the Plant, or a
sale of Owner as an entity, or of Owner’s membership interest in connection
with the sale of such Plant as a going business, provided that Owner gives
Delta-T written notice of such transfer at least thirty (30) days prior to the
date on which it becomes effective, and (ii) Owner may pledge or grant a
security interest in its interest in this License to its lender or lenders
provided that no lender shall have a right to sell or otherwise transfer this
License or any rights under it except in connection with the sale of the Plant
as a going business, and provided further that any such lender must give
Delta-T prior notice of such sale or transfer.


 


2.3  Payment:  At such time as


 


(i)            Owner
has paid Prime Contractor all amounts due to it under the Prime Contract in
accordance with its terms;


 


(ii)           the
Prime Contract is terminated (A) due to breach by the Prime Contractor or
bankruptcy of the Prime Contractor, or (B) due to a Force Majeure Event
(as defined in the Prime Contract) affecting Prime Contractor; or


 


Confidential Information


 


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(iii)          the Prime Contract remains in effect, has not been completed for
reasons other than the fault of the Owner so that all amounts have not yet
become due under such contract, but the Plant is capable of operating for
commercial purposes; or


 


(iv)          Owner has paid Delta-T’s License Fee in full;


 


the
license rights granted Owner under Section 2.1 above shall become
irrevocable and shall continue in full force and effect notwithstanding any
breach or default hereunder by Owner, provided that such continuation shall not
limit or preclude any remedy Delta-T may have for damages. In no case, however,
may Owner use the Delta-T Technology for any purpose unless it has first paid
Delta-T Corporation a license fee of $2,100,000.00 for the Plant, less the
amounts, if any, specifically enumerated and paid to Delta-T under the Prime
Contract for the license fee.  Furthermore, in the event of Termination of
the Prime Contract, Owner and Delta-T will cooperate reasonably to facilitate
Owner’s transition to a new prime contractor having a relationship with Delta-T
as a subcontractor similar to the Delta-T relationship with the Prime
Contractor.


 


Owner
shall pay 70% of the Technology License Fee to Delta-T within 60 days of
execution of this Agreement.  The
remaining 30% shall be paid upon the Plant successfully passing the Performance
Test in compliance with the Performance Guarantees.


 


3.  RESTRICTIONS ON
ACCESS AND CONFIDENTIALITY


 


3.1  Confidential
Information: “Confidential
Information” as used herein means (a) the Delta-T Technology; (b) either
Party’s product plans, business plans and projections; and (c) any other information
that is clearly marked as confidential or proprietary. However, Confidential
Information does not include information that the receiving Party can
demonstrate by documentary evidence falls under one of the following
exceptions:


 


a.  Was known to it prior to its receipt from the
other Party or from Prime the Contractor, without breach of an obligation of
confidentiality and was not subject to any obligation of confidentiality;


 


b.  Is, or after the date of this License
becomes, without fault of Owner, part of the public domain; or


 


c.  Is disclosed to Owner by someone other than
Delta-T who is under no obligation not to disclose it.


 


3.2          Restrictions on Disclosure:  Owner shall not disclose any
Delta-T Technology, by Inspection or otherwise, 
to any person or entity other than (i) its employees to the extent
that such employees have a need to have access to such information to perform
their obligations, and only if they have first been advised of the
confidentiality of the information and agree to keep it confidential and not to
use or disclose it for any purpose other than fulfilling their obligations to
Owner, and (ii) third parties as needed to 


 


Confidential Information


 


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maintain
or operate the Plant as permitted under Section 2 above, to the extent
that such third parties have a need to have access to such information to
perform their obligations, and only if they have first been advised of the
confidentiality of the information and agreed to keep it confidential and not
to use or disclose it for any purpose other than fulfilling their obligations
to Owner by signing the non-disclosure agreement attached hereto as Exhibit C,
or such other form as Delta-T may reasonably agree.  Owner shall in no event, however, disclose
any Delta-T Technology, in Inspection or otherwise, to any third party listed
on Exhibit B or to any Designer except (with respect to Designers) as
expressly permitted under Section 2 above. “Inspection” for
the purposes of this Section 3 shall mean any visual or other inspection
of any portion of the Plant containing Delta-T Technology in sufficient detail
to reveal measurements of the components, configuration of piping and
components, operating parameters, or access to software used to control such
components.  Furthermore, in no case
shall Owner permit any employee or third party to view the internal portion of
a molsieve installed at the Plant and based on the Delta-T Technology unless it
needs to do so due to malfunction of the molsieve and such third party is not
an entity listed on Exhibit B and
Owner has first used good faith efforts to notify and allow Delta-T to arrive
at the Plant and correct the problem within 72 hours.


 


3.3  Disclosure to
Prime Contractor:   The
Parties acknowledge that Prime Contractor has independent access to the Delta-T
Technology under the Subcontract. The Parties agree that (i) Prime
Contractor shall have full access to any Confidential Information in connection
with its work under the Prime Contract and (ii) neither Delta-T nor Owner
shall have any liability or obligations to the other for Prime Contractor’s
misuse of any Confidential Information disclosed as permitted under this
Agreement unless such Party directed or otherwise participated in such misuse
in such a manner that it would otherwise be liable for such misuse under law or at equity.


 


3.4  Protection;
Copies:  Owner shall take all reasonable means to
protect the confidentiality of the Delta-T Technology.  In particular, but without limitation, Owner
shall not (i) make copies of any document containing any of the Delta-T
Technology except to the extent reasonably necessary to use such technology as
permitted under this License or the Prime Contract, (ii) deliver any such
documents to any government agency for any purpose without complying with any
applicable law or regulation necessary to protect the confidentiality of the
same, or (iii) remove, obliterate or fail to reproduce on any copy of any
such document any and all copyright and confidentiality notices printed
thereon.


 


3.5  Use:  Owner
shall not use any of the Delta-T Technology except as expressly permitted under
this License or the Prime Contract.


 


3.6  Court Order or
Other Legal Process:   In the event that any subpoena, request or demand
(“Demand”) shall be served upon Owner under any court action, administrative or
dispute resolution proceeding, for delivery or disclosure of any of the Delta-T
Technology, then Owner will promptly advise Delta-T of such Demand and deliver
to Delta-T a copy of such Demand and all documentation relating to such Demand
and the proceeding in which it is made which is in the possession of Owner and
is reasonably requested by Delta-T.  The
Parties shall consult with each other concerning any such 


 


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Demand
and Owner shall cooperate with Delta-T, as is reasonably necessary, to minimize
the disclosure of such technology by agreed protective order prepared and
negotiated by Delta-T and the party making the Demand, or by other means not
requiring Owner to contest or oppose the Demand.  If Delta-T is not a party to the action or
proceeding in which the Demand is served, and wishes to have the Demand opposed,
then Delta-T may intervene in such action or proceeding for the purpose of
opposing the Demand or minimizing the disclosure of the Delta-T Technology, and
such intervention shall not be objected to by Owner.  If Owner makes a disclosure of Delta-T
Technology pursuant to a Demand after complying in all respects with the
provisions of this Section 3.5, then such disclosure shall not be deemed a
breach of this License.


 


3.7  Injunctive
Relief:  Owner agrees that any breach of this License
Agreement shall cause Delta-T irreparable harm. 
Accordingly, and in addition to any other remedies that Delta-T may have
at law or in equity, Delta-T shall be entitled to obtain injunctive relief
against Owner to prevent any continuing breach, and without posting or filing
any bond or other security.  All costs,
expenses and attorney’s fees incurred by the prevailing Party as a result of
the litigation of any claim under this License Agreement shall be paid to it by
the losing party.


 


4.  PERFORMANCE
GUARANTEES, LIMITATION OF WARRANTY AND LIABILITY


 


4.1          Delta-T
guarantees that the Plant, when built according to Delta-T’s plans and
specifications, shall perform in accordance with the performance guarantees set
forth in Exhibit E.  Exhibit D
shall govern conducting the performance test.


 


4.2  Limitation of Warranty:  The  DELTA-T TECHNOLOGY IS
PROVIDED UNDER THIS LICENSE WITH THE WARRANTIES EXPRESSED IN THIS LICENSE.  The
only warranties made by Delta-T with respect to the Delta-T Technology are
those made in this License.


 


4.3  Limitation
of Liability:  Except for the remedies set forth in this
License, in no case shall Delta-T have any liability to Owner under this
License whether based on contract, negligence or other tort, or any other legal
theory, whether or not it had knowledge of the damages that might result.  Owner agrees that any and all right to
damages or remedies of any and every kind that Owner may have, now or in the
future, with respect to the Delta-T Technology, including, without limitation,
damages or remedies resulting from performance of the Delta-T Technology,
express or implied warranties against infringement or other warranties, are
those available to it under or by virtue of the Prime Contract and in this
License. Notwithstanding anything to the contrary in this Section 4.3, in
no event shall Delta-T’s cumulative liability under this License exceed
$*.  OWNER HEREBY ACKNOWLEDGES THAT THE
REMEDIES CONTAINED IN THIS LICENSE ARE OWNER’S EXCLUSIVE REMEDIES AND ARE IN
LIEU OF ANY AND ALL OTHER REMEDIES AVAILABLE AT LAW, OR IN EQUITY.


 


5.  TERMINATION


 


5.1  Reasons for
Termination: Unless
and until this License becomes irrevocable, as provided at Section 2.3
above, at the option of Delta-T, this License shall terminate (i) 


 


Confidential Information


 


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upon
termination of the Prime Contract by Owner for convenience, (ii) upon
termination of the Prime Contract by Owner for any reason other than a breach
by Prime Contractor resulting from a breach by Delta-T of the Subcontract, or (iii) upon
termination of the Subcontract for any reason other than breach by
Delta-T.  In the case of termination of
the Prime Contract by Owner, however, Delta-T shall negotiate in good faith
with Owner to enter into a contract to complete the services remaining to be
performed by Delta-T under the Subcontract, provided that all breaches by the
Prime Contractor are first cured, and upon entering into such a contract this
License shall continue in full force and effect.


 


5.2  Consequences of
Termination:  Upon termination of this License Agreement,
Owner shall immediately return to Delta-T all documents embodying any Delta-T
Technology and shall cease all use of the Delta-T Technology.  To the extent Delta-T Technology is embodied
in equipment delivered to Owner prior to termination, Owner may sell the same,
and display the same for sale, only upon consent of Delta-T, which consent
shall not be withheld except to the extent reasonably necessary to assure that
the Delta-T Technology is not disclosed or transferred to an entity listed on Exhibit B
and that it is not otherwise used or disclosed in a manner prohibited by this
License.


 


6.  GENERAL PROVISIONS


 


6.1          Assignment:  No Party shall assign or transfer its rights,
duties or obligations hereunder, except as expressly provided herein, without
the prior written consent of the other. This License shall be binding upon and
shall inure to the benefit of the Parties hereto and to their successors and
permitted assigns.


 


6.2          Merger; Waiver; Amendment:  This
License constitutes the full and complete agreement among the Parties with
respect to the subject matter hereof. 
There are no statements, agreements, understandings, representations or
trade customs of any kind, express or implied, concerning the subject matter
hereof which are not merged herein or superseded hereby.  A waiver of any of the terms of this License
shall not bind any Party unless signed by one of its duly authorized
representatives.  Waiver by any Party of
any default by the other hereunder shall not be deemed a waiver by such party
of any default by the other which may occur thereafter.  This License may only be modified or amended
by an agreement in writing executed by all Parties hereto.


 


6.3          Governing Law; Venue:  The
validity, performance, construction and effect of this License shall be
governed by the laws of the State of Minnesota without regard to the choice of
laws provisions thereof.


 


6.4          Notice:  All
notices provided for herein will be considered as properly given if in writing
and delivered personally or by courier properly addressed:


 


	
  If
  to Owner, to:

  	
   

  	
  1220
  North Tower Road,

  
	
   

  	
   

  	
  Suite 201

  
	
   

  	
   

  	
  Fergus Falls, Minnesota 56537

  
	
   

  	
   

  	
  Attention: President

  



 


Confidential Information


 


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  If
  to Delta-T, to:

  	
   

  	
  Delta-T
  Corporation

  
	
   

  	
   

  	
  323 Alexander Lee Parkway

  
	
   

  	
   

  	
  Williamsburg, VA 23185

  
	
   

  	
   

  	
  Attn: Mr. Robert L. Swain, Vice President

  



 


6.5          Survival:  Owner’ obligations under the provisions of
Sections 3, 4, 5.2 and 6  shall
survive the termination or expiration of this License.


 


6.6          Severability:  In
the event any section, or any part or portion of any section of this License
shall be held to be invalid, void or otherwise unenforceable, such holding
shall not affect the remaining part or portions of that section, or any other
section hereof.


 


IN WITNESS WHEREOF, the Parties have executed this License to be effective on as of the date first set forth above.


 


 


	
  DELTA-T CORPORATION

  	
   

  	
  OTTER TAIL AG ENTERPRISES, LLC

  
	
   

  By:

  	
   

  	
   

  	
   

  By:

  	
   

  	
   

  
	
  Printed

  Name:

  	
   

  	
   

  	
  Printed

  Name:

  	
   

  	
   

  
	
   

  Title:

  	
   

  	
   

  	
   

  Title:

  	
   

  	
   

  
	
   

  Date:

  	
   

  	
   

  	
   

  Date:

  	
   

  	
   

  
							



 


Confidential Information


 


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Exhibit A


Specific
Items Included in Delta-T Technology


 


·      Information
related to the sequence of processing steps used to convert cornmeal to mash;


·      the design of the mix tank system,
including, without limitation, the mash recirculation, jet-mixing,
classifier/strainer and process condensate superheater components;


·      the heat recovery system in the mash
preparation section, including, without limitation, the piping configuration;


·      the fermentation recirculation, transfer
and cooling systems, including, without limitation, the surrounding piping


·      the entire distillation, dehydration,
evaporation system, and de-acid system, including, without limitation, the
molsieve design and operating parameters and configuration, the multi-column
distillation configuration and the way the evaporator and molsieve are
thermally integrated for maximum energy efficiency


 


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EXHIBIT B


LIST OF COMPETITORS


 


	
  4B Components 

  East Peoria, Illinois

  	
   

  	
  Magnin-Interis 

  Charmes, France

  
	
   

  	
   

  	
   

  
	
  Abengoa BioEnergy 

  Sevilla, Spain

  	
   

  	
  Katzen
  International, Inc. 

  Cincinnati, Ohio

  
	
   

  	
   

  	
   

  
	
  Agrol Biotechnologies
  Ltd. 

  Guildford, Surrey Canada

  	
   

  	
  Lurgi PSI Inc. 

  Memphis, TN

  
	
   

  	
   

  	
   

  
	
  Ambitech Engineering
  Corporation 

  Downers Grove, Illinois

  	
   

  	
  Merrick &
  Company 

  Aurora, Colorado

  
	
   

  	
   

  	
   

  
	
  AMG Engineering 

  Cincinnati, Ohio

  	
   

  	
  Praj Industries 

  Pune, India

  
	
   

  	
   

  	
   

  
	
  Bio-Process Innovation 

  West Lafayette, Indiana

  	
   

  	
  Process Plus, LLC 

  Cincinnati, Ohio

  
	
   

  	
   

  	
   

  
	
  Bio-Renewable Group 

  Omaha, Nebraska

  	
   

  	
  Raphael Katzen
  Associates International 

  Cincinnati, Ohio

  
	
   

  	
   

  	
   

  
	
  Broin &
  Associates, Inc. 

  Aberdeen, South Dakota

  	
   

  	
  Ro-Tech Incorporated 

  Louisville, Kentucky

  
	
   

  	
   

  	
   

  
	
  Burns &
  McDonnell 

  Kansas City, Missouri

  	
   

  	
  SNC-Lavalin Group 

  Toronto, Canada

  
	
   

  	
   

  	
   

  
	
  Chematur
  Engineering & Weatherly 

  Engineering 

  Atlanta, Georgia

  	
   

  	
  Southeastern Energy
  Development, Inc. 

  Brooklyn, NY 

  (Alliance with Pure Vision Technology)

  
	
   

  	
   

  	
   

  
	
  Dick Engineering Inc. 

  Toronto, Ontario, Canada

  	
   

  	
  Technip 

  Cedex, France

  
	
   

  	
   

  	
   

  
	
  MECS, Inc. 

  St. Louis, Missouri

  	
   

  	
  Vogelbusch
  USA, Inc. 

  Houston, TX 

  (and its parent Vogelbusch-Austria)

  
	
   

  	
   

  	
   

  
	
  Fagen, Inc.

  Granite Falls, Nebraska

  	
   

  	
  Wave Zeal Ltd. 

  Winnepeg, Manitoba CANADA

  
	
   

  	
   

  	
   

  
	
   Harris Group Inc. 

  Seattle, WA

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ICM, Inc. 

  Colwich, KS

  	
   

  	
  Washington Group
  International 

  Boise, Idaho

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Any individual, group
  or company that performs, on the date of the License or during its term,
  (a) consulting or engineering related to the design of alcohol process
  technology and/or (b) design/build services for existing and prospective
  alcohol plants

  



 


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EXHIBIT C


 


NON-DISCLOSURE AGREEMENT


 


This Agreement is entered into this
       day of
              ,
200   by and between
                                    ,
a corporation organized under the laws of
                          
(“Owner”), and
                                                                      
a corporation organized under the laws of
                                  (“Recipient”),
each of which may be referred to herein individually as a “Party” and
collectively as “Parties.”


 


WHEREAS, Owner owns and operates an ethanol plant which is based on technology
that is confidential to Delta-T Corporation, a Virginia corporation (“Delta-T”),
or Owner is in the process of planning and building such an ethanol plant, and
Owner has, or plans to, enter into an agreement for license of such technology from
Delta-T and it has agreed not to disclose such technology to any third party
except under an agreement containing the terms set forth in this Agreement, and


 


WHEREAS, Recipient is in the business of supplying goods and/or services useful
in the construction or maintenance of ethanol plants, and


 


WHEREAS, in order to supply, and/or bid on the supply of, goods or services
Recipient will need to receive confidential information of Delta-T,


 


IN CONSIDERATION of the mutual terms and conditions of this Agreement, and other good
and valuable consideration receipt of which is hereby acknowledged, Owner and
Recipient agree as follows:


 


1.   Confidential Information:


 


1.1 Definition of Confidential Information:  “Confidential
Information” shall mean (a) all information about the business of Delta-T,
including without limitation, plans, customers or customer lists, operating
costs, prices it has offered or obtained for its products or technology, and (b) all
forms and types of financial, business, scientific, technical, economic, or
engineering information, including patterns, plans, compilations, program
devices, formulas, designs, prototypes, methods, techniques, processes,
procedures, programs or codes, whether tangible or intangible and whether or
how stored, compiled or memorialized physically, electronically, graphically,
photographically, or in writing , which is disclosed to Recipient by Owner or
by Delta-T, whether disclosed orally, visually or in written or other tangible
form.


 


1.2 Exclusions:  “Confidential
Information” shall not, however, include information, which Recipient can
demonstrate by documentary evidence:


 


a.   was in
its possession prior to receipt by Recipient under this Agreement;


b.  appears in issued patents or
printed publications in integrated form 
or is in general use in the trade without violation by Recipient of this
Agreement, or violation by any other party of an obligation not to disclose it;
or


 


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c.     is disclosed to Recipient by someone by a
party other than Delta-T or Delta-T’s Customer who is under no obligation not
to disclose it.


 


2.   No Use or
Disclosure:


 


2.1  General  Restrictions:  Recipient shall not, without Delta-T’s
express written permission (a) make copies of any Confidential Information
or (b) divulge, disclose or communicate any Confidential Information to
anyone other than its employees who need to have access to such information in
order to fulfill the purpose set forth above and who have been advised of the
terms of this Agreement and agreed to comply with it, or (c) use any
Confidential Information for any purpose other than the purposes set forth
above.  Recipient shall take all
reasonable steps to protect the Confidential Information from improper use or
disclosure, and shall in no case use less care to protect Confidential
Information than it uses to protect its own proprietary or confidential
information.


 


2.2 Disclosures Required by Court Order:  If Recipient is required to disclose any Confidential Information by
applicable law, regulation or legal process, Recipient shall provide Owner and
Delta-T notice of such request or requirement and copies of all documents
relevant to the request or requirement. 
Recipient shall give such notice promptly, and in sufficient time to
allow Delta-T to seek a protective order or other remedy.  Recipient shall not disclose any Confidential
Information due to a requirement of law, regulation or legal process unless:  (a) it has first given the notice required
by this Section 2.2 and Delta-T has either given Recipient written
permission to disclose it, or Delta-T has failed to respond to Recipient’s
notice at least 24 hours prior to the time that Recipient is required to make
such disclosure, (b) it is advised by written opinion of its counsel that
it is legally required to disclose such information, and (c) it has used
its best efforts to obtain all reasonable assurances from the party or parties
to whom the information is to be disclosed that the information will not be
used or disclosed for any purpose other than the purpose for which the
applicable law, regulation or legal process requires its disclosure.


 


2.3 Delta-T Is Third Party Beneficiary: Recipient agrees that Delta-T is a third
party beneficiary of this Agreement and that Delta-T may enforce this Agreement
against Recipient in Delta-T’s own name, with or without the participation of
Owner as a party.


 


3.   Designation of Person with Administrative
Responsibility:  Recipient shall designate one of its
employees to be responsible for administration of Recipient’s compliance with
its obligations under this Agreement and shall advise Owner in writing of such
employee’s name, title and personal address within four business days of any
change of such designation.  Until
further notice, the individual so designated is:


 


	
  Name:

  	
   

  
	
  Title:

  	
   

  



 


4.   Term and Termination:  The
term of this Agreement shall commence on the date first written above and shall
continue until terminated by notice in writing by either Party to the other,
but Recipient’s obligations under Section 2 of this Agreement shall
survive with respect to all Confidential Information disclosed hereunder until
such time, if ever, that such information falls 


 


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into
one or more of the exclusions set forth at Section 1.2 above.  Within thirty (30) days of termination of
this Agreement Recipient shall, without request by Owner, deliver to Owner all
of the Confidential Information that it received under this Agreement in
tangible form, and all copies thereof, shall destroy all documents, whether in
electronic or any other form, and other tangible items containing any of such
Confidential Information and shall, upon request, certify to Owner and Delta-T
in writing that it has done so.


 


5.   No License or Other Rights: 
Nothing in this Agreement shall constitute or otherwise be construed as
granting to Recipient any interest or license in any Confidential Information,
or creating any obligation on the part of any of the parties hereto to enter
into any further agreement or business arrangement.


 


6.   Remedies for Breach: 
Recipient agrees that any breach by it of this Agreement shall cause
Delta-T irreparable harm.  Accordingly,
and in addition to any other remedies that Delta-T may have at law or in
equity, Delta-T shall be entitled to obtain injunctive relief against Recipient
to prevent any continuing breach, and without posting or filing any bond or
other security.  All costs, expenses and
attorney’s fees resulting from the litigation or arbitration of any claim under
this Agreement shall be paid by the losing party to the prevailing party.  Recipient further agrees that the rights of
Owner and Delta-T under this Agreement are in addition to any and all other
rights that either of them may have as a matter of law.


 


7.   This Section intentionally
left blank.


 


8.   Export Control:  Recipient hereby assures Delta-T that it does not intend to, and that
it will not, transmit, directly or indirectly, any Confidential Information,
any product produced directly by the use of such information, or any product
produced by a plant constructed using such information, to any country other
than the United States without Delta-T’s prior written consent.


 


9.   General Provisions:


 


9.1  Assignment:  This
Agreement may not be assigned by Recipient to any other party.


 


9.2  Choice of
Law: This Agreement
shall be governed by and construed under the laws of the Staate of Minnesota,
United States of America.


 


9.3 
Notices:  Any notice required or permitted to be given
under this Agreement shall be given in writing and shall be addressed:


 


	
  If
  to Delta-T, to:

  	
   

  	
  Delta-T
  Corporation

  
	
   

  	
   

  	
  323
  Alexander Lee Parkway

  
	
   

  	
   

  	
  Williamsburg,
  VA 23185 USA

  
	
   

  	
   

  	
  Attn:
  Vice President, Operations

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If
  to Recipient, to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:

  



 


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9.4 Survival of Terms:  Recipient’s obligations under Section 2
of this Agreement shall survive as provided in Section 4, and the Parties
obligations under Section 6 and 7 of this Agreement shall survive
termination of this Agreement.


 


9.5 Severability:  If
for any reason a court of competent jurisdiction or an award in arbitration
finds any provision of this Agreement to unenforceable, the Parties agree that
they shall amend this Agreement to allow for enforcement to the maximum extent
enforceable and the remainder of this Agreement shall continue in full force
and effect.


 


9.6 Language:  The language of this Agreement shall be
English, and all communications and notices required to permitted to be made
hereunder, and any dispute resolution proceeding related to a dispute resolved
under Section 7 above, shall be conducted in English.


 


9.7 Headings and Captions:  The
headings and captions in this Agreement are for convenience only and are not to
be considered in construing this Agreement. 
All references to any article, section or paragraph numbers shall be
deemed to be references to an article, section or paragraph of this Agreement
unless otherwise expressly stated.


 


9.8 Complete Agreement:  This Agreement and sets forth the entire Agreement between the Parties
with respect to the subject matter hereof and supersedes any prior Agreement
related to thereto.  No addition or amendment
may be made to this Agreement except by a writing signed by both Parties.


 


9.9 No Waiver:  Failure by any Party to enforce any provision
of this Agreement with respect to any breach thereof, shall not be deemed a
waiver of any right to enforce any other breach of this Agreement.


 


In Witness Whereof, the Parties have executed this Agreement by their authorized
representatives.


 


 


	
  Owner:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Recipient:

  	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
								



 


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EXHIBIT D


PERFORMANCE
TEST PROTOCOLS


 


1.             Performance Test
Protocols


 


1.1          PRE-TEST PREPARATION


 


1.1.1Prior to the
PERFORMANCE TESTS, the PLANT must have reached Mechanical Completion.  In addition, 
DELTA-T must have run the PLANT or near design rate consistently for a
period of seven (7) days, as evidenced by plant operational data provided
to Delta-T by OWNER, before the PERFORMANCE TEST is initiated. Before
commencement of PERFORMANCE TEST, DELTA-T shall notify OWNER
in writing at least seven (7) Days
prior to planned commencement of the PERFORMANCE TEST that all pre-test
conditions have been satisfied, including the following:


 


·      Adequate
and competent supervision, personnel and resources for effective operation,
maintenance and performance analysis of the PLANT, including laboratory
analysis, temporary meters or other measuring devices and instrumentation
specified as to accuracy and reproducibility by DELTA-T in advance of the
PERFORMANCE TEST required to conduct and evaluate the PERFORMANCE TEST shall
have been furnished.  The PLANT shall be
operated and maintained in accordance with the technical advice and instruction
from the DELTA-T Operations Manual and on-site directives from DELTA-T, and
otherwise within generally accepted practices within the fuel ethanol industry.


 


·      The
PLANT, its machinery, equipment, instrumentation and piping, shall all be clean
lubricated where appropriate, leak tight, and ready to operate according to
design specifications.  All systems and
appropriate checkouts and calibrations shall have been completed and documented
by responsible PLANT technicians, contractors, and/or vendors.  Analytical and any special test equipment and
reagents will have been calibrated and made accurate.


 


·      Cleaning
(CIP) of the process equipment has been accomplished seven (7) days or
less before the PERFORMANCE TEST per DELTA-T direction and standard procedures
set out in the DELTA-T Operations Manual. 
All ingredients and supplies required to complete the test are on
hand.  This includes, but is not limited
to, feedstock of corn (meeting specifications listed in Exhibit D Section 1.2)
supplied in stable quantities sufficient to support PLANT operation at a rate
up to 120% of the guaranteed fuel ethanol production rate, as well as
sufficient steam and other utilities, enzymes, chemicals, and other ingredients
of the type specified by DELTA-T in the Operations Manual and supplies to
support PLANT operation at a rate up to 120% of the guaranteed fuel ethanol
production rate.


 


·      Adequate
operation, analytical, and maintenance support shall be scheduled for the test
period.


 


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1.2          COORDINATION


 


1.2.1 DELTA-T
shall coordinate the PERFORMANCE
TEST with OWNER and Prime Contractor during the 24
hour/day around the clock PERFORMANCE
TEST period.  This
coordination of the PERFORMANCE
TEST activities will be handled by a DELTA-T
representative designated to serve as DELTA-T’s Test Coordinator (“Test
Coordinator”).  The Test Coordinator will
work with an individual designated by the OWNER to be its representative for
the PERFORMANCE TEST to
set the test schedule and to coordinate operations during the test period.
DELTA-T will also assign DELTA-T Shift Coordinators to support the operation
during the test period.


 


1.2.2 OWNER shall
supply, or cause to be supplied, all feedstock, utilities and other supplies
and services required to conduct the PERFORMANCE TEST, as specified under Section 1.1.1
above, throughout the entire PLANT during all PERFORMANCE TESTS.


 


1.2.3 DELTA-T
shall direct its and Owner’s personnel in the operation of the PLANT in a
manner consistent with the operating parameters provided in the Operations
Manual.


 


1.3          CONDUCTING THE TEST


 


1.3.1        The DELTA-T Test
Coordinator shall be provided with operating data by the OWNER sufficient to
verify that the PLANT is operating at a condition suitable for initiation of
the PERFORMANCE TEST.  At the scheduled
start time of the PERFORMANCE
TEST, the DELTA-T Test Coordinator will signal that the
test has formally begun and will direct operators to take the initial test
measurements. The test will be conducted over a three-day (72 hour) period of
operation.  During the Test period, the
PLANT shall be operated by the OWNER in compliance with the instructions of
DELTA-T and the Delta-T Operations Manual and instructions provided by DELTA-T,
including, without limitation, adjustments in temperatures, pressures,
feedstock rates, steam flow, and other process control inputs, provided these
adjustments do not result in unsafe operating conditions.  PLANT operators will monitor and record
operating data according to standard procedures and in addition will record the
supplemental data specified in this protocol on data sheets in the form to be
provided by DELTA-T.  Records will be
developed from permanent plant equipment that is calibrated immediately prior
to test.  All test measurements will be
reviewed by the Test Coordinator (or a designated representative).  If the Test Coordinator believes that there
might be a problem with the measurement method or reading, the reading will be
retaken and verified by the Test Coordinator and OWNER’S Representative.
Immediately upon the conclusion of the PERFORMANCE
TEST, the Test Coordinator will meet with representatives
of OWNER to review the test results. 
DELTA-T and OWNER shall each be given a copy of the test results.  If the Performance Guarantees have been met,
then OWNER shall promptly issue a notice to DELTA-T to such effect.  If the PERFORMANCE TESTS have not been met,
then OWNER shall issue a written notice to DELTA-T within one (1) day of
completion of the PERFORMANCE TESTS indicating in what manner such Performance
Guarantees have not been successfully completed.


 


1.3.2        If the 72-hour test period
is interrupted for any reason within DELTA-T’s control or OWNER’S control, a
new three-day test period will resume after the cause for the interruption has
been corrected and the PLANT has achieved an acceptable operating capacity at substantially
the same rate immediately prior to the interruption.  DELTA-T and OWNER shall stop the PERFORMANCE
TEST if it becomes obvious 


 


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that it cannot be
carried to a satisfactory conclusion in the current attempt.  If the PERFORMANCE TEST has been interrupted
for reasons not attributable to   DELTA-T
or other persons or factors within its control, and continues to be interrupted
such that DELTA-T has spent a cumulative period of ten (10) calendar days
on site since the commencement of the test, then OWNER shall compensate DELTA-T
for the personnel that DELTA-T has on site. 
This compensation period shall begin on the cumulative 11th
day on site, and will continue until the completion of the PERFORMANCE
TEST.  This compensation will cease
should the inability to complete the PERFORMANCE TEST be the fault of DELTA-T
or other persons or factors within its control. 
Compensation rates are provided in Exhibit B.1.


 


2.             Analytical/Calculation
Protocols


 


2.1          UNDENATURED FUEL ETHANOL QUALITY


 


	
  METHOD:

  	
  Analyze samples
  according to DELTA-T provided procedures. 
  The last test result before emptying day tank into main storage tank
  shall determine the quality for the batch. 
  The average of all batch test results over the test period shall be
  used in determining the quality for the PEFORMANCE TEST.

   

  If the fuel
  ethanol in the day tank does not meet the quality specifications of Exhibit D,
  section 1.2.1, DELTA-T has the discretion to send it on to the main storage
  tank (on the theory that the blended product in the main storage tank will
  meet the quality specifications) the average of all batch test results shall
  be used to establish the blended quality. 
  If the blended fuel ethanol does not meet quality specifications as a
  result of below quality product measured in one or more day tank batches the
  volume of the batch(s) shall not be included in ethanol production “rate”
  quantities used in calculating liquidated damages.

   

  
	
  SAMPLE POINT:

  	
  Undenatured Fuel
  Ethanol Day Tank Storage

   

  
	
  SAMPLE SIZE:

  	
  250 mls.

   

  
	
  SAMPLE CONTAINER:

  	
  Nalgene

   

  
	
  FREQUENCY:

  	
  Once per two (2) hours

   

  
	
  SAMPLES RETAINED:

  	
  All

   

  
	
  PREPARATION:

  	
  Standardize test
  reagents.  Clean glassware and sample
  containers. Assure that reagents are of sufficient quality.

   

  
	
  DOCUMENTATION:

  	
  Log results on a
  PERFORMANCE TEST Data Sheet.

  



 


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  2.2     Undenatured Fuel Ethanol
  Production Rate

  
	
   

  	
   

  	
   

  
	
  METHOD:

  	
   

  	
  The day tank will be
  manually measured every eight (8) hours to serve as the principal method
  of measurement of production volume, along with a final measurement of the
  day tank before the contents are sent to the main storage tank(s). In
  addition, flow totalizer readings will be taken from product meter or other
  measuring device mutually agreed upon between OWNER and DELTA-T at regular
  intervals as backup verification of the manual measurements. The total volume
  from the test meters will be adjusted to a volume equivalent 99.50wt% ethanol
  at 60(o)F. Divide by the total number of test hours to determine the average
  rate over the test period. Multiply result by 1.05 to calculate Denatured
  Fuel Ethanol Rate.

  
	
   

  	
   

  	
   

  
	
  SAMPLE POINT:

  	
   

  	
  Product volumetric
  totalizing meter (with computer monitoring) after Product Receiver.

  
	
   

  	
   

  	
   

  
	
  SAMPLE SIZE:

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  
	
  SAMPLE CONTAINER:

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  
	
  FREQUENCY:

  	
   

  	
  Once per two
  (2) hours and at the end of each Day Tank batch.

  
	
   

  	
   

  	
   

  
	
  SAMPLES RETAINED:

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  
	
  PREPARATION:

  	
   

  	
  Certify that the flow
  meter is properly calibrated.

  
	
   

  	
   

  	
   

  
	
  DOCUMENTATION:

  	
   

  	
  Log results on a
  PERFORMANCE TEST Data Sheet and sign off by the OWNER and DELTA-T.

  



 


	
  2.3     Undenatured Fuel Ethanol
  Yield

  
	
   

  	
   

  	
   

  
	
  BASIS:

  	
   

  	
  56 lb. per bushel corn
  containing 14.5% moisture and 72% dry starch and of 1% foreign material (by
  weight).

   

  
	
  METHOD:

  	
   

  	
  Record corn weigh belt
  totalizer readings to measure the accumulated meal weight.  Measure the sample moisture and starch
  content.  Convert total undenatured
  ethanol volume from the Rate Test to weight at 60(o)F.  Divide the calculated mass quantity of
  undenatured ethanol by the calculated corn mass quantity of total starch fed
  over the time period to determine yield. 
  In addition, this weigh belt total should be cross checked by totaling
  all corn receipts, 

  



 


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  subtracting all foreign
  material content, and taking into account the current corn bin volumes.

  
	
   

  	
   

  	
   

  
	
  TEST POINT:

  	
   

  	
  Corn weigh belt

   

  
	
  FREQUENCY:

  	
   

  	
  Once per two hours

   

  
	
  PREPARATION:

  	
   

  	
  Certify that the weigh
  belt is properly calibrated

   

  
	
  DOCUMENTATION:

  	
   

  	
  Log results on
  “PERFORMANCE TEST Data Sheet”

  



 


	
  2.4     Process Electrical
  Consumption

  
	
   

  	
   

  	
   

  
	
  METHOD:

  	
   

  	
  Record electric meter
  readings at beginning of test and at the required frequency thereafter.  Divide total Kwh for test period by total
  volume of undenatured ethanol produced to determine average Kwh per
  gallon.  Average results of all
  calculations for test periods to determine the process electrical power
  consumption value for PERFORMANCE TEST.

   

  
	
  TEST POINT:

  	
   

  	
  Electric power meter
  types and locations as established by Delta-T, and as necessary to isolate
  process consumption.

   

  
	
  FREQUENCY:

  	
   

  	
  Once per 24 hours

   

  
	
  PREPARATION:

  	
   

  	
  Isolate process
  electrical consumption activities during test period.

   

  
	
  DOCUMENTATION:

  	
   

  	
  Log results on a PERFORMANCE
  TEST Data Sheet

   

  



 


2.5 NATURAL GAS CONSUMPTION


	
   

  	
   

  	
   

  
	
  METHOD:

  	
   

  	
  Record plant
  natural gas meter totalizer readings in MCF over test period.  Obtain higher heating value specification
  for gas over the test period and calculate the BTU over the test period.  Divide this value by the amount of
  undenatured ethanol produced during the test period to determine BTU per
  gallon of undenatured ethanol produced during the test period.  Quantities of natural gas will be adjusted
  to 1,000 btu/ft(3) (70° F, 1 atm) and 10% DDGS moisture respectively
  before the calculation is made. 
  Average results of all calculations for test period to determine
  natural gas consumption value for Acceptance Test.

   

  
	
  TEST POINT:

  	
   

  	
  Plant gas meter

   

  
	
  FREQUENCY:

  	
   

  	
  Once per two (2) hours

  



 


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  PREPARATION:

  	
   

  	
  Certify gas
  meter is properly calibrated and suspend all non-process use of natural gas.

   

  
	
  DOCUMENTATION:

  	
   

  	
  Log results on
  an “Acceptance Test Data Sheet.”

   

  



 


2.6          CALCULATION PROTOCOL


 


All calculations will be based on actual measured
data taken during the test period.  For
any given sample period, the average value during that period will be
determined by the average of the measured data points for that sample
period.  The liquidated damages, if any,
will be determined using the data collected for each individual sample period
and averaged over the PERFORMANCE TEST period. All samples shall be taken in
duplicate and OWNER and DELTA-T shall each retain one sample.  OWNER shall analyze one of the duplicates;
the second shall be reserved for use in case of a disagreement.  OWNER shall cause such analyses to be
conducted at the Plant during the PERFORMANCE TEST period and in the presence
of the Test Coordinator or such coordinator’s designee, and Owner and Lender’s
Independent Engineer if they are present. 
In case of disagreement, a referee laboratory shall be selected by
agreement between OWNER and DELTA-T, and the cost of such referee laboratory
shall be paid by the party or parties not substantiated by the referee.  The findings of this referee laboratory shall
be accepted as final.


 


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EXHIBIT E


PERFORMANCE
GUARANTEES


 


1.     Performance Guarantee Figures


 


Performance guarantees are subject to the PERFORMANCE TEST PROTOCOL set
forth in Exhibit C being adhered to, raw material, chemicals, and
utilities being provided in conformance with quality and quantity requirements
established by Delta-T; and equipment being operated and maintained in
accordance with manufacturers’ recommendations and the DELTA-T Operations
Manual.


 


1.1
Definitions


The term “guarantee”
as used herein shall have the same meaning as “warranty.”


 


1.2
Process Guarantees


All quantities set
forth below are based on average quantities over the period of the applicable
PERFORMANCE TEST.


 


	
  1.2.1       Anhydrous Undenatured
  Ethanol Production Guarantee

  
	
   

  	
   

  	
   

  
	
  Anhydrous Fuel 

  Ethanol Production 

  Rate:

  	
   

  	
  Minimum
  6548 US un-denatured gallons per hour (average) based on a minimum feedstock
  specification of 56 lb/bushel test weight corn containing a maximum of 14.5%
  moisture (by weight), a minimum of 72% dry fermentable starch (by weight) and
  a maximum of 1% foreign material (by weight).  

   

  Un-denatured
  ethanol will meet specifications for fuel ethanol per ASTM D4806-04.

  
	
   

  	
   

  	
   

  
	
  Anhydrous  

  Fuel Ethanol Yield:

  	
   

  	
  Minimum 0.515 pounds
  un-denatured fuel ethanol per pound of fermentable starch (average) in corn
  feed based on a minimum feedstock specification of 56 lb/bushel test weight
  No. 2 Yellow Dent corn containing a maximum of 14.5% moisture (wgt),
  minimum 72% dry, trash-free starch, maximum 1% (wgt) foreign material.

  



 


	
  1.2.2       Utility Consumption
  Guarantees

  
	
   

  	
   

  	
   

  
	
  Natural Gas 

  Consumption:

  	
   

  	
  Maximum 36,000 BTU per
  gallon (average) of un-denatured fuel ethanol produced for gas-fired boiler
  and gas fired rotary drum dryer   based on natural gas provided at
  a minimum gas quality of 939 BTU per standard cubic foot (1atm, 70° F), 10%
  maximum (weight) DDGS moisture content, and minimum boiler thermal efficiency
  of 84%. This guarantee is only in effect if the
  plant design DOES include a DDGS dryer

  
	
   

  	
   

  	
   

  
	
  Process Electrical 

  Consumption:

  	
   

  	
  Maximum 1.000 kWh per gallon  (average) of un-denatured fuel
  ethanol produced when operating at the nameplate capacity based on electric
  service with 0.85 power factor.  This
  number includes 

  



 


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  process equipment components in mash preparation,
  liquefaction, yeast mix and propagation, fermentation, distillation,
  dehydration and acid reduction, evaporation, separation and stillage, process
  condensate, chemical storage, CO2 scrubbing, compressed air, WDGS
  transfer and handling, ethanol storage and load-out, cooling tower including
  cooling water circulation, condensate return, process sumps, and heat
  tracing.  The indicated consumption
  does not include grain receiving and storage, milling, boiler, chiller, RTO, water
  supply or treatment,  and CO2
  transmission or recovery. 

  
	
   

  	
   

  	
   

  
	
  Process Steam 

  Consumption:

  	
   

  	
  Maximum 24,000 actual
  steam BTUs per gallon (average) (without dryer) of un-denatured fuel ethanol
  produced (as calculated in Section 2.5 of Exhibit B).  This number includes the steam to all
  process components. This guarantee is only
  in effect if the plant design does NOT include a DDGS dryer

  



 


2.     Right to Cure; Limitation on
Liquidated Damage Claim


 


In the event that one or more of the performance criteria set forth in Section 1.2
above are not satisfied, DELTA-T shall have the right at its expense to require
a test of the degree of accuracy of the testing equipment and testing methods
and procedures.  If the variation from
the guaranteed rates is less than or equal to the demonstrated margin of error
of the relevant PERFORMANCE TEST, then OWNER shall have the right (but not the
obligation) to make improvements in the testing equipment, at OWNER’S cost
provided the variations are not attributable to DELTA-T, and require that
DELTA-T repeat the relevant PERFORMANCE TEST. 
If OWNER does not make such improvements, then   DELTA-T shall have the right to do so and
OWNER shall reimburse DELTA-T for the cost of making the required
improvements.  If the performance criteria
set forth in Exhibit D, Section 1.1 are not satisfied for reasons not
attributable to DELTA-T or other persons or factors within DELTA-T’s control,
then OWNER may, at its option, remedy the defect or deficiency and have the
PERFORMANCE TESTS re-run at any time within three (3) months of the date
of commencement of the first ACCEPTANCE TEST, or pay to DELTA-T the remaining
unpaid portion of the Fee.


 


Within
said three (3) month period, DELTA-T shall take whatever action is
reasonably necessary and consistent with sound engineering and construction
practices to cause the PLANT to satisfy the performance guarantees in Section 1.2.  Within said three (3) month period,
DELTA-T may re-run the PERFORMANCE TEST one or more times before paying
liquidated damages as set forth in Section 3.1 below as a result of
failing to meet the guarantees set forth in Section 1.2 above.  Any claims for liquidated damages must be in
writing and shall be submitted to Delta-T no later than thirty (30) days from
the date of completion of the last PERFORMANCE TEST, which requires the payment
of liquidated damages.


 


The
Parties acknowledge and agree that the terms of this Contract with respect to
liquidated damages, including those payable under this Exhibit D, are fair
and reasonable considering the damage Owner would sustain in the event of
DELTA-T’s failure to perform as required under this Contract, that such damages
have been agreed upon and fixed as liquidated damages because of the difficulty
of ascertaining as of the date hereof the exact damages that would be sustained
by Owner, and that such liquidated damages provisions shall be applicable
regardless of the actual amount of damages sustained.  All amounts shall be paid as liquidated damages
and not as penalty.


 


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3.     Liquidated Damages and Maximum
Damages for Process Guarantees


 


3.1  Amount
of Damages:


 


If
a defect in the BASIC PROCESS DESIGN or the Delta-T Technology causes the PLANT
to fail one or more of the process performance guarantees set forth in
Section1.2 above during a PERFORMANCE TEST as provided herein, and DELTA-T has
not been able to correct the defect and pass all components of the PERFORMANCE
TESTS within the time set forth at Section 2 above, then OWNER shall be
entitled to liquidated damages based on the net amount due as allocated below
up to a maximum cumulative amount of *


 


The sum of the countervailing factors, determined as set forth under Section 3.2
below, shall be deducted from the sum of the damages determined
thereunder.  In no case, however, shall
OWNER have any obligation to pay DELTA-T as a result of such calculation.  If the countervailing factors are greater
than the damages the calculation the liquidated damages shall be deemed to be
zero and neither Party shall have any obligation to the other as a result of
the PERFORMANCE TEST.


 


3.2
Amount of Damages and Countervailing Factors


 


	
  Fuel Ethanol Yield:

  	
   

  	
  * per 0.01 lb
  of anhydrous un-denatured ethanol per lb of convertible starch that the
  PERFORMANCE TEST results show lower or higher than the guaranteed ethanol
  yield listed in Paragraph 1.2 above. To the extent the yield is lower the
  resulting number shall constitute damages. To the extent that it is higher
  the resulting amount shall be a countervailing factor.

   

  For
  example, if the PERFORMANCE TEST average ethanol yield is 0.505 pounds of
  un-denatured anhydrous ethanol per pound of starch, the amount included in
  the liquidated damages calculation for this component would be ((0.510 –
  0.515) = -.005/.01 = -.05 < |1| = 0 x $*) = $0

   

  This
  example illustrates the fact that only full increments of positive or
  negative variances count towards the liquidated damages financial
  calculation. Anything less than this numerical increment is considered to be
  too close to the tolerance of measurement to be meaningful. An increment of
  .005 is less than .01, so it is rounded down to zero. As another example, an
  increment of .015 would be rounded down to .01.

  
	
   

  	
   

  	
   

  
	
  Fuel Ethanol Production Rate:

  	
   

  	
  $*
  per 10 US gallons per hour of un-denatured ethanol that the PERFORMANCE TEST
  results show lower or higher than the guarantee ethanol production rate
  listed in Paragraph 1.2 above. To the extent the rate is lower the resulting
  number shall constitute damages. To the extent that it is higher the
  resulting amount shall be a countervailing factor.

   

  For
  example, if the PERFORMANCE TEST average ethanol production rate is 10 US
  gallons per hour over the guarantee rate, the amount included in the
  liquidated damages calculation for this component would be (10gph) = 10/10 =
  1.0 x $* =*

  



 


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  NATURAL GAS CONSUMPTION:

   

   

  	
   

  	
  * per each 100
  BTU per US gallon of un-denatured ethanol that the PERFORMANCE TEST results
  show higher or lower than guaranteed natural gas consumed for the boiler and
  DDGS dryer listed in Paragraph 1.2 above. To the extent the consumption is
  higher the resulting number shall constitute damages. To the extent that it
  is lower the resulting amount shall be a countervailing factor.  

   

  For
  example, if the PERFORMANCE TEST average natural gas consumption is 37,000
  BTU per gallon of un-denatured ethanol, then the amount included in the
  liquidated damages calculation for this component would be (36,000 – 37,000)
  = -1,000/100 = (-10 x $*=*. a penalty.

  
	
   

  	
   

  	
   

  
	
  Process Electrical Consumption:

  	
   

  	
  * per each
  0.01 kWh per US gallon of un-denatured ethanol that the PERFORMANCE TEST
  results show higher or lower than the guaranteed power consumption production
  rate listed in Paragraph 1.2 above. To the extent the consumption is higher
  the resulting number shall constitute damages. To the extent that it is lower
  the resulting amount shall be a countervailing factor.

   

  For example, if the PERFORMANCE TEST average
  electric process power consumption excluding utilities is 0.98 kwh per gallon
  of un-denatured ethanol produced, then the amount included in the liquidated
  damages calculation for this component would be (1.0 – 0.98) = 0.02/0.01 = 2
  x $*=*, a countervailing factor.

  



 


If we assume the example performance numbers set forth above to
illustrate a theoretical liquidated damage calculation, there would be no
liquidated damages paid because the cumulative sum of all the performance
calculations is positive, as shown below:


 


	
  Production Rate Deviation

  	
   

  	
  $*

  	
   

  	
  Countervailing Factor

  
	
  Ethanol Yield Deviation

  	
   

  	
  $

  	
   

  	
  0

  
	
  Natural Gas
  Consumption Deviation

  	
   

  	
  (*)

  	
   

  	
  Damages

  
	
  Electric Power
  Consumption Deviation

  	
   

  	
  $*

  	
   

  	
  Countervailing
  Factor

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Subtotal

  	
   

  	
  $*

  	
   

  	
  Net Positive Sum

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Liquidated Damages

  	
   

  	
  -0-

  	
   

  	
   

  



 


3.3
Damages Reasonable


 


The Parties
acknowledge and agree that the terms of this Agreement with respect to
liquidated damages, including those payable under this Exhibit D, are fair
and reasonable considering the damage OWNER would sustain in the event of the
failure of the Plant to meet the performance guarantees set forth above, that
such damages have been agreed upon and fixed as liquidated damages because of
the difficulty of ascertaining as of the date hereof the exact damages that
would be sustained by OWNER, and that such liquidated damages provisions shall
be applicable regardless of the actual amount of damages sustained.  All amounts shall be paid as liquidated
damages and not as a penalty.


 


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4.     Conditions to Process
Guarantees


 


4.1   DELTA-T shall have no
obligation or liability for any claimed breach of warranty or guarantee under
this Exhibit D to the extent DELTA-T has been relieved from its full
warranty as provided at Article 12 of the Prime Contract.  In addition, to the extent such warranty or
guarantee may be directly and causally affected, DELTA-T shall be relieved of
its warranty or guarantee obligations arising from:


 


4.1.1        The feedstock provided by OWNER to be
provided by Owner, does not comply with the conditions described herein.


4.1.2        Contamination of feedstock or other
materials to which the Equipment is exposed.


4.1.3        Abuse, or poor maintenance, of the
Equipment.


4.1.4        OWNER’S failure to supply utilities
required to meet the guaranteed production rates as set forth at Section 1.2.2
of Exhibit C.


4.1.5        OWNER’S failure to fulfill any of its
obligations, which individually or in the aggregate are material, under the
PERFORMANCE TEST protocols set forth at Exhibit C above.


4.1.6        OWNER’S failure, in any material way, to
operate the PLANT in accordance with the operating manuals and instructions
provided by DELTA-T.


4.1.7        If OWNER designs or procures equipment
and systems that fail to meet DELTA-T’S BASIC PROCESS DESIGN specifications for
energy efficiency.


4.1.8        Owner fails to provide electrical service
with a 0.85 power factor


 


5.             Performance Bonus


 


Upon Final Completion and
Delta-T successfully passing the Second Performance Test in compliance with the
guarantees set forth in Section 1.2 above, Delta-T and Owner shall
cooperate during a bonus period of operation.  Owner agrees to pay to
Delta-T a bonus of $* for each 1% above nameplate plus 10%, capped at 20% above
nameplate or $*.  Delta-T has three (3) months from Final Completion
to achieve this bonus.  The bonus nameplate plus 10% to 20% capacities
must be achieved over a consecutive two (2) week period without
interruption to normal production, with permanent equipment operating within
design parameters and with no undue wear and tear or increased fouling or
maintenance.  Bonus shall be payable thirty (30) days after achieving
these bonus criteria.


 


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MECHANICAL COMPLETION, COMMISSIONING, STARTUP


 


Definitions:


 


Mechanical
Completion:  The
completion of construction activities essential to the safe and proper
operation of the plant, as more fully listed below.


 


Commissioning:  The checking and preparation of the plant for
operation, functional control loop checking, interlock testing, system purging
and utility system startups, as more fully listed below.  In general, the tasks required taking the
plant from mechanical completion and making it ready for start-up.


 


Ready for Startup:  When the activities listed for Mechanical
Completion and Commissioning have occurred and the Plant is ready to mill corn
at the hammer mills.  At that time,
DELTA-T will notify OWNER that the Plant is Ready for Startup.


 


Startup:  Startup begins with the initial feed of raw
material to the plant, filling of Equipment with operating material, startup
and operation of individual process stages, adjustment and optimization of
operating conditions, optimization of control loops, verification of startup,
shutdown and partial load operations. 
Utility system startups (unless integrated with the processing portions
of the plant) are a part of the Commissioning Phase.


 


These events may not
occur at the same point in time for all parts of the plant.  Utility systems needed for operation of the
rest of the plant may reach Mechanical Completion, Commissioning and Startup
before the main process parts of the plant. 
Some processing areas of the plant or sub-systems of operating areas may
reach Mechanical Completion and be Commissioned and Started up before other
parts of the plant, for example, grain receiving and storage may be completed
and into operation, i.e., filled with grain, prior to other parts of the
facility.


 


The following lists indicate the
activities or events, which take place in each of the phases described.


 


Mechanical Completion


 


·      Inspection of
all equipment to check that erected facilities conform to construction drawings
and Contract specifications.


·      Non-operating
field leak tests or field pressure tests on piping and field-fabricated
equipment as required by the Contract specifications, disposing of test media
on site at a location specified by Owner, and removal of test blinds and
restoring systems to “ready for operation” condition.


·      Removal of all temporary
supports, bracing or other foreign objects.


·      Inspection of all columns to
ensure proper installation of all internals.


·      Field inspection of all shop fabricated
equipment.


·      Line flushing as part of hydrotesting.


·      Check to ensure that all
baseplates and soleplates are level and properly grouted.


 


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·      Check pipe hangers,
supports, guides and pipe specialties, and remove all shipping and erection
bracing.


·      Check alignment of all
piping fit-up with equipment to avoid excessive nozzle loading and pipe
stresses.


·      Insulation for process purposes.


·      Install Lubricants.


·      Check rotating machinery for
correct direction of rotation and for freedom of moving parts.


·      Check cold alignments on
rotating equipment.


·      Schedule the services of
factory representatives for equipment or other items as required.


·      Electrical and
Instrumentation installed.


·      Irrespective of the
foregoing,  Mechanical Completion shall
be deem achieved once feedstock is introduced into the process and ethanol has
been produced


 


Commissioning


 


·      Test burners.


·      Dry out
castables, refractory and brickwork according to the manufacturer’s
instructions (if not yet completed).


·      Regenerate media as required.


·      Test refrigeration systems
and low-temperature units in cold condition.


·      Check thermal expansions.


·      Check safety valves;
re-adjust if required.


·      Check supports, suspensions
and flexibility for thermal expansion.


·      Verify start-up strainers
removed, or in place as required.


·      Check flange connections for
tightness.


·      Clean y-strainers and
condensate drains.


·      Start-up measuring and
control loops, check interaction of indicators and control loops.


·      Start-up analyzers.


·      Report and adjust limit
values for alarm and control systems.


·      Coordinate punch list work.


·      Check calibration.


·      Check fuse size.


 


Startup


 


·      Observe all safety
procedures including personnel protective gear, work permits and entry permits.


·      Start-up in accordance with
operating manuals and manufacturer’s instructions


·      Verify sealing fluid flow.


·      Observe operation to be sure
lubrication is maintained.


·      Observe operation to be sure
alignment is maintained.


·      Make operating noise
measurements.


·      Verify operating capacities.


·      Check supports, stops,
spring hangers and expansion joints for hot operation.


·      Check flanges for tightness
and make hot pull-ups, as required.


·      Blow down y-strainers and
condensate drains regularly.


·      Verify amperage on critical
units.


 


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·      Optimize control loop
parameters.


·      Adjust and calibrate on-line
analyzers such as conductivity and pH.


 


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