exv10w21



 




Exhibit 10.21






	 	 	 	 	 	 	 
	


 

         May 17, 2007

	 	 
	 	CONSULTANTS

•     GEOTECHNICAL

•     MATERIALS

•     ENVIRONMENTAL
	 	







MinnErgy, LLC — Renewable fuels PO Box 186

Winona, MN 55987

Attn: Dan Arnold/Ron Scherbring




	 	 	 
	RE:

	 	Proposal for Additional Geotechnical Services

Proposed Ethanol Plant

Eyota, MN

AET#11-04152






Dear Mr. Arnold / Mr. Scherbring,




Introduction



American Engineering Testing, Inc. is pleased to offer you additional subsurface exploration and
geotechnical review services for your Proposed Ethanol Plant in Eyota, MN. This proposal is being
submitted per our telephone conversation of May 16, 2007. This letter is intended to define our
scope of work, and to present you with an estimate of our fee, the anticipated schedule and other
information regarding our services.




Purpose of Study



The purpose of this geotechnical work is to explore the subsurface conditions at the site based
upon the proposed new plant site layout, and based on our characterization of the obtained data,
to prepare a geotechnical engineering report presenting comments and recommendations to assist
you and your design team in planning and construction of the project.




Project Information



We understand you have redesigned the proposed corn ethanol production plant in Eyota, MN and
require additional subsurface exploration and geotechnical review services.



The new plant will include the construction of grain storage tanks, exterior process tanks,
fermentation tanks, a process building, evaporation, distillation equipment, a rail road spur,
parking and drive areas. We anticipate soil bearing pressure for these structures supported on
shallow frost depth spread footings are on the order of 1(ksf) to 6 (ksf). Based upon the
topographic information provided, it appears the site generally slopes downward from the south
approximately elevation 1290’ towards the north to approximately elevation 1275’. The proposed
plan finished floor elevation will be 1287.0’




Background Information



Base upon our previous subsurface exploration work performed at the site, AET anticipates a
general soil profiled of lean clay topsoil, underlain by variable clayey, sandy alluvium and till
deposits with weathered bedrock deposits at depth. It appears the bedrock at the site is Galena
group formation, possibly Prosser Limestone.






 









 






Scope of Services




     Field Work


Our proposed scope of field work includes advancing thirty-one (31) (SB) soil borings at the site,
as indicated on the attached site sketches. Based upon our previous boring information we estimate
our borings will be between 5’ to 25’ deep.



The test borings will be sampled with a split-spoon sampler utilizing standard penetration test
methods per ASTM:D1586. Our services will include arranging clearance of underground public
utilities through the Gopher State One Call System.



We assume that the proposed boring locations will be staked in the field by the project surveyor
and will be accessible to our truck mounted equipment which will likely require clearing portions
of the southern 1/4 of the site for access to our proposed boring locations.




     Soil Laboratory Testing


Our services will include mechanical laboratory testing of selected soil samples to aid in judging
engineering properties of the soils. In this proposal we have budgeted $500.00 for geotechnical
laboratory testing. If conditions are encountered which indicate the laboratory program should be
expanded for proper evaluation, we will review the recommended tests and associated cost with you
prior to proceeding.




     Engineering Report 


Following the field and laboratory work, a formal engineering report will be prepared and
submitted. This report will include logs of the test borings, the laboratory test results, a
review of engineering properties of the on-site soils, and our geotechnical engineering opinions
and recommendations regarding the following:





	•	 	Grading procedures to prepare the building areas for structural support, including comments on the suitability of the
on-site soils for reuse as fill
	 
	•	 	Foundation types and depths, including allowable soil bearing capacity and estimates of foundation settlement
	 
	•	 	Ground floor slab support, including recommendations on the need for a vapor or capillary water barrier
	 
	•	 	Backfilling procedures with drain tile recommendations and estimates of lateral earth pressures
	 
	•	 	Preparation of the subgrade for pavements and rail road spurs
	 
	•	 	Pavement section thickness designs
	 
	•	 	Comments on other items which may affect final performance or constructability, such as frost heave and drainage
considerations




The scope of work defined in this proposal is intended for geostructural purposes only. This scope
is not intended to explore for the presence or extent of environmental contamination at the site.
However, we will note obvious contamination encountered which can be detected by human sight or
smell sensing.






 









 





Fees




The scope of work defined in this proposal will be performed on a time and materials basis
according to our current schedule of fees. A short form copy of this schedule is attached. For the
scope of work described, we estimate a cost in the range of $11,000.00 to $15,000.00. 



In the event the scope of our work needs to be revised due to unanticipated conditions or for
proper evaluation, we will review such adjustments and the associated fees with you; and receive
your approval before proceeding.




Schedule




Weather permitting, we anticipate drilling operations can begin within about one (1) to two (2)
weeks after receiving authorization to proceed. Verbal results of the drilling activities can be
obtained shortly after completion of the drilling. We anticipate the geotechnical report can be
prepared within about one (1) to two (2) weeks after completion of the field work. We are available
to review special schedule needs with you.




Terms



Our services will be performed per the attached “Service Agreement,” along with the “Subsurface
Boring Supplement.” Client and its authorized representatives agree that verbal authorization of
our services is formal acceptance of the terms and conditions contained herein.




Acceptance



Please indicate your acceptance of this proposal by endorsing the enclosed copy and returning it to
us. The original proposal is intended for your records.




Remarks



This proposal is valid for a period of 90 days.



We appreciate the opportunity to submit this proposal to you and look forward to working with you
on this project. If you have any questions regarding our services, or need additional information,
please do not hesitate to contact me.




Sincerely,

American Engineering Testing, Inc.






/s/ Alec J. Hovick

 




Alec J. Hovick

Manager — Rochester

Phone: (507) 281-3547

Fax: (507) 281-4941




AJH:acl




Attachments




ACCEPTANCE:






 









 








	 	 	 	 	 
	Client:	Minnergy
 	 	 
	 
	Authorized	
 	 	 
	Signature:	 /s/ Daniel H. Arnold
 	 	 
	 
	Typed
	
 	 	 
	Name:
	Daniel H. Arnold
 	 	 
	 
	Title:
	Chairman 	 	 
	 
	Date:
	5-23-07 	  	
 



 









 






	 	 	 	 	 



SERVICE AGREEMENT — TERMS AND CONDITIONS




SECTION 1 — RESPONSIBILITIES



1.1 — The party to whom the proposal/contract is addressed is considered the Client of
American Engineering Testing, Inc. (AET). The terms and conditions state are binding, upon
acceptance, on the Client, its successors, assignees, joint ventures and third party beneficiaries.
Oral proposal acceptance or authorizing purchase orders from the Client are considered formal
acceptance of AET’s terms and conditions.



1.2 Prior to AET performing work, Client will provide AET with all information that may
affect the cost, progress, safety and performance of the work. This includes, but is not limited
to, information on proposed and existing construction, all pertinent sections of contracts between
Client and property owner, site safety plans or other documents which may control or affect AET’s
work. If new information becomes available during AET’s work, Client will provide such information
to AET in a timely manner. Also, Client will provide a representative for timely answers to
project-related questions by AET.



1.3 Work by AET will not relieve other persons of their responsibility to perform work
according to the contract documents or specifications, and AET will not be held responsible for
work or omissions by Client and other persons. AET will not be responsible for directing or
supervising the work of others, unless specifically authorized and agreed to in writing.



1.4 Work by AET often includes sampling at specific locations. Inherent with such sampling
is variation of conditions between sampling locations. Client recognizes this uncertainty and the
associated risk, and acknowledges that opinions developed by AET, based on the samples, are
qualified to that extent.



1.5 AET is not responsible for interpretations or modifications of AET’s recommendations by
other persons.



1.6 Should changed conditions be alleged, Client agrees to notify AET before evidence of
alleged change is no longer accessible for evaluation.




SECTION 2 — SITE ACCESS AND RESTORATION



2.1 — Client will furnish AET safe and legal site access.



2.2 — It is understood by Client that in the normal course of the work, some damage to the
site or materials may occur. AET will take reasonable precautions to minimize such damage.
Restoration of the site is the responsibility of the Client.




SECTION 3 — SAFETY



3.1 — Client shall inform AET of any known or suspected hazardous materials or unsafe
conditions at the work site. If, during the course of AET’s work, such materials or conditions are
discovered, AET reserves the right to take measures to protect AET personnel and equipment or to
immediately terminate services. Client shall be responsible for payment of such additional
protection costs.



3.2 — AET shall only be responsible for safety of AET employees at the work site. The
Client or other persons shall be responsible for the safety of all other persons at the site.




SECTION 4 — SAMPLES



4.1 — Client is responsible for information AET of any known or suspected hazardous
materials prior to submittal to AET. All samples obtained by, or submitted to, AET remain the
property of the Client during and after the work. Any known or suspected hazardous material
samples will be returned to the Client at AET’s discretion.



4.2 — Non-hazardous samples will be held for 30 days and then discarded unless, within 30
days’ of the report date, the Client provides a written request that AET store or ship the samples,
at the Client’s expense.




SECTION 5 — PROJECT RECORDS




The original project records prepared by AET will remain the property of AET. AET shall retain
these original records for a period of three years following submission of the report, during which
period the project records can be made available to Client at AET’s office at reasonable times.




SECTION 6 — STANDARD OF CARE




AET will perform services consistent with the level of care and skill normally performed by other
firms in the profession at the time of this service and in this geographic area, under similar
budgetary constraints. No other warranty is implied or intended.




SECTION 7 — INSURANCE




AET carries Worker’s Compensation, Comprehensive General Liability, Automobile Liability and
Professional Liability insurance. AET will furnish certificates of insurance to Client upon
request.




 









 








2007 GEOTECHNICAL/ENVIRONMENTAL FEE SCHEDULE 





	 	 	 	 	 	 	 	 	 	 	 
	I.	 	Engineering/Technical Personnel Rates	 	 
	 	 	A.	 	Work Processing Specialist	 	53.00/hr
	 	 	B.	 	Draftperson	 	65.00/hr
	 	 	C.	 	Senior Engineering Technician	 	69.00/hr
	 	 	D.	 	Drill Technician	 	78.00/hr
	 	 	E.	 	Environmental Technician	 	83.00/hr
	 	 	F.	 	Engineering Assistant	 	93.00/hr
	 	 	G.	 	Engineer I/Geologist I	 	99.00/hr
	 	 	H.	 	Engineer II/Geologist II	 	114.00/hr
	 	 	I.	 	Senior Engineer/Geologist	 	126.00/hr
	 	 	J.	 	Principal Engineer/Geologist	 	151.00/hr
	 
	 	 	 	 	 	 	 	 	 	 
	II.	 	Vehicle Mileage	 	 
	 	 	A.	 	Personal Automobile/Truck	 	0.60/mile
	 	 	B.	 	Auxiliary Truck	 	0.80/mile
	 	 	C.	 	1-ton Truck with Drill Rig	 	0.95/mile
	 	 	D.	 	1 1⁄2-ton to 2 1⁄2-ton Truck with Drill Rig	 	1.15/mile
	 	 	E.	 	CPT Truck Rig (20-ton push capacity)	 	1.30/mile
	 	 	F.	 	Tractor/Lowboy Trailer	 	1.50/mile
	 
	 	 	 	 	 	 	 	 	 	 
	III.	 	Site Exploration Equipment Rental	 	 
	 	 	A.	 	Drill Rig Rental	 	 
	 	 	 	 	1.	 	Rotary Drill on 1-ton Truck	 	57.00/hr
	 	 	 	 	2.	 	Rotary Drill on 1 1⁄2 to 2 1⁄2 ton Truck	 	67.00/hr
	 	 	 	 	3.	 	Rotary Drill on All-Terrain Vehicle	 	97.00/hr
	 	 	 	 	4.	 	Portable, Non-rotary Rig	 	67.00/hr
	 	 	B.	 	Auxiliary Vehicle Rental	 	14.50/hr
	 	 	C.	 	Cone (CPT) Rig/Equipment Rental	 	 
	 	 	 	 	1.	 	CPT Truck Rig (20-ton push capacity)	 	120.00/hr
	 	 	 	 	2.	 	All-Terrain Rig (10-ton push capacity)	 	97.00/hr
	 	 	 	 	3.	 	Electronic Cone w/Computer	 	35.00/hr
	 	 	 	 	4.	 	Soil Sampler	 	3.00/hr
	 	 	 	 	5.	 	Water Sampler	 	20.00/hr
	 	 	D.	 	Geotechnical Equipment Rental	 	 
	 	 	 	 	1.	 	Field Vane Shear	 	280.00/day
	 	 	 	 	2.	 	Inclinometer Reading Equipment	 	290.00/day
	 	 	 	 	3.	 	Pneumatic Transducer Reading

Equipment (pore pressure, settlement

Or earth pressure)	 	145.00/day
	 	 	 	 	4.	 	Bore Hole Permeability	 	 
	 	 	 	 	 	 	a.     Open End Casing MEthold	 	105.00/day
	 	 	 	 	 	 	b.     HQ Wireline Packer	 	280.00/hr
	 	 	 	 	5.	 	Borehole Pressuremeter	 	48.00/hr
	 	 	 	 	6.	 	Dougle Ring Infiltrometer	 	225.00/day
	 	 	 	 	7.	 	Pile Driving Analyzer (PDA)	 	650.00/day
	 	 	 	 	8.	 	Auxiliary PDA Equipment	 	 
	 	 	 	 	 	 	a.     Generator	 	39.00/day
	 	 	 	 	 	 	b.     Calibrated SPT Rod	 	165.00/day
	 	 	E.	 	Bit Wear	 	 
	 	 	 	 	1.	 	Diamond Bit — Sedimentary Rock	 	 
	 	 	 	 	 	 	a.     B, NQ 	 	10.00/foot 
	 	 	 	 	 	 	b.     HQ 	 	12.00/foot 
	 	 	 	 	2.	 	Diamond Bit — Metamorphic & Igneous	 	 
	 	 	 	 	 	 	a.     B, NQ	 	17.00/foot






 









 










	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	b.     HQ	 	20.00/foot
	 
	 	 	 	 	 	 	 	 	 	 
	IV.	 	Laboratory Tests of Soil	 	 
	 	 	A.	 	Water Content	 	13.00/test
	 	 	B.	 	Dry Density (includes water content)	 	48.00/test
	 	 	C.	 	Atterberg Limits (ASTM:D4318)	 	 
	 	 	 	 	1.	 	Plasticity Index	 	100.00/test
	 	 	 	 	2.	 	Liquid Limit or Plastic Limit Separately	 	75.00/test
	 	 	D.	 	Shrinkage Limit (ASTM:D427)	 	95.00/test
	 	 	E.	 	Sieve Analysis (includes -#200)	 	85.00/test
	 	 	F.	 	Hydrometer Analysis (sieve included)	 	225.00/test
	 	 	G.	 	Specific Gravity (ASTM:D854)	 	 
	 	 	 	 	1.	 	Mineral Soil	 	115.00/test
	 	 	 	 	2.	 	Organic Soil	 	130.00/test
	 	 	H.	 	Hand Penetrometer/Trovane	 	10.00/test
	 	 	I.	 	Unconfined Compression	 	72.00/test
	 	 	J.	 	Permeability Test	 	 
	 	 	 	 	1.	 	Clay Permeability	 	222.00/test
	 	 	 	 	2.	 	Remolded Clay Permeability	 	322.00/test
	 	 	 	 	3.	 	Sand Permeasbility	 	192.00/test
	 	 	K.	 	Electric Resistivity	 	77.00/test
	 	 	L.	 	Organic Content of Soil	 	70.00/test
	 	 	M.	 	Topsoil Borrow Test (Mn/DOT 3877)	 	320.00/test
	 	 	N.	 	Soil pH	 	47.00/test
	 	 	O.	 	R.value (Hveem Stabilometer)	 	340.00/test
	 	 	P.	 	California Bearing Ratio	 	 
	 	 	 	 	1.	 	Granular	 	550.00/test
	 	 	 	 	2.	 	Cohesive	 	620.00/test
	 	 	Q.	 	Miscellaneous	 	 
	 	 	 	 	1.	 	Thin-wall Samples (extrusion only)	 	25.00/tube
	 
	 	 	 	 	 	 	 	 	 	 
	V.	 	Expenses	 	 
	 	 	A.	 	Direct Project Expenses: includes out-of-
Town per diem; plowing & towing; special
Materials & supplies; special travel, transportation
& freight; subcontracted services, and
Miscellaneous costs	 	Cost + 15%
	 	 	B.	 	Equipment Replacement (when abandonment

Is more feasible than recovery)	 	Cost
	 	 	C.	 	Equipment Recovery (when required by
Regulatory agencies of project specifications)	 	Cost + 15%
	 
	 	 	 	 	 	 	 	 	 	 
	VI.	 	Expert Witness Service Rates	 	 
	 	 	A.	 	Litigation Preparation	 	198.00/hr
	 	 	B.	 	Deposition or Court Time

(4-hour minimum)	 	245.00/hr





The rates presented are portal-to-portal with vehicle mileage, expenses and equipment rentals being
additional.



Overtime for personnel charged at above cost plus 25% for over 8 hours per day or Saturday; and at
above cost plus 50% for Sundays or Holidays. Hazardous work charged at an additional 25%. Night
time shift work will include a premium charge of $30.00 per person per shift.




 









 








SUBSURFACE BORING SUPPLEMENT

TO TERMS AND CONDITIONS




 

SECTION 1 — UNDERGROUND UTILITY AND STRUCTURE CLEARANCE



1.1 It is necessary that borings, excavations and other penetrations be located such that
they maintain a minimum safe distance from underground utilities or other man-made objects. Client
shall advise AET of all utilities that service or are located on the site, as well as any
underground improvements located on the site. AET will contact state notification centers, where
available, or individual utility owners where a state notification center is not available prior to
drilling.



1.2 Public utility owners may not provide the locating service on private property. In
such situations, the Client is responsible for location of such utilities prior to drilling.



1.3 The property owner may have private underground improvements which cannot be cleared
through the state notification center or public utility owners. The Client is responsible for
location of these improvements.



1.4 AET will not be responsible for any damages to “non-located” or incorrectly located
underground utilities or other man-made improvements.




SECTION 2 — SITE RESTORATION




2.1 — Client accepts that in the normal course of field exploration work, certain types of
damage to the site may occur which are inherent with this type of work, such as tire indentations
to lawns and landscape areas. It is the responsibility of AET to take reasonable precautions to
minimize such damage. It is also AET’s responsibility to patch boreholes placed through pavement
or slab areas after performance of borings. Otherwise, restoration of the site is the
responsibility of the client.




SECTION 3 — CONTAMINATION



3.1 — Client acknowledges and accepts that avoidable contamination risks may be associated
with AET’s subsurface drilling, sampling and installation of monitoring devices. Risks include,
but are not limited to, cross contamination created by linking contamined zones to uncontaminated
zones during the drilling process; containment and proper disposal of known or suspected hazardous
materials, drill cuttings and drill fluids; and decontamination of equipment and disposal and
replacement of contaminated consumables. Client and AET agree that the discovery of unanticipated
actual or suspected hazardous materials may make it necessary for AET to take immediate measures,
including regulatory notification, to protect human health and safety, and/or the environment.
Client and AET also agree that the discovery of such materials constitutes a changed condition
which may result in added costs to the Client, and may require a renegotiation of work scope or
termination of services.



3.2 — Pursuant to risks set forth in Section 3.1, which are inherent with AET’s work
performed on the Client’s behalf, Client agrees to hold harmless and indemnify AET from and against
liability associated with contamination resulting therefrom.




SECTION 4 — LOST EQUIPMENT




Equipment lost in bore holes may be required to be required to be retrieved or properly abandoned
by government agencies. Client agrees to pay AET all costs related to retrieving and/or abandoning
such equipment at AET fee schedule rates, unless agree otherwise.




SECTION 5 — LIMITATIONS ON SUBSURFACE EXPLORATION




Client recognizes that unavoidable risks occur whenever engineering or related disciplines are
applied to identify subsurface conditions. Variations in soil conditions usually occur between and
beyond sampled/tested locations. Even a comprehensive sampling and testing program performed in
accordance with a professional standard of care may fail to detect certain conditions, because the
variability of conditions cannot be seen. For similar reasons, actual environmental, geologic and
geotechnical conditions that AET characterizes to exist between sampling points may differ
significantly from those that actually exist. The passage of time also must be considered, and
Client recognizes that, due to natural occurrences or direct or indirect human activities at the
site or distant from it, actual conditions discovered may change. Client recognizes that nothing
can be done to eliminate the risks associated with these limitations.