EXIBIT 10.3 TO SOY ENERGY, LLC FORM 10-Q FOR THE QUARTER ENDED 04-30-2010



Exhibit 10.3


	
  

 	
  

 
	
 

 	
 Industrial 
Services, LLC

 


Soy Energy

Freedom Fuels’ Plant Modifications

Phase 1 Engineering Services— Scope Definition


          THIS
PHASE 1 ENGINEERING SERVICES AGREEMENT (the “Agreement”) is entered into as of
April 6, 2010 (“Effective Date”) by and between Ball Industrial Services, LLC
(“BIS”) and Soy Energy, LLC (“Soy”).


          NOW,
THEREFORE, in consideration of the mutual promises contained herein and other
good and valuable consideration, and intending to be legally bound by this
Agreement, the parties do hereby agree as follows:


	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Project Objective:

 	
  

 
	
  

 	
 Ÿ

 	
 Soy retains BIS to
 perform, and BIS agrees to perform, the engineering and consultation services
 set forth in this Agreement.

 
	
  

 	
 Ÿ

 	
 The project is all of the
 required and necessary modifications of the Freedom Fuels biodiesel plant in
 Mason City, Iowa, to allow the biodiesel plant to use 100% Corn Stillage Oil
 (CSO) as a feedstock for the conversion to ASTM quality biodiesel fuel
 (Work);

 
	
  

 	
 Ÿ

 	
 BIS has submitted to Soy
 for review a preliminary draft contract “Soy Energy - BIS Agreement - RE00”,
 which is a Cost of Work Plus a 10% Fee (based on Cost of Work) with a
 Guaranteed Maximum Price Agreement (G-Max Agreement);

 
	
  

 	
 Ÿ

 	
 BIS shall perform all the
 preliminary engineering services necessary for it to determine (collectively,
 the Phase 1 Package):

 
	
  

 	
  

 	
 Ÿ

 	
  

 	
 The Guaranteed Maximum
 Price for the entire Work;

 
	
  

 	
  

 	
 Ÿ

 	
  

 	
 The initial Project
 Schedule for the Work; and,

 
	
  

 	
  

 	
 Ÿ

 	
  

 	
 The Cash Flow requirements
 for the Work.

 
	
  

 	
 Ÿ

 	
 BIS shall complete the
 engineering services and deliver the Phase 1 Package no later than 45 days
 after the Effective Date.

 
	
  

 	
  

 	
 Ÿ

 	
 This presumes the timely
 cooperation from Crown Ironworks.

 
	
  

 	
  

 	
 Ÿ

 	
 BIS will have 10 days from
 the time all the G-Max Agreement terms & conditions are finalized and
 mutually agreed upon to submit to. Soy the Guaranteed Maximum Price.

 
	
  

 
	
 Engineering Services/Consultation:

 
	
  

 	
 Ÿ

 	
 As needed BIS shall
 schedule and conduct meetings with Soy to discuss such matters as
 specifications, procedures, progress, coordination, and scheduling of the
 Work.

 
	
  

 	
 Ÿ

 	
 BIS shall advise Soy on
 proposed site use, improvements, selection of materials, building systems and
 equipment related to the Work.

 
	
  

 	
 Ÿ

 	
 BIS shall also provide
 recommendations consistent with the Work requirements to Soy on
 constructability; availability of materials and labor; time requirements for
 procurement, installation and construction; and factors related to
 construction cost including, but not limited to, costs of alternative designs
 or materials, preliminary budgets, life-cycle data, and possible cost
 reductions.

 













	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Schedule

 	
  

 
	
  

 	
 Ÿ

 	
 When Work requirements
 have been sufficiently identified; BIS shall prepare a Work schedule for
 Soy’s acceptance.

 
	
  

 	
 Ÿ

 	
 The Work schedule shall
 coordinate and integrate BIS’s services, and Soy’s responsibilities and
 identify items that could affect the Work’s timely completion.

 
	
  

 	
 Ÿ

 	
 The Work schedule shall
 include the following:

 
	
  

 	
  

 	
  

 	
 Ÿ

 	
 Components of the Work;

 
	
  

 	
  

 	
  

 	
 Ÿ

 	
 Times of commencement and
 completion required of each Subcontractor;

 
	
  

 	
  

 	
  

 	
 Ÿ

 	
 Ordering and delivery of
 products, including those that must be ordered well in advance of
 construction; and,

 
	
  

 	
  

 	
  

 	
 Ÿ

 	
 The impact on Soy’s use of
 the facility.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Soy’s Responsibilities:

 
	
  

 	
 Ÿ

 	
 Soy shall provide BIS
 information with reasonable promptness, regarding requirements for and
 limitations on the Work, including objectives, constraints, and criteria,
 including schedule and other site requirements.

 
	
  

 	
 Ÿ

 	
 Soy shall furnish BIS with
 any information, to the extent Soy has the rights to do so, under Soy’s
 control and relevant to BIS’s performance of the Work with reasonable
 promptness after receiving BIS’s request for such information or services.

 
	
  

 	
 Ÿ

 	
 BIS shall be entitled to
 rely on the accuracy of information furnished by Soy but shall exercise
 proper precautions relating to the safe performance of the Work.

 
	
  

 	
 Ÿ

 	
 Soy shall furnish BIS all
 tests, inspections and reports, to the extent that Soy has the rights to do
 so, in their possession or obtainable by them, such as structural,
 mechanical, and chemical tests, tests for air and water pollution, and tests
 for hazardous materials.

 
	
  

 	
 Ÿ

 	
 Soy shall coordinate with
 Crown Ironworks all aspects of the Crown process and provide to BIS all the
 necessary process information to integrate the new modifications,

 
	
  

 	
  

 	
  

 	
 Ÿ

 	
 Alternatively, Soy shall
 facilitate the direct liaison between BIS and Crown.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Soy’s Designated Representative:

 
	
 Soy shall identify a
 representative authorized to act on behalf of Soy with respect to the Work.

 
	
  

 	
 Ÿ

 	
 Soy’s representative shall
 render decisions promptly and furnish information expeditiously, so as to
 avoid unreasonable delay in the services or Work of BIS.

 
	
  

 	
 Ÿ

 	
 The term “Soy” means Soy
 Energy, LLC or Soy’s authorized representative.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Phase Engineering Compensation:

 
	
 In consideration of the
 performance of BIS’s Phase 1 engineering services provided under this
 Agreement, Soy shall pay BIS a fee as follows (Phase 1 Fee):

 
	
  

 	
 Ÿ

 	
 The total Phase 1
 Engineering Fee is $125,000 (One-Hundred Twenty-five Thousand U.S. Dollars);

 
	
  

 	
  

 	
  

 	
 Ÿ

 	
 Initial Payment: $62,500
 will be paid upon execution of this Agreement.

 
	
  

 	
  

 	
  

 	
 Ÿ

 	
 Final Payment: $62,500 is
 due upon delivery of the Phase 1 Package.

 
	
  

 	
 Ÿ

 	
 The full amount of the
 Phase 1 Fee shall be shall be included in and credited to the Guaranteed
 Maximum Price for the Work but shall not be subject to the 10% fee to be paid
 to BIS.

 
	
  

 	
 Ÿ

 	
 BIS shall submit invoices
 for each payment of the Phase 1 Fee and shall execute and provide Soy with a
 mechanic’s lien waiver, in the form required by Soy, related to the requested
 Phase 1 Fee payment, and shall cooperate with Soy and provide such other
 supporting evidence as may be requested by Soy’s lender or its title company.

 













	
  

 	
  

 	
  

 	
  

 
	
 Instruments of Service:

 
	
  

 	
 Ÿ

 	
 Instruments of Service are
 representations, in any medium of expression now known or later developed, of
 the tangible & intangible work performed by BIS and BIS’s consultants.

 
	
  

 	
 Ÿ

 	
 Instruments of Service may
 include, without limitation, studies, surveys, models, sketches, drawings,
 specifications, and other similar materials.

 
	
  

 	
  

 	
  

 	
  

 
	
 Ownership and Use of Documents

 
	
  

 	
 Ÿ

 	
 BIS and BIS’s consultants
 shall be deemed the authors and owners of their respective Instruments of
 Service, including the Drawings and Specifications, and will retain all
 common law, statutory and other reserved rights, including copyrights.

 
	
  

 	
 Ÿ

 	
 BIS grants to Soy an
 irrevocable license to use the Instruments of Service, including any work
 product with respect to the Work, for use with respect to Soy’s project for
 which the Instruments of Service, including any work product, was prepared.
 Client may retain copies of the Instruments of Service, including any work
 product, for reference.

 
	
  

 	
  

 	
  

 	
 Ÿ     Under
 no circumstances is Soy allowed to transmit, show, describe or otherwise
 share any information with a BIS competitor, potential competitor, their Agent
 or Representative any of BIS’s Instruments of Service or work products. 

 
	
  

 	
  

 	
  

 	
 Ÿ     Neither
 is Soy allowed to use any Instruments of Service or work products to solicit
 quotations, bids or proposals for the Work.

 
	
  

 	
 Ÿ

 	
 The Subcontractors,
 Sub-subcontractors, and material or equipment suppliers shall not own or
 claim a copyright in the Instruments of Service. Submittal or distribution to
 meet official regulatory requirements or for other purposes in connection
 with this Project is not to be construed as publication in derogation of
 BIS’s or BIS’s consultants’ reserved rights.

 
	
  

 	
  

 	
  

 	
  

 
	
 Termination

 
	
  

 	
 Ÿ

 	
 Soy may terminate this
 Agreement upon fifteen (15) days written notice for any reason. In case of
 such termination without cause, BIS shall be entitled to receive payment for
 Work completed through the date of termination. Soy shall receive credit for
 any payments made to BIS under this Agreement against any such costs and
 Work,

 
	
  

 	
 Ÿ

 	
 If either Party breaches
 any of the terms and conditions under this Agreement, the non-breaching Party
 may provide written notice to the breaching Party specifying the breach, and
 the breaching Party shall have fifteen (15) days after the date of notice to
 cure the specified breach. If the breaching Party does not cure the breach
 within the fifteen (15) day period, the non-breaching Party, by written
 notice to the breaching Party, may terminate the Agreement.

 
	
  

 	
 Ÿ

 	
 Upon termination, the
 obligations of the parties under this Agreement shall terminate and be of no
 further force or effect.

 
	
  

 	
  

 	
  

 	
  

 
	
 No Assignment

 
	
  

 	
 Ÿ

 	
 Neither party to this
 Agreement may assign its duties and obligations under this Agreement without
 the prior written consent of the other party.

 
	
  

 	
  

 	
  

 	
  

 
	
 Miscellaneous

 
	
  

 	
 Ÿ

 	
 This Agreement shall be
 governed by and construed and enforced in accordance with the laws of the
 state of Iowa.

 
	
  

 	
 Ÿ

 	
 If any provision of this
 Agreement shall be determined to be invalid, illegal or otherwise
 unenforceable pursuant to any applicable legal requirements, such
 determination shall not impair or otherwise affect the validity, legality, or
 enforceability of the remaining provisions of this Agreement, which shall
 remain in full force and effect.

 
	
  

 	
 Ÿ

 	
 The failure of BIS or Soy
 to insist, in any one or more instances, on the performance of any of the
 obligations required by the other under this Agreement shall not be construed
 as a waiver or relinquishment of such obligation or right with respect to
 future performance. 

 













	
  

 	
  

 	
  

 
	
  

 	
 Ÿ

 	
 This Agreement may not be
 changed, altered or amended in any way except in writing signed by a duly
 authorized representative of each party to this Agreement.

 
	
  

 	
 Ÿ

 	
 This Agreement sets forth
 the full and complete understanding of the parties to this Agreement with
 respect to the subject matter hereof.

 
	
  

 	
  

 	
  

 
	
  

 	
 IN WITNESS WHEREOF, the
 parties to this Agreement have caused this Agreement to be executed as of the
 Effective Date.

 






	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Ball Industrial Services,
 LLC

 	
  

 	
 Soy Energy, LLC

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ James D. Hegberg

 	
  

 	
 By:

 	
 /s/ Charles Sand

 
	
  

 	
  

 	

 


 	
  

 	
  

 	

 


 
	
  

 	
 Its:

 	
 Vice President

 	
  

 	
 Its:

 	
 Chairman