**Exhibit10.11**

 

**AGREEMENT****BETWEENOWNER AND DESIGN/BUILDERON THE BASIS OF A STIPULATED PRICE**

 

**THISAGREEMENT** is made andentered into this 9th day of August, 2004 by and between EastKansas Agri-Energy, LLC, a Kansas limited liability company (hereinafter called**OWNER**) and ICM, Inc., a Kansascorporation (hereinafter called **DESIGN/BUILDER**).

 

OWNERand DESIGN/BUILDER, in consideration of the mutual covenants hereinafter setforth, agree as follows:

 

**Article 1.****                                           ****THE PROJECT AND WORK.**

 

1.01.                        DESIGN/BUILDER shall complete all Work forthe Project as specified or indicated in the Contract Documents. The Project isgenerally described as the design and construction of a dry mill fuel-gradeethanol plant to be located in or near Garnett, Kansas, as more accurately describedin Exhibit B to this Agreement.  TheDesign/Builder’s Work includes all engineering services, labor, materials, andequipment to design, construct and startup a dry mill ethanol plant capable ofproducing no less than 35 million gallons per year of denatured fuel-gradeethanol and no less than 68,000 tons per year of dried distillers’ grains.  A more specific statement of the scope ofwork to be provided by DESIGN/BUILDER is described in Exhibits A through G(other than OWNER’s responsibilities set forth in Exhibit E).

 

**Article 2.****                                           ****CONTRACT TIMES.**

 

2.01.                        *Days to Achieve SubstantialCompletion and Final Payment.*  The Work will be Substantially Completedwithin 345 days after the date when the Contract Times commence to run asprovided in paragraph 2.01.A of the General Conditions, and completed and readyfor final payment of the Contract Price in accordance with paragraph 13.08 ofthe General Conditions within 60 days after Substantial Completion, unlessotherwise provided in the Contract Documents.

 

**Article 3.****                                           ****CONTRACT PRICE.**

 

3.01.                        OWNER shall pay DESIGN/BUILDER the ContractPrice for completion of the Work in accordance with the ContractDocuments.  The Contract Price may beadjusted as provided by the General Conditions. For all Work, OWNER shall pay to DESIGN/BUILDER a price equal toThirty-Five Million Nine Hundred Thousand Dollars ($35,900,000)

 

3.02.                        Unless otherwise expressly agreed by theparties, the Work to be performed by DESIGN/BUILDER shall not include thoseitems designated as OWNER’s responsibilities in Exhibit E or in the GeneralConditions.

 

3.03                           DESIGN/BUILDER shall provide to OWNER thetraining described in Exhibit G.

 

3.04                           DESIGN/BUILDER agrees to maintain theinsurance coverages, limits, and deductibles set forth in Exhibit H.

 

**Article 4.****                                           ****PAYMENT PROCEDURES**

 

4.01                           *Payment of Contract Price. *DESIGN/BUILDER shall submit and OWNER will process Applications forPayment of the Contract Price in accordance with Article 13 of the GeneralConditions and Sections 4.01.A. through C. below.

 

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A.            *Down Payment*.At financial closing on the Project or, if earlier, delivery of the Notice toProceed, OWNER shall make a down payment of Four Million Dollars ($4,000,000)to DESIGN/BUILDER which shall be applied toward the first progress paymentdiscussed below (with excess amounts, if any, of such deposit being appliedtoward each immediately successive progress payment thereafter).

 

B.                                     *Progress Payments; Retainage.*  OWNERshall make progress payments on account of the Contract Price on the basis ofDESIGN/BUILDER’s Applications for Payment, as provided in Sections 4.01.B.1 andB.2 below.  Progress payments shall bedue and payable in accordance with 13.04 of the General Conditions.  All such payments will be measured by theacceptable Schedule of Values established under paragraph 2.06.A of theGeneral Conditions.

 

1.                                       Prior to Substantial Completion, suchprogress payments will be made in an amount equal to the percentage indicatedbelow, but, in each case, less the aggregate of payments previously made andless such amounts as OWNER may withhold in accordance with paragraph 13.04.B ofthe General Conditions.

 

a.                                       Ninety percent (90%) of Work completed (withthe balance being retainage).  Once theWork has been fifty percent (50%) completed as determined by OWNER, there willbe no additional retainage on account of Work completed.

 

b.                                      Ninety percent (90%) (with the balance beingretainage) of the cost of materials and equipment not incorporated in the Work(but delivered, suitably stored and accompanied by documentation satisfactoryto OWNER as provided in paragraph 13.02.A of the General Conditions).  Once the Work has been fifty percent (50%)completed as determined by OWNER, there will be no additional retainage onaccount of such costs and materials.

 

2.                                       Upon Substantial Completion, payment will bemade in an amount sufficient to increase total payments to DESIGN/BUILDER toOne Hundred percent (100%) of the Contract Price, less Five Hundred ThousandDollars ($500,000.00) and such amounts as OWNER may withhold in accordance withparagraph 13.04.B of the General Conditions.

 

C.                                     *Final Payment.*  OWNERshall pay the remaining $500,000 of the Contract Price to DESIGN/BUILDER inaccordance with paragraph 13.08 of the General Conditions.

 

UnderExhibit A, DESIGN/BUILDER’s obligations include design and construction of theProject to comply with the atmospheric emissions specifications prescribed bythe applicable State Department of Environmental Quality as of the EffectiveDate of this Agreement as such specifications relate to a plant having thecapacity of producing thirty-five (35) million gallons of fuel-grade ethanolper year.  If different specificationsare implemented (including, without limitation, emission limitations,performance test methods, compliance procedures, or monitoring, reporting orrecord keeping) after the Effective Date, then the cost of additional design,labor, materials and equipment required to meet such specifications, if any,shall be paid by OWNER to DESIGN/BUILDER as a Change Order cost.

 

**Article 5.****                                           ****INTEREST.**

 

5.01.                        All moneys not paid by OWNER toDESIGN/BUILDER when due hereunder shall bear interest at the rate of EighteenPercent (18%) per annum, compounded monthly, from the due date thereof.

 

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**Article 6.****                                           ****DESIGN/BUILDER’S REPRESENTATIONS.**

 

6.01.                        DESIGN/BUILDER makes the followingrepresentations:

 

A.                                   DESIGN/BUILDER has examined and carefullystudied the Contract Documents listed in Sections 7.01.A through C, and, to theextent prepared (but not yet approved by OWNER) prior to the Effective Date,the documents described in Section 7.01.D.3 and .4.

 

B.                                     DESIGN/BUILDER is familiar with and issatisfied as to all federal, state and local Laws and Regulations in existenceon the Effective Date that may affect cost, progress, performance, furnishing,and completion of the Work in accordance with the Contract Documents.

 

C.                                     DESIGN/BUILDER is familiar with the work tobe performed by OWNER and others at the Site that relates to the Work as indicatedin the Contract Documents.

 

D.                                    DESIGN/BUILDER has correlated the informationknown to DESIGN/BUILDER, reports and drawings identified in the ContractDocuments, and all additional examinations, investigations, tests, studies anddata with the Contract Documents.

 

E.                                      DESIGN/BUILDER has given OWNER written noticeof all conflicts, errors, ambiguities or discrepancies that DESIGN/BUILDER hasdiscovered in the Contract Documents and the written resolution thereof byOWNER is acceptable to DESIGN/BUILDER, and the Contract Documents aresufficient to indicate and convey understanding of all terms and conditions forperformance and furnishing of the Work.

 

F.                                      The completed Project will satisfy each ofthe performance criteria set forth in Exhibit A.

 

**Article 7.****                                           ****CONTRACT DOCUMENTS.**

 

7.01.                        The Contract Documents which comprise theentire agreement between OWNER and DESIGN/BUILDER concerning the Work consistof the following:

 

A.                                   This Agreement (pages 1 to 5, inclusive).

 

B.                                     Exhibits to this Agreement (A to H,inclusive).

 

C.                                     General Conditions of the Contract BetweenOwner and Design/Builder (pages 1 to 36, inclusive).

 

D.                                    The following which may be delivered,prepared, or issued after the Effective Date of this Agreement and are notattached hereto.

 

1.                                       Notice to Proceed.

 

2.                                       All Written Amendments and other documentsamending, modifying or supplementing the Contract Documents pursuant toparagraph 3.03.A of the General Conditions.

 

3.                                       Specifications as defined in paragraph1.01.A.32 of the General Conditions.

 

4.                                       Drawings as defined in paragraph 1.01.A.16 ofthe General Conditions.

 

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

 

**Article 8.****                                           ****EXPANSION OPTION.**

 

8.01                           If requested by OWNER within two (2) yearsafter the date of Substantial Completion, DESIGN/BUILDER will design andconstruct an expansion of the Project so that it is capable of producing notless than forty (40) million gallons of fuel-grade ethanol per year.  For all Work performed in connection withsuch expansion, OWNER shall pay to DESIGN/BUILDER a price equal to the sum of(i) the Performance Adjustment (as defined below), and (ii) the MetalAdjustment (as defined below) (the “Expansion Contract Price”).  “Performance Adjustment” shall mean theamount determined by multiplying $.50 by the excess, if any, of the AddedCapacity (as defined below) over Thirty-Five Million (35,000,000).  “Added Capacity” shall mean the averageannual number of gallons of denatured fuel-grade ethanol that the Project iscapable of producing as reasonably determined by DESIGN/BUILDER based upon thethirty (30) day performance test to be performed by DESIGN/BUILDER during orafter the third month of production after such expansion.     DESIGN/BUILDER determined the portion ofthe Expansion Contract Price listed in clause (i) above in whole or part on thecosts associated with the construction of the ethanol plant for Western PlainsEnergy.  Due to the subsequent increasein the cost of metals, the Expansion Contract Price includes in clause (ii)above an adjustment for the increased cost (if any) associated with items usedin the expansion that are metal or contain metal parts or components.  For purposes of clause (ii) above, the “MetalAdjustment” shall equal the amount (if any) that (i) the cost for itemscontaining metal (including, without limitation, materials, equipment,furnishings, tanks, values and controls) used in the expansion, exceed (ii) thecost for such items used in the construction of the ethanol plant for WesternPlains Energy.  In connection therewith,DESIGN/BUILDER will permit OWNER to review any and all relevant invoices andquotes pertaining to such items used in the expansion and the construction ofthe plant for Western Plains Energy.  Allof the terms and provisions of the Contract Documents shall apply to suchexpansion; provided, however, OWNER shall pay to DESIGN/BUILDER Five HundredThousand Dollars ($500,000.00) of the Expansion Contract Price as a downpayment under Section 4.01A., In addition to such down payment, anadditional Two Million Dollars ($2,000,000) of the Expansion Contract Priceshall be paid as progress payments under Section 4.01B (without anyretainage), and the remainder of the Expansion Contract Price (afterdetermination of the actual amount of the Expansion Contract Price as providedabove), if any, as final payment.

 

**Article 9.****                                           ****MISCELLANEOUS.**

 

9.01.                        The attached General Conditions of theContract between Owner and Design/Builder are referred to herein as the GeneralConditions.

 

9.02.                        Terms used in this Agreement which aredefined in Article 1 of the General Conditions will have the meaningsindicated therein.

 

9.03.                        No assignment by a party hereto of any rightsunder or interests in the Contract Documents will be binding on another partyhereto without the written consent of the party sought to be bound, whichconsent shall not be unreasonably withheld; and, specifically but withoutlimitation, moneys that may become due and moneys that are due may not beassigned without such consent (except to the extent that the effect of thisrestriction may be limited by law), and unless specifically stated to thecontrary in any written consent to an assignment no assignment will release ordischarge the assignor from any duty or responsibility under the ContractDocuments.

 

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9.04.                        OWNER and DESIGN/BUILDER each binds itself,its successors, assigns and legal representatives to the other party hereto,its successors, assigns and legal representatives in respect to all covenants,agreements and obligations contained in the Contract Documents.

 

9.05.                        Any provision or part of the ContractDocuments held to be void or unenforceable under any Law or Regulation shall bedeemed stricken, and all remaining provisions shall continue to be valid andbinding upon OWNER and DESIGN/BUILDER, who agree that the Contract Documentsshall be reformed to replace such stricken provision or part thereof with avalid and enforceable provision that comes as close as possible to expressingthe intention of the stricken provision.

 

9.06.                        This Agreement may be executed in any numberof counterparts, each of which shall be deemed to be an original and all ofwhich shall constitute one agreement that is binding upon all of the partieshereto, notwithstanding that all parties are not signatories to the samecounterpart.  Facsimile signatures of theparties hereto shall be binding.

 

9.07.                        This Agreement will be effective on the datefirst written above.  Within ninety (90)days of such effective date, OWNER shall provide to DESIGN/BUILDER the Noticeto Proceed and evidence, acceptable to DESIGN/BUILDER, of funding for theProject.

 

INWITNESS WHEREOF, OWNER and DESIGN/BUILDER have signed this Agreement on thedate first written above.

 
| **OWNER**: East Kansas Agri-Energy, LLC            |                            | **DESIGN/BUILDER**: ICM, Inc. |
|----------------------------------------------------|---------------------------------|-------------------------------|
|                                               |                            |                          |
| By:                                                | /s/  William Pracht             |                          | By: | /s/  Dave Vander Griend |
| Title:                                             | Chairman                        |                          | Title: | CEO |
|                                               |                            |                          |
| Addresses  for giving notices and representatives: |                            |                          |
|                                               |                            |                          |
| Name:                                              | Dianne  Allen                   |                          | Name: | Bob  Shank |
| Title:                                             | Project  Coordinator            |                          | Title: | Project  Manager |
| Address:                                           | P.O.  Box 225 Garnett, KS 66032 |                          | Address: | 310  N. First Street, Colwich, KS |
| Phone:                                             | 785-448-2888                    |                          | Phone: | 316-796-0900 |
| Facsimile:                                         | 785-448-2884                    |                          | Facsimile: | 316-796-0570 |
|                                                    |                                 |                               |  |  |  |  |  |  |  |  |  |  |  |  |

 

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**GENERAL CONDITIONS OF THE**

**CONTRACT BETWEEN**

**OWNER AND DESIGN/BUILDER**

 

**ARTICLE 1—DEFINITIONS**

 

***1.01******                       ******Defined Terms***

 

A.                                   Wherever used in these General Conditions orin the other Contract Documents the following terms have the meanings indicatedwhich are applicable to both the singular and plural thereof:

 

1.*                   ****Agreement—***The Agreement Between Owner andDesign/Builder on the Basis of a Stipulated Price covering the Work.  Other Contract Documents are incorporatedinto the Agreement and made a part thereof as provided therein.

 

2.*                   ****Application for Payment—***The form which is to be used byDESIGN/BUILDER in requesting progress or final payments and which is to beaccompanied by such supporting documentation as is required by the ContractDocuments.

 

3.*                   ****Asbestos—***Any material that contains more than onepercent (1%) asbestos and is friable or is releasing asbestos fibers into theair above current action levels established by the United States OccupationalSafety and Health Administration.

 

4.*                   ****Bonds—***Performance and payment bonds and otherinstruments of security.

 

5.*                   ****Cash Flow Projection—***A schedule prepared by DESIGN/BUILDERestimating that portion of the Contract Price to be due during each month ofperformance.

 

6.*                   ****Change Order—***A written order which is signed byDESIGN/BUILDER and OWNER which authorizes an addition, deletion or revision inthe Work, or an adjustment in the Contract Price or the Contract Times, issuedon or after the Effective Date of the Agreement.

 

7.*                   ****Construction—***The performing or furnishing of labor, thefurnishing and incorporating of materials and equipment into the Work and thefurnishing of services (other than Design Professional Services) and documents,all as required by the Contract Documents. Construction includes the materials and equipment incorporated into theProject.

 

8.*                   ****Construction Subagreement—***A written agreement between DESIGN/BUILDERand a construction contractor for provision of Construction.

 

9.*                   ****Contract Documents—***The Agreement and related exhibits, theNotice to Proceed, these General Conditions, the Specifications and the Drawingstogether with all Change Orders, and Written Amendments, issued on or after theEffective Date of the Agreement.

 

10.*             ****Contract Price—***The moneys payable by OWNER to DESIGN/BUILDERfor completion of the Work in accordance with the Contract Documents.

 

11.*             ****Contract Times—***The number of days or the dates stated in theAgreement (i) to achieve Substantial Completion, and (ii) to complete the Workso that it is ready for final payment of the Contract Price in accordance withparagraph 13.08.

 

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12.*             ****defective—***An adjective which when modifying the termConstruction refers to Construction that is unsatisfactory, faulty ordeficient, in that it does not conform to the Contract Documents, or does notmeet the requirements of any inspection, reference standard, test or approvalreferred to in the Contract Documents, or has been damaged prior to OWNER’sfinal payment.

 

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

 

14.*             ****Design Subagreement—***A written agreement between DESIGN/BUILDERand a design professional for provision of Design Professional Services.

 

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

 

16.*             ****Drawings—***Those portions of the Contract Documentsprepared by or for DESIGN/BUILDER and approved by OWNER consisting of drawings,diagrams, illustrations, schedules and other data which show the scope, extent,and character of the Work.

 

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

 

18.*             ****Engineer—***A duly licensed individual or entitydesignated by DESIGN/BUILDER to perform or furnish specified DesignProfessional Services in connection with the Work.

 

19.*             ****Hazardous Condition—***The presence at the Site of Asbestos,Hazardous Waste, PCB’s, Petroleum Products or Radioactive Materials in suchquantities or circumstances deemed to be hazardous under applicable Laws orRegulations.

 

20.*             ****Hazardous Waste—***The term Hazardous Waste shall have themeaning provided in Section 1004 of the Solid Waste Disposal Act (42 USC Section 6903).

 

21.*             ****Laws and Regulations; Laws orRegulations—***Any and allapplicable laws, rules, regulations, ordinances, codes, permits, and orders ofany and all governmental bodies, agencies, authorities and courts havingjurisdiction.

 

22.*             ****Liens—***Charges, security interests or encumbrancesupon real property or personal property.

 

23.***Notice to Proceed—***A written noticegiven by OWNER to DESIGN/BUILDER fixing the date on which the Contract Timeswill commence to run.

 

24.*             ****OWNER—***The public body, or authority, individual orentity with whom DESIGN/BUILDER has entered into the Agreement and for whom theWork is to be provided.

 

25.*             ****PCBs—***Polychlorinated biphenyls.

 

26.*             ****Petroleum—***Petroleum, including crude oil or anyfraction thereof which is liquid at standard conditions of temperature andpressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute), suchas oil, petroleum, fuel oil, oil sludge, oil refuse, gasoline, kerosene, andoil mixed with other non-Hazardous Wastes and crude oils.

 

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27.*             ****Project—***The Construction to be provided under theContract Documents as provided in paragraph 1.01 of the Agreement.

 

28.*             ****Radioactive Material—***Source, special nuclear, or byproductmaterial as defined by the Atomic Energy Act of 1954 (42 USC Section 2011et seq.) as amended from time to time.

 

29.*             ****Schedule of Values—***A schedule prepared by DESIGN/BUILDERand acceptable to OWNER indicating that portion of the Contract Price to bepaid for each major component of the Work.

 

30.*             ****Site—***Lands or other areas designated in theContract Documents as being furnished by OWNER for the performance of theConstruction, storage, or access.

 

31.*             ****Specifications—***Those portions of the Contract Documentsprepared by or for DESIGN/BUILDER and approved by OWNER consisting of writtentechnical descriptions of materials, equipment, construction systems, standardsand workmanship as applied to the Construction and certain administrativedetails applicable thereto.

 

32.*             ****Subcontractor—***An individual or entity other than a Supplieror Engineer having a direct contract with DESIGN/BUILDER or with any otherSubcontractor for the performance of a part of the Work.

 

33.*             ****Submittal—***A written or graphic document prepared by orfor DESIGN/BUILDER which is required by the Contract Documents to be submittedto OWNER by DESIGN/BUILDER.  Submittalsmay include Drawings, Specifications, progress schedules, shop drawings,samples, Cash Flow Projections, and Schedules of Values.  Submittals other than Drawings andSpecifications are not Contract Documents.

 

34.*             ****Substantial Completion—***The time at which the Construction (or aspecified part) has progressed to the point where it is sufficiently complete,in accordance with the Contract Documents, so that ethanol and distiller’sgrains can be produced.  The terms “substantiallycomplete” and “substantially completed” as applied to the Construction refer toSubstantial Completion of Construction.

 

35.*             ****Supplier—***A manufacturer, fabricator, supplier,distributor, materialman or vendor having a direct contract with DESIGN/BUILDERor with any Subcontractor to furnish materials or equipment to be incorporatedin the Work by DESIGN/BUILDER or any Subcontractor.

 

36.*             ****Work—***The entire completed construction or thevarious separately identifiable parts thereof required to be performed orfurnished under the Contract Documents. Work includes and is the result of performing or furnishing DesignProfessional Services and Construction required by the Contract Documents.

 

37.*             ****Written Amendment—***A written amendment of the ContractDocuments, signed by OWNER and DESIGN/BUILDER on or after the Effective Date ofthe Agreement and normally dealing with the nonengineering or nontechnicalrather than strictly design or construction-related aspects of the ContractDocuments.

 

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**ARTICLE 2—PRELIMINARYMATTERS**

 

***2.01******                       ******Commencement of Contract Times;Notice to Proceed***

 

A.                The Contract Timeswill commence to run on the day indicated in the Notice to Proceed.  A Notice to Proceed may be given at any timewithin the period of time set forth in Section 9.07 of the Agreement.

 

***2.02******                       ******Starting the Work***

 

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

 

***2.03******                       ******Before Starting Construction***

 

A.                DESIGN/BUILDER shall submit the following forreview within ten (10) days after commencement of the Contract Times:

 

1.                    A preliminary progress schedule indicatingthe times (number of days or dates) for starting and completing the variousstages in the design and construction of the Work;

 

2.                    A preliminary Schedule of Values for allof the Work, which will include quantities and prices of items aggregating theContract Price and will subdivide the Work into component parts in sufficientdetail acceptable to OWNER to serve as the basis for progress payments duringperformance of the Work.  Such priceswill include a pro rata amount of overhead and profit applicable to each itemof Work; and

 

3.                    A preliminary Cash Flow Projection.

 

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

 

***2.04******                       ******Initial Conference***

 

A.                Within twenty (20) days after the ContractTimes start to run, a conference by telephone or in person with OWNER,DESIGN/BUILDER and others as appropriate will be held to establish a workingunderstanding among the parties as to the Work and to discuss the designconcepts, schedules referred to in paragraph 2.03.A, procedures for handlingSubmittals, processing Applications for Payment, maintaining required records,items required pursuant to paragraph 8.01.A.6 and other matters.

 

***2.05******                       ******Initially Acceptable Schedules***

 

A.                At least ten (10) days before submission ofthe first Application for Payment a conference by telephone or in person withDESIGN/BUILDER, OWNER and others as appropriate will be held to review foracceptability the schedules submitted in accordance with paragraph 2.03.A.  DESIGN/BUILDER shall have an additional ten(10) days to make corrections and adjustments and to complete and resubmit theschedules.  No progress payment shall bemade to DESIGN/BUILDER until the schedules are submitted to and acceptable toOWNER as provided below. The progress schedule will 

 

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be acceptable to OWNER asproviding an orderly progression of the Work to completion within the ContractTimes, but such acceptance will neither impose on OWNER responsibility for thesequencing, scheduling or progress of the Work nor interfere with or relieveDESIGN/BUILDER from DESIGN/BUILDER’s full responsibility therefor.  The format and structure of the progress schedule willbe acceptable to OWNER.  OWNER’sacceptance shall not be deemed to confirm that the schedule is areasonable plan for performing the Work. DESIGN/BUILDER’s Schedule of Values and Cash Flow Projection willbe acceptable to OWNER as to form and substance.

 

**ARTICLE 3—CONTRACTDOCUMENTS:  INTENT, AMENDING, REUSE**

 

***3.01******                       ******Intent***

 

A.                The Contract Documents comprise the entireagreement between OWNER and DESIGN/BUILDER concerning the Work.  The Contract Documents are complementary;what is called for by one is as binding as if called for by all.  The Contract Documents will be construed inaccordance with the laws of the State of Kansas.  Except as otherwise required by applicableLaws and Regulations, the Contract Documents shall govern the obligations ofthe parties regarding the Work and Project.

 

B.                  It is the intent of the Contract Documents todescribe a functionally complete Project to be designed and constructed in accordancewith the Contract Documents.  Any Work,materials or equipment that may reasonably be inferred from the ContractDocuments or from prevailing custom or trade usage as being required to producethe intended result will be furnished and performed whether or not specificallycalled for.  When words or phrases whichhave a well-known technical or construction industry or trade meaning are usedto describe work, materials or equipment, such words or phrases shall beinterpreted in accordance with that meaning.

 

***3.02******                       ******References***

 

A.                Reference to standards, specifications,manuals or codes of any technical society, organization or association, or tothe Laws or Regulations of any governmental authority, whether such referencebe specific or by implication, shall mean the latest standard, specification,manual, code or Laws or Regulations in effect on the Effective Date of theAgreement except as may be otherwise specifically stated in the ContractDocuments.

 

B.                  No provision of any standard, specification,manual, code or instruction shall be effective to change the duties andresponsibilities of OWNER, DESIGN/BUILDER or any of their subcontractors,consultants, agents, or employees from those set forth in the ContractDocuments, nor shall it be effective to assign to OWNER any duty or authorityto supervise or direct the furnishing or performance of the Work or any duty orauthority to undertake responsibility inconsistent with the provisions of Article 8or any other provision of the Contract Documents.

 

***3.03******                    ******Amending and SupplementingContract Documents***

 

A.                The Contract Documents may be amended toprovide for additions, deletions and revisions in the Work or to modify theterms and conditions thereof in one or more of the following ways:

 

1.                    A Change Order; or

 

2.                    A formal Written Amendment.

 

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***3.04******                       ******Reuse of Documents***

 

A.                All documents including Drawings andSpecifications prepared or furnished by DESIGN/BUILDER pursuant to the ContractDocuments are instruments of service in respect of the Project andDESIGN/BUILDER shall retain an ownership and property interest therein whetheror not the Project is completed.  OWNERmay make and retain copies for information and reference in connection with theuse and occupancy of the Project by OWNER and others; however, such documentsare not intended or represented to be suitable for reuse by OWNER or others onextensions of the Project or on any other project.  Any reuse without written verification oradaptation by DESIGN/BUILDER for the specific purpose intended will be at OWNER’ssole risk and without liability or legal exposure to DESIGN/BUILDER, and OWNERshall indemnify and hold harmless DESIGN/BUILDER, Subcontractors, and Engineerfrom all claims, damages, losses and expenses including attorneys’ fees arisingout of or resulting therefrom.  Any suchverification or adaptation will entitle DESIGN/BUILDER to further compensationat rates to be agreed upon by OWNER and DESIGN/BUILDER.

 

B.                  In addition to paragraph 3.04.A, alldocuments including Drawings and Specifications prepared or furnished byDESIGN/BUILDER pursuant to the Contract Documents are subject to the use anddisclosure restrictions set forth in Exhibit F attached to the Agreement.  Nothing contained in paragraph 3.04.A. shallbe construed or interpreted as granting OWNER any rights or interest in thePROPRIETARY PROPERTY (as defined in Exhibit F) other than as expressly providedin Exhibit F attached to the Agreement.

 

**ARTICLE 4—AVAILABILITYOF LANDS; DIFFERING SITE CONDITIONS; REFERENCE POINTS; HAZARDOUS CONDITIONS**

 

***4.01******                       ******Availability of Lands***

 

A.                OWNER shall furnish, as indicated in theContract Documents, the lands upon which the Construction is to be performed,rights-of-way and easements for access thereto, and such other lands which aredesignated for the use of DESIGN/BUILDER.

 

B.                  Upon reasonable written request, OWNER shallfurnish DESIGN/BUILDER with a correct statement of record legal title and legaldescription of the lands upon which the Construction is to be performed andOWNER’s interest therein.  OWNER shallidentify any encumbrances or restrictions not of general application butspecifically related to use of lands so furnished with which DESIGN/BUILDERwill have to comply in performing the Work. Easements for permanent structures or permanent changes in existingfacilities will be obtained and paid for by OWNER, unless otherwise provided inthe Contract Documents.

 

C.                  OWNER shall provide any of its lands andaccess thereto that may be required for temporary construction facilities orstorage of materials and equipment.

 

***4.02******                       ******Differing Site Conditions***

 

A.                DESIGN/BUILDER shall promptly, and before theconditions are disturbed, give a written notice to OWNER of (i) subsurface orlatent physical conditions at the Site which differ materially from thoseindicated in the OWNER’s geotechnical report for the Project site or the landand grading specifications listed in Exhibit E, or (ii) unknown physicalconditions at the Site, of an unusual nature, which differ materially fromthose ordinarily encountered and generally recognized as inhering in work ofthe character called for by the Contract Documents.

 

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B.                  OWNER will investigate the site conditionspromptly after receiving the notice.  Ifthe conditions do materially so differ and cause an increase or decrease in theDESIGN/BUILDER’s cost of performing any part of the Work, an equitableadjustment shall be made under this clause and the Contract Price modified inwriting by Change Order in accordance with Article 9.

 

C.                  No request by DESIGN/BUILDER for an equitableadjustment under paragraph 4.02 shall be allowed unless DESIGN/BUILDER hasgiven the written notice required; provided that the time prescribed inparagraph 9.02.A for giving written notice may be extended by OWNER.

 

***4.03******                       ******Reference Points***

 

A.                DESIGN/BUILDER shall be responsible forlaying out the construction and shall protect and preserve the reference pointsestablished by OWNER pursuant to paragraph 8.01.A.6.e and shall make no changesor relocations without the prior written approval of OWNER.  DESIGN/BUILDER shall report to OWNER wheneverany reference point or property monument is lost or destroyed or requiresrelocation because of necessary changes in grades or locations, and shall beresponsible for the accurate replacement or relocation of such reference pointsor property monuments by professionally qualified personnel.

 

***4.04******                       ******Hazardous Conditions***

 

A.                OWNER represents and warrants that there isno Hazardous Condition or materials that could create a Hazardous Conditionexisting at the Site as of the Effective Date of the Agreement that has notbeen disclosed in writing to DESIGN/BUILDER and that OWNER or OWNER’s officers,directors, employees, agents, other consultants or subcontractors shall notbring to the Site during the term of the Agreement any materials creating aHazardous Condition.  OWNER will beresponsible for any Hazardous Condition encountered at the Site which was notidentified in the Contract Documents to be within the scope of the Work.  OWNER shall not be responsible for materialscreating a Hazardous Condition brought to the Site by DESIGN/BUILDER,Subcontractors, Suppliers or anyone else for whom DESIGN/BUILDER is responsible.

 

B.                  DESIGN/BUILDER and any affected Subcontractorshall immediately (i) stop all Construction in connection with such HazardousCondition and in any area affected thereby (except in an emergency as requiredby paragraph 6.15), and (ii) notify OWNER (and thereafter confirm such noticein writing).  OWNER shall promptlydetermine the necessity of retaining a qualified expert to evaluate suchHazardous Condition or take corrective action, if any.  DESIGN/BUILDER shall not be required toresume Construction in connection with such Hazardous Condition or in any suchaffected area until after OWNER has obtained any required permits relatedthereto and delivered to DESIGN/BUILDER special written notice (i) specifyingthat such Hazardous Condition and any affected area is or has been renderedsafe for the resumption of Construction, or (ii) specifying any specialconditions under which such Construction may be resumed safely.  If OWNER and DESIGN/BUILDER cannot agree asto entitlement to or the amount or extent of an adjustment, if any, in ContractPrice as a result of such Construction stoppage or such special conditionsunder which Construction is agreed by DESIGN/BUILDER to be resumed, eitherparty may make a claim therefor as provided in Article 9.

 

C.                  To the fullest extent permitted by Laws andRegulations, OWNER shall indemnify and hold harmless DESIGN/BUILDER,Subcontractors, Suppliers, Engineers and the officers, directors, employees,agents, other consultants and subcontractors of each and any of them from andagainst all claims, costs, losses and damages (including but not limited to allreasonable fees and charges of engineers, architects, attorneys and otherprofessionals and all court or arbitration or other dispute resolution costs)arising out of or resulting from such Hazardous Condition.  Nothing in this paragraph 

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4.04.C shall obligate OWNER to indemnify anyindividual or any entity, including DESIGN/BUILDER, from and against theconsequences of that individual’s or entity’s own negligence or willfulmisconduct.  OWNER shall not be obligatedto indemnify or hold harmless DESIGN/BUILDER, Subcontractors, Suppliers or anyother individual or any entity for any such claim, cost, loss or damage arisingout of or resulting from materials creating a Hazardous Condition brought tothe Site by DESIGN/BUILDER, Subcontractors, Suppliers or any other party forwhom DESIGN/BUILDER is responsible. DESIGN/BUILDER shall indemnify and hold harmless OWNER and OWNER’s officers,directors, employees, agents, other consultants and subcontractors of each andany of them from and against all claims, costs, losses and damages (includingreasonable attorney fees) arising out of or resulting from materials creating aHazardous Condition brought to the Site by DESIGN/BUILDER, Subcontractors,Suppliers or any other party for whom DESIGN/BUILDER is responsible.

 

**ARTICLE 5—BONDSAND INSURANCE**

 

***5.01******                       ******Performance, Payment and OtherBonds***

 

A.                DESIGN/BUILDER shall not be required to furnisha performance, payment or any other Bonds.

 

***5.02******                       ******DESIGN/BUILDER’s LiabilityInsurance***

 

A.                DESIGN/BUILDER shall purchase and maintainsuch Commercial General Liability (subject to customary exclusions in respectof professional liability), Automobile Liability and Worker’s Compensationinsurance as is appropriate for the Work being performed and furnished and aswill provide protection from claims set forth below which may arise out of orresult from DESIGN/BUILDER’s performance and furnishing of the Work andDESIGN/BUILDER’s other obligations under the Contract Documents, whether it isto be performed or furnished by DESIGN/BUILDER, any Subcontractor or Supplier,or by anyone directly or indirectly employed by any of them to perform orfurnish any of the Work, or by anyone for whose acts any of them may be liable:

 

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

 

2.                    Claims for damages because of bodily injury,occupational sickness or disease, or death of DESIGN/BUILDER’s employees;

 

3.                    Claims for damages because of bodily injury,sickness or disease, or death of any person other than DESIGN/BUILDER’semployees;

 

4.                    Claims for damages insured by customarypersonal injury liability coverage which are sustained (i) by any person as aresult of an offense directly or indirectly related to the employment of suchperson by DESIGN/BUILDER, or (ii) by any other person for any other reason;

 

5.                    Claims for damages, other than to the Workitself, because of injury to or destruction of tangible property whereverlocated other than claims under paragraph 5.02.A.7. below, including loss ofuse resulting therefrom;

 

6.                    Claims for damages because of bodily injuryor death of any person or property damage arising out of the ownership,maintenance or use of any motor vehicle; and

 

7.                    Claims for professional errors and omissionsarising from the Design Professional Services provided for the Project.

 

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B.                  The policies of insurance required byparagraph 5.02.A shall:

 

1.                    With respect to insurance required byparagraphs 5.02.A.3 through 5.02.A.6 inclusive, include as additional insuredsOWNER and any other persons or entities identified in writing by OWNER, all ofwhom shall be listed as additional insureds, and include coverage for therespective officers and employees of all such additional insureds;

 

2.                    Include at least the specific coverages andbe written for not less than the limits of liability set forth in Exhibit H orrequired by Laws or Regulations, whichever is greater;

 

3.                    Include completed operations insurance;

 

4.                    Include contractual liability insurancecovering DESIGN/BUILDER’s indemnity obligations under paragraphs 6.06, 6.10 and6.19;

 

5.                    Contain a provision or endorsement that thecoverage afforded will not be cancelled, materially changed or renewal refuseduntil at least thirty (30) days prior written notice has been given to OWNERand each other additional insured to whom a certificate of insurance has beenissued (and the certificates of insurance furnished by the DESIGN/BUILDERpursuant to paragraph 5.08.B will so provide);

 

6.                    Remain in effect at least until final paymentand at all times thereafter when DESIGN/BUILDER may be correcting, removing orreplacing *defective* Construction in accordancewith paragraphs 12.06 and 12.07;

 

7.                    With respect to completed operationsinsurance, remain in effect for at least one year after final payment (andDESIGN/BUILDER shall furnish OWNER and each other additional insured to whom acertificate of insurance has been issued evidence satisfactory to OWNER and anysuch additional insured of continuation of such insurance at final payment);and

 

8.                    DESIGN/BUILDER shall maintain in effect allinsurance coverage required under this paragraph at the DESIGN/BUILDER’S soleexpense with insurance companies (and policies) approved by OWNER and lawfullyauthorized to do business in the jurisdiction in which the Project islocated.  If the DESIGN/BUILDER fails toobtain or maintain any insurance coverage required under this Agreement, theOWNER may purchase such coverage and charge the expense to the DESIGN/BUILDER,or terminate this Agreement for cause in accordance with paragraph 14.02 below.

 

***5.03******                       ******OWNER’s Liability Insurance***

 

A.                In addition to the insurance required to beprovided by DESIGN/BUILDER under paragraph 5.02, OWNER, at OWNER’s option, maypurchase and maintain at OWNER’s expense OWNER’s own liability insurance aswill protect OWNER against claims which may arise from operations under theContract Documents.

 

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***5.04******                       ******Property Insurance***

 

A.                OWNER shall purchase and maintain propertyinsurance upon the Construction at the Site in the amount of the fullreplacement cost thereof at the OWNER’s sole expense with insurance companies(and policies) approved by DESIGN/BUILDER and lawfully authorized to dobusiness in the jurisdiction in which the Project is located (subject to suchdeductible amounts as may be agreed to by OWNER and DESIGN/BUILDER or as may berequired by Laws and Regulations).  Thisinsurance will:

 

1.                    Include the interests of OWNER,DESIGN/BUILDER, Subcontractors, and any other persons or entities listed as aninsured or additional insured;

 

2.                    Be written on a Builder’s Risk “all-risk” orequivalent policy form that shall at least include insurance for physical lossand damage to the Construction, temporary buildings, falsework and allmaterials and equipment in transit, and shall insure against at least thefollowing perils or causes of loss: fire, lightning, extended coverage, theft, vandalism and maliciousmischief, earthquake, collapse, debris removal, demolition occasioned byenforcement of Laws and Regulations, water damage, flood, system testing, andsuch other perils or causes of loss as may be agreed in writing byDESIGN/BUILDER and OWNER;

 

3.                    Include expenses incurred in the repair orreplacement of any insured property (including but not limited to fees andcharges of engineers and architects);

 

4.                    Cover materials and equipment stored at theSite or at another location that was agreed to in writing by OWNER prior tobeing incorporated in the Construction, provided that such materials andequipment have been included in an Application for Payment approved by OWNER; and

 

5.                    Be maintained in effect until final paymentis made unless otherwise agreed to in writing by OWNER and DESIGN/BUILDER withthirty (30) days written notice to each other additional insured to whom acertificate of insurance has been issued.

 

B.                  OWNER shall purchase and maintain such boilerand machinery insurance or additional property insurance as DESIGN/BUILDER mayreasonably require or required by Laws and Regulations which will include theinterests of OWNER, DESIGN/BUILDER, Subcontractors, and other individuals andentities listed as an insured or additional insured.

 

C.                  All the policies of insurance (and thecertificates or other evidence thereof) required to be purchased and maintainedby OWNER in accordance with paragraph 5.04 will contain a provision orendorsement that the coverage afforded will not be cancelled or materiallychanged or renewal refused until at least thirty (30) days prior written noticehas been given to DESIGN/BUILDER and to each other additional insured to whom acertificate of insurance has been issued.

 

D.                 OWNER shall not be responsible for purchasingand maintaining any property insurance to protect the interests ofDESIGN/BUILDER, Subcontractors, Suppliers, Engineers or others in the Work tothe extent of any deductible amounts agreed to by OWNER andDESIGN/BUILDER.  The risk of loss withinsuch identified deductible amounts will be borne by DESIGN/BUILDER,Subcontractor or others suffering any such loss and if any of them wishes propertyinsurance coverage within the limits of such deductible amount, each maypurchase and maintain it at the purchaser’s own expense.

 

E.                   If DESIGN/BUILDER requests in writing thatother special insurance be included in the property insurance policies providedunder paragraph 5.04, OWNER shall, if possible, include such insurance, and 

 

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the cost thereof will becharged to DESIGN/BUILDER by appropriate Change Order or WrittenAmendment.  Prior to commencement of theWork at the Site, OWNER shall in writing advise DESIGN/BUILDER whether or notsuch other insurance has been procured by OWNER.

 

***5.05******                       ******Waiver of Subrogation Rights***

 

A.                OWNER and DESIGN/BUILDER intend that allpolicies purchased in accordance with paragraph 5.04 will protect OWNER, DESIGN/BUILDER,Engineers, Subcontractors, others who may have a financial interest in theProject, and all other individuals or entities listed as insureds or additionalinsureds in such policies and will provide primary coverage for all losses anddamages caused by the perils or causes of loss covered thereby.  All such policies shall contain provisions tothe effect that in the event of payment of any loss or damage the insurers willhave no rights of recovery against any of the insureds or additional insuredsthereunder.  Each party waives all rightsagainst the other party and its officers, directors, employees, members, andagents for all losses and damages caused by, arising out of or resulting fromany of the perils or causes of loss covered by such policies and any otherproperty insurance applicable to the Work.

 

***5.06******                       ******Receipt and Application ofProceeds***

 

A.                Any insured loss under the policies ofinsurance required by paragraph 5.04 will be adjusted with OWNER and madepayable to OWNER as fiduciary for the benefit of insureds, as their interestsmay appear, subject to the requirements of any applicable mortgage clause andof paragraph 5.06.B.  OWNER shall depositin a separate account any money so received, and shall distribute it inaccordance with such agreement as the parties in interest may reach.  If no other special agreement is reached thedamaged Work shall be repaired or replaced, the moneys so received applied onaccount thereof and the Work and the cost thereof covered by an appropriateChange Order or Written Amendment.

 

B.                  OWNER as fiduciary shall have power to adjustand settle any loss with the insurers unless one of the parties in interestshall object in writing within fifteen (15) days after the occurrence of lossto OWNER’s exercise of this power.  Ifsuch objection be made, OWNER as fiduciary shall make settlement with theinsurers in accordance with such agreement as the parties in interest mayreach.  If no such agreement among theparties in interest is reached, OWNER as fiduciary shall adjust and settle theloss with the insurers and, if required in writing by any party in interest,OWNER as fiduciary shall give bond for the proper performance of such duties..

 

***5.07******                       ******Acceptance of Insurance; Optionto Replace***

 

A.                If either party has any objection to thecoverage afforded by or other provisions of the insurance required to bepurchased and maintained by the other party in accordance with Article 5on the basis of their not complying with the Contract Documents, the objectingparty shall so notify the other party in writing within thirty (30) days afterreceipt of the certificates (or other evidence requested) required by paragraph2.03.B.  OWNER and DESIGN/BUILDER shalleach provide to the other such additional information in respect of insuranceprovided as the other may reasonably request. If either party does not purchase or maintain all of the insurancerequired of such party by the Contract Documents, such party shall notify theother party in writing of such failure to purchase prior to the start of theWork, or of such failure to maintain prior to any change in the requiredcoverage.  Without prejudice to any otherright or remedy, the other party may elect to obtain equivalent insurance to protectsuch other party’s interests at the expense of the party who was supposed toprovide such coverage, and a Change Order or Written Amendment shall be issuedto adjust the Contract Price accordingly.

 

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

 

A.                All insurance required by the ContractDocuments to be purchased and maintained by OWNER or DESIGN/BUILDER shall beobtained from insurance companies that are duly licensed or authorized in thejurisdiction in which the Project is located to issue insurance policies forthe limits and coverages so required. Such insurance companies shall also meet such additional requirementsand qualifications as may be agreed in writing by DESIGN/BUILDER and OWNER.

 

B.                  DESIGN/BUILDER shall deliver to OWNER, withcopies to each additional insured, certificates of insurance (and otherevidence of insurance requested by OWNER or any other additional insured)which  DESIGN/BUILDER is required topurchase and maintain in accordance with paragraph 5.02.A.  OWNER shall deliver to DESIGN/BUILDER, withcopies to each additional insured, certificates of insurance (and otherevidence of insurance requested by DESIGN/BUILDER or any other additionalinsured) which OWNER is required to purchase and maintain in accordance withparagraphs 5.04.A and 5.04 B.

 

**ARTICLE 6—DESIGN/BUILDER’SRESPONSIBILITIES**

 

***6.01******                       ******Design Professional Services***

 

A.*               ****Standard of Care****:* DESIGN/BUILDER shall perform or furnish Design Professional Services andrelated services in all phases of the Project. The standard of care for all such services performed or furnished underthis Agreement will be the care and skill ordinarily used by members of theengineering profession practicing under similar conditions at the same time andlocality.  Notwithstanding the foregoing,if the parties agree in writing upon specific standards for the Work (i.e.,Performance Guarantee Criteria), the Design Professional Services shall beperformed to achieve such standards.

 

B.*                 ****Preliminary Design Phase****:* During the preliminary design phase, DESIGN/BUILDER shall:

 

1.                    Consult with OWNER to understand OWNER’srequirements for the Project and review available data.

 

2.                    Advise OWNER as to the necessity of OWNERproviding or obtaining from others additional reports, data or services of thetypes provided in paragraph 8.01.A.6.a-g and assist OWNER in obtaining suchreports, data, or services.

 

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

 

4.                    Obtain such additional geotechnical andrelated information which it deems necessary for performance of the Work.

 

5.                    Prepare preliminary design documentsconsisting of final design criteria, preliminary drawings, outlinespecifications, and written descriptions of the Project.

 

6.                    Furnish the preliminary design documents toand review them with OWNER within the time indicated in the schedules describedin paragraph 2.05.A.

 

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C.*                 ****Final Design Phase****:*  Afterwritten acceptance by OWNER of the preliminary design phase documentsDESIGN/BUILDER shall:

 

1.                    On the basis of the accepted preliminarydesign phase documents, prepare final Drawings showing the scope, extent, andcharacter of the Construction to be performed and furnished by DESIGN/BUILDERand Specifications.

 

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

 

3.                    Furnish the above documents, Drawings andSpecifications to and review them with OWNER within the time indicated in theschedules described in paragraphs 2.03.A and 2.05.A.

 

D.                 ***Construction Phase***. During Construction, DESIGN/BUILDER shall provide Engineering and DesignProfessional Services as necessary to complete the Project.

 

E.*                  ****Operational Phase****:* During the operational phase, DESIGN/BUILDER shall:

 

1.                    Provide assistance in connection with thestart-up, testing, refining and adjusting of any equipment or system.

 

2.                    Assist OWNER in training staff to operate andmaintain the Project as provided in Exhibit G.

 

Otherthan assistance normally provided in the industry after final payment, nothingin this paragraph 6.01.E. shall be interpreted or construed as obligatingDESIGN/BUILDER to perform or provide such assistance to OWNER after finalpayment and acceptance of the Work under paragraph 13.09 below.

 

***6.02******                       ******Supervision and Superintendenceof Construction***

 

A.                DESIGN/BUILDER shall supervise, inspect anddirect the Construction competently and efficiently, devoting such attentionthereto and applying such skills and expertise as may be necessary to providethe Construction in accordance with the Contract Documents.  DESIGN/BUILDER shall be solely responsiblefor the means, methods, techniques, sequences and procedures employed for theprovision of Construction. DESIGN/BUILDER shall be responsible to see that the completedConstruction complies accurately with the Contract Documents and shall keepOWNER advised as to the quality and progress of the Construction.

 

B.                  DESIGN/BUILDER shall keep on the Site at alltimes during construction a competent resident superintendent, who shall not bereplaced without written notice to OWNER except under extraordinarycircumstances.  The superintendent willbe DESIGN/BUILDER’s representative at the Site and shall have authority to acton behalf of DESIGN/BUILDER.  Allcommunications to the superintendent shall be as binding as if given toDESIGN/BUILDER.

 

***6.03******                       ******Labor, Materials and Equipment***

 

A.                DESIGN/BUILDER shall provide competent, suitablyqualified personnel to survey and lay out the Construction and performConstruction as required by the Contract Documents. DESIGN/BUILDER shall at alltimes maintain good discipline and order at the Site.

 

B.                  Unless otherwise specified in the ContractDocuments, DESIGN/BUILDER shall furnish or cause to be furnished and assumefull responsibility for materials, equipment, labor, transportation,construction equipment and machinery, tools, appliances, fuel, power, light,heat, telephone, water, sanitary facilities, 

 

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temporary facilities andall other facilities and incidentals necessary for the furnishing, performance,testing, start-up and completion of the Work. DESIGN/BUILDER will direct the checkout of utilities and operations ofsystems and equipment.

 

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

 

***6.04******                       ******Progress Schedule***

 

A.                DESIGN/BUILDER shall adhere to the progress schedule establishedin accordance with paragraph 2.05.A as it may be adjusted from time to time.

 

1.                    DESIGN/BUILDER shall submit to OWNER foracceptance proposed adjustments in the progress schedule that will notchange the Contract Times.  Suchadjustments will conform generally to the progress schedule then ineffect.

 

2.                    Proposed adjustments in the progress schedule thatwill change the Contract Times  shall besubmitted in accordance with the requirements of Article 11.  Such adjustments may only be made by a ChangeOrder or Written Amendment.

 

***6.05 Concerning Subcontractors, Suppliers and Others***

 

A.                DESIGN/BUILDER shall not employ anySubcontractor, Engineer, Supplier or other individual or entity against whomOWNER may have reasonable objection. DESIGN/BUILDER shall not be required to employ any Subcontractor,Engineer, Supplier or other individual or entity to furnish or perform any ofthe Work against whom DESIGN/BUILDER has reasonable objection.

 

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

 

C.                  DESIGN/BUILDER shall be solely responsiblefor scheduling and coordinating Subcontractors, Engineers, Suppliers and otherindividuals and entities performing or furnishing any of the Work under adirect or indirect contract with DESIGN/BUILDER.  DESIGN/BUILDER shall require allSubcontractors, Engineers, Suppliers and such other individuals and entitiesperforming or furnishing any of the Work to communicate with the OWNER throughDESIGN/BUILDER.

 

D.                 All services performed or provided to andmaterial and equipment supplied to DESIGN/BUILDER by a Subcontractor orSupplier will be pursuant to an appropriate Design Subagreement or ConstructionSubagreement between DESIGN/BUILDER and the Subcontractor, Engineer or Supplierwhich specifically binds the Subcontractor, Engineer or Supplier to theapplicable terms and conditions of the Contract Documents for the benefit ofOWNER.  Whenever any such 

 

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agreement is with aSubcontractor, Engineer or Supplier who is listed as an additional insured onthe property insurance provided in paragraph 5.04.A or 5.04.B, the agreementbetween the DESIGN/BUILDER and the Subcontractor, Engineer or Supplier willcontain provisions whereby the Subcontractor, Engineer or Supplier waives allrights against OWNER, DESIGN/BUILDER, and all other additional insureds for alllosses and damages caused by any of the perils or causes of loss covered bysuch policies and any other property insurance applicable to the Work.  If the insurers on any such policies requireseparate waiver forms to be signed by any Subcontractor, Engineer or Supplier,DESIGN/BUILDER will obtain the same.

 

***6.06******                       ******Patent Fees and Royalties***

 

A.                DESIGN/BUILDER shall pay all license fees androyalties and assume all costs incident to the use in the performance of theWork or the incorporation in the Work of any invention, design, process,product or device (other than any increased license fees, royalties and costsarising out of or resulting from a Change Order) which is the subject of patentrights or copyrights held by others.  Tothe fullest extent permitted by Laws and Regulations,  DESIGN/BUILDER shall indemnify and holdharmless OWNER, from and against all claims, costs, losses and damages(including but not limited to all reasonable fees and charges of engineers,architects, attorneys and other professionals and all court or arbitration orother dispute resolution costs) arising out of or resulting from anyinfringement of patent rights or copyrights incident to the use in theperformance of the Work or resulting from the incorporation in the Work of anyinvention, design, process, product or device.

 

***6.07******                       ******Permits***

 

A.                Unless otherwise provided in the ContractDocuments, OWNER shall obtain and pay for all necessary permits andlicenses.  DESIGN/BUILDER shall assistOWNER, when necessary, in obtaining such permits and licenses.  DESIGN/BUILDER shall pay all governmentalcharges and inspection fees necessary for the prosecution of the Construction,which are applicable on the Effective Date of the Agreement.  DESIGN/BUILDER shall pay all charges ofutility owners for connections to the Work (other than those charges that arerequired to be paid by OWNER to satisfy its obligations under Exhibit E), andOWNER shall pay all charges of such utility owners for capital costs relatedthereto.

 

***6.08******                       ******Laws and Regulations***

 

A.                DESIGN/BUILDER shall give all notices andcomply with all Laws and Regulations of the place of the Project which areapplicable to furnishing and performance of the Work.  OWNER shall not be responsible for monitoringDESIGN/BUILDER’s compliance with any Laws or Regulations.

 

B.                  If DESIGN/BUILDER performs any Work knowingor having reason to know that it is contrary to Laws or Regulations,DESIGN/BUILDER shall bear all costs arising therefrom.

 

C.                  Changes in Laws and Regulations not known onthe Effective Date of the Agreement having an effect on the cost or time ofperformance may be the subject of a claim under Article 9.

 

***6.09******                       ******Taxes***

 

A.                OWNER shall pay to DESIGN/BUILDER all sales,consumer, use, gross receipts and other similar taxes which are applicableduring the performance of the Work and are either paid by DESIGN/BUILDER or arerequired to be reimbursed by DESIGN/BUILDER to its Subcontractors, Suppliers,or Engineers.

 

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***6.10******                       ******Use of Site and Other Areas***

 

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

 

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

 

C.                  DESIGN/BUILDER shall not load nor permit anypart of any structure to be loaded in any manner that will endanger thestructure, nor shall DESIGN/ BUILDER subject any part of the Work or adjacentproperty to stresses or pressures that will endanger it.

 

***6.11******                       ******Record Documents***

 

A.                DESIGN/BUILDER shall maintain in a safe placeat the Site one record copy of all Drawings, Specifications, WrittenAmendments, and Change Orders, in good order and annotated to show all changesmade during Construction.  These recorddocuments together with all approved Submittals will be available to OWNER forreference.  Upon completion of the Work,these record documents and Submittals, including a reproducible set of recorddrawings, will be delivered to OWNER.

 

**6.12     *Safety andProtection***

 

A.                                   DESIGN/BUILDER shall be responsible forinitiating, maintaining and supervising all safety precautions and programs inconnection with the Construction. DESIGN/BUILDER shall take all necessary precautions for the safety of,and shall provide the necessary protection to prevent damage, injury or lossto:

 

1.                    All persons on the Site or who may beaffected by the Construction;

 

2.                    All Work and materials and equipment to beincorporated therein, whether in storage on or off the Site; and

 

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3.                    Other property at the Site or adjacentthereto, including trees, shrubs, lawns, walks, pavements, roadways,structures, utilities and underground facilities not designated for removal,relocation or replacement in the course of construction.

 

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

 

***6.13******                       ******Safety Representative***

 

A.                DESIGN/BUILDER shall designate a qualified andexperienced safety representative at the Site whose duties and responsibilitiesshall be the prevention of accidents and the maintaining and supervising ofsafety precautions and programs.

 

***6.14******                       ******Hazard Communication Programs***

 

A.                DESIGN/BUILDER shall be responsible forcoordinating any exchange of material safety data sheets or other hazardcommunication information required to be made available to or exchanged betweenor among employers at the Site in accordance with Laws or Regulations.

 

***6.15******                       ******Emergencies***

 

A.                In emergencies affecting the safety orprotection of persons or the construction or property at the Site or adjacentthereto, DESIGN/BUILDER, without special instruction or authorization fromOWNER, is obligated to act to prevent threatened damage, injury or loss.  DESIGN/BUILDER shall give OWNER promptwritten notice if DESIGN/BUILDER believes that any significant changes in theConstruction or variations from the Contract Documents have been causedthereby.  If a change in the ContractDocuments is required because of the action taken by DESIGN/BUILDER in responseto such an emergency, a Change Order will be issued to document theconsequences of such action.

 

***6.16******                       ******Submittals***

 

A.                OWNER will review and approveSubmittals.  OWNER’s review and approvalof required Submittals shall not relieve DESIGN/BUILDER from responsibility forany variation from the requirements of the Contract Documents.

 

B.                  Where a Submittal is required by the ContractDocuments, any related Construction provided prior to OWNER’s review andapproval of the pertinent Submittal will be at the sole expense andresponsibility of DESIGN/BUILDER.

 

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***6.17******                       ******Continuing the Work***

 

A.                DESIGN/BUILDER shall carry on the Work andadhere to the progress schedule during all disputes or disagreements withOWNER.  No Work shall be delayed orpostponed pending resolution of any disputes or disagreements, except asDESIGN/BUILDER and OWNER may otherwise agree in writing or as otherwiseprovided in the Contract Documents.

 

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

 

A.                DESIGN/BUILDER warrants and guarantees toOWNER that all Construction will be in accordance with the Contract Documentsand will not be *defective*. DESIGN/BUILDER’swarranty and guarantee hereunder excludes defects or damage caused by:

 

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

 

2.                    Normal wear and tear under normal usage.

 

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

 

1.                    Observations by OWNER;

 

2.                    The making of any progress or final payment;

 

3.                    The issuance of a certificate of SubstantialCompletion;

 

4.                    Use or occupancy of the Work or any partthereof by OWNER;

 

5.                    Any acceptance by OWNER or any failure to doso;

 

6.                    Any review and approval of a Submittal;

 

7.                    Any inspection, test or approval by others;or

 

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

 

C.                  DESIGN/BUILDER shall, at final completion,assign to OWNER all manufacturer’s warranties for materials and equipmentincorporated into the Project; provided, however, in the event of a claim byOWNER against DESIGN/BUILDER, OWNER shall use its best efforts to cooperatewith DESIGN/BUILDER in the enforcement of any applicable warranty.

 

**6.19****                       *****Indemnification***

 

OWNER and DESIGN/BUILDER are and will be throughout the term of theAgreement independent contractors as to each other.  Each party recognizes that it shall be solelyresponsible for its own conduct, including without limitation its own fault, asto any aspect of the Agreement.  In theevent any claim is 

 

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made or any action isfiled by a third party arising out of this Agreement or the services to beperformed under it, the parties anticipate that each will defend said claim oraction on its own behalf, and will pay, settle, or otherwise dispose of anydemand or judgment against it consistent with the provisions of the Kansascomparative negligence statute, K.S.A. §60-258a, in effect on the date of thisAgreement.  In the event either party ismade to respond in damages for the fault of the other party, then the otherparty agrees to indemnify and hold harmless the first party (including itsofficers, directors, employees, and agents) from any payment that it has tomake, including without limitation the payment of reasonable attorneys’ feesincurred in resisting, settling, or otherwise disposing of the demand, onaccount of the other party’s fault.  Inregard to the indemnity obligation in this paragraph 6.19 or any otherprovision of the General Conditions, neither party shall make a payment forwhich indemnity will be sought from the other party without first providingsuch other party written notice of the claim and an opportunity to assume thedefense.

 

**ARTICLE 7—OTHERCONSTRUCTION**

 

***7.01******                       ******Related Construction at Site***

 

A.                OWNER may perform other Work related to theProject at the Site by OWNER’s own forces, or let other direct contractstherefor or have other work performed by utility owners.  Written notice thereof will be given toDESIGN/BUILDER prior to starting any such other work.

 

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

 

C.                  If the proper execution or results of anypart of DESIGN/BUILDER’s Work depends upon work performed or services providedby others under this Article 7, DESIGN/BUILDER shall inspect such otherwork and appropriate instruments of service and promptly report to OWNER inwriting any delays, defects or deficiencies in such other work or services thatrender it unavailable or unsuitable for the proper execution and results ofDESIGN/BUILDER’s Work.  DESIGN/BUILDER’sfailure so to report will constitute an acceptance of such other work as fitand proper for integration with DESIGN/BUILDER’s Work except for latent ornonapparent defects and deficiencies in such other work.

 

**ARTICLE 8—OWNER’SRESPONSIBILITIES**

 

***8.01******                       ******General***

 

A.                OWNER shall do the following in a timelymanner so as not to delay the services of DESIGN/BUILDER.

 

1.                    Designate in writing a person to act as OWNER’srepresentative with respect to the services to be rendered under thisAgreement.

 

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2.                    Provide such legal services as OWNER mayrequire with regard to land use and governmental permitting issues pertainingto the Project including any such land use or governmental permitting issuesthat may be raised by DESIGN/BUILDER.

 

3.                    If requested in writing by DESIGN/BUILDER,furnish reasonable evidence satisfactory to DESIGN/BUILDER, that sufficientfunds are available and committed for the entire cost of the Project.  Unless such reasonable evidence is furnished,DESIGN/BUILDER is not required to commence or continue any Work, or may, ifsuch evidence is not presented within a reasonable time, stop Work upon fifteen(15) days’ notice to the Owner.

 

4.                    Make payments to DESIGN/BUILDER promptly whenthey are due as provided in Article 13.

 

5.                    Furnish lands and easements as set forth inparagraph 4.01.A.

 

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

 

a.          Environmental assessment and impact statements;

 

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

 

c.          Property descriptions;

 

d.         Zoning, deed and other land use restrictions;

 

e.          Engineering surveys to establish reference points for design andconstruction which in OWNER’s judgment are necessary to enable DESIGN/BUILDERto  proceed with the Work;

 

f.            Assistance in filing documents required toobtain necessary approvals of governmental authorities having jurisdiction overthe Project; and

 

g.         Subsurface data.

 

7.                    Review Submittals subject to OWNER reviewpursuant to paragraph 6.16.A.

 

8.                    Provide information known to or in thepossession of OWNER relating to the presence of materials and substances at thesite which could create a Hazardous Condition.

 

9.                    Perform all items designated as OWNER’sresponsibilities in Exhibit E.

 

***8.02******              ******Scope of OWNER’s Safety andHazardous Waste Responsibilities***

 

A.                OWNER shall not supervise, direct or havecontrol or authority over, nor be responsible for, DESIGN/BUILDER’s means,methods, techniques, sequences or procedures of Construction or the safetyprecautions and programs incident thereto, or for any failure of DESIGN/BUILDERto comply with Laws and Regulations applicable to the furnishing or performanceof the Work.  OWNER will not beresponsible for DESIGN/BUILDER’s failure to perform or furnish the Work inaccordance with the Contract Documents.

 

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**ARTICLE 9—CHANGES IN THE WORK;CLAIMS**

 

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

 

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

 

***9.02        Notice of Intent to Make Claim***

 

A.     If OWNER and DESIGN/BUILDER are unable toagree as to the extent, if any, of an adjustment in the Contract Price or an adjustmentof the Contract Times that should be allowed as a result of any order of OWNERpursuant to paragraph 9.01.A or other occurrence for which the ContractDocuments provide that such adjustment(s) may be made, a claim may be madetherefor.  Written notice of intent tomake such a claim shall be submitted to the other party promptly and in noevent more than thirty (30) days after the start of the occurrence or eventgiving rise to the claim.

 

***9.03        Claim Documentation***

 

A.     Substantiating documentation shall besubmitted by the claiming party within thirty (30) days after delivery of thenotice required by paragraph 9.02.A.

 

***9.04        Decision***

 

A.     The other party shall render a decision onthe claim no more than thirty (30) days after the receipt of the substantiatingdocumentation required by paragraph 9.03.A.  This decision will be final and binding unless the claiming party givesnotice of intention to exercise its rights under Article 15 within thirty (30)days of receipt of the decision and exercises such rights within thirty (30)days of giving the notice of intent.

 

***9.05        Time Limit Extension***

 

A.     The time limits of paragraphs 9.03.A and9.04.A may be extended by mutual agreement.

 

***9.06        Exceptions***

 

A.     DESIGN/BUILDER shall not be entitled to anincrease in the Contract Price with respect to any Work performed that is notcontemplated by the Contract Documents as amended, modified and supplemented asprovided in paragraph 3.03.

 

***9.07        Execution of Change Orders***

 

A.     OWNER and DESIGN/BUILDER shall executeappropriate Change Orders or Written Amendments covering:

 

1.       changes in the Work which are (i) orderedby OWNER pursuant to paragraph 9.01, (ii) required because of acceptance of *defective* Construction under paragraph 12.08 or correcting *defective* Work under paragraph 12.07A or (iii) agreed to bythe parties; and

 

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

 

**ARTICLE 10—CHANGE OF CONTRACTPRICE**

 

***10.01      General***

 

A.     The Contract Price constitutes the totalcompensation (subject to authorized adjustments) payable to DESIGN/BUILDER forperforming the Work.

 

B.      The Contract Price may only be changed bya Change Order or by a Written Amendment. Any claim for an adjustment in the Contract Price shall be based onwritten notice delivered by the party making the claim to the other partypromptly in accordance with paragraph 9.02.A.

 

C.      The value of any Work covered by a ChangeOrder or of any claim for an increase or decrease in the Contract Price will bedetermined as follows:

 

1.       By a mutually agreed lump sum (which mayinclude an allowance for overhead and profit not necessarily in accordance withparagraph 10.02); or

 

2.       Where agreement to a lump sum is notreached under paragraph 10.01.C.1, on the basis of the Cost of the Work(determined as provided in paragraph 10.02) plus a DESIGN/BUILDER’s Fee foroverhead and profit (determined as provided in paragraph 10.02.C).

 

***10.02      Cost of the Work***

 

A.*     **CostsIncluded**:*  The termCost of the Work means the sum of all costs necessarily incurred and paid byDESIGN/BUILDER in the proper performance of work authorized only by a ChangeOrder or Written Amendment (together “Change Order Work”).  Except as otherwise may be agreed to in writingby OWNER, such costs shall be in amounts no higher than those prevailing in thelocality of the Project, shall include only the following items and shall notinclude any of the costs itemized in paragraph 10.02.B:

 

1.       Payrollcosts for employees in the direct employ of DESIGN/BUILDER in the performanceof the Change Order Work under the then current schedule of job classificationsand hourly rates of DESIGN/BUILDER.

 

2.       Costof all materials and equipment furnished and incorporated in the Change OrderWork, including costs of transportation and storage thereof, and Suppliers’field services required in connection therewith.

 

3.       Paymentsmade by DESIGN/BUILDER to Subcontractors for Change Order Work performed orfurnished by Subcontractors.

 

4.       Paymentsmade by DESIGN/BUILDER to Engineers (not employees of DESIGN/BUILDER or itsaffiliates) for Design Professional Services provided or furnished by Engineersunder a Design Subagreement for Change Order Work.

 

5.       Costsof special consultants (including but not limited to testing laboratories andsurveyors, but excluding employees of DESIGN/BUILDER or its affiliates)employed for services specifically related to Change Order Work.

 

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6.       Supplementalcosts including the following items:

 

a.     The proportion of necessary transportation, travel andsubsistence expenses of DESIGN/BUILDER’s employees incurred in discharge ofduties connected with Change Order Work.

 

b.     Cost, including transportation and maintenance, of allmaterials, supplies, equipment, machinery, appliances, office and temporaryfacilities at the Site and hand tools not owned by the workers, which areconsumed in the performance of Change Order Work, and cost less market value ofsuch items used but not consumed which remain the property of DESIGN/BUILDER.

 

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

 

d.     Sales, consumer, use or similar taxes related to Change OrderWork, paid by DESIGN/BUILDER or required to be reimbursed by DESIGN/BUILDER toits Subcontractors, Suppliers, or Engineers.

 

**B**.*      **Costs Excluded**:*  The term Cost of the Work shall not includeany of the following:

 

1.       Payroll costs and other compensation ofDESIGN/BUILDER’s officers, executives, principals (of partnerships and soleproprietorships), general managers, engineers, architects, estimators,attorneys, auditors, accountants, purchasing and contracting agents,expediters, timekeepers, clerks and other personnel employed by DESIGN/BUILDERwhether at the Site or in DESIGN/BUILDER’s principal or a branch office forgeneral administration of the Work and not specifically included in the agreedupon schedule of job classifications referred to in paragraph 10.02.A.1 — allof which are to be considered administrative costs covered by theDESIGN/BUILDER’s fee.

 

2.       Expenses of DESIGN/BUILDER’s principaland branch offices other than DESIGN/BUILDER’s office at the Site.

 

3.       Any part of DESIGN/BUILDER’s capitalexpenses, including interest on DESIGN/BUILDER’s capital employed for the Workand charges against DESIGN/BUILDER for delinquent payments.

 

4.       Costs due to the negligence ofDESIGN/BUILDER, any Subcontractor, or anyone directly or indirectly employed byany of them or for whose acts any of them may be liable, including but notlimited to, the correction of *defective* Work,disposal of materials or equipment wrongly supplied and making good any damageto property.

 

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

 

C.*      **Fee**:*

 

1.       A mutually agreed fee or, in the eventthe parties can not agree upon a fee, DESIGN/BUILDER’s fee for overhead andprofit on Change Orders priced by paragraph 10.01.C.2 (whether additive or 

 

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deductive)shall be fifteen percent (15%) of the Cost of the Change Order Work for subcontracts,materials and equipment.

 

2.       When both additions and credits areinvolved in any one change, the adjustment in DESIGN/BUILDER’s fee shall becomputed on the basis of the net change in accordance with paragraph 10.02.C.1above.

 

D.*      **Documentation**:*  Whenever the cost of any Work is to bedetermined pursuant to paragraphs 10.02.A and 10.02.B, DESIGN/BUILDER willestablish and maintain records thereof in accordance with generally acceptedaccounting practices and submit in a form acceptable to OWNER an itemized costbreakdown together with supporting data.

 

**ARTICLE 11—CHANGE OF CONTRACTTIMES**

 

***11.01      General***

 

A.     The Contract Times may only be changed by aChange Order or a Written Amendment.  Anyclaim for an adjustment of the Contract Times shall be based on written noticepursuant to paragraph 9.02.

 

B.      All Contract Times are of the essence ofthe Agreement.

 

***11.02******                ******TimeExtensions***

 

A.      Where DESIGN/BUILDER is prevented fromcompleting any part of the Work within the Contract Times due to delay beyond thecontrol of DESIGN/BUILDER, the Contract Times will be extended in an amountequal to the time lost due to such delay if a claim is made therefor asprovided in Article 9.  Delays beyond thecontrol of DESIGN/BUILDER shall include, but not be limited to, acts or neglectby OWNER, governmental agencies, acts or neglect of utility owners or othercontractors performing other construction work as contemplated by Article 7,fires, floods, epidemics, abnormal weather conditions or acts of God.  Delays attributable to and within the controlof a Subcontractor or Supplier shall be deemed to be delays within the controlof DESIGN/BUILDER.

 

B.      Nothing in this paragraph 11.02 bars achange in Contract Price pursuant to Article 10 to compensate for the directcosts incurred by DESIGN/BUILDER due to delay, interference, or disruptiondirectly attributable to actions or inactions of OWNER.  However, OWNER shall not be liable toDESIGN/BUILDER for costs or damages arising out of or resulting from (i) delayscaused by or within the control of DESIGN/BUILDER, or (ii) delays beyond thecontrol of both parties including but not limited to fires, floods, epidemics,abnormal weather conditions, acts of God or acts or neglect by governmentalagencies, utility owners, or other contractors performing other work ascontemplated by Article 7.

 

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

 

***12.01      Notice of Defects***

 

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

 

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***12.02      Access to Construction***

 

A.     Upon advance notice to and approval byDESIGN/BUILDER, which will not be unreasonably withheld, OWNER, otherrepresentatives and personnel of OWNER, independent testing laboratories andgovernmental agencies with jurisdictional interests will have access to theConstruction at the Site at reasonable times for their observation, inspectingand testing.  DESIGN/BUILDER shallprovide them proper and safe conditions for such access and advise them ofDESIGN/BUILDER’s Site safety procedures and programs so that they may complytherewith as applicable.

 

***12.03      Tests and Inspections***

 

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

 

B.      DESIGN/BUILDER shall give OWNER reasonablenotice of the planned schedule for all required inspections, tests orapprovals.

 

C.      If any Construction (or the constructionwork of others) that is required to be inspected, tested or approved is coveredby DESIGN/BUILDER without written concurrence of OWNER, it must, if requestedby OWNER, be uncovered for observation at DESIGN/BUILDER’s expense unlessDESIGN/BUILDER has given OWNER timely notice of DESIGN/BUILDER’s intention tocover the same and OWNER has not acted with reasonable promptness in responseto such notice.

 

***12.04      Uncovering Construction***

 

A.     If any Construction is covered contrary tothe written request of OWNER, it must, if requested by OWNER, be uncovered forOWNER’s observation and recovered at DESIGN/BUILDER’s expense.

 

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

 

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areunable to agree as to the amount or extent thereof, DESIGN/BUILDER may make aclaim therefor as provided in Article 9.

 

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

 

A.     If the Construction is *defective*,or DESIGN/BUILDER fails to supply sufficient skilled workers or suitablematerials or equipment, or fails to furnish or perform the Construction in sucha way that the completed Construction will conform to the Contract Documents,OWNER may order DESIGN/BUILDER to stop Construction or any portion thereof,until the cause for such order has been eliminated; however, this right ofOWNER to stop Construction will not give rise to any duty on the part of OWNERto exercise this right for the benefit of DESIGN/BUILDER or any other party.

 

***12.06******       ******Correction or Removal of Defective Construction***

 

A.     Prior to acceptance and final payment underparagraph 13.09 below, OWNER will have authority to disapprove or reject *defective* Construction and will have authority to requirespecial inspection or testing of the Construction whether or not theConstruction is fabricated, installed or completed.  DESIGN/BUILDER shall promptly, either correct all *defective*Construction, whether or not fabricated, installed or completed, or, if theConstruction has been rejected by OWNER, remove it from the Site and replace itwith non-defective Construction. DESIGN/BUILDER shall bear all costs of such correction or removal(including but not limited to reasonable fees and charges of engineers,architects, attorneys and other professionals, all court or arbitration orother dispute resolution costs, and all costs of repair or replacement of workof others) made necessary thereby. Nothing in this paragraph shall be interpreted or construed as requiringDESIGN/BUILDER to correct or remove and replace defective Construction acceptedby OWNER pursuant to paragraph 12.08 below.

 

***12.07      Correction Period***

 

A.     If within one (1) year after the date ofSubstantial Completion or such longer period of time as may be prescribed byLaws or Regulations or by the terms of any applicable special guaranteerequired by the Contract Documents or by any specific provision of the ContractDocuments, any Construction is found to be *defective*,DESIGN/BUILDER shall promptly, without cost to OWNER and in accordance withOWNER’s written instructions, (i) correct such *defective*Construction, or, if it has been rejected by OWNER, remove it from the Site andreplace it with Construction that is not *defective*, and(ii) satisfactorily correct or remove and replace any damage to otherConstruction or the work of others resulting therefrom.  If DESIGN/BUILDER does not promptly complywith the terms of such instructions, or in an emergency where delay would causeserious risk of loss or damage, OWNER may have the *defective*Construction corrected or the rejected Construction removed and replaced, andall costs and damages caused by or resulting from such removal and replacement(including but not limited to all reasonable fees and charges of engineers,architects, attorneys and other professionals, all court or arbitration orother dispute resolution costs, and all costs of repair or replacement of workof others) will be paid by DESIGN/BUILDER, subject to the provisions ofparagraph 16.06.  Nothing in thisparagraph shall be interpreted or construed as requiring DESIGN/BUILDER tocorrect or remove and replace defective Construction accepted by OWNER pursuantto paragraph 12.08 below.

 

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

 

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***12.08******             ******Acceptance of Defective Construction***

 

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

 

**ARTICLE 13—PAYMENTS TODESIGN/BUILDER AND COMPLETION**

 

***13.01      Schedule of Values***

 

A.     The Schedule of Values established asprovided in paragraph 2.05.A will serve as the basis for progress payments andwill be incorporated into a form of Application for Payment acceptable toOWNER.

 

***13.02      Application for Progress Payment***

 

A.     At least ten (10) days before the dateestablished for each progress payment (but not more often than once a month),DESIGN/BUILDER shall submit to OWNER for review and approval an Application forPayment filled out and signed by DESIGN/BUILDER covering the Work completed asof the date of the Application and accompanied by such supporting documentationas is required by the Contract Documents or as reasonably required by OWNER’slender.  The amount of retainage withrespect to progress payments will be as stipulated in the Agreement.

 

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

 

***13.03      DESIGN/BUILDER’sWarranty of Title***

 

A.     DESIGN/BUILDER warrants and guarantees thattitle to all construction materials and equipment covered by any Applicationfor Payment, whether incorporated in the Project or not, will pass to OWNER nolater than the time of payment free and clear of all Liens.  This paragraph 13.03.A does not apply to anydocuments covered by paragraph 3.04.

 

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***13.04******       ******Progress Payments***

 

A.     Progress payments shall be made by theOWNER to the DESIGN/BUILDER according to the following procedure:

 

1.       OWNERwill, within ten (10) days of receipt of each Application for Payment, eitherindicate in writing its acceptance of the Application and state that theApplication is being processed for payment, or return the Application toDESIGN/BUILDER indicating in writing its reasons for refusing to accept theApplication and the exact amount(s) in dispute. All undisputed amounts will become due and be paid by OWNER toDESIGN/BUILDER not more than ten (10) days after OWNER’s acceptance orrejection of such Application, as the case may be.

 

2.       Ifthe OWNER should fail to pay the DESIGN/BUILDER at the time the payment of anyamount becomes due, then DESIGN/BUILDER may, at any time thereafter, uponserving written notice that DESIGN/BUILDER will stop the Work within seven (7)days after receipt of the notice by the OWNER, and after such seven (7) dayperiod, stop the Work until payment of the amount owing has been received,including interest thereon.  Writtennotice shall be deemed to have been duly served if sent by certified mail tothe last known business address of the OWNER.

 

3.       Paymentsdue but unpaid shall bear interest at the rate specified in the Agreement.  Any disputed payment shall be due at the timemutually determined by the parties or, if applicable, the time determined bythe arbitrator under paragraph 15.01.

 

4.       NoProgress Payment nor any partial or entire use or occupancy of the Project bythe OWNER shall constitute an acceptance of any Work not in accordance with theContract Documents.

 

B.      OWNER may refuse to make the whole or any part of any suchpayment or, because of subsequently discovered evidence or the results ofsubsequent inspections or tests, nullify any previous payment, to the extentthat is reasonably necessary to protect OWNER from loss because:

 

1.       The Work is *defective*, orcompleted Work has been damaged, requiring correction or replacement;

 

2.       The Contract Price has been reduced by Written Amendment orChange Order;

 

3.       OWNER has been required to correct *defective*Work or complete Work in accordance with paragraph 12.09.A;

 

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

 

5.       Claims have been made against OWNER on account ofDESIGN/BUILDER’s performance or furnishing of the Work;

 

6.       The provisions of paragraph 13.02.B are applicable; or

 

7.       Liens have been filed in connection with the Work, exceptwhere DESIGN/BUILDER has delivered a specific Bond satisfactory to OWNER tosecure the satisfaction and discharge of such Liens.

 

***13.05      Substantial Completion***

 

A.     When DESIGN/BUILDER considers theConstruction ready for its intended use DESIGN/BUILDER shall notify OWNER inwriting that the Construction is substantially complete (except for itemsspecifically listed by DESIGN/BUILDER as incomplete) and request that OWNERissue a certificate of Substantial Completion. Within a reasonable time thereafter, OWNER and 

 

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DESIGN/BUILDER shall make aninspection of the Construction to determine the status of completion.  If OWNER does not consider the Constructionsubstantially complete, OWNER will notify DESIGN/BUILDER in writing giving thereasons therefor.  If OWNER considers theConstruction substantially complete, OWNER will prepare and deliver toDESIGN/BUILDER a certificate of Substantial Completion which shall fix the dateof Substantial Completion.  There shallbe attached to the certificate a list of all items to be completed or correctedbefore final payment, which may be amended by OWNER for a period of sixty (60)days after delivery thereof. DESIGN/BUILDER shall not be responsible for correcting or completing punchlist items not disclosed in writing by OWNER to DESIGN/BUILDER within such60-day period.  At the time of deliveryof the certificate of Substantial Completion OWNER will deliver toDESIGN/BUILDER (i) a written determination as to division of responsibilitiespending final payment between OWNER and DESIGN/BUILDER with respect tosecurity, operation, safety, maintenance, heat, utilities, insurance andwarranties and guarantees, and (ii) the payment required by section 4.01.B.2. of the Agreement.

 

B.      OWNER will have the right to excludeDESIGN/BUILDER from the Site after the date of Substantial Completion, butOWNER will allow DESIGN/BUILDER reasonable access to complete or correct itemson the list of items to be completed.

 

***13.06      Final Inspection***

 

A.     Upon written notice from DESIGN/BUILDER thatthe entire Construction (other than receipt of the written emissions reportdocumenting compliance with the atmospheric emission criteria set forth inExhibit A) or an agreed portion thereof is complete, OWNER will make a finalinspection with DESIGN/BUILDER and will notify DESIGN/BUILDER in writing of allparticulars in which this inspection reveals that the Construction isincomplete or *defective*.  DESIGN/BUILDER shall immediately take suchmeasures as are necessary to complete such Construction or remedy suchdeficiencies.

 

***13.07      Final Application forPayment***

 

A.  After DESIGN/BUILDER has completed all suchcorrections to the satisfaction of OWNER and delivered in accordance with theContract Documents all maintenance and operating instructions, schedules,guarantees, certificates or other evidence of insurance required by paragraph5.08.B, certificates of inspection, marked-up record documents (as provided inparagraph 6.11) and other documents, DESIGN/BUILDER may make application forfinal payment of the Contract Price following the procedure for progresspayments.  Such final Application forPayment shall be accompanied (unless previously delivered) by:  (i) all documentation called for in theContract Documents, including but not limited to the evidence of insurancerequired by subparagraph 5.02.B.7, (ii) consent of the surety, if any, to finalpayment, and (iii) complete and legally effective releases or waivers(satisfactory to OWNER) of all Liens arising out of or filed in connection withthe Work.  In lieu of such releases orwaivers of Liens and as approved by OWNER, DESIGN/BUILDER may furnish receiptsor releases in full and an affidavit of DESIGN/BUILDER that: (i) thereleases and receipts include all labor, services, material and equipment for whicha Lien could be filed, and (ii) all payrolls, material and equipment billsand other indebtedness connected with the Work for which OWNER or OWNER’sproperty might in any way be responsible have been paid or otherwisesatisfied.  If any Subcontractor orSupplier fails to furnish such a release or receipt in full, DESIGN/BUILDER mayfurnish a Bond or other collateral satisfactory to OWNER to indemnify OWNERagainst any Lien.

 

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*** 13.08     Final Payment and Acceptance***

 

A.     If OWNER is satisfied that the Work hasbeen completed and DESIGN/BUILDER’s other obligations under the ContractDocuments have been fulfilled (other than receipt of the written emissionscompliance report documenting compliance with the atmospheric emission criteriaset forth in Exhibit A), OWNER will, within ten (10) days after receipt of suchfinal Application for Payment, give written notice to DESIGN/BUILDER that suchWork is acceptable.  Otherwise, OWNERwill return the Application to DESIGN/BUILDER, indicating in writing thereasons for refusing to process final payment, in which case DESIGN/BUILDERshall make the necessary corrections and resubmit the Application.  Thirty (30) days after the presentation toOWNER of the acceptable Application and accompanying documentation, inappropriate form and substance and with OWNER’s notice of acceptability,$250,000 of the remaining amount of the Contract Price will become due and willbe paid by OWNER to DESIGN/BUILDER.  Ifthe written emissions compliance report documenting compliance with theatmospheric emission critieria set forth in Exhibit A is received by OWNER onor before OWNER’s receipt of such final Application for Payment, the remaining$250,000 of the Contract Price will become due and will be paid by OWNER toDESIGN/BUILDER on the same date as set forth in the immediately precedingsentence.  If the written emissionscompliance report documenting compliance with the atmospheric emission critieriaset forth in Exhibit A is received by OWNER after OWNER’s receipt of such finalApplication for Payment, the remaining $250,000 of the Contract Price willbecome due and will be paid by OWNER to DESIGN/BUILDER thirty (30) days afterOWNER’s receipt of such report.  “Asbuilt” drawings and OWNER’s manuals shall be delivered to OWNER within six (6)months after receipt by DESIGN/BUILDER of such notice that the Work isacceptable.

 

B.      If, through no fault of DESIGN/BUILDER,final completion of the Work is significantly delayed, OWNER shall, uponreceipt of DESIGN/BUILDER’s final Application for Payment, and withoutterminating the Agreement, make payment of the balance due for that portion ofthe Work fully completed and accepted. If the remaining balance to be held by OWNER for Work not fully completedor corrected is less than the retainage stipulated in the Agreement, thewritten consent of the surety to the payment of the balance due for thatportion of the Work fully completed and accepted shall be submitted byDESIGN/BUILDER to OWNER with the Application for such payment.  Such payment shall be made under the termsand conditions governing final payment, except that it shall not constitute awaiver of claims.

 

***13.09      Waiver of Claims***

 

A.     The making and acceptance of final paymentof the Contract Price will constitute:

 

1.       A waiver of all claims by OWNER against DESIGN/BUILDER, exceptclaims arising from unsettled Liens, from *defective*Construction appearing after final inspection pursuant to paragraph 13.06, fromfailure to comply with the Contract Documents or the terms of any specialguarantees specified therein, or from DESIGN/BUILDER’s continuing obligationsunder the Contract Documents; and

 

2.       a waiver of all claims byDESIGN/BUILDER against OWNER other than those previously made in writing andstill unsettled, or from OWNER’s continuing obligations under the ContractDocuments.

 

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**ARTICLE 14—SUSPENSION OF WORK ANDTERMINATION**

 

***14.01      Owner May Suspend Work***

 

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

 

***14.02      OWNER May Terminate for Cause***

 

A.     The occurrence of any one or more of thefollowing events justifies termination for cause:

 

1.       DESIGN/BUILDER persistently fails toperform the Work in accordance with the Contract Documents (including, but notlimited to, failure to supply sufficient skilled workers or suitable materialsor equipment or failure to adhere to the progress schedule established underparagraph 2.05.A as revised from time to time.)

 

2.       DESIGN/BUILDER intentionally or willfullydisregards Laws or Regulations of any public body having jurisdiction.

 

3.       DESIGN/BUILDER otherwise breaches orviolates in any material way any provisions of the Contract Documents.

 

4.       DESIGN/BUILDER fails to timely pay itsConsultants or Subcontractors any undisputed amounts.

 

5.       DESIGN/BUILDER becomes financiallyinsolvent or files a voluntary petition of bankruptcy, or an involuntarypetition of bankruptcy is filed that is not dismissed within ninety (90) daysafter the date of such filing.

 

B.      OWNER may, after giving DESIGN/BUILDERwritten notice of the occurrence of an event in paragraph 14.02.A and twenty(20) days therefrom to remedy such event (or, if such event is not capable ofbeing remedied within such twenty (20) days, such number of days as isreasonably needed to remedy such event), and to the extent permitted by Lawsand Regulations, terminate the services of DESIGN/BUILDER, excludeDESIGN/BUILDER from the Site and take possession of the Work incorporate in theWork all materials and equipment stored at the Site or elsewhere for whichOWNER has paid DESIGN/BUILDER and finish the Work as OWNER may deemexpedient.  In such case DESIGN/BUILDERshall not be entitled to receive any further payment other than reimbursementfor DESIGN/BUILDER’s payments to Subcontractors and Suppliers for labor,services, equipment and materials prior to the date of termination, but only tothe extent not previously paid by OWNER. If the unpaid balance of the Contract Price exceeds all reasonable costsincurred by OWNER resulting from completing the Work (including but not limitedto all reasonable fees and charges of engineers, architects, attorneys andother professionals and all court or arbitration or other dispute resolutioncosts) such excess will be paid to DESIGN/BUILDER.  If all reasonable costs incurred by OWNER tocomplete the Work (including but not limited to all reasonable fees and chargesof engineers, architects, attorneys and other professionals and all court orarbitration or other dispute resolution costs) exceed the unpaid balance of theContract Price, DESIGN/BUILDER shall pay the difference to OWNER subject to theprovisions of 

 

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paragraph16.06.  When exercising any rights orremedies under this paragraph OWNER shall be required to obtain a reasonableprice for the Work performed.

 

C.      Where DESIGN/BUILDER’s services have beenso terminated by OWNER, the termination will not affect any rights or remediesof OWNER against DESIGN/BUILDER then existing or which may thereafteraccrue.  Any payment of moneys dueDESIGN/BUILDER by OWNER will not release DESIGN/BUILDER from liability.

 

D.      Nothing in this paragraph shall beinterpreted or construed as requiring DESIGN/BUILDER to perform any additionalservices after such termination including, without limitation, the creation ofany drawings, specifications or any other document necessary to complete theWork.

 

***14.03      OWNER May Terminate for Convenience***

 

A.     Prior to the date on which concrete isfirst poured at the Site by DESIGN/BUILDER, OWNER may, without cause andwithout prejudice to any other right or remedy of OWNER, elect to terminate theAgreement upon twenty (20) days written notice to DESIGN/BUILDER.  In such case, DESIGN/BUILDER shall be paid(without duplication of any items) for:

 

1.                    Completed and acceptable Work executed inaccordance with the Contract Documents prior to the effective date oftermination, including fair and reasonable sums for overhead and profit on suchWork;

 

2.                    Expenses sustained prior to the effectivedate of termination in performing services and furnishing labor, materials orequipment as required by the Contract Documents in connection with uncompletedWork, plus fair and reasonable sums for overhead and profit on such expenses;

 

3.                    Amounts paid in settlement of terminatedcontracts with Subcontractors, Engineers, Suppliers and others (including butnot limited to all reasonable fees and charges of engineers, architects,attorneys and other professionals and all court or arbitration or other disputeresolution costs incurred in connection with termination of contracts withSubcontractors, Engineers and Suppliers); and

 

4.                    Reasonable expenses directly attributable totermination.

 

B.      Except as otherwise provided in theAgreement, DESIGN/BUILDER shall not be paid on account of loss of anticipatedprofits or revenue or other economic loss arising out of or resulting from suchtermination.

 

***14.04******             ******DESIGN/BUILDER May Stop Work or Terminate***

 

A.     If, through no act or fault ofDESIGN/BUILDER, the Work is suspended for a period of more than ninety (90)days by OWNER or under an order of court or other public authority, or OWNERfails to act on any Application for Payment within thirty (30) days after it issubmitted or OWNER fails for thirty (30) days to pay DESIGN/BUILDER any sumfinally determined to be due, then DESIGN/BUILDER may, upon seven (7) dayswritten notice to OWNER, and provided OWNER does not remedy such suspension orfailure within that time, terminate the Agreement and recover from OWNERpayment on the same terms as provided in paragraph 14.03.  In lieu of terminating the Agreement andwithout prejudice to any other right or remedy, or OWNER has failed for thirtydays to pay DESIGN/BUILDER any sum finally determined to be due, DESIGN/BUILDERmay upon seven (7) days written notice to 

 

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OWNER stop the Work untilpayment is made of all such amounts due DESIGN/BUILDER, including interestthereon.  The provisions of thisparagraph 14.04.A are not intended to preclude DESIGN/BUILDER from making claimunder Article 9 for an increase in Contract Price or Contract Times or otherwise for expenses or damage directly attributable toDESIGN/BUILDER’s stopping Work as permitted by this paragraph.

 

**ARTICLE 15—DISPUTE RESOLUTION**

 

***15.01  Dispute******Resolution Agreement***

 

A.  OWNER and DESIGN/BUILDER agree that they willfirst submit any and all unsettled claims, counterclaims, disputes and othermatters in question between them arising out of or relating to the ContractDocuments or the breach thereof (“disputes”), to mediation by a mutuallyagreeable, impartial mediator, or if the parties cannot so agree, a mediatordesignated by the American Arbitration Association (“AAA”) pursuant to itsConstruction Industry Mediation Rules, prior to either of them initiating against the other a demand forarbitration pursuant to paragraph 15.01.B through 15.01.E, unless delay ininitiating arbitration would irrevocably prejudice one of the parties.  Any time limits within which to file a demandfor arbitration shall be suspended with respect to a dispute submitted tomediation within those same applicable time limits and shall remain suspendeduntil 10 days after the termination of the mediation.  The mediator of any dispute submitted tomediation under this Agreement shall not serve as arbitrator of such disputeunless otherwise agreed.

 

B.      All claims, disputes and other matters inquestion between OWNER and DESIGN/BUILDER arising out of or relating to theContract Documents or the breach thereof (except for claims which have beenwaived by the making or acceptance of final payment as provided by paragraph13.09) will be decided by binding arbitration in accordance with theConstruction Industry Arbitration Rules of the AAA then in effect, subject to thelimitations of this paragraph 15.01.  Thearbitrator shall have the discretion to award reasonable attorneys’ fees andcosts to the prevailing party.  Thisagreement so to arbitrate and any other agreement or consent to arbitrateentered into in accordance herewith as provided in this paragraph 15.01 will bespecifically enforceable under the prevailing law of any court havingjurisdiction.

 

C.      Notice of the demand for arbitration willbe filed in writing with the other party to the Agreement and with thedesignated arbitration entity.  Thedemand for arbitration will be made within a reasonable time after the claim,dispute or other matter in question has arisen, and in no event shall any suchdemand be made after the date when institution of legal or equitableproceedings based on such claim, dispute or other matter in question would bebarred by the applicable statute of limitations.

 

D.      Except as provided in paragraph 15.01.Ebelow, no arbitration arising out of or relating to the Contract Documents shallinclude by consolidation, joinder or in any other manner any other individualor` entity who is not a party to this contract unless:

 

1.       the inclusion ofsuch other individual or entity is necessary if complete relief is to beafforded among those who are already parties to the arbitration, and

 

2.       such other individual or entity issubstantially involved in a question of law or fact which is common to thosewho are already parties to the arbitration and which will arise in suchproceedings, and

 

3.       the written consent of the otherindividual or entity sought to be included and of OWNER and DESIGN/BUILDER hasbeen obtained for such inclusion, which consent shall make specific referenceto this paragraph; but no such consent shall constitute consent to arbitrationof any dispute 

 

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not specifically described in such consent or toarbitration with any party not specifically identified in such consent.

 

E.      Notwithstanding paragraph 15.01.D, if aclaim, dispute or other matter in question between OWNER and DESIGN/BUILDERinvolves the Work of a Subcontractor, Supplier or Engineer either OWNER orDESIGN/BUILDER may join such entity as a party to the arbitration between OWNERand DESIGN/BUILDER hereunder.  DESIGN/BUILDERshall include in all subcontracts required by paragraph 6.05.D a specificprovision whereby the Subcontractor consents to being joined in an arbitration between OWNER and DESIGN/BUILDER involvingthe Work of such Subcontractor.  Nothingin this paragraph 15.01.E nor in the provision of suchsubcontract consenting to joinder shall create any claim, right or cause ofaction in favor of Subcontractor, Supplier or Engineer against OWNER.

 

F.      Notwithstanding the foregoing, theprovisions of this Article 15 shall not apply to any claim by DESIGN/BUILDER ofany breach or threatened breach of any covenant contained in Exhibit F of theAgreement or the provisions thereof.

 

**ARTICLE 16—MISCELLANEOUS**

 

***16.01      Giving Notice***

 

A.     Whenever any provision of the ContractDocuments requires the giving of written notice, it will be deemed to have beenvalidly given:

 

1.       Ifdelivered in person to the individual or to a member of the firm or to anofficer of the corporation for whom it is intended;

 

2.       Ifdelivered at or sent by registered or certified mail, postage prepaid, to thelast business address known to the giver of the notice; or

 

3.       Iftransmitted by facsimile, the time at which a machine generated confirmationstates the notice was received at the facsimile telephone number of theintended recipient last known by the sender.

 

***16.02      Computation of Times***

 

A.     When any period of time is referred to inthe Contract Documents by days, it will be computed to exclude the first andinclude the last day of such period.  Ifthe last day of any such period falls on a Saturday or Sunday or on a day madea legal holiday by the law of the applicable jurisdiction, such day will beomitted from the computation.

 

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

 

***16.03      Notice of Claim***

 

A.     Should OWNER or DESIGN/BUILDER sufferinjury or damage to person or property because of any error, omission or act ofthe other party or of any of the other party’s employees or agents or othersfor whose acts the other party is legally liable, claim will be made in writingto the other party within a reasonable time of the first observance of suchinjury or damage.  The provisions of thisparagraph 16.03.A shall not be construed as a substitute for or a waiver of theprovisions of any applicable statute of limitations or repose.

 

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***16.04      Cumulative Remedies***

 

A.     Except as provided in paragraph 16.06 ofthe General Conditions below, the duties and obligations imposed by theseGeneral Conditions and the rights and remedies available hereunder to theparties hereto, and, in particular but without limitation, any general orspecific warranties, guarantees and indemnities imposed upon a party and all ofthe rights and remedies available to the other party thereunder, are inaddition to, and are not to be construed in any way as a limitation of, anyrights and remedies available to any or all of them which are otherwise imposedor available by Laws or Regulations, by special warranty or guarantee or byother provisions of the Contract Documents, and the provisions of thisparagraph will be as effective as if repeated specifically in the ContractDocuments in connection with each particular duty, obligation, right and remedyto which they apply.

 

***16.05      Survival of Obligations***

 

A.     All representations, indemnifications,warranties and guarantees made in, required by or given in accordance with theContract Documents, as well as all continuing obligations indicated in theContract Documents, will survive final payment, completion and acceptance ofthe Work and termination or completion of the Agreement.

 

***16.06******Limitationon OWNER’s Recovery of Damages and Waiver of Consequential Damages***

 

A.     OWNER’s maximum cumulative recovery, forthe Project as a whole, of damages from DESIGN/BUILDER for OWNER’s correctionof *defective* Construction under paragraph 12.07.A., acceptance of *defective*Construction under paragraph 12.08 and/or termination for cause under paragraph14.02 shall be limited to $2,500,000.00.

 

B.      Notwithstanding any other provision of theContract Documents, each party hereby waives all claims against the other partyand such other party’s employees and agents for any consequential damages thatmay arise out of or relate to a breach of the Contract Documents (except forany breach of the covenants contained in Exhibit F of the Agreement or anyprovision thereof) or the performance of the Work whether arising in contract,warranty, tort (including negligence), strict liability or otherwise, includingbut not limited to losses of use, profits, business, reputation or financing.

 

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**ExhibitAtoAgreement Between Owner and Design/Builder**

**On theBasis of a Stipulated Price**

 

**PerformanceCriteria**

 

DESIGN/BUILDER representsand warrants to OWNER that the completed Project will satisfy each of thefollowing performance criteria.  Prior tothe reduction of retainage under paragraph 13.08 of the General Conditions,DESIGN/BUILDER shall commission the Project and conduct a seven-day performancetest to establish compliance with each of the performance criteria except theatmospheric emissions.  Compliance shallbe measured simultaneously for all criteria, and computed on the average overthe seven-day performance test.  If theProject fails to reach any performance criterion, then DESIGN/BUILDER shall (atno additional cost to OWNER) make such changes in design, construction, orequipment as required to meet the criterion, and conduct another seven dayperformance test.

 

**Table 1  *ethanol plant criteria —35 MGY capacity***

 
| **Criteria**                                                                                                | ** ** | **Specification**                                                                                                          | ** ** | **Testing Statement**                                                                                 | ** ** | **Documentation**                                                              |
|-------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------|
| Plant Capacity –  fuel-grade ethanol                                                                   |       | Operate at a rate of 35  million gallons per year of denatured fuel grade ethanol meeting the  specifications of ASTM 4806 |       | Seven-day performance test                                                                            |       | Concurrence of production  records and a written report from DESIGN/BUILDER.   |
| Dried Distillers Grains  with Solubles (DDGS)                                                               |       | Operate at rate of 68,000  tons per year of approximately 10% moisture DDGS for one (1) dryer;                             |       | Determined by calculation  of mass flow from centrifuge and dryer(s) in a seven- day performance test |       | Concurrence of production  records and a written analysis from DESIGN/BUILDER. |
| Carbon Dioxide                                                                                              |       | Approximately 92,000 tons  per year of CO2 gas.                                                                            |       | Determined as a function  of fermented gallons in a seven-day performance test.                       |       | Mass flow calculation by  DESIGN/BUILDER.                                      |
| Grain to Ethanol  Conversion ratio; *Corn/Sorghum 56#/bu.,  16% or less moisture, zero aflatoxin tolerance* |       | Not be less than 2.80  denatured gallons (2.67 gallons undenatured) of ethanol per bushel of ground  corn.                 |       | As determined by meter  readings during a seven-day performance test.                                 |       | Concurrence of production  records and written analysis by DESIGN/BUILDER.     |
| Electrical Energy                                                                                           |       | .75 kw per denatured  gallon of fuel grade ethanol. Does not include CO2plant, CO2  gas system or grain handling system.   |       | As determined by meter  readings during a seven-day performance test.                                 |       | Concurrence of production  records and written analysis by DESIGN/BUILDER.     |

 
| Natural Gas |   | Consumption shall not  exceed 34,000 Btu |   | As determined by meter  readings during |   | Concurrence of production  records |
|-------------|--------|------------------------------------------|--------|-----------------------------------------|--------|------------------------------------|

 

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|                    |   | per denatured gallon of fuel-grade ethanol. |   | a seven-day performance test. |   | and written analysis by DESIGN/BUILDER.           |
|-------------------------|--------|---------------------------------------------|--------|-------------------------------|--------|---------------------------------------------------|
| Process Water Discharge |   | 0 gallons under normal  operations          |   | Process discharge meter       |   | Plant control system  reports from DESIGN/BUILDER |

 
| Atmospheric Emissions |   | As prescribed by the  applicable State Department of Environmental Quality as of the Effective Date  of the Agreement. |   | Written  emissions compliance report from a third party selected by DESIGN/BUILDER  confirming regulatory compliance of the air emissions performance tests prescribed by the applicable State  Department of Environmental Quality as of the Effective Date of the  Agreement. |   | Written  emissions compliance report from a third party selected by DESIGN/BUILDER  confirming regulatory compliance of the air emissions performance tests prescribed by the applicable State Department  of Environmental Quality as of the Effective Date of the Agreement. |
|-----------------------|--------|------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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**ExhibitBtoAgreement Between Owner and Design/Builder**

**On theBasis of a Stipulated Price**

 

**GeneralProject Scope**

 

**Construct a no less than 35 million gallon per year(MGY) dry mill fuel-grade ethanol plant in or near Garnett, Kansas.  The plant will grind approximately 12.5million bushels per year to produce approximately 35 MGY of fuel-grade ethanoldenatured with five percent gasoline (or a similar product).  The plant will also produce not less than260,000 tons per year of 65% moisture wet distillers’ grains with solubles(WDGS) and approximately 92,000 tons per year of raw carbon dioxide (CO2)gas.**

** **

**Arriving grain (corn or sorghum)will be dumped into a double hopper operated dump pit in a receiving building.Truck dump time is five minutes under normal operating conditions. Truckdrivers will start the grain system, dump the grain, and obtain a weigh ticketfrom the scale operator. A 15,000-bushel per hour leg will lift the grain toone of two 100,000-bushel concrete storage bins. A dust collection system withbag house will be installed on the grain receiving system to limit particulateemissions.**

** **

Ground grain will be mixed in a slurry tank, routed through a pressurevessel and steam flashed off in a flash vessel. Cooked mash will continue through two liquefaction tanks and into one ofthree fermenters.  Simultaneously,propagated yeast will be added to the mash as the fermenter is filling.  After batch fermentation is complete, thebeer will be pumped to the beer well and then to the beer column to vaporizethe alcohol from the mash.

 

Alcohol streams are dehydrated in the distillation column, the sidestripper and the molecular sieve system. Two hundred proof alcohol is pumped to the tank farm shift tanks andblended with five percent denaturant as the product is being pumped into afinalstorage tank.  Loading facilities fortruck and rail cars will be provided. The farm tanks include: one (1) tank for 190 proof storage, one (1) tankfor 200 proof storage, one (1) tank for denaturant storageand fuel additive, and one (1) tank for denatured ethanol storage. Alltanks are covered carbon steel tanks with one floating roof as required by theConstruction Permit.

 

Grain mash from the beer stripper is dewatered in one of the two (2)decanter type centrifuges.  Wet cake fromthe centrifuge is conveyed to the wet cake pad..  Water in the thin stillage is evaporated andrecycled by the Bio-Methanation system. Syrup may be added to the wet cake. Corn mash from the beer stripper is dewatered in decanter typecentrifuges.  Wet cake from thecentrifuge is conveyed to the DDGS dryer system.  Water in the thin stillage is evaporated andrecycled by the Bio-Methanation system. Syrup is added to the wet cake entering the dryer.  OWNER will also have the capacity to producethe syrup as a segregated stream should they desire to do so. DDGS ispneumatically conveyed to flat storage in the DDGS storage building. Shippingis accomplished by scooping and pushing the product with a front-end loaderinto an in-floor conveyor system.

 

The WDGS will consist of a wet cake includingapproximately 34% solids off of the centrifuge. Syrup from the evaporators can be added back into the wet cake for saleas a part of the WDGS. The system is also capable of producing a modifiedwet product (partially dried).

Fresh water for the boilers,cooking and other processes will be obtained from local sources that willsupply the needs of the plant**. **Boiler water conditioned inregenerative softeners will be pumped through a deaerator scrubber and into adeaerator tank.  Appropriate boilerchemicals will be added as preheated water is sent to the boiler.

 

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The design includes a compressed air system consisting of two 75 hpcompressors, a receiver tank, pre-filter, coalescing filter and air dryer.

 

The design also incorporates the use of a clean-in-place (CIP) systemfor cleaning cook, fermentation, distillation, evaporation, centrifuges andother systems.  Fifty percent causticsoda is received by truck and stored in two 7,500-gallon tanks.  The CIP system uses four tanks for receiving,make-up, CIP return and CIP waste which is fed to the methanator. Those tanksinclude one 17,600-gallon CIP Tank, two 7,500-gallon 50% Caustic tanks, and one7,500-gallon Waste CIP tank.  A screen isused to remove the solids.

 

DESIGN/BUILDER will be using a process to thermally oxidize the exhaustgases from the dryer. This process will remove over 75% of the VOCs andparticulate that is in the dryer exhaust. The energy required to completethermal oxidation will then be ducted to a waste heat boiler that will produce100% of the steam requirements of the ethanol plant. The exhaust gasses fromthe waste heat boiler will be ducted through two stack gas economizers torecover the maximum amount of energy possible from the exhaust gas stream.After the economizers, the gas stream will be vented to the atmosphere. TheThermal Oxidizer waste heat boiler combination is designed to operate inconjunction with the drying system or independent of the drying system. Thiswill allow for plant startups and shutdowns without affecting either dryeroperation or steam production capabilities. The dryer can bypass the ThermalOxidizer unit and vent directly to the atmosphere on an emergency basis.

 

Under normal operating circumstances, the plant will not have anywastewater discharges that have been in contact with corn and sorghum mash,cleaning system or contact process water. A DESIGN/BUILDER/Phoenix Bio-Methanator will reduce the organic acids inprocess water allowing complete reuse within the plant.  The Bio-Methanator is included in theContract Price.  The plant will haveblowdown discharges from the cooling tower and boiler.

 

Most of the processes within the plant will be computer controlled by aSiemens/Moore APACS distributed control system with graphical user interfaceand three workstations which is included in the Contract Price.  It is estimated that the system will consistof 200 discrete inputs, 200 discreet outputs, 175 analog inputs and 120 analogoutputs.**** Programmable logic controllers (PLCs) willcontrol certain process equipment.

 

All design and work anticipated by this Exhibit B are included in theContract Price.  Design and work providedby the DESIGN/BUILDER will meet specifications, criteria, and allowances asprovided in the construction permit and all other Laws and Regulations enactedas of the Effective Date.

 

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** **

**ExhibitCtoAgreement Between Owner and Design/Builder**

**On theBasis of a Stipulated Price**

 

The Contract Price includes the cost of the following:

 

**Table 2** — AncillaryBuildings

 
| **Building**                  | ** ** | **Type**                                                            | ** ** | **Preliminary    Dimensions**    | ** ** | **Addition  Info**                                         |
|-------------------------------|------------|---------------------------------------------------------------------|------------|----------------------------------|------------|------------------------------------------------------------|
| Process                       |       | Structural steel or pre  engineered metal, steel siding - Insulated |       | 60 x 140 x 35                    |       | Includes laboratory,  control room & offices, MCC Room |
| Energy Center                 |       | Structural steel or pre  engineered metal, steel siding - Insulated |       | As determined by  Design/Builder |       |                                                       |
| Administrat-ion Building      |       | Wood framed                                                         |       | 37 x 70 x 10                     |       |                                                       |
| Evaporation                   |       | Structural steel or pre  engineered metal, steel siding - Insulated |       | 50 x 45 x 35                     |       |                                                       |
| Grain Receiving and  Shipping |       | Pre-engineered metal –  roof insulation only                   |       | 25 x 75 x 25                     |       |                                                       |

 

TheContract Price also includes the cost of a new skid loader (cost not to exceed$30,000), used fork lift (cost not to exceed $12,000) and used scissors lift-30foot (cost not to exceed $10,000).  Suchitems shall be selected by DESIGN/BUILDER in its sole discretion.

 

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**Exhibit D****to****Agreement Between Ownerand Design/Builder****On the Basis of a Stipulated Price**

The Contract Price does notinclude the cost of any furnishings for the Plant or ancillary buildingsincluding, without limitation, the following additional items:

 

**Table 3 Administration Building**

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

 

**Table****4**Maintenance and PowerEquipment****

 
| **Description**             | ** ** | **Additional  Description**                                                   | ** ** | **Est.  Amount**                                     | ** ** |
|-----------------------------|------------|-------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| Spare Parts                 |       | Spare parts  Parts bins Misc. materials, supplies and equipment               |       | $ 250,000  for spare parts needed for start-up. |       |
| Shop supplies and equipment |       | One shop  welder One portable gas welder One plasma torch One acetylene torch |       | $ 50,000                                        |       |

 

The foregoing prices are estimated based uponrecent projects of DESIGN/BUILDER and therefore the actual prices may vary.      

 

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**ExhibitE****to****Agreement BetweenOwner and Design/Builder****On the Basis of a StipulatedPrice**

 

**OWNER’S Required Permits andServices List**

 

OWNER shall provide all of the permits,authorizations and services except building permits, but including but notlimited to:

 

1)                   **Land and Grading – Land andGrading –**OWNER shallprovide a site near or in Garnett, Kansas. OWNER shall obtain all legal authority to use the site for its intendedpurpose and perform technical due diligence for DESIGN/BUILDER to performincluding but not limited to proper zoning approvals, elevation restrictions,soil tests, and water tests. The site shall be rough graded per DESIGN/BUILDERspecifications and be within six inches of final grade including the roughgrading for Site roadways.  The sitesoils shall be modified as required to provide a minimum allowable soil bearingpressure of 3,000 pounds per square foot for all foundation elements.  The soils beneath the foundation elementsshall not exceed the total or differential settlements such that the facilityis unable to perform its intended purpose.

 

Other items tobe provided by OWNER include, but are not limited to, the following: initialsite survey (boundary and topographic) as required by the design engineers, layoutof the property corners including two construction benchmarks, Soil Borings andsubsequent Geotechnical Report describing recommendation for Roads, foundationsand if required, soil stabilization/remediation, site engineering and detaileddrawings (to the extent not provided by DESIGN/BUILDER), land disturbancepermit, erosion control permit, site grading as described above with minimumsoil standards, placement of erosion control measures, plant access road from acounty, state or federal road designed to meet local county road standards,plant storm and sanitary sewers, fire water loop with hydrants and all requiredfire protection equipment, plant water main branches taken from the loop to bewithin five feet of the designated building locations, plant roads as specifiedand designed for the permanent elevations and effective depth, paving ifdesired, “construction” grading plan as drawn (including site retention pond),plant water well and associated permit(s).

 

2)                   **Roads –** OWNER shall provide or have provided, access road of sufficient quality to withstandsemi-truck traffic of 25,000+ annual loads with weight of 80,000 lbs each.

 

3)                   **Air Quality Permit****–** OWNER shallobtain a permit for construction from the proper authorities for a Notice toProceed to be valid.  OWNER shall obtainan Operating Permit in timely manner to allow startup of the plant as scheduledby DESIGN/BUILDER.

 

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

 

5)                   **Natural Gas Supply and ServiceAgreement****–** Continuous supply of natural gas of at least 1.3 Billioncubic feet per year, at a rate of 135 MMBtu per hour and at a minimum pressureof 200 psig at the plant site.  OWNER orvendor shall provide supply meter and regulators to provide burner tippressures as specified by DESIGN/BUILDER. Owner will be responsible to deliverthe gas to the physical plant.

 

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6)                   **Electrical Service –**Continuous supply of 12,000 kVA, 12,400-voltelectrical energy or more to a point immediately adjacent to the site.  OWNER shall supply a high voltage switch and,if required, a substation.  OWNER orvendor shall supply metering as specified by the power company.  This electrical capacity will be sufficientto support an ethanol plant production at a rate of no less than Forty Five(45) million gallons per year, and a standard CO2 processing plant. Owner willbe responsible to deliver electricity connections to the physical plant.

 

7)                   **Water Supply and ServiceAgreement –**For process andsanitary purposes, fresh water in such amounts and quality as may be specifiedby DESIGN/BUILDER to OWNER.

 

8)                   **Wastewater Discharge Permit -**For discharges of cooling tower and boilerblowdown under normal operating procedures. Process wastewater discharges during emergency failure of wastewatertreatment plant to treat all process wastewater.

 

9)                   **Railroad –**OWNER shall provide work necessary forconstruction of the railroad track siding to the plant site, at gradesspecified by DESIGN/BUILDER, including all necessary dirt work to properlylocate the track, preparation of the railroad track bed, and track, ties andballast to railroad company specifications and all required permits withrespect thereto.

 

10)             **Regulatory Contingency –**Until satisfactory atmospheric emissions compliance,****Owner shall maintain Two Hundred Fifty Thousand Dollars($250,000.00) in its budget to cover any unforeseen governmental regulationchanges implemented after the Effective Date of the Agreement.  This contingency is not part of the ContractPrice, and its use may be authorized only by agreement of OWNER andDESIGN/BUILDER.

 

11)             **Water treatment****–******OWNER shall provide such water treatmentequipment as deemed necessary by DESIGN/BUILDER. This might include reverseosmosis and softening equipment.

 

12)             **Road Paving****–** Ifparticulate matter restrictions in the air permit require paving of the plantroads, this will be part of the requirements of OWNER.

 

13)             **BATF Application/Misc. Permits****–** OWNER will beresponsible for completing, submitting and obtaining Bureau of Alcohol Tobaccoand Firearms permitting to produce fuel grade alcohol and any other permitsrequired with respect to the construction and/or operation of the Plant.

 

14)             **Office Equipment****–******With the exception of plant DCS controlsystems, OWNER will be responsible for office furnishings, computers andsoftware to run the day to day business.

 

15)             **Construction Power****–******OWNER will provide and fund the on siteelectricity needed during construction of the plant.

 

16)             **Construction Water and Sewer****–**Construction water and sewer neededduring the construction of the plant to be provided and funded by OWNER.

 

In the event OWNER desires thatDESIGN/BUILDER perform all or any part of the foregoing obligations of OWNER,and DESIGN/BUILDER agrees to perform such obligations, a Change Order shall beissued and the Contract Price shall be increased by the amount determinedpursuant to paragraph 10.01C.2. of the GeneralConditions and DESIGN/BUILDER’s fee for overhead and profit under paragraph10.02.C.1. shall be ten percent (10%) of the costs forsubcontracts, materials and equipment.

 

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**ExhibitFtoAgreement Between Owner and Design/Builder****On the Basis of a StipulatedPrice**

** **

**LICENSE OF PROPRIETARY PROPERTY OF DESIGN/BUILDER**

** **

OWNER expressly understands, acknowledges andagrees that:

 

1.                                       DESIGN/BUILDER is using certain technologyand information in the design and construction of the Project which is morefully described in paragraphs 3 and 4 below (the “**PROPRIETARY PROPERTY**”).

 

2.                                       Upon OWNER’s payment to DESIGN/BUILDER of theentire Contract Price, OWNER shall be granted a perpetual limited license touse the PROPRIETARY PROPERTY in connection with OWNER’s operations of theProject, subject to the limitations provided herein.  In the event the Agreement is terminated forany reason under Article 14 of the General Conditions prior to payment of theentire Contract Price and OWNER desires to use the PROPRIETARY PROPERTY inconnection with OWNER’s operation of the Project, DESIGN/BUILDER, at OWNER’swritten request, shall grant to OWNER a perpetual limited license to use thePROPRIETARY PROPERTY in connection with OWNER’s operations of the Project,subject to the limitations provided herein, upon payment in full by OWNER toDESIGN/BUILDER of (i) all amounts due and payable to DESIGN/BUILDER under theContract Documents, and (ii) an a license fee of Two Million Dollars($2,000,000).

 

3.                                       The PROPRIETARY PROPERTY includes, withoutlimitation, OPERATING PROCEDURES (hereinafter defined), operating methods,techniques, protocols, procedures, plans and processes, and other informationrelating to design, construction and operation of the Project including thedesign, arrangement, configuration and specifications of (i) the combinationsof distillation, evaporation and alcohol dehydration equipment (including, butnot limited to, pumps, vessels, tanks, heat exchangers, piping, values andassociated electronic control equipment) and all documents supporting thosecombinations; (ii) the combination of the distillers grain drying (DGD),thermal oxidization (TO) and heat recovery steam generation (HRSG) equipment(including, but not limited to, pumps, vessels, tanks, heat exchangers, pipingand associated electronic control equipment) and all documents supporting thosecombinations; and (iii) the Project computer system, known as the distributedcontrol system (DCS) (including, but not limited to, the softwareconfiguration, programming, parameters, set points, alarm points, ranges,graphical interface and system hardware connections) and all documentssupporting that system. The “**OPERATINGPROCEDURES**” include, without limitation, the process equipment andspecifications manuals, standards of quality, service, protocols, datacollection methods, construction specifications, training methods, engineeringstandards, advertising or promotional materials, and any other informationprescribed by DESIGN/BUILDER from time to time concerning the PROPRIETARYPROPERTY.

 

4.                                       DESIGN/BUILDER has the exclusive right andinterest in and to the PROPRIETARY PROPERTY and the goodwill associatedtherewith.  Notwithstanding theforegoing, goodwill created by the operation of the Project and all financialbenefits derived therefrom shall be the property of OWNER.

 

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5.                                       OWNER considers the PROPRIETARY PROPERTY tobe valid and will not directly or indirectly, contest the validity or theownership by DESIGN/BUILDER thereof.

 

6.                                       OWNER’s use of the PROPRIETARY PROPERTY doesnot give OWNER any ownership interest or other interest in or to thePROPRIETARY PROPERTY except for the limited license granted to OWNER.

 

7.                                       Except as otherwise provided in paragraph 2above, OWNER shall not pay any separate license fee or royalty toDESIGN/BUILDER for OWNER’s continual use of the PROPRIETARY PROPERTY pursuantto the limited license granted to OWNER, the consideration for this license isincluded in the Contract Price payable to DESIGN/BUILDER under the ContractDocument.

 

8.                                       OWNER’s failure to materially comply with theOPERATING PROCEDURES shall void all representations and warranties set forth inExhibit A to the Agreement relating to the performance of the Project.

 

9.                                       The limited license granted to OWNER shallnot be assigned or sublicensed, in whole or in part, without the prior writtenconsent of DESIGN/BUILDER, which consent will not be unreasonablywithheld.  Prior to any such assignmentor sublicense, OWNER shall obtain from such assignee or sublicensee an agreementto be bound by all of the provisions contained herein, in form and substanceacceptable to DESIGN/BUILDER.

 

10.                                 The PROPRIETARY PROPERTY is confidential andproprietary.  OWNER shall keep thePROPRIETARY PROPERTY confidential, and shall use all reasonable efforts tomaintain the PROPRIETARY PROPERTY as secret and confidential.  OWNER shall not at any time withoutDESIGN/BUILDER’s prior written consent, copy, duplicate, record or otherwisereproduce the PROPRIETARY PROPERTY, in whole or in part, or otherwise make thesame available to any unauthorized person. OWNER agrees that DESIGN/BUILDER would be irreparably damaged by reasonof any violation of the confidentiality provisions contained herein and thatany remedy at law for a breach of such provisions would be inadequate.  Therefore, DESIGN/BUILDER shall be entitledto seek injunctive or other equitable relief in a court of competentjurisdiction against OWNER, its agents, employees, affiliates, partners,members, stockholders, officers or other associates, for any breach orthreatened breach of the confidentiality covenants contained herein without thenecessity of proving actual monetary loss. It is expressly understood that the remedy described herein shall not bethe exclusive remedy of DESIGN/BUILDER for any breach of such covenants, andDESIGN/BUILDER shall be entitled to seek such other relief or remedy, at law orin equity, to which it may be entitled as a consequence of any breach of suchcovenants.

 

11.                                 Nothing herein or the AGREEMENT shall beinterpreted or construed as granting OWNER a license or right to use thePROPRIETARY PROPERTY in the design or construction of any enlargement orexpansion of the Project.

 

12.                                 The laws of the State of Kansas shall governthe validity of the provisions contained herein, the construction of suchprovisions, and the interpretation of the rights and duties of theparties.  Any legal action brought toenforce or construe the provisions of this Exhibit shall be brought in courtslocated in Kansas, and the parties agree to the exclusive 

 

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jurisdiction of such courts and agree that they will notinvoke the doctrine of forum non conveniens or other similar defenses.

 

13.                                 The provisions of this Exhibit F shallsurvive the termination or expiration of the Contract Documents

 

The foregoing provisions are part of, andincorporated into, the Agreement and should be interpreted consistentlytherewith.  Unless otherwise definedherein or unless the context otherwise requires, capitalized terms used hereinshall have the meaning given to such terms in the Contract Documents.  In the event any of the foregoing provisionsis contrary to any provision in the Agreement (or any other document referencedtherein), the foregoing provision shall supercede andhave precedence over such contrary provision.

 

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**ExhibitG****to****Agreement BetweenOwner and Design/Builder****On the Basis of a StipulatedPrice**

** **

**ICM Training Classes**

 

The Contract Price includes a commitment byDESIGN/BUILDER to perform training for certain personnel of OWNER at theethanol plant owned by US Energy Partners, LLC, a Kansas limited liabilitycompany (“U.S. Energy”), which is located in Russell, Kansas.

 

Employee training will be coordinated byoperational personnel of DESIGN/BUILDER with the support of personnel of USEnergy on location in Russell, KS. Vendor training will also occur inconjunction with this program. The specific schedule, attendees and trainingdetail will be provided after the Project start up date is determined.

 

Such personnel of OWNER will have theopportunity to operate the Russell plant under the supervision of operators ofUS Energy assigned to comparable positions. It is anticipated that personnelparticipating in such training will include the plant manager, laboratorymanager and shift supervisors who will work in Russell for a period of 1-3weeks. There will be no cost to OWNER for this startup training andDESIGN/BUILDER will provide all training materials.  All other costs and expenses for suchpersonnel of OWNER such as travel, compensation, rooms and meals will be the responsibilityof OWNER.

 

DESIGN/BUILDER will providesuch assistance to OWNER during the start-up of the plant as it customarilyprovides.  Representative(s) ofDESIGN/BUILDER will be present at the plant during the performance testingdescribed in Exhibit A.  For a period ofthirty (30) days after Substantial Completion, DESIGN/BUILDER will provide itscustomary on-site technical and operating support for a period of thirty (30)days after Substantial Completion. DESIGN/BUILDER will provide its customary off-site technical andoperating support for a period of one hundred eighty (180) days afterSubstantial Completion.  The foregoingwill be provided by DESIGN/BUILDER to OWNER at no additional cost. 

 

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**ExhibitH****to****Agreement BetweenOwner and Design/Builder****On the Basis of a StipulatedPrice**

 

**INSURANCE**

 

DESIGN/BUILDER’S Employers’ Liability,Business Automobile Liability, and Commercial General Liability policies, asrequired in General Conditions paragraph 5.02 shall be written with at leastthe following limits of liability:

 

1.             Employers’ Liability Insurance

 

a.       $1,000,000

Bodily Injury by Accident

Each Accident

 

b.      $1,000,000

Bodily Injury by Disease

Policy Limit

 

c.       $1,000,000

Bodily Injury by Disease 

Each Employee

 

2.             Business Automobile Liability Insurance

 

a.       $1,000,000

Each Accident

 

3.             Commercial General LiabilityInsurance

 

a.       $1,000,000

Each Occurrence

 

b.      $2,000,000

GeneralAggregate

 

c.       $2,000,000

Products/Completed

OperationsAggregate

 

d.      $1,000,000

Personal andAdvertising

Injury Limit

 

4.             Liability Umbrella policy:  $4,000,000 (in addition to the underlyinglimits).

 

5.             Professional Errors & Omissionspolicy.  $1,000,000 perpolicy year. 

 

6.             Workers Compensation (StatutoryLimits).

 

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