**Exhibit10.10**

 

CONSTRUCTION AGREEMENT

 

BETWEEN

 

AVENTINE RENEWABLE ENERGY – MT VERNON, LLC (“**Owner**”)

 

AND

 

FAGEN, INC. (“**Fagen**”)

 

April 29, 2010

 

----

 

**TABLE OF CONTENTS**

 
| ** **                                                     | ** **                             | **Page** |
|----------------------------------------------------------------|----------------------------------------|----------|
| ** **                                                     | ** **                             |
| **Article 1  Definitions; Rules of Interpretation**  | **1**                                  |
| ** **                                                     | ** **                             |
| 1.1                                                            | Rules of Construction             | 1        |
| 1.2                                                            | Defined Terms                          | 2        |
|                                                           |                                   |     |
| **Article 2  The Project**                                | **6**                                  |
| ** **                                                     | ** **                             |
| 2.1                                                            | Services to be Performed               | 6        |
| 2.2                                                            | Extent of Agreement                    | 6        |
| 2.3                                                            | Conflicting Provisions                 | 6        |
|                                                           |                                   |     |
| **Article 3  Fagen Responsibilities**                     | **7**                                  |
| ** **                                                     | ** **                             |
| 3.1                                                            | Fagen’s Services in General       | 7        |
| 3.2                                                            | Standard of Care                       | 7        |
| 3.3                                                            | Government Approvals and Permits       | 7        |
| 3.4                                                            | Subcontractors                         | 8        |
| 3.5                                                            | Maintenance of Site                    | 9        |
| 3.6                                                            | Project Safety                         | 9        |
| 3.7                                                            | Submission of Reports                  | 9        |
|                                                           |                                   |     |
| **Article 4  Owner’s Responsibilities**              | **10**                                 |
| ** **                                                     | ** **                             |
| 4.1                                                            | Duty to Cooperate                      | 10       |
| 4.2                                                            | Furnishing of Services and Information | 10       |
| 4.3                                                            | Owner’s Representative            | 11       |
| 4.4                                                            | Government Approvals and Permits       | 11       |
| 4.5                                                            | Owner’s Separate Contractors      | 12       |
| 4.6                                                            | Security                               | 12       |
|                                                           |                                   |     |
| **Article 5  Ownership of Work Product; Risk of Loss**    | **12**                                 |
| ** **                                                     | ** **                             |
| 5.1                                                            | Work Product                           | 12       |
| 5.2                                                            | Risk of Loss                           | 12       |
|                                                           |                                   |     |
| **Article 6  Commencement and Completion of the Project** | **13**                                 |
| ** **                                                     | ** **                             |
| 6.1                                                            | Reserved                               | 13       |
| 6.2                                                            | Notice to Proceed; Commencement        | 13       |
| 6.3                                                            | Project Start-Up                       | 13       |
| 6.4                                                            | Mechanical Completion                  | 14       |
| 6.5                                                            | Final Completion                       | 14       |
| 6.6                                                            | Post Completion Support                | 15       |
|                                                           |                                   |     |
| **Article 7  Waiver of Damage Claims**                    | **15**                                 |
| ** **                                                     | ** **                             |
| 7.1                                                            | Waiver of Damage Claims                | 15       |
|                                                           |                                   |     |
| **Article 8  Warranties**                                 | **15**                                 |

 

i

----

 

Table of Contents(continued)

 
| ** **                                                                        | ** **                                            | **Page** |
|-----------------------------------------------------------------------------------|-------------------------------------------------------|----------|
| ** **                                                                        | ** **                                            |
| 8.1                                                                               | Fagen Warranty                                        | 15       |
| 8.2                                                                               | Correction of Defective Work                          | 16       |
| 8.3                                                                               | Warranty Period Not Limitation to Owner’s Rights | 16       |
| 8.4                                                                               | Disclaimer                                            | 16       |
|                                                                              |                                                  |     |
| **Article 9  Contract Price**                                                | **17**                                                |
| ** **                                                                        | ** **                                            |
| 9.1                                                                               | Payment Basis                                         | 17       |
| 9.2                                                                               | Fagen’s Fee                                      | 20       |
| 9.3                                                                               | Additional Costs                                      | 20       |
| 9.4                                                                               | Books and Records                                     | 20       |
|                                                                              |                                                  |     |
| **Article 10  Payment Procedures**                                           | **21**                                                |
| ** **                                                                        | ** **                                            |
| 10.1                                                                              | Payment Prior to Financial Closing                    | 21       |
| 10.2                                                                              | Rework and Enhancements                               | 21       |
| 10.3                                                                              | Progress Payments                                     | 21       |
| 10.4                                                                              | Final Payment                                         | 23       |
| 10.5                                                                              | Failure to Pay Amounts Due                            | 23       |
| 10.6                                                                              | Fagen’s Payment Obligations                      | 23       |
| 10.7                                                                              | Reconciliation of Fagen’s Fee                    | 23       |
| ** **                                                                        | ** **                                            |
| **Article 11  Hazardous Conditions and Differing Site Conditions**           | **23**                                                |
| ** **                                                                        | ** **                                            |
| 11.1                                                                              | Hazardous Conditions                                  | 23       |
| 11.2                                                                              | Differing Site Conditions; Inspection                 | 25       |
| ** **                                                                        | ** **                                            |
| **Article 12  Force Majeure; Change in Legal Requirements**                  | **25**                                                |
| ** **                                                                        | ** **                                            |
| 12.1                                                                              | Force Majeure Event                                   | 25       |
| 12.2                                                                              | Effect of Force Majeure Event                         | 25       |
| 12.3                                                                              | Change in Legal Requirements                          | 26       |
| ** **                                                                        | ** **                                            |
| **Article 13  Changes to the Contract Price and Scheduled Completion Dates** | **26**                                                |
| ** **                                                                        | ** **                                            |
| 13.1                                                                              | Change Orders                                         | 26       |
| 13.2                                                                              | Emergencies                                           | 27       |
| 13.3                                                                              | Failure to Complete Owner’s Milestones           | 27       |
| ** **                                                                        | ** **                                            |
| **Article 14  Indemnity**                                                    | **27**                                                |
| ** **                                                                        | ** **                                            |
| 14.1                                                                              | Tax Claim Indemnification                             | 27       |
| 14.2                                                                              | Payment Claim Indemnification                         | 27       |
| 14.3                                                                              | Fagen’s General Indemnification                  | 28       |
| 14.4                                                                              | Owner’s General Indemnification                  | 29       |
| 14.5                                                                              | Indemnification                                       | 29       |
| ** **                                                                        | ** **                                            |
| **Article 15  Stop Work; Termination for Cause**                             | **29**                                                |
| ** **                                                                        | ** **                                            |
| 15.1                                                                              | Owner’s Right to Stop Work                       | 29       |
| 15.2                                                                              | Owner’s Right to Perform and Terminate for Cause | 30       |
| 15.3                                                                              | Fagen’s Right to Stop Work                       | 31       |
| 15.4                                                                              | Fagen’s Right to Terminate for Cause             | 31       |

 

ii

----

 

Table of Contents(continued)

 
| ** **                                                 | ** **                                       | **Page** |
|------------------------------------------------------------|--------------------------------------------------|----------|
|                                                       |                                             |     |
| 15.5                                                       | Bankruptcy of Owner or Fagen                     | 32       |
| ** **                                                 | ** **                                       |
| **Article 16  Representatives of the Parties**        | **33**                                           |
| ** **                                                 | ** **                                       |
| 16.1                                                       | Designation of Owner’s Representatives      | 33       |
| 16.2                                                       | Designation of Fagen’s Representatives      | 33       |
| ** **                                                 | ** **                                       |
| **Article 17  Insurance**                             | **34**                                           |
| ** **                                                 | ** **                                       |
| 17.1                                                       | Insurance                                        | 34       |
| 17.2                                                       | Fagen’s Insurance Requirements              | 35       |
| 17.3                                                       | Owner’s Liability Insurance                 | 36       |
| 17.4                                                       | Owner’s Property Insurance                  | 37       |
| ** **                                                 | ** **                                       |
| **Article 18  Representations and Warranties**        | **38**                                           |
| ** **                                                 | ** **                                       |
| 18.1                                                       | Fagen and Owner Representations and Warranties   | 38       |
| 18.2                                                       | Fagen Representations and Warranties             | 38       |
| ** **                                                 | ** **                                       |
| **Article 19  Dispute Resolution**                    | **39**                                           |
| ** **                                                 | ** **                                       |
| 19.1                                                       | Dispute Avoidance and Mediation                  | 39       |
| 19.2                                                       | Arbitration                                      | 39       |
| 19.3                                                       | Duty to Continue Performance                     | 40       |
| 19.4                                                       | No Consequential Damages                         | 40       |
| 19.5                                                       | Limitation of Liability                          | 40       |
| ** **                                                 | ** **                                       |
| **Article 20  Confidentiality of Shared Information** | **40**                                           |
| ** **                                                 | ** **                                       |
| 20.1                                                       | Non-Disclosure Obligation                        | 40       |
| 20.2                                                       | Publicity and Advertising                        | 42       |
| 20.3                                                       | Term of Obligation                               | 42       |
| ** **                                                 | ** **                                       |
| **Article 21  Miscellaneous**                         | **42**                                           |
| ** **                                                 | ** **                                       |
| 21.1                                                       | Assignment                                       | 42       |
| 21.2                                                       | Successors                                       | 42       |
| 21.3                                                       | Governing Law                                    | 42       |
| 21.4                                                       | Severability                                     | 42       |
| 21.5                                                       | No Waiver                                        | 42       |
| 21.6                                                       | Headings                                         | 43       |
| 21.7                                                       | Notice                                           | 43       |
| 21.8                                                       | No Privity with Design Consultant/Subcontractors | 44       |
| 21.9                                                       | Amendments                                       | 44       |
| 21.10                                                      | Entire Agreement                                 | 44       |
| 21.11                                                      | Third-Party Beneficiaries                        | 44       |
| 21.12                                                      | Counterparts                                     | 44       |
| 21.13                                                      | Survival                                         | 44       |
| ** **                                                 | ** **                                       |
| **EXHIBIT A  Owner’s Scope of Work**             | **1**                                            |
| ** **                                                 | ** **                                       |
| **EXHIBIT B  General Scope of Work for Fagen**        | **1**                                            |

 

iii

----

 

Table of Contents(continued)

 
| ** **                                               | **Page**   |
|----------------------------------------------------------|------------|
|                                                     |       |
| **EXHIBIT C  Owner’s Requirements**            | **1**      |
| ** **                                               | ** ** |
| **EXHIBIT D  Fagen’s Standard Rates**          | **1**      |
| ** **                                               | ** ** |
| **EXHIBIT E  Form of Informational Report**    | **1**      |
| ** **                                               | ** ** |
| **EXHIBIT F  Required Permits**                     | **1**      |
| ** **                                               | ** ** |
| **EXHIBIT G  Fagen’s Time and Material Rates** | **1**      |
| ** **                                               | ** ** |
| **EXHIBIT H  Reserved**                             | **1**      |
| ** **                                               | ** ** |
| **EXHIBIT I  Reserved**                             | **1**      |
| ** **                                               | ** ** |
| **EXHIBIT J  Form of Summary of Payment**      | **1**      |
| ** **                                               | ** ** |
| **EXHIBIT K  Form of Lien Waiver**             | **1**      |
| ** **                                               | ** ** |
| **[Intentionally  left blank.]**                         |       |
| ** **                                               |       |
| **EXHIBIT L  APTI License**                         | **1**      |
| ** **                                               | ** ** |
| **[to be attached]**                                     | ** ** |

 

iv

----

 

**CONSTRUCTION AGREEMENT**

 

This CONSTRUCTION AGREEMENT (the “Agreement”) ismade and entered into effective as of April 29, 2010, (the “EffectiveDate”) by and between Aventine Renewable Energy-Mt Vernon, LLC, a Delawarelimited liability company (the “Owner”) and Fagen, Inc., aMinnesota corporation (“Fagen”) (each a “Party” and collectively,the “Parties”).

 

**RECITALS**

 

A.    The Ownerdesires to complete construction of a dry grind ethanol production facility inMt. Vernon, Indiana (the “Plant”);

 

B.    Fagen desiresto provide construction services for the Plant; and

 

C.    The Partiesdesire to enter into this Agreement to set forth their respective rights andobligations with respect to the Plant.

 

NOW, THEREFORE, in consideration of the mutual covenantsand obligations contained herein and for other good and valuable consideration,Owner and Fagen agree as follows.

 

**AGREEMENT**

 

**Article 1**

 

**Definitions;Rules of Interpretation**

 

**1.1         ****Rules of Construction.**  The capitalized terms listed in this Article shallhave the meanings set forth herein whenever the terms appear in this Agreement,whether in the singular or the plural or in the present or past tense.  Other terms used in this Agreement but notlisted in this Article shall have meanings as commonly used in the Englishlanguage and, where applicable, in generally accepted construction anddesign-build standards of the ethanol industry. Words not otherwise defined herein that have well known and generallyaccepted technical or trade meanings are used herein in accordance with suchrecognized meanings.  In addition, thefollowing rules of interpretation shall apply:

 

(a)                                  The masculine shall includethe feminine and neuter.

 

(b)                                 References to “Articles,” “Sections,”“Schedules,” or “Exhibits” shall be to Articles, Sections, Schedules orExhibits of this Agreement.

 

(c)                                  This Agreementwas negotiated and prepared by each of the Parties with the advice andparticipation of counsel.  The Partieshave agreed to the wording of this Agreement and none of the provisions hereofshall be construed against one Party on the ground that such Party is theauthor of this Agreement or any part hereof.

 

1

----

 

**1.2         ****Defined Terms.**** **In addition to definitionsappearing elsewhere in this Agreement, the following terms have the followingmeanings:

 

*AAA*is defined in Section 19.1.

 

*Agreement* is defined in the Preamble.

 

*Applicable Law*means

 

(a)                                  any and all laws,legislation, statutes, codes, acts, rules, regulations, ordinances, treaties orother similar legal requirements enacted, issued or promulgated by aGovernmental Authority;

 

(b)                                 any and all orders,judgments, writs, decrees, injunctions, Governmental Approvals or otherdecisions of a Governmental Authority; and

 

(c)                                  any and all legally bindingannouncements, directives or published practices or interpretations, regardingany of the foregoing in (a) or (b) of this definition, enacted,issued or promulgated by a Governmental Authority;

 

tothe extent, for each of the foregoing in (a), (b) and (c) of thisdefinition, applicable to or binding upon (i) a Party, its affiliates, itsshareholders, its members, its partners or their respective representatives, tothe extent any such person is engaged in activities related to the Project; or (ii) theproperty of a Party, its affiliates, its shareholders, its members, itspartners or their respective representatives, to the extent such property isused in connection with the Project or an activity related to the Project.

 

*APTI* is defined in Section 20.1.

 

*Bankrupt Party*is defined inSection 15.6.1.

 

*Certificate of Mechanical Completion* is defined in Section 6.4.3.

 

*Change Order*is defined in Section 13.1.1.

 

*Confidential Information*is defined in Section 20.1.

 

*Contract Documents*is defined in Section 2.2.

 

*Contract Time(s) *means scheduled datesprovided for in the Contract Documents including Scheduled MechanicalCompletion Date and Final Completion Date.

 

*Damages* is defined in Section 14.3.1.

 

*Day* or *Days*shall mean calendar days unless otherwise specifically noted in the ContractDocuments.

 

*Design Consultant*is a qualified, licenseddesign professional that is not an employee of Fagen, but is retained by Fagen,or employed or retained by anyone under contract with Fagen or Subcontractor,to furnish design services required under the Contract Documents.

 

2

----

 

*Differing Site Conditions* is defined in Section 11.2.1.

 

*Effective Date* is defined in the Preamble.

 

*Enhancements* is defined in Section 10.2

 

*Fagen*is defined in the Preamble.

 

*Fagen’sFee*is defined in Section 9.2.

 

*Fagen’s Representative*is defined inSection 16.2.

 

*Fagen’s Senior Representative*is defined inSection 16.2.

 

*Final Completion*is defined in Section 6.5.2.

 

*Final Completion Date*isdefined in Section 6.5.1.

 

*FinalPayment* is defined in Section 10.4.

 

*Final Summary of Payment*is defined inSection 10.4.

 

*Force Majeure Event*is defined inSection 12.1.

 

*Governmental Approvals* are any materialauthorizations or permissions issued or granted by any Governmental Authorityto the Project, its Owner, Fagen, Subcontractors and their affiliates inconnection with any activity related to the Project.

 

*Governmental Authority* means any federal, state,local or municipal governmental body; any governmental, quasi-governmental,regulatory or administrative agency, commission, body or other authorityexercising or entitled to exercise any administrative, executive, judicial,legislative, policy, regulatory or taxing authority or power; or any court orgovernmental tribunal; in each case having jurisdiction over the Owner, Fagen,the Project, or the Site.

 

*Hazardous Conditions* are any materials, wastes,substances and chemicals deemed to be hazardous under applicable LegalRequirements, or the handling, storage, remediation, or disposal of which areregulated by applicable Legal Requirements.

 

*Informational Report*isdefined in Section 3.7.

 

*Lease* shall mean thatcertain Lease between Owner and the Ports of Indiana, dated October 31,2006, and all amendments thereto, with respect to the Site.

 

*Legal Requirements*or*Laws*are all applicable federal, state and local statutes,laws, codes, ordinances, rules, regulations, judicial decisions, orders,decrees, plans, injunctions, permits, tariffs, governmental agreements andgovernmental restrictions, whether now or hereafter in 

 

3

----

 

effect,of any government or quasi-government entity having jurisdiction over theProject or Site, the practices involved in the Project or Site, or any Work,including any consensus standards for materials, products, systems, andservices established by ASTM International, any successor organization thereto,or any Governmental Authority.

 

*License*is defined in Section 20.1.

 

*Manufacturer’s Warranty*shall mean a warranty provided by the original manufacturer or vendor ofequipment used in the Plant.

 

*Mechanical Completion* is defined inSection 6.4.2.

 

*Notice to Proceed*is defined inSection 6.2.

 

*Operating Procedures*means, withoutlimitation, the process equipment and specifications manuals, standards ofquality, service protocols, data collection methods, constructionspecifications, training methods, engineering standards and any otherinformation prescribed by Fagen, Subcontractors, or any other party whoprovided, or will provide, equipment or other materials to the Project, fromtime to time concerning the ownership, operation, maintenance and repair of thePlant, subject to the limitations provided in the Agreement.

 

*Owner* is defined in thePreamble.

 

*OwnerIndemnified Parties* is defined in Section 14.3.1.

 

*Owner’s Milestones* is defined in Section 13.3.

 

*Owner’s Operator*means, ifapplicable, the entity that Owner identifies, upon written notice toFagen, as operator of the Project or any other entity that Ownerchooses, upon notice to Fagen, to replace such entity as operator ofthe Project.

 

*Owner’s Representative*is defined inSection 16.1.

 

*Owner’s Senior Representative*is defined inSection 16.1.

 

*Party or Parties*is defined in the Preamble.

 

*Pass Through Warranties*mean any warranties providedto Fagen by a Subcontractor, which will all be assigned to Owner.

 

*PayPeriod* means, with respect to a given Summary of Payment, the two (2) weekperiod following the last day of the previous Pay Period to which theimmediately prior Summary of Payment is applied; provided that the initial PayPeriod shall commence on the date of delivery of the Notice to Proceed and endon the earlier of the ninth (9th) or twenty-fourth (24th) day of the calendar monthduring which the Notice to Proceed is issued.

 

4

----

 

*PaymentBasis*is defined in Section 9.1.

 

*Pay Period*means, with respect to agiven Summary of Payment, the two (2) week period following the last day ofthe previous Pay Period to which the immediately prior Summary of Payment isapplied; provided that the initial Pay Period shall commence on the date ofdelivery of the Notice to Proceed and end on the earlier of the ninth (9th) or twenty-fourth (24th) day of the calendar monthduring which the Notice to Proceed is issued.

 

*Plant* is defined in theRecitals.

 

*Port* shall mean thePorts of Indiana, a body corporate and politic, including the Port ofIndiana-Mount Vernon, in Posey County, Indiana.

 

*PriorWork* is defined in Section 10.2.

 

*Project*is defined in Section 2.1.

 

*Punch List*is defined inSection 6.4.3.

 

*Qualified Independent Expert*means an expert retained byOwner and approved by Fagen pursuant to Section 11.1.2.

 

*ReimbursableCosts*is defined in Section 9.1.1.

 

*Safety Representative*is defined inSection 3.6.1.

 

*Scheduled Mechanical Completion Date*is defined inSection 6.4.1.

 

*Site* is the land or premises on which the Plantis located.

 

*Subcontractor* is any person or entityretained by Fagen, or by any person or entity retained directly or indirectlyby Fagen, in each case as an independent contractor to perform a portion of theWork, and shall include materialmen and suppliers.

 

*Summary of Payment*is defined inSection 10.3.1.

 

*Target Price*as used herein shall refer to the sum of all estimated Reimbursable Costs,which for purposes of this Agreement shall be $*****.  For clarity, the Target Pricedoes not include Fagen’s Fee.

 

*Work*is defined in Section 3.1.

 

*Work Product*is defined inSection 5.1.

 

5

----

 

**Article 2**

 

**The Project**

 

**2.1         ****Services to be Performed.**  Pursuant to this Agreement, and except asotherwise set forth herein, Fagen shall perform all work and services inconnection with the construction of the Plant, and provide all material,equipment, tools and labor necessary to complete the Plant in accordance withthe terms of this Agreement.  Fagen willassign a Field Representative who will represent Fagen and report Projectstatus to Owner periodically. The Plant, together with all equipment, labor,services and materials to be furnished hereunder is defined as the “Project.”

 

**2.1.1   **Fagen acknowledges that Owner is leasing the premises on which the Workwill be performed.  Owner shall makeavailable to Fagen a copy of said Lease.

 

**2.1.2   **Fagen shall reasonably permit Owner’s assignment of this Agreement to thePort in the event that Owner is in an uncured default of its Lease.

 

**2.2         ****Extent of Agreement.**  This Agreement consists of the followingdocuments, and all exhibits, schedules, appendices and attachments hereto andthereto (collectively, the “Contract Documents”):

 

**2.2.1   **All written modifications, amendments and change orders to thisAgreement.

 

**2.2.2   **This Agreement, including all exhibits and attachments, executed by Ownerand Fagen, including those below:

 
| **List  of Exhibits** |
|-----------------------|
|                  |   |   |
| Exhibit A        |   | Owner’s  Scope of Work |
| Exhibit B        |   | General  Scope of Work for Fagen |
| Exhibit C        |   | Owner’s  Requirements |
| Exhibit D        |   | Fagen’s  Standard Rates |
| Exhibit E        |   | Form of  Informational Report |
| Exhibit F        |   | Required  Permits |
| Exhibit G        |   | Fagen’s  Time and Materials Rates |
| Exhibit H        |   | [Reserved] |
| Exhibit I        |   | [Reserved] |
| Exhibit J        |   | Form of  Summary of Payment |
| Exhibit K        |   | Form of  Lien Waiver |
| Exhibit L        |   | APTI  License |

 

**2.3         ****Conflicting Provisions.**  In the event of any conflict or inconsistencybetween the body of this Agreement and any Exhibit or Schedule hereto, theterms and provisions of this Agreement, as amended from time to time, shallprevail and be given priority.  Subjectto the foregoing, the several documents and instruments forming part of thisAgreement are to be taken as mutually explanatory of one another and in thecase of ambiguities or discrepancies within or

 

6

----

 

between such parts the same shall be explained andinterpreted, if possible, in a manner which gives effect to each part and whichavoids or minimizes conflicts among such parts. No oral representations or other agreements have been made by theParties except as specifically stated in the Contract Documents.

 

**Article 3**

 

**FagenResponsibilities**

 

**3.1         ****Fagen’s Services in General.**  Except for services and information to beprovided by Owner and specifically set forth in Article 4 and Exhibits Aand C, Fagen shall perform or cause to be performed, and shall provide or causeto be provided, all construction services, supervision, labor, inspection,material, and machinery to complete construction of the Project consistent withthe Contract Documents (the “Work”). All construction services and other Work of Fagen shall be performed inaccordance with (i) the general project scope guidelines set forth inExhibit B, (ii) all Legal Requirements, and (iii) generallyaccepted construction and design-build standards of the ethanol industry in theUnited States during the relevant time period. Any design and engineering or other professional service to be performedpursuant to this Agreement, which under Applicable Law must be performed bylicensed personnel, shall be performed by licensed personnel as required byLaw.  The enumeration of specific dutiesand obligations to be performed by Fagen under the Contract Documents shall notbe construed to limit in any way the general undertakings of Fagen as set forthherein.  Fagen’s Representative shall bereasonably available to Owner and shall have the necessary expertise andexperience required to supervise the Work. Fagen’s Representative shall communicate regularly with Owner and shallbe vested with the authority to act on behalf of Fagen.

 

**3.2         ****Standard of Care.**  Allservices performed by Fagen and its Subcontractors shall be performed inaccordance with the standard of care and skill generally accepted in theethanol industry during the relevant time period and in accordance with any of thepractices, methods and acts that in the exercise of reasonable judgment inlight of the facts known at the time the decision was made, would have beenexpected to accomplish the desired result at a reasonable cost consistent withgood business practices, safety and expedition. This standard of care is not intended to be limited to the optimumpractice, method or act to the exclusion of all others, but rather to beacceptable practices, methods or acts generally accepted in the constructionand design-build standards of the ethanol industry.  Fagen and its Subcontractors shall performall construction activities efficiently and with the requisite expertise,skill, competence, resources and care to satisfy the requirements of theContract Documents and all applicable Legal Requirements.  Subject to the other provisions of thisAgreement, Fagen shall at all times exercise complete and exclusive controlover the means, methods, sequences and techniques of construction.

 

**3.3         ****Government Approvals and Permits.**  Except as identified in Exhibits A and C and,with respect to items identified as Owner’s responsibility, in Exhibit F(which items shall be obtained by Owner pursuant to Section 4.4), Fagenshall obtain all necessary permits, approvals and licenses required for theprosecution of the Work from any government or quasi-government entity havingjurisdiction over the Project. Notwithstanding the foregoing, Owner shall payfor all costs, fees, inspections, reviews, charges, and expenses of whateverkind or nature necessary

 

7

----

 

for Fagen to obtain such permits, approvals, andlicenses.  Fagen shall provide reasonableassistance to Owner in obtaining those permits, approvals and licenses that areOwner’s responsibility.

 

**3.4          Subcontractors.**

 

**3.4.1   **Fagen may subcontract portions of the Work in accordance with the termshereof.  Fagen shall coordinate withOwner its selection of any Subcontractors, and the scope of work for suchSubcontractors, for any portion of the Work for which Fagen subcontracts.  Fagen shall solicit Owner’s input to theselection process for Subcontractors and their scope of work, however theParties agree that the ultimate selection of any Subcontractor, and its scopeof work, shall be determined solely by Fagen.

 

**3.4.2   **Fagen assumes responsibility to Owner for the proper performance of theWork of Subcontractors and any acts and omissions in connection with suchperformance.  Nothing in the ContractDocuments is intended or deemed to create any legal or contractual relationshipbetween Owner and any Subcontractor, including but not limited to anythird-party beneficiary rights.

 

**3.4.3   **Fagen shall coordinate the activities of all of Fagen’sSubcontractors.  If Owner performs otherwork on the Project or at the Site with separate contractors under Owner’scontrol, Fagen agrees to reasonably cooperate and coordinate its activitieswith those separate contractors so that the Project can be completed in anorderly and coordinated manner without unreasonable disruption.

 

**3.4.4   **Fagen shall ensure that each subcontract with a Subcontractor isassignable to (i) Owner without consent of the Subcontractor or any otherperson or entity in the event that Fagen shall be in an uncured default orterminated with cause under the terms of this Agreement, or (ii) the Portin the event that Owner is in an uncured default of its Lease.

 

**3.4.5   **Except to the extent timely payment has not been made by Owner to Fagenfor work performed and billed by Fagen, Fagen shall not directly or indirectlycreate, incur, assume or suffer to be created by it, or any of itsSubcontractors, employees, laborers, mechanics or materialmen of goods orservices, any lien on the Site, the Project, the Work or any part of, orinterest in, any part thereof.  In theevent such a lien is recorded in contravention of this provision, Fagen shalltake all necessary actions to immediately have such lien released.

 

8

----

 

**3.5         ****Maintenance of Site.**  Fagen shall keep the Site reasonably freefrom debris, trash and construction wastes to permit Fagen to perform itsconstruction services efficiently, safely and without interfering with the useof adjacent land areas.  Upon MechanicalCompletion of the Work, Fagen shall remove all debris, trash, constructionwastes, materials, equipment, machinery and tools arising from the Work topermit Owner to occupy the Plant for its intended use (provided however, thatFagen may keep such materials, equipment, machinery, and tools on Site throughFinal Completion as are necessary to complete the Punch List).

 

**3.6          Project Safety.**

 

**3.6.1   **Fagen recognizes the importance of performing the Work in a safe mannerso as to prevent damage, injury or loss to (i) any individuals at theSite, whether working or visiting, (ii) the Work, including materials andequipment incorporated into the Work or stored on-Site or off-Site, and (iii) anyother property at the Site or adjacent thereto. Fagen assumes responsibility for implementing and monitoring all safetyprecautions and programs related to the performance of the Work.  Fagen shall, prior to commencingconstruction, designate a representative (the “Safety Representative”)with the necessary qualifications and experience to supervise the implementationand monitoring of all safety precautions and programs related to the Work.Unless otherwise required by the Contract Documents, Fagen’s SafetyRepresentative shall be an individual stationed at the Site who may haveresponsibilities on the Project in addition to safety.

 

**3.6.2   **Fagen and Subcontractors shall comply with all Legal Requirementsrelating to safety, as well as any Owner-specific safety requirements set forthin the Contract Documents; provided, that such Owner-specific requirements do notviolate any applicable Legal Requirement. Fagen will promptly report in writing any safety-related injury, loss,damage or accident arising from the Work to Owner’s Representative and, to theextent mandated by Legal Requirements, to all government or quasi-governmentauthorities having jurisdiction over safety-related matters involving the Plantor the Work.

 

**3.6.3   **Fagen’s responsibility for safety under this Section 3.6****is not intended in any way to relieveSubcontractors of their own contractual and legal obligations andresponsibility for (i) complying with all Legal Requirements, includingthose related to health and safety matters, and (ii) taking all necessarymeasures to implement and monitor all safety precautions and programs to guardagainst injury, losses, damages or accidents resulting from their performanceof the Work.

 

**3.7         ****Submission of Reports.****** Fagen shall provide Owner with a monthlyinformational report substantially inthe form of Exhibit E attached hereto (“Informational Report”).

 

**3.8          Startup andPerformance Testing**.  Fagen shall provide such services as Ownermay request in writing in conjunction with the startup of the Plant afterMechanical Completion and any performance tests of the Plant. All such servicesshall be provided by Fagen on a time and materials basis.

 

9

----

 

**3.9          DecisionsInvolving the Work**.  Fagen’s on-site project manager will consultwith Owner’s on-site project manager in the decisions regarding the performanceof the Work on a  daily basis.  In this regard, Owner’s on-site projectmanager will have equal input in such decisions.  If there is disagreement between Fagen’son-site project manager and Owner’s on-site project manager on any decision,the matter will immediately be referred to Fagen’s Representative and Owner’sRepresentative for resolution.  In theevent of disagreement between Fagen’s Representative and Owner’sRepresentative, the Parties shall proceed pursuant to Article 19.

 

**3.10        Performanceof Work**.  Fagenhereby acknowledges that, based upon its review of all documents provided to itby or on behalf of Owner and its review of the Site prior to its execution ofthis Agreement, it believes in good faith it can perform the Work in order tocomplete the Project for the Target Price and in accordance with the ContractTimes.  Owner acknowledges, however, thatthe foregoing is not a guarantee that the Project will be completed for theTarget Price or in accordance with the Contract Times.

 

**Article 4**

 

**Owner’s Responsibilities**

 

**4.1         ****Duty to Cooperate.**** **Owner shall, throughout the performance of the Work, reasonablycooperate with Fagen and perform its responsibilities, obligations and servicesin a timely manner to facilitate Fagen’s timely and efficient performance ofthe Work and so as not to delay or interfere with Fagen’s performance of itsobligations under the Contract Documents.

 

**4.2          Furnishing of Services andInformation.**

 

**4.2.1   **Prior to the issuance of the Notice to Proceed, at its own cost andexpense, Owner shall provide the following items to Fagen for Fagen’sinformation and use and all of which Fagen is entitled to rely upon inperforming the Work:

 

(a)                                  surveysdescribing the Site, boundaries, topography and reference points for use duringconstruction, including existing service and utility lines;

 

(b)                                 geotechnicalstudies describing subsurface conditions including soil borings and othersurveys describing other latent or concealed physical conditions at the Site;

 

(c)                                  temporary andpermanent easements, zoning and other requirements and encumbrances affectingland use, or necessary to permit the proper design and construction of thePlant and enable Fagen to perform the Work;

 

(d)                                 legaldescriptions of the Site;

 

(e)                                  to the extentavailable, as-built and record drawings of any existing structures at the Site;

 

10

----

 

(f)                                    allenvironmental studies, reports and impact statements describing theenvironmental conditions, including Hazardous Conditions, in existence at theSite that have been conducted or performed;

 

(g)                                 all standardoperating procedures and permits necessary to construct the Plant;

 

(h)                                 all P&IDs, ISOS(Pipe Detail Drawings), ORTHOS (Pipe Layout and General Drawings), Mechanical(Including Plumbing & HVAC), Electrical Power Drawings (Including allinstrument & motor loops), Electrical Control Drawings, CivilDrawings, Structural Drawings, Architectural Drawings, General ArrangementDrawings, and Equipment Arrangement Drawings in each case that are in Owner’spossession;

 

(i)                                     all Civil,Structural, Mechanical (equipment), and Electrical specifications in Owner’spossession; and

 

(j)                                     such otherinformation as Fagen may reasonably request in order to perform the Work.

 

**4.2.2   **Owner shall provide to Fagen all Owner deliverables under Exhibit Cpursuant to Owner’s Milestones.  Suchdeliverables shall be provided, at Owner’s own cost and expense, for Fagen’sinformation and use. Fagen is entitled to rely upon such deliverables inperforming the Work.

 

**4.2.3   **Owner is responsible for securing and executing all necessary agreementswith adjacent land or property owners that are necessary to enable Fagen toperform the Work and that have been identified and notified in writing by Fagento Owner prior to the Effective Date. Owner is further responsible for all costs, including attorneys’ fees,incurred in securing these necessary agreements.

 

**4.3         ****Owner’s Representative.**** **Owner’s Representative, as set forth in Section 16.1 hereof, shallbe responsible for providing Owner-supplied information and approvals in atimely manner to permit Fagen to fulfill its obligations under the ContractDocuments.  Owner’s Representative shallalso provide Fagen with prompt notice if it observes any failure on the part ofFagen to fulfill its contractual obligations, including any errors, omissionsor defects in the performance of the Work.  Owner’s Representative shall be vested withthe authority to act on behalf of Owner and Fagen shall be entitled to rely onwritten communication from Owner’s Representative with respect to any Projectmatter.

 

**4.4         ****Government Approvals and Permits.**  Owner shall obtain and pay for all necessaryGovernmental Approvals required by Law (including permits, approvals, licenses,government charges, reviews, and inspection fees) which are identified inExhibit C and Exhibit F as Owner’s responsibility (the “Permits”).  Owner shall provide reasonable assistance toFagen in obtaining those permits, approvals and licenses that are Fagen’sresponsibility pursuant to Exhibit F and Section 3.3.  Notwithstanding the foregoing, in addition tothe indemnification set forth in Section 14.4.1, Owner shall hold harmlessFagen, its officers, directors, employees, and

 

11

----

 

agents, for Owner’s failure to comply with allApplicable Laws in obtaining or maintaining the required Permits.  The denial or revocation of any permitsobtained by Owner as a result of Owner’s failure to comply with Applicable Lawor the requirements of the permits and any Owner actions affecting the validityof any required permit obtained by Owner, shall be deemed a failure of Owner tofulfill Owner’s Milestones and shall entitle Fagen, to the extent it isadversely impacted thereby, to any and all remedies available pursuant to thisAgreement and Applicable Law.

 

**4.5         ****Owner’s Separate Contractors.**  Owner is responsible for all work, includingsuch work listed on Exhibits A and C, performed on the Project or at theSite by separate contractors under Owner’s control.  Owner shall contractually require itsseparate contractors to reasonably cooperate and coordinate their activitieswith Fagen so that the Project can be completed in an orderly and coordinatedmanner without unreasonable disruption.

 

**4.6         ****Security.**  Owner shallbe responsible for Site security at the Site (including fencing, alarm systems,security guarding services and the like) at all times during the term of thisAgreement, to prevent vandalism, theft and danger to the Project, the Site, andpersonnel.  Owner shall coordinate andsupervise ingress and egress from the Site so as to minimize disruption to theWork.  Owner shall consult withContractor and hire a security firm familiar with union picketing and relatedinterferences so as to minimize disruption to the Work.

 

**Article 5**

 

**Ownershipof Work Product; Risk of Loss**

 

**5.1         ****Work Product.**** **All drawings,specifications, calculations, data, notes and other materials and documents,including electronic data, furnished by Fagen to Owner under this Agreement (“WorkProduct”) shall, upon payment in full therefore by Owner, become theproperty of Owner.  For the avoidance ofdoubt, as Owner pays in full for any portion of the Work Product, such portionof the Work Product shall be owned by Owner. In addition, for any portion of the Work Product which Owner so pays infull Fagen shall be given an irrevocable, royalty-free, exclusive license touse such Work Product at any time and for all legal purposes.  Fagen’s use of such Work Product shall be atits sole risk without liability or legal exposure to Owner, its affiliates, orany of their officers, directors, employees or agents. Transfer of title to theWork Product is conditioned on Owner’s express agreement that its revision of,modification to, or failure to strictly adhere to or follow, the Work Productby Owner or any party under its direction or control, is at Owner’s sole riskwithout liability or legal exposure to any Fagen, its affiliates, or any oftheir officers, directors, employees, or agents; provided, however, that anyPass Through Warranties or express warranties provided by this Agreement shallremain in effect according to their terms.

 

**5.2         ****Risk of Loss.**  Fagen shall have noliability for a physical loss of or damage to the Work unless such loss ordamage is caused by the misconduct or negligence of Fagen, its Subcontractors,or someone acting under its direction or control. Fagen shall not be liable forphysical loss of or damage to the Work where such loss or damage is caused bythe misconduct or negligence of Owner’s employees or third parties who are notSubcontractors.  Except to the extent ofa warranty claim, Fagen shall have no liability for a physical loss of ordamage to the

 

12

----

 

Work occurring after Final Completion.  Fagen shall have no liability for losses ordamages for a physical loss of or damage to the Work for which insurancecoverage obtained by Owner under this Agreement is available for such loss ordamage; in such circumstances, any liability for losses and damages asdescribed in this sentence shall be limited to payment of the deductible andany losses or damages in excess of such coverage (or the percentage thereofwhich is equal to Fagen’s or its Subcontractors’ degree of negligence ormisconduct - if it is or they are not the sole cause therefor) for theapplicable insurance policy.

 

**Article 6**

 

**Commencementand Completion of the Project**

 

**6.1         ****Reserved.**

 

**6.2         ****Notice to Proceed; Commencement.**  The Work shall commencefollowing Fagen’s receipt of Owner’s written valid notice to proceed (“Noticeto Proceed”) unless the Parties mutually agree otherwise in writing.  The Parties agree that a valid Owner’s Noticeto Proceed cannot be given until:  (1) Ownerhas title to or has obtained all necessary rights and permits to the realestate on which the Plant will be constructed and; (2) the Site workrequired of Owner, as described in Exhibit C, has been reviewed and deemedadequate by Fagen;****(3) theair permit(s) and/or other applicable local, state or federal permitsnecessary so that construction can begin, as listed on Exhibit F, havebeen obtained; (4) Owner has provided proof of financing to Fagen; (5) ifapplicable, Owner has executed a sales tax exemption certificate and providedthe same to Fagen; (6) Owner has provided the name of itsproperty/all-risk insurance carrier and the specific requirements for fireprotection; (7) Owner has, in accordance with Section 17.4.4,provided insurance certificates or copies of insurance policies demonstratingthat Owner has obtained the insurance policies required pursuant to Section 17.4hereof and naming additional insured and protecting other interests asprescribed in Section 17.4, and (8) Fagen provides Owner writtennotification of its acceptance of the Notice to Proceed.  Such Notice to Proceed and Fagen’s acceptanceof same shall be provided concurrent with the execution of this Agreement.

 

**6.2.1   **Notice to Proceed shall be delivered by Owner to Fagen, in a formreasonably acceptable to Fagen, pursuant to the notice requirements set forthin Section 21.7 hereof, with a copy to:

 

Fagen, Inc.

501W. Highway 212

P.O. Box 159

GraniteFalls, MN  56241

Attention:Becky Dahl

Fax:  (320) 564-3278

 

**6.3         ****Project Start-Up.**  Fagen shall have no responsibility forstart-up of the Plant, but shall provide such assistance as Owner may requestpursuant to Section 3.8 above.

 

13

----

 

**6.4          Mechanical Completion.**

 

**6.4.1      **Mechanical Completion of the Plant shall be achieved no later than September 1,2010, subject to adjustment in accordance with the Contract Documents hereof(the “Scheduled Mechanical Completion Date”).

 

**6.4.2**       “MechanicalCompletion” with respect to the Plant shall be deemed to occur on the dateon which the Work has been physically completed as provided in thisAgreement.  No production is guaranteed onthe date of Mechanical Completion.

 

**6.4.3    Procedures**.  Fagen shall prepare and issue a “Certificateof Mechanical Completion” for the Work for the Plant that will set forth(i) the date of Mechanical Completion, (ii) the remaining items ofWork, as reasonably agreed to by Fagen and Owner, that have to be completedbefore Final Payment (“Punch List”), (iii) provisions (to theextent not already provided in this Agreement) establishing Owner’s and Fagen’sresponsibility for the Plant’s security, maintenance, utilities and insurancepending Final Payment, and (iv) an acknowledgment that warranties withrespect to the Work commence on the date of Mechanical Completion, except asmay otherwise be noted in the Certificate of Mechanical Completion.  Upon Mechanical Completion, Owner shall payto Fagen all unpaid amounts, less an amount equal to the reasonable value ofall remaining or incomplete items of Work as noted in the Certificate ofMechanical Completion, and less an amount equal to the value of any Subcontractorlien waivers not yet obtained with respect to such Plant, and less a portion ofthe Fee equal to ***** Dollars ($*****).

 

**6.5         ****Final Completion.**

 

**6.5.1   **Final Completion of the Work for the Plant must be achieved by Fagenwithin ninety (90) Days after the earlier of the actual date of MechanicalCompletion or the Scheduled Mechanical Completion Date (the “FinalCompletion Date”).

 

**6.5.2   **“Final Completion” of the Plant shall be achieved when the Ownerreasonably determines that the following conditions have been met:

 

(a)                                  MechanicalCompletion has been achieved;

 

(b)                                 the itemsidentified on the Punch List have been completed by Fagen, unless and to theextent of any such Punch List items which Fagen is prevented from completingbecause of the actions or inactions of Owner or seasonal weather conditions,provided however that in the event of weather delays, Fagen shall complete suchitems as soon as reasonably practical;

 

(c)                                  clean-up of theSite has been completed;

 

(d)                                 all permits andinspections required to have been obtained or passed by Fagen have beenobtained and completed; and

 

14

----

 

(e)                                  release andwaiver of all claims and liens from Fagen and its Subcontractors and suppliershave been provided.

 

Afterreceipt of a Final Summary of Payment from Fagen in accordance with Section 10.4,Owner shall make Final Payment in accordance with Section 10.4, less anamount equal to the value of any Subcontractor lien waivers not yet obtained.

 

**6.5.3   **Upon making Final Payment, Owner waives all claims against Fagen underthis Agreement and relating to the Work except claims relating to (i) Fagen’sfailure to satisfy its payment or indemnity, defense and/or hold harmlessobligations under the Contract Documents, (ii) Fagen’s failure to completethe Work in accordance with the Contract Documents, including, but not limitedto, defects appearing within one (1) year after Mechanical Completion, (iii) theterms of Fagen’s warranties under the Contract Documents,  (iv) audit rights of Owner and anyclaims resulting from the exercise of such audit rights, and (v) Fagen’sfailure to comply with its obligations under Article 20.

 

**6.6         ****Post Completion Support.**  Adequate personnel tocomplete all Work within the Contract Time(s) will be maintained on-Siteby Fagen or a Subcontractor until Final Completion has been achieved.

 

**Article 7**

 

** Waiver of Damage Claims**

 

**7.1         ****Waiver of Damage Claims.**Owner, for itself and itssuccessors and assigns, hereby expressly waives any claims, causes of action(including breach of contract), and right it has, may have, or may hereafteraccrue to pursue or collect any amount of money or damages, including but notlimited to those relating to extra costs, losses, loss of profits, expenses,claims, penalties and any other damages, whether special or consequential, andof whatsoever nature incurred by Owner which arise solely due to a delay inachieving Final Completion by the Final Completion Date.

 

**Article 8**

 

**Warranties**

 

**8.1         ****Fagen Warranty.**  Fagenwarrants to Owner that the construction, including all materials and equipmentfurnished by Fagen and its Subcontractors as part of the construction, shall benew, of good quality, in conformance with the Contract Documents and all LegalRequirements, free of defects in materials and workmanship.  Fagen’s warranty obligation excludes (i) defectscaused by abuse, damage, modification, alterations, or failure to maintain theWork by persons other than Fagen or anyone for whose acts Fagen may be liableor responsible and (ii) defects or errors in any Owner supplied or thirdparty (i.e. other than Fagen Affiliates or Subcontractors) supplied equipment,drawings, deliverables, specifications, materials, labor, or information.Nothing in this warranty is intended to limit any Manufacturer’s Warranty whichprovides Owner with greater warranty rights than set forth in thisSection 8.1 or the Contract

 

15

----

 

Documents. Fagen will provide to Owner all manufacturers’ and Subcontractors’warranties upon the earlier of Mechanical Completion or termination of thisAgreement.   Owner’s failure to complywith all Operating Procedures shall void those warranties, whether expressed orimplied (if any), that were given by Fagen to Owner that are affected by suchfailure.  If Fagen reasonably determinesthat all damage caused by such failure can be repaired and Owner makes allrepairs needed to correct such damage, such warranties shall be reinstated forthe remaining term thereof, if any, from the date of the repair.

 

**8.2          Correction of Defective Work.**

 

**8.2.1   **Fagen’s warranty obligation extends for a period of one (1) yearfrom the date of Mechanical Completion of the Work; provided that Owner mustreport such non-conformance within ten (10) Days of the date Owner firstlearns or should have learned of such failure or non-conformance and that suchone (1)-year period shall be extended one (1) Day for any part of thewarrantied Work that is found to be not in conformance with the ContractDocuments for each Day that such part of the Work is not in conformity with theContract Documents, including any time during which any part of the Work isrepaired or replaced pursuant to this Article 8.

 

**8.2.2   **Fagen shall, within seven (7) Days of receipt of written notice fromOwner that the Work is not in conformance with the Contract Documents, takemeaningful steps to commence and complete correction of such nonconformingWork, including the correction, removal or replacement of the nonconformingWork and correction or replacement of any Work damaged by such nonconformingWork.  If Fagen fails to commence thenecessary steps within such seven (7) Day period or fails thereafter tocontinue to diligently perform such steps through completion, Owner, inaddition to any other remedies provided under the Contract Documents, mayprovide Fagen with written notice that Owner will commence or assume correctionof such nonconforming Work and repair of such damaged Work with its ownresources.  If, following such writtennotice, Owner performs such corrective and repair Work, Fagen shall beresponsible for all reasonable costs incurred by Owner in performing thecorrection.

 

**8.3         ****Warranty Period Not Limitation to Owner’s Rights.**  The one (1)-year period referenced in Section 8.2above applies only to Fagen’s obligation to correct nonconforming Work and isnot intended to constitute a period of limitations for any other rights orremedies Owner may have regarding Fagen’s other obligations under the ContractDocuments.

 

**8.4         ****Disclaimer.**  **EXCEPT FOR CONTRACTOR’S WARRANTIES SET FORTH IN SECTION 8.1,CONTRACTOR MAKES NO REPRESENTATIONS, GUARANTEES, WARRANTIES, OR CLAIMS WITHRESPECT TO, AND ASSUMES NO RESPONSIBILITY FOR, THE PERFORMANCE OR USE OF THECOMPLETED WORK AND SHALL HAVE NO RESPONSIBILITY FOR TESTING OR OPERATION OF THEWORK.  EXCEPT FOR CONTRACTOR’S WARRANTIESSET FORTH IN SECTION 8.1, CONTRACTOR EXPRESSLY DISCLAIMS ALL WARRANTIESAND GUARANTEES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, INCLUDING**

 

16

----

 

**ANY IMPLIED WARRANTY OFMERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR USE, INFRINGEMENT, ANDOPERABILITY.**

 

**Article 9**

 

**ContractPrice**

 

**9.1         ****Payment Basis.**  Asfull consideration to Fagen for complete performance of the Work and all costsincurred in connection therewith, Owner shall pay to Fagen the following costsand fees, which shall along with Fagen’s Fee, comprise the Contract Price:

 

**9.1.1   **All costs actually incurred by Fagen in connection with its performanceof the Work (“Reimbursable Costs”).

 

**9.1.2   **The Reimbursable Costs include but are not limited to:

 

1.               Procurement and relatedservices provided by Fagen’s personnel in connection with the Work, whichservices shall be billed to Owner at Fagen’s standard rates for such services,which rates are attached hereto as Exhibit D;

 

2.               Wages and salaries for Fagen’spersonnel who provide services in connection with the Work, includingconstruction workers and supervisory and administrative personnel for thatportion of their time required for the Work, except for those personnel whoseservices are reimbursable pursuant to Section 9.1.2.1;

 

3.               Costs paid or incurred byFagen for fringe benefits, statutory charges and employment benefits, includingbut not limited to vacation pay, sick leave, per diems and related expensesincluding but not limited to taxes, insurance contributions, assessments andbenefits required by law or collective bargaining agreements, customarybenefits such as sick leave, medical and health benefits, holidays, vacations,and pensions, for Fagen’s personnel who provide services in connection with theWork, except for those personnel whose services are reimbursable pursuant to Section 9.1.2.1;

 

4.               Reasonable lodging andsubsistence expenses of Fagen’s personnel while traveling in discharge ofduties connected with the Work;

 

5.               Fagen’s payments toSubcontractors, including service providers and consultants for Work performed,services provided, and royalties and license fees paid for the use of aparticular design process or product required by this Agreement;

 

6.               Costs, includingtransportation and storage thereof, of all materials, supplies and equipmentincorporated or to be incorporated in the Work including costs of materials inexcess of those actually installed to allow for reasonable waste and spoilage;

 

7.               Costs, includingtransportation, storage, installation, maintenance, dismantling and removal, ofall materials, services, supplies,

 

17

----

 

temporary facilities, machinery, equipment, and tools (excluding handtools referenced in item 12 below) that are provided by Fagen at the Plant andused in the performance of the Work and the cost (less salvage value) of suchitems used, but not consumed, which remain Fagen’s property; provided, however,that all materials, supplies, temporary facilities, machinery, equipment andtools (excluding hand tools referenced in item 12 below) which are purchased byFagen for performance of the Work for which Fagen receives one hundred percent(100%) reimbursement from Owner shall be owned by Owner upon completion of theProject.

 

8.               Rental charges for temporaryfacilities, machinery, equipment and tools that are provided by Fagen for theProject and rented from others, and costs of transportation, installation,maintenance, repairs and replacements, dismantling and removal thereof, atrental charges consistent with those prevailing in the area; or which coverFagen’s expenses, whichever is greater;

 

9.               Rental charges for temporaryfacilities, machinery, equipment and tools that are provided by Fagen for theProject, and are rented from Fagen, and costs of transportation, installation,maintenance, repairs and replacements, dismantling and removal thereof atrental rates equal to ten percent (10%) less than the lowest of thethen-current rates charged by Hertz, RSC, and United Rental;

 

10.         Costs of removal of Fagengenerated debris from the site;

 

11.         Costs of storage ofmaterials and equipment stored off-site, provided such storage is approved byOwner;

 

12.         Costs for small hand toolspurchased by Fagen for the use of its workers on the Site shall be reimbursedby the Owner based on an allowance of 4.0% of base wages of constructionworkers described in Subparagraph 9.1.2.2 above (excluding benefits, per diems,taxes, etc.).  The list of handtools that apply to this section shall be agreed to in advance by Owner andFagen.

 

13.         Costs of blueprinting andother document reproduction, computer services, facsimile transmissions, messengerservices, office supplies, payroll services, postage and parcel deliverycharges, photographs, fixed and mobile telephone (installation, monthlyservice, local and long distance calls), word and data processing, and otherincidental expenses in carrying on the Work;

 

14.         All reasonable costsincurred by Fagen for frost removal so that winter construction, if necessary,can proceed;

 

15.         Premiums for all insurancewhich Fagen is required to procure under the Contract Documents;

 

16.         Any sales, use, excise andother taxes on materials, labor, receipts, installations or services furnished(including those furnished by Owner), or any other taxes arising out of theperformance of the Work (excluding income taxes) imposed by any governmentalauthority, for which Fagen may become liable, to the extent Owner

 

18

----

 

is not exempt from such taxes;

 

17.         Costs, fees and assessmentsfor the building permit and other permits, licenses and inspections by anyGovernmental Authority for which Fagen is required to pay under this Agreement;

 

18.         Fees and expenses related toany testing required by this Agreement, including heat and x-ray testing,except for those related to retesting defective or non-conforming Work;

 

19.         Out-of-pocket legal,mediation and arbitration costs, including attorneys’ fees and expenses, otherthan those arising from disputes between Owner and Fagen, incurred by Fagen inconnection with the Work;

 

20.         Other costs reasonablyincurred in performance of the Work if and to the extent proven to be expendedin the execution of the Work, including but not limited to Work performed as aresult of Differing Site Conditions or Hazardous Materials, excluding: thecosts identified above, overhead and general expenses, capital expenses onFagen’s capital, and costs to correct damaged, defective or nonconforming Workresulting from Fagen’s gross negligence or material breach of its obligationsunder the Contract Documents;

 

21.         Costs of repairing,reperforming, or otherwise correcting damaged or non-conforming Work executedby Fagen or its Subcontractors, provided that the damage to or nonconformanceof the Work was not caused by Fagen, Subcontractors, or parties within theircontrol and only to the extent that the cost of repair, reperformance or othercorrection is not recovered by Fagen or Owner from insurance, sureties,Subcontractors, or suppliers; and

 

22.         Removing debris, trash, andother materials left at the Site by third parties prior to Fagen’s acceptance ofNotice to Proceed.

 

**9.1.3 **The Reimbursable Costs shall not include:

 

(a)   Salaries and othercompensation of Fagen’s personnel stationed at Fagen’s principal office oroffices other than the Site office except as provided in Section 9.1.2;

 

(b)   Expenses of Fagen’sprincipal office and offices other than the Site office, except as may beexpressly included in Section 9.1.2;

 

(c)   Overhead and generalexpenses, except as may be expressly included in Section 9.1.2;

 

(d)   Fagen’s capital expenses,including interest on Fagen’s capital employed for the Work; and

 

(e)   Costs, including costs torepair damage to the Work or defective Work, arising from the negligence ormisconduct of Fagen, its Subcontractors, or anyone

 

19

----

 

directly or indirectlyemployed by them or those for whose acts any of them may be liable.

 

**9.2         ****Fagen’s Fee.**  Fagen shallbe paid a fee in addition to all Reimbursable Costs (“Fagen’s Fee”).  Fagen’s Fee shall be in the minimum amount of***** Dollars ($*****) and shall be subject to adjustment as follows:

 

**9.2.1      **After taking intoconsideration any and all adjustments as may be provided herein, Fagen’s Feeshall be increased by an amount equal to *****.

 

**9.2.2**       If *****,as each may be adjusted pursuant to this Agreement, Fagen’s Fee shall be *****Dollars ($*****).

 

**9.2.3.**      Forillustrative purposes only: If *****, then Fagen’s Fee shall be an amountdetermined as follows;

 

*******

 

*******

* *

*******

 

**9.3         ****Additional Costs.**  TheParties agree that any time and materials work performed by Fagen under thisAgreement (i.e. work specifically identified in this Agreement as to beperformed on a time and material basis or specifically requested in writing byOwner to be performed on a time and material basis) shall not be calculated in,or impact, either the Reimbursable Costs or the Target Price.  Additionally, Change Order amounts (excludingChange Order amounts involving Change Orders which expand the scope of Work tobe provided by Fagen under the Contract Documents, with work under such ChangeOrders to be provided on a time and material basis (unless otherwise agreed inwriting by Fagen and Owner)) , or other adjustments to Fagen’s Work and/or theSchedule which impact Fagen and are agreed to by the Parties, shall be addedto, or subtracted from, (as applicable) both the Reimbursable Costs and TargetPrice.  Further, any adjustment resultingfrom a Force Majeure event shall be added to, or subtracted from, theReimbursable Costs and the Target Price.

 

**9.4          Books and Records**.  Contractor shall keep andmaintain such full and detailed books, records and accounts as may bereasonably necessary for proper financial management of the Project under theContract Documents, including one set of records showing all payments made toContractor by Owner.  Such records shallbe maintained for at least two (2) years after final payment toContractor.  At any reasonable timewithin two (2) years after final payment to Contractor, Owner and itsrepresentatives may inspect, copy and audit all such books, records andaccounts, including, without limitation, those relating to (i) payments toContractor for Work performed, (ii) Taxes assessed or imposed on the Workor (iii) any regulatory or other

 

20

----

 

proceeding before aGovernmental Authority.  All information,books, records and accounts provided to Owner by Contractor pursuant to thisSection shall be subject to the confidentiality requirements of Section 20.1.

 

**Article 10**

 

**PaymentProcedures**

 

**10.1       ****Payment Prior to Financial Closing;**

 

**10.1.1     Mobilization Fee. **Aspart of the Payment Basis, Owner shall pay Fagen ***** Dollars ($*****), as amobilization fee as soon as allowed by its organizational documents, but in noevent later than five (5) days after the Effective Date.

 

**10.2       ****Rework and Enhancements.**  Owner and Fagen acknowledgethe Plant has been partially constructed prior to the Effective Date by a thirdparty (“Prior Work”) and Fagen has not verified the Prior Work’sconformance with the Contract Documents. Accordingly, should Fagen discover any nonconforming or defective PriorWork, Fagen will immediately notify Owner, and following consultation withOwner, repair and/or replace such Prior Work on a time and materials basis, ifand to the extent such Work is within Fagen’s capabilities (i.e. within theexpertise and capability of Fagen’s employees). Any such rework not within Fagen’s capabilities may be contracted to athird party by Owner, provided that such third party shall not interfere withFagen’s Work and/or schedule. Additionally, should Owner request in writing that Fagen design orconstruct any enhancements to the Plant’s existing design (“Enhancements”),such Enhancements shall be performed on a time and materials basis.  Fagen’s time and materials rates are attachedhereto as Exhibit G and are incorporated herein by reference.

 

**10.3        Progress Payments.**

 

**10.3.1    **Following the issuance of Notice to Proceed pursuant to Section 6.2,Fagen shall submit to Owner, on or before the tenth (10th) and twenty-fifth (25th) day of each month following the acceptance ofNotice to Proceed requests for payment (each, a “Summary of Payment”).  Each Summary of Payment shall seek paymentfor Reimbursable Costs incurred by Fagen during the pay period for which theSummary of Payment is issued together with the applicable portion of Fagen’sFee (excluding *****) of Fagen’s Fee until such withheld amount equals *****Dollars ($*****) (after which time no amount of Fagen’s Fee shall bewithheld)).  The ***** Dollars ($*****)withheld by Owner pursuant to this paragraph 10.3.1 shall be referred to hereinas “Retainage”.  Along with each Summaryof Payment Fagen will submit to Owner (1) an itemized list of employee laborcosts, including benefits, fringe, statutory burdens, and per diem amounts; (2)details of labor hours worked (*e.g.,* copies oftimesheets) to the extent not already provided to Owner during the performanceof the work; (3) invoices and purchase orders for Reimbursable Costs; and (4) aschedule showing rental equipment used during the relevant pay period.  One half of the Retainage ($*****) shall bepaid to Fagen upon Mechanical Completion and all remaining Retainage shall bepaid to Fagen upon Final Completion.

 

21

----

 

**10.3.2    **The Summary of Payment shall be substantially in the form attached heretoas Exhibit J.  Along with each Summary of Payment, Fagen shall submit toOwner, via hardcopy or by electronic means including facsimile or portabledocument format, signed lien waivers, substantially in the form attached heretoas Exhibit K, received from Subcontractors and suppliers for the Work includedin the Summary of Payment submitted for the immediately preceding Pay Periodand for which payment has been received. Notwithstanding the foregoing, nothing herein requires that signed lienwaivers submitted pursuant to this section be notarized or otherwise certifiedin any manner.

 

**10.3.3    **The Summary of Payment shall constitute Fagen’s representation that theWork has been performed in accordance with the Contract Documents and hasprogressed to the point indicated in the Summary of Payment.  No additional documentation will be providedto Owner in support of the Summary of Payment, provided however, that Fagenwill work with Owner to provide such additional information as Owner needs toapply for sales tax exemptions and/or refunds. The Work completed at the Site and the documentation provided pursuantto Section 10.3.1 and 10.3.2 hereof shall provide sufficient substantiation toOwner of the accuracy of the Summary of Payment for Owner to pay such Summaryof Payment.  Title to the Work, includingWork reflected in a Summary of Payment, which is in process, is in transit, isin storage, or has been incorporated into the Site or is otherwise on Site,shall pass to Owner free and clear of all claims, liens, encumbrances, andsecurity interests upon Fagen’s receipt of payment therefore.

 

**10.3.4    **Within ten (10) Days after Owner’s receipt of each Summary of Payment inaccordance with Section 10.3.2, Owner shall pay Fagen all amounts properly due,and less amounts properly withheld under this Agreement.

 

**10.3.5    **The Summary of Payment may request payment for: (i) completed Work; (ii)prepayments for materials or equipment for the Project when prepayment isrequired by the manufacturer or supplier of such materials or equipment; or(iii) equipment and materials not yet incorporated into the Project providedthat (x) the equipment and materials are suitably stored at either the Site oranother location (subject to Owner’s prior approval), (y) the equipment andmaterials are protected by suitable insurance, and (z) upon payment, Owner willreceive the equipment and materials free and clear of all liens andencumbrances.

 

**10.3.6    ****Withholding of Payments.**  On or before the date set forth in Section10.3.4, Owner shall pay Fagen all amounts properly due.  If Owner determines that Fagen is notentitled to all or part of a Summary of Payment, it will notify Fagen inwriting at least five (5) Days prior to the date payment is due.  The notice shall indicate the specificamounts Owner intends to withhold, the reasons and contractual basis for thewithholding, and the specific measures Fagen must take to rectify Owner’sconcerns.  Fagen and Owner will attemptto resolve Owner’s concerns prior to the date payment is due.  If the Parties cannot resolve such concerns,Fagen may pursue its rights under the Contract Documents, including those underArticle 19.  Notwithstandinganything to the contrary in the Contract Documents, Owner shall pay 

 

22

----

 

Fagenall undisputed amounts in a Summary of Payment within the times required by theAgreement.

 

**10.4       ****Final Payment.**  Fagen shall deliver to Ownera request for final payment (the “Final Summary of Payment”) when FinalCompletion has been achieved in accordance with Section 6.5. Owner shall makefinal payment (except for amounts in dispute) within thirty (30) Days afterOwner’s receipt of the Final Summary of Payment (“Final Payment”).

 

**10.5        Failure to Pay Amounts Due.**

 

**10.5.1    ****Interest**.  Payments which are due and unpaid by Owner toFagen shall bear interest commencing five (5) Days after payment is due at therate that is the lower of eighteen percent (18%) per annum, or the maximum rateallowed by Law.

 

**10.5.2    ****Right to Suspend Work.**  If Owner fails to pay Fagen any undisputedamount that becomes due, Fagen, in addition to all other remedies provided inthe Contract Documents, may stop Work pursuant to Section 15.3hereof.  All payments properly due andunpaid shall bear interest at the rate set forth in Section 10.5.1.

 

**10.5.3    ****Failure to Make Final Payment.**  Owner’s failure to make FinalPayment pursuant to section 10.4 hereof shall void any and all warranties,whether express or implied, provided by Fagen pursuant to this Agreement.

 

**10.6       ****Fagen’s Payment Obligations.**  Fagen will paySubcontractors in accordance with its contractual obligations to such parties,all the amounts Fagen has received from Owner on account of their work.  Fagen will impose similar requirements onSubcontractors to pay those parties with whom they have contracted.  Fagen will indemnify and defend Owner againstany claims for payment and mechanic’s liens as set forth in Section 14.2hereof.

 

**10.7       ****Reconciliation of Fagen’s Fee.**  Within thirty (30) daysafter all Reimbursable Costs are totaled and made known to Owner, but in noevent sooner than thirty (30) days after Final Completion, Owner shall pay toFagen the sum of money necessitated by the adjustment provided for in Section9.2.1.

 

**Article 11**

 

**HazardousConditions and Differing Site Conditions**

 

**11.1        Hazardous Conditions.**

 

**11.1.1    **Unless otherwise expressly provided in the Contract Documents to be partof the Work, Fagen is not responsible for any Hazardous Conditions encounteredat the Site.  Upon encountering anyHazardous Conditions, Fagen will stop Work immediately in the affected area andas promptly as practicable notify Owner and, if Fagen is specifically requiredto do so by Legal Requirements, all 

 

23

----

 

GovernmentalAuthorities having jurisdiction over the Project or Site.  Fagen shall not remove, remediate or handlein any way (except in case of emergency) any Hazardous Conditions encounteredat the Site without prior written approval of Owner.

 

**11.1.2    **Upon receiving notice of the presence of suspected Hazardous Conditions,Owner shall take the necessary measures required to ensure that the HazardousConditions are remediated or rendered harmless. Such necessary measures shall include Owner retaining QualifiedIndependent Experts to (i) ascertain whether Hazardous Conditions have actuallybeen encountered, and, if they have been encountered, (ii) prescribe theremedial measures that Owner is required under applicable Legal Requirements totake with respect to such Hazardous Conditions in order for the Work toproceed.  Owner’s choice of suchQualified Independent Experts shall be subject to the prior approval of Fagen,which approval shall not be unreasonably withheld or delayed.

 

**11.1.3    **Fagen shall be obligated to resume Work at the affected area of theProject only after Owner’s Qualified Independent Expert provides it withwritten certification that (i) the Hazardous Conditions have been removed orrendered harmless, and (ii) all necessary approvals have been obtained from allgovernment entities having jurisdiction over the Project or Site and aremediation plan has been undertaken permitting the Work to proceed.

 

**11.1.4    **Fagen will be entitled, in accordance with this Article 11, to anadjustment in Contract Time(s) and Target Price to the extent Fagen’s time ofperformance and costs have been adversely impacted by the presence of HazardousConditions, provided that such Hazardous Materials were not introduced to theSite by Fagen, Subcontractors or anyone for whose acts they may be liable.

 

**11.1.5    **To the fullest extent permitted by Law, Owner shall indemnify, defend andhold harmless Fagen, Subcontractors, anyone employed directly or indirectly forany of them, and their officers, directors, employees and agents, from andagainst any and all claims, losses, damages, liabilities and expenses,including attorneys’ fees and expenses, arising out of or resulting from the presence,removal or remediation of Hazardous Conditions at the Site.

 

**11.1.6    **Notwithstanding the preceding provisions of this Section 11.1, Owneris not responsible for Hazardous Conditions introduced to the Site by Fagen,Subcontractors or anyone for whose acts they may be liable.  Fagen shall indemnify, defend and holdharmless Owner and Owner’s officers, directors, employees and agents from andagainst all claims, losses, damages, liabilities and expenses, includingattorneys’ fees and expenses, arising out of or resulting from those HazardousConditions introduced to the Site by Fagen, Subcontractors or anyone for whoseacts they may be liable.

 

24

----

 

**11.2        Differing Site Conditions; Inspection.**

 

**11.2.1    **Concealed or latent physical conditions or subsurface conditions at theSite that (i) differ from the conditions indicated in the Contract Documents,or (ii) are of an unusual nature, differing from the conditions ordinarilyencountered and generally recognized as inherent in the Work are collectivelyreferred to herein as “Differing Site Conditions.”  If Fagen encounters a Differing SiteCondition, Fagen will be entitled to an adjustment in the Contract Time(s) andTarget Price to the extent Fagen’s time of performance and costs are adverselyimpacted by the Differing Site Condition.

 

**11.2.2    **Upon encountering a Differing Site Condition, Fagen shall provide promptwritten notice to Owner of such condition, which notice shall not be later thanfourteen (14) business days after such condition has been encountered.  Fagen shall, to the extent reasonablypossible, provide such notice before the Differing Site Condition has beensubstantially disturbed or altered.

 

**Article 12**

 

**ForceMajeure; Change in Legal Requirements**

 

**12.1       ****Force Majeure Event****.**  A forcemajeure event (“Force Majeure Event”) shall mean a cause or event beyondthe reasonable control of, and without the fault or negligence of a Partyclaiming Force Majeure, including, without limitation, an emergency underSection 13.2, floods, earthquakes, hurricanes, tornadoes, adverse weatherconditions not reasonably anticipated or acts of God; sabotage; vandalismbeyond that which could reasonably be prevented by a Party claiming ForceMajeure; terrorism; war; riots; fire; explosion; blockades; insurrection;strike; slow down or labor disruptions (even if such difficulties could beresolved by conceding to the demands of a labor group); economic hardship ordelay in the delivery of materials or equipment that is beyond the control of aParty claiming Force Majeure, and action or failure to take action by anyGovernmental Authority after the Effective Date (including the adoption orchange in any rule or regulation or environmental constraints lawfully imposedby such Governmental Authority), but only if such requirements, actions, orfailures to act prevent or delay performance; and inability, despite duediligence, to obtain any licenses, permits, or approvals required by anyGovernmental Authority.

 

**12.2       ****Effect of Force Majeure Event.**  Neither Party shall be considered in defaultin the performance of any of the obligations contained in the ContractDocuments, except for the Owner’s or Fagen’s obligations to pay money(including but not limited to, Summary of Payments), when and to the extent thefailure of performance shall be caused by a Force Majeure Event.  If either Party is rendered wholly or partlyunable to perform its obligations under the Contract Documents because of a ForceMajeure Event, such Party will be excused from performance affected by theForce Majeure Event to the extent and for the period of time so affected;provided that:

 

(a)                                  thenonperforming Party, within seventy two (72) hours after the nonperformingParty actually becomes aware of the occurrence of the Force Majeure Event,gives 

 

25

----

 

the other Party writtennotice describing the event or circumstance in detail, including if known, anestimation of its expected duration and probable impact on the performance ofthe affected Party’s obligations hereunder and continues to furnish timelyregular reports with respect thereto during the continuation of and upon thetermination of the Force Majeure Event;

 

(b)                                 the suspensionof performance is of no greater scope and of no longer duration than isreasonably required by the Force Majeure Event;

 

(c)                                  the obligationsof either Party that arose before the occurrence causing the suspension ofperformance and the performance that is not prevented by the occurrence, shallnot be excused as a result of such occurrence;

 

(d)                                 thenonperforming Party uses its best efforts to remedy its inability to performand mitigate the effect of such event and resumes its performance at theearliest possible time after cessation of such occurrence;

 

(e)                                  when thenonperforming Party is able to resume performance of its obligations under theContract Documents, that Party shall give the other Party written notice tothat effect; and

 

(f)                                    Fagen shall beentitled to a Day-for-Day time extension for those events set forth in Section12.1 to the extent the occurrence of such event delayed Fagen’s performance ofits obligations under this Agreement.

 

**12.3        Change in Legal Requirements.**  The Contract Time(s) shall be adjusted tocompensate Fagen for the effects of any changes to the Legal Requirements thatoccur after the date of this Agreement and as a result of such change, theperformance of the Work is adversely affected. Such effects may include, without limitation, revisions Fagen is requiredto make to the Work because of changes in Legal Requirements.

 

**Article 13**

 

**Changes tothe Contract Price and Scheduled Completion Dates**

 

**13.1        Change Orders.**

 

**13.1.1    **A change order (“Change Order”) is a written instrument issuedafter execution of this Agreement signed by Owner and Fagen, stating theiragreement upon all of the following:

 

(a)                                  the scope ofthe change in the Work;

 

(b)                                 the amount ofthe adjustment to the Target Price; and

 

(c)                                  the extent ofthe adjustment to the Contract Time(s).

 

26

----

 

**13.1.2    **All changes in the Work authorized by an applicable Change Order shall beperformed under the applicable conditions of the Contract Documents.  Prior to incurring any costs with respect toestimating services, design services and any other services involved in thepreparation of the proposed revisions to the Contract Documents, Fagen mustobtain the written approval of Owner for such costs.

 

**13.1.3    **If Owner requests a proposal for a change in the Work from Fagen andsubsequently elects not to proceed with the change, a Change Order shall beissued to reflect resulting adjustments to the Contract Times, and reimburseFagen for reasonable costs incurred for estimating services, design servicesand any other services involved in the preparation of proposed revisions to theContract Documents; provided that such costs were previously approved by Ownerpursuant to Section 13.1.2.

 

**13.2        Emergencies.**  In any emergency affecting the safety ofpersons and/or property, Fagen shall act, at its discretion, to preventthreatened damage, injury or loss and shall notify the Owner as soon aspracticable and in any event within seventy two (72) hours after Fagen becomesaware of the emergency.  The notice toOwner shall describe the emergency in detail, including a reasonable estimationof its expected duration and impact, if any, on the performance of Fagen’sobligations hereunder.  Any change in theTarget Price and/or Contract Time(s) on account of emergency work shall bedetermined as provided in this Article 13. Notwithstanding the above, the Parties agree that impact to the TargetPrice and/or Contract Time(s) shall be borne by the Party responsible for theemergency, or to the extent both Parties are partially responsible, to theextent of their comparative fault.

 

**13.3        Failure to Complete Owner’s Milestones.**  The dates when Owner’s obligations arerequired to be completed to enable Fagen to achieve the Contract Time(s) areidentified in Exhibit C (“Owner’s Milestones”).  The Contract Time(s) shall be revised toprovide a Day-for-Day extension of the Contract Time(s) for completion of theWork for each full Day during which Owner fails to timely complete itsobligations pursuant to the Owner’s Milestones.

 

**Article 14**

 

**Indemnity**

 

**14.1        Tax Claim Indemnification.**  If, in accordance with Owner’sdirection, an exemption for all or part of the Work is claimed for taxes, Ownershall indemnify, defend and hold harmless Fagen (and its officers, directors,agents, successors and assigns) from and against any and all damages, claimscosts, losses, liabilities, and expenses (including penalties, interest, fines,taxes of any kind, attorneys’ fees, accountants and other professional fees andassociated expenses or costs) incurred by Fagen as a result of any action takenby Fagen in accordance with Owner’s directive.

 

**14.2        Payment Claim Indemnification.**  To the extent Fagen hasreceived payment for any portion of the Work, Fagen shall indemnify, defend andhold harmless Owner Indemnified Parties from any claims or mechanic’s liensbrought against Owner Indemnified Parties or against the Project as a result ofthe failure of Fagen, or those for whose acts it is responsible, to 

 

27

----

 

pay for any services, materials, labor, equipment,taxes or other items or obligations furnished or incurred for or in connectionwith the Work.  Within three (3) businessdays of receiving written notice from Owner that such a claim or mechanic’slien has been filed, Fagen shall commence, and shall thereafterdiligently,  take the steps necessary todischarge such claim or lien.

 

**14.3       ****Fagen’s General Indemnification.**

 

**14.3.1    **Fagen, to the fullest extent permitted by Law, shall indemnify, holdharmless and defend Owner and its successors, assigns, officers, directors,employees and agents (“Owner Indemnified Parties”) from and against anyand all losses, costs, damages, injuries, liabilities, claims, demands,penalties, interest and causes of action, including without limitation attorney’sfees (collectively, the “Damages”) for bodily injury, sickness or death,and property damage or destruction (other than to the Work itself) to theextent resulting from the negligent acts, willful misconduct or omissions ofFagen, Subcontractors, their agents or anyone employed directly or indirectlyby any of them or anyone for whose acts any of them may be liable.

 

**14.3.2    **If an employee of Fagen, Subcontractors, their agents, anyone employeddirectly or indirectly by any of them or anyone for whose acts any of them maybe liable has a claim against Owner Indemnified Parties, Fagen’s indemnityobligation set forth in Section 14.3.1 above shall not be limited by anylimitation on the amount of damages, compensation or benefits payable by or forFagen, Subcontractors, their agents or other entity under any employee benefitacts, including workers’ compensation or disability acts.

 

**14.3.3    **Without limiting the generality of Section 14.3.1 hereof, Fagen shallfully indemnify, save harmless and defend the Owner Indemnified Parties fromand against any and all Damages in favor of any Governmental Authority or otherthird party to the extent caused by (a) failure of Fagen or anySubcontractor or any of their agents to comply with Legal Requirements asrequired by this Agreement, or (b) failure of Fagen or any Subcontractoror any of their agents to properly administer and pay any taxes or feesrequired to be paid by Fagen under this Agreement.

 

**14.3.4    **Nothing in Fagen’s General Indemnification contained in this Section 14.3shall be read to limit in any way any entitlement Fagen shall have to insurancecoverage under any insurance policy, including any insurance policy required byeither Party under this Agreement.

 

28

----

 

**14.4        Owner’s General Indemnification.**  Owner, to the fullest extent permitted byLaw, shall indemnify, hold harmless and defend Fagen and any of Fagen’sofficers, directors, employees, or agents from and against claims, losses, damages,liabilities, including attorneys’ fees and expenses, for bodily injury,sickness or death, and property damage or destruction (other than to the Workitself) to the extent resulting from the negligent acts, willful misconduct, oromissions of Owner, its officers, directors, employees, agents, or anyone forwhose acts any of them may be liable.

 

**14.4.1    **Without limiting the generality of Section 14.4 hereof, Owner shall fullyindemnify, save harmless and defend Fagen and any of Fagen’s officers, directors,employees, or agents from and against any and all Damages in favor of anyGovernmental Authority or other third party to the extent caused by(a) failure of Owner or any of Owner’s agents to comply with LegalRequirements as required by this Agreement, or (b) failure of Owner orOwner’s agents to properly administer and pay any taxes or fees required to bepaid by Owner under this Agreement.

 

**14.4.2    **Owner shall indemnify and hold harmless Fagen, Subcontractors, anyoneemployed directly or indirectly for any of them, and their officers, directors,employees and agents, from and against any and all claims, losses, damages,liabilities and expenses, (including but not limited to all fees and expensesof engineers, architects, attorneys, and other professionals and all court orarbitration or other dispute resolution costs), arising out of or relating tothe (i) implementation, (ii) construction, (iii) performance, (iv) maintenance,or (v) lack; in each case, of soil stabilization on the Site after Final Completion.

 

**14.4.3    **Nothing in the Owner’s General Indemnification contained in this Section14.4 shall be read to limit in any way any entitlement Owner shall have toinsurance coverage under any insurance policy, including any insurance policyrequired by either Party under this Agreement.

 

**14.5        Indemnification.**  Owner, to the fullest extent permitted byLaw, shall (i) indemnify, hold harmless and defend Fagen and all of Fagen’sofficers, directors, employees and agents from and against all third party claims,losses, damages, liabilities, including attorneys’ fees and expenses, and (ii)waive all claims, rights, causes of action, losses, damages, liabilities,including attorneys’ fees and expenses against Fagen and its officers,directors, employees and agents, in each case; arising from or attributable to(a) any Prior Work, and (b) agreements for design, build, procurement,engineering, construction, or related services entered into by Aventine withthird parties which relate to, or were related to, the Project.

 

**Article 15**

 

**Stop Work;Termination for Cause**

 

**15.1        Owner’s Right to Stop Work.**  Owner may, without cause andfor its convenience, order Fagen in writing to stop and suspend the Work.  Such suspension shall not exceed sixty (60)consecutive Days, or in the aggregate more than ninety (90) Days, during theduration of construction of the Plant. Fagen is entitled to seek an adjustment of the Contract 

 

29

----

 

Time(s) and Target Price if its time and/or cost toperform the Work has been adversely impacted by any suspension or stoppage ofwork by Owner.

 

**15.2        Owner’s Right to Perform and Terminatefor Cause.**

 

**15.2.1    **If Fagen fails to: (i) provide a sufficient number of skilled workers;(ii) supply the materials required by the Contract Documents; (iii) comply withapplicable Legal Requirements; (iv) timely pay, without cause, Subcontractors;(v)  perform the Work with promptness and diligence to ensure that theWork is completed by the Contract Time(s), as such times may be adjusted inaccordance with this Agreement; or (vi) perform material obligations under theContract Documents; then Owner, in addition to any other rights and remediesprovided in the Contract Documents or by law or equity, shall have the rightsset forth in Sections 15.2.2 and 15.2.3 below.

 

**15.2.2    **Upon the occurrence of an event set forth in Section 15.2.1 above,Owner may provide written notice to Fagen that it intends to terminate theAgreement unless the problem cited is cured, or commenced to be cured withinseven (7) Days of Fagen’s receipt of such notice.  If Fagen fails to cure, or reasonablycommence to cure such problem and thereafter diligently pursue such cure tocompletion, then Owner may give a second written notice to Fagen of its intentto terminate following an additional seven (7) Day period.  If Fagen, within such second seven (7) Dayperiod, fails to cure, or reasonably commence to cure such problem andthereafter diligently pursue such cure to completion, then Owner may declarethe Agreement terminated for default by providing written notice to Fagen ofsuch declaration.  If (i) the insurancecoverage required to be provided by Fagen pursuant to Article 17 hereof issuspended or cancelled without Fagen providing immediate replacement coverage(and, in any case, within seven (7) Days of the occurrence thereof) meeting therequirements specified in Article 17 hereof; (ii) Fagen purports to make anassignment of this Agreement in breach of the provisions of Section 21.1hereof, or (iii) any representation or warranty made by Fagen under Section18.1 hereof was false or materially misleading when made, then Owner mayterminate this Agreement upon written notice to Fagen.

 

**15.2.3    **In addition to any other remedy available to Owner under the ContractDocuments or at Law, upon declaring the Agreement terminated pursuant toSection 15.2.2 above, Owner may enter upon the premises and takepossession, for the purpose of completing the Work, of all materials,equipment, scaffolds, tools, appliances and other items thereon, which havebeen paid for by Owner for the performance of the Work, all of which Fagenhereby transfers, assigns and sets over to Owner for such purpose, and toemploy any person or persons to complete the Work and provide all of therequired labor, services, materials, equipment and other items.  If Owner improperly terminates the Agreementfor cause, Owner shall pay Fagen for the following:

 

(a)                                  all Work,including without limitation costs and expenses incurred in performing theWork, executed but not previously paid for;

 

30

----

 

(b)                                 the reasonablecosts and expenses attributable to such termination, including demobilizationcosts;

 

(c)                                  amounts due insettlement of terminated contracts with Subcontractors; and

 

(d)                                 A terminationfee in the amount of twenty percent (20%) on the sum of items (a), (b), and (c)above.

 

**15.3        Fagen’s Right to Stop Work.**

 

**15.3.1    **Fagen may, in addition to any other rights afforded under the ContractDocuments or at Law, stop work for Owner’s failure to pay amounts properly dueunder Fagen’s Summary of Payment in accordance with Section 15.3.2 below.

 

**15.3.2    **If any of the events set forth in Section 15.3.1 above occur, Fagenhas the right to stop work by providing written notice to Owner that Fagen willstop work unless such event is cured within seven (7) Days from Owner’s receiptof Fagen’s notice. If Owner fails to cure or reasonably commence to cure suchproblem and thereafter diligently pursue such cure to completion, then Fagenmay give a second written notice to Owner of its intent to stop work within anadditional seven (7) Day period.  IfOwner, within such second seven (7) Day period, fails to cure, or reasonablycommence to cure such problem and thereafter diligently pursue such cure tocompletion, then Fagen may stop work unless such problem involves an amountdisputed in good faith by Owner.  In suchcase, Fagen shall be entitled to make a claim for adjustment to the ContractTime(s) to the extent it has been adversely impacted by such stoppage.

 

**15.4        Fagen’s Right to Terminate for Cause.**

 

**15.4.1    **Fagen, in addition to any other rights and remedies provided in theContract Documents or by Law, may terminate the Agreement for cause for thefollowing reasons:

 

(a)                                  Work on the Plant has beenstopped for thirty five (35) consecutive Days, or more than sixty (60) Days,during the duration of construction of such Plant, because of court order, anyGovernmental Authority having jurisdiction over the Work, or orders by Ownerunder Section 15.1 hereof, provided that such stoppages are not due to theacts or omissions of Fagen, Design Consultant and their respective officers,agents, employees, Subcontractors or any other person for whose acts Fagen maybe liable under Law.

(b)                                 Owner’s failure to provideFagen with any information, permits or approvals that are Owner’sresponsibility under the Contract Documents which result in the Work beingstopped for thirty five (35) consecutive Days, or more than sixty (60) Days,during the duration of the Work, even though Owner has not ordered Fagen inwriting to stop and suspend the Work pursuant to Section 15.1 hereof.

 

31

----

 

(c)                                  Owner fails to meet itsobligations under Exhibits A or C and such failure results in the Work beingstopped for thirty five (35) consecutive Days, or more than sixty (60)  Days, during the duration of the Work eventhough Owner has not ordered Fagen in writing to stop and suspend the Workpursuant to Section 15.1 hereof.

(d)                                 Owner’s failure to cure theproblems set forth in Section 15.3.1 above within seven (7) Days afterFagen has stopped the Work.

 

**15.4.2    **Upon the occurrence of an event set forth in Section 15.4.1 above,Fagen may elect to terminate this Agreement by providing written notice toOwner that it intends to terminate the Agreement unless the problem cited iscured within seven (7) Days of Owner’s receipt of such notice.  If Owner fails to cure, or reasonablycommence to cure, such problem, then Fagen may give a second written notice toOwner of its intent to terminate within an additional seven (7) Dayperiod.  If Owner, within such secondseven (7) Day period, fails to cure, such problem, then Fagen may declare theAgreement terminated for default by providing written notice to Owner of suchdeclaration.  In such case, Fagen shallbe entitled to recover in the same manner as if Owner had wrongfully terminatedthe Agreement as provided in Section 15.2.3.

 

**15.5        Bankruptcy of Owner or Fagen.**

 

**15.5.1    **If either Owner or Fagen institutes or has instituted against it a caseunder the United States Bankruptcy Code (such Party being referred to as the “BankruptParty”), such event may impair or frustrate the Bankrupt Party’s abilityto perform its obligations under the Contract Documents.  Accordingly, should such event occur:

 

(a)                                  The Bankrupt Party,its trustee or other successor, shall furnish, upon request of the non-BankruptParty, adequate assurance of the ability of the Bankrupt Party to perform allfuture obligations under the Contract Documents, which assurances shall beprovided within ten (10) Days after receiving notice of the request; and

 

(b)                                 The BankruptParty shall file an appropriate action within the bankruptcy court to seekassumption or rejection of the Agreement within sixty (60) Days of theinstitution of the bankruptcy filing and shall diligently prosecute suchaction.

 

**15.5.2    **If the Bankrupt Party fails to comply with its foregoing obligations, thenon-Bankrupt Party shall be entitled to request the bankruptcy court to rejectthe Agreement, declare the Agreement terminated and pursue any other recourseavailable to the non-Bankrupt Party under this Article 15.

 

**15.5.3    **The rights and remedies under this Section 15.5 shall not be deemedto limit the ability of the non-Bankrupt Party to seek any other rights andremedies provided by the Contract Documents or by Law, including its ability toseek relief from any automatic stays under the United States Bankruptcy Code orthe right of 

 

32

----

 

Fagen,if it is the non-Bankrupt Party, to stop Work under any applicable provision ofthis Agreement.

 

**Article 16**

 

**Representativesof the Parties**

 

**16.1       ****Designation of Owner’s Representatives.**  Owner designates the individual listed belowas its senior representative (“Owner’s Senior Representative”), whichindividual has the authority and responsibility for avoiding and resolvingdisputes under Article 19:

 

Tom Manuel

Chief Executive Officer

Aventine Renewable Energy — Mt Vernon, LLC

P.O.  Box 1800

Pekin, IL 61555

Phone: (309) 347-9388

Facsimile: (309)347-8541

 

Owner designates the individual listed below as itsrepresentative (“Owner’s Representative”), which individual has theauthority and responsibility set forth in Section 4.3:

 

JeffreyG. See

V.P.of Project Development

AventineRenewable Energy — Mt Vernon, LLC

7201Port Road

MountVernon, IN 47620

Cell605-691-9258

Facsimile:309-478-1892

 

**16.2       ****Designation of Fagen’s Representatives.**  Fagen designates the individual listed belowas its senior representative (“Fagen’s Senior Representative”), whichindividual has the authority and responsibility for avoiding and resolvingdisputes under Article 19:

 

Roland “Ron” FagenCEO and President501 W. Highway 212P.O. Box 159Granite Falls, MN 56241Telephone:  (320) 564-3324Facsimile: (320) 564-3278

 

33

----

 

Fagen designates the individual listed below as itsrepresentative (“Fagen’sRepresentative”), which individual hasthe authority and responsibility set forth in Section 3.1:

 

Evan FagenExecutive Vice President501 W. Highway 212P.O. Box 159Granite Falls, MN 56241Telephone:  (320) 564-3324 Facsimile: (320) 564-5196

 

**Article 17**

 

**Insurance**

 

**17.1        Insurance.**  Fagen shall procure and maintain in forcethrough the Final Completion Date the following insurance coverage with thepolicy limits indicated, and otherwise in compliance with the provisions ofthis Agreement:

 
| Commercial General Liability: |   |   |   |
|-------------------------------|--------|--------|--------|

 
| General  Aggregate          |   | $ | 2,000,000 |   |
|-----------------------------|--------|---|-----------|--------|
| Products-Comp/Op  AGG       |   | $ | 2,000,000 |   |
| Personal  & Adv Injury  |   | $ | 1,000,000 |   |
| Each Occurrence             |   | $ | 1,000,000 |   |
| Fire  Damage (Any one fire) |   | $ | 50,000    |   |
| Med  Exp (Any one person)   |   | $ | 5,000     |   |

 
| Automobile Liability: |   |   |   |
|-----------------------|--------|--------|--------|

 
| Combined  Single Limit |   |   |      |
|------------------------|--------|--------|-----------|
| Each  Occurrence       |   | $      | 1,000,000 |   |
|                        |        |        |           |  |

 
| Excess Liability — Umbrella Form: |   |   |   |
|----------------------------------------|--------|--------|--------|

 
| Each  Occurrence |   | $ | 20,000,000 |   |
|------------------|--------|---|------------|--------|
| Aggregate        |   | $ | 20,000,000 |   |

 
| Workers’ Compensation                                                 |   |   |   |
|----------------------------------------------------------------------------|--------|--------|--------|
|                                                                       |   |   |   |
| Statutory limits as required by the state in which  the Work is performed. |
|                                                                       |   |   |   |
| Employers’ Liability:                                                 |   |   |   |

 
| Each  Accident         |   | $ | 1,000,000 |   |
|------------------------|--------|---|-----------|--------|
| Disease-Policy  Limit  |   | $ | 1,000,000 |   |
| Disease-Each  Employee |   | $ | 1,000,000 |   |

 

34

----

 
| Professional Errors and Omissions |   |   |   |
|-----------------------------------|--------|--------|--------|

 
| Per  Claim |   | $ | 5,000,000 |   |
|------------|--------|---|-----------|--------|
| Annual     |   | $ | 5,000,000 |   |

 

**17.2        Fagen’s Insurance Requirements.**

 

**17.2.1    **Fagen is responsible for procuring and maintaining from insurancecompanies authorized to do business in the state in which the Plant is located,the following insurance coverage for claims which may arise from or out of theperformance of the Work and obligations under the Contract Documents:

 

(a)                                  coverage forclaims arising under workers’ compensation, disability and other similaremployee benefit Laws applicable to the Work;

 

(b)                                 coverage forclaims by Fagen’s employees for bodily injury, sickness, disease, or death;

 

(c)                                  coverage forclaims by any person other than Fagen’s employees for bodily injury, sickness,disease, or death;

 

(d)                                 coverage forpersonal injury liability claims for damages sustained by a person as a director indirect result of Fagen’s employment of the person, or sustained by anyother person;

 

(e)                                  coverage forclaims for damages (other than to the Work) because of injury to or destructionof tangible property, including loss of use;

 

(f)                                    coverage forclaims of damages because of personal injury or death, or property damageresulting from ownership, use and maintenance of any motor vehicle; and

 

(g)                                 coverage forcontractual liability claims arising out of Fagen’s obligations underSection 14.3.

 

**17.2.2    **Fagen’s liability insurance required by this Section 17.2 shall bewritten for the coverage amounts set forth in Section 17.1 and shallinclude completed operations insurance for the period of time set forth in theAgreement, and shall name Owner as an additional insured, without applicationof deductible, retention or retrospective premiums as to the additionalinsured.

 

**17.2.3    **To the extent Owner requires Fagen or any Design Consultant to provideprofessional liability insurance for claims arising from the negligentperformance of design services by Fagen or the Design Consultant, the coveragelimits, duration and other specifics of such insurance shall be as set forth inthe Agreement.  Any professionalliability shall specifically delete any design-build or similar exclusions thatcould compromise coverage because of the design-build delivery of theProject.  Such policies shall be providedprior to the commencement of any design services hereunder.

 

35

----

 

Promptly following execution of this Agreement, Fagenshall provide Owner with copies of insurance certificates reflecting coveragerequired under this Section 17.2. evidencing that (i) all of Fagen’s insuranceobligations required by the Contract Documents are in full force and in effectand will remain in effect for the duration required by the Contract Documentsand (ii) no insurance coverage required hereunder will be canceled, renewalrefused, or changed unless at least thirty (30) Days prior written notice isgiven to Owner.  **Allinsurance certificates provided by Fagen pursuant to this Section 17.2.3 shall,as applicable, clearly identify in writing as additional insured and/orexpressly include Owner**. Fagen’s insurance shall not lapse or be cancelled during the term ofthis Agreement. Owner shall have the right to review, at Fagen’s offices, allinsurance policies to which Owner is named as an additional insured.  In the event Fagen replaces insuranceproviders for any policy required under this Section, revises policy coverage,or otherwise modifies any applicable insurance policy in any way, Fagen shallprovide Owner, for its review or possession as provided under this Section17.2.3, prompt notice of such fact and the certificate of insurance for suchnew, revised or modified policy when available.

 

**17.3        Owner’s Liability Insurance.**  Owner shall procure and maintain frominsurance companies authorized to do business in the state in which the Plantis located the following liability insurance with the policy limits indicated:

 
| Commercial  General Liability: |   |   |   |
|--------------------------------|--------|--------|--------|

 
| General  Aggregate          |   | $ | 2,000,000 |   |
|-----------------------------|--------|---|-----------|--------|
| Products-Comp/Op  AGG       |   | $ | 2,000,000 |   |
| Personal  & Adv Injury  |   | $ | 1,000,000 |   |
| Each Occurrence             |   | $ | 1,000,000 |   |
| Fire  Damage (Any one fire) |   | $ | 50,000    |   |
| Med  Exp (Any one person)   |   | $ | 5,000     |   |

 
| Automobile Liability: |   |   |   |
|-----------------------|--------|--------|--------|

 
| Combined  Single Limit |   |   |      |
|------------------------|--------|--------|-----------|
| Each  Occurrence       |   | $      | 1,000,000 |   |
|                        |        |        |           |  |

 
| Excess Liability — Umbrella Form: |   |   |   |
|----------------------------------------|--------|--------|--------|

 
| Each  Occurrence |   | $ | 20,000,000 |   |
|------------------|--------|---|------------|--------|
| Aggregate        |   | $ | 20,000,000 |   |

 
| Employers’ Liability: |   |   |   |
|----------------------------|--------|--------|--------|

 
| Each  Accident         |   | $ | 1,000,000 |   |
|------------------------|--------|---|-----------|--------|
| Disease-Policy  Limit  |   | $ | 1,000,000 |   |
| Disease-Each  Employee |   | $ | 1,000,000 |   |

 

36

----

 

Thegeneral liability insurance obtained by Owner shall name Fagen, andSubcontractors as additional insured, without application of deductible,retention or retrospective premiums as to the additional insured.

 

**17.4        Owner’s Property Insurance.**

 

**17.4.1    **Unless otherwise provided in the Contract Documents, Owner shall procurefrom insurance companies authorized to do business in the state in which thePlant is located, and maintain through Final Completion, property insuranceupon the entire Plant in a minimum amount equal to the full insurable value ofthe Plant, including professional fees, overtime premiums and all otherexpenses incurred to replace or repair the insured property.  The property insurance obtained by Ownershall include as additional insured the interests of Owner, Fagen, andSubcontractors and shall insure against the perils of fire and extendedcoverage, theft, vandalism, malicious mischief, collapse, flood, earthquake,debris removal and other perils or causes of loss as called for in the ContractDocuments and without application of any deductible, retention or retrospectivepremium.  Except as set forth in the lastsentence of this paragraph, Owner shall maintain coverage equal to or in excessof the value of each of Fagen’s and Subcontractors’ property on the Site.  The property insurance shall include physicalloss or damage to the Work, including materials and equipment in transit, atthe Site or at another location. Notwithstanding the foregoing, the property insurance provided by Ownerhereunder shall not be required to include Fagen’s and Subcontractors’ tools orconstruction equipment.

 

**17.4.2    **Unless the Contract Documents provide otherwise (e.g. the last sentenceof Section 17.4.1 above), (i) Owner shall procure and maintain Work equipmentand machinery insurance that will include as additional insured Owner, Fagen,and Subcontractors, in an amount not less than the Contract Price , and withoutapplication of any deductible, retention or retrospective premium as to theadditional insured and (ii) Owner shall maintain coverage equal to or in excessof the value of each of Fagen’s, and Subcontractors’ interest or investment inWork equipment or machinery on the Site.

 

**17.4.3    **[Reserved.]

 

**17.4.4    **Promptly following execution of this Agreement, Owner shall provide Fagenwith copies of the insurance certificates reflecting coverage required underthis Section 17.4 evidencing that (i) all Owner’s insurance obligationsrequired by the Contract Documents are in full force and in effect and willremain in effect until Fagen has completed all of the Work and has receivedFinal Payment from Owner, and (ii) no insurance coverage will be canceled,renewal refused, or changed unless at least thirty (30) Days prior writtennotice is given to Fagen.  **All insurance certificates provided by Owner pursuant to this Section17.4.4 shall, as applicable, clearly identify in writing as additional insuredand/or expressly include the interests of Fagen and Subcontractors**.  Owner’s property insurance shall not lapse orbe cancelled during the term of this Agreement. Fagen shall have the right toreview, at Owner’s offices, all insurance policies to which Fagen andSubcontractors are named as 

 

37

----

 

additionalinsured.  In the event Owner replacesinsurance providers for any policy required under this Section, revises policycoverage, or otherwise modifies any applicable insurance policy in any way,Owner shall provide Fagen prompt notice of such fact, the certificate ofinsurance for such new, revised or modified policy when available.

 

**17.4.5    **Owner and Fagen waive against each other and Owner’s separatecontractors, Subcontractors, agents and employees of each and all of them alldamages covered by insurance provided herein, except such rights as they mayhave to the proceeds of such insurance. Fagen and Owner shall, where appropriate and where agreed to byapplicable counterparties, (i) require similar waivers of subrogation from Owner’sseparate contractors, Subcontractors, and insurance providers and (ii) requireeach of them to include similar waivers in their contracts or policies.

 

**Article 18**

 

**Representationsand Warranties**

 

**18.1       ****Fagen and Owner Representations and Warranties.**  Each of Fagen and Owner represents that:

 

(a)                                  it is duly organized, validly existing and in good standing under theLaws of its state of formation and has all requisite power and authority toexecute and deliver this Agreement, to perform its obligations hereunder and toconsummate the transactions contemplated hereby;

 

(b)                                 this Agreement has been duly executed and delivered by such Party andconstitutes the legal, valid and binding obligations of such Party, enforceableagainst such Party in accordance with their respective terms, except asenforcement may be limited by bankruptcy, insolvency, moratorium or similarLaws affecting creditor’s rights or by general equitable principles;

 

(c)                                  the execution, delivery and performance of this Agreement and the consummationof the transactions contemplated hereby do not and will not conflict with orviolate (a) the certificate of incorporation or bylaws or equivalentorganizational documents of such Party, or (b) any Law applicable to such Partyand other than the permits listed on Exhibit F, such execution, delivery andperformance of this Agreement does not require any Governmental Approval; and

 

(d)                                 there is no action pending or, to the knowledge of such Party,threatened, which would hinder, modify, delay or otherwise adversely affectsuch Party’s ability to perform its obligations under the Contract Documents.

 

**18.2        Fagen Representations and Warranties.**  Fagen further represents that it has thenecessary financial resources to fulfill its obligations under this Agreement.

 

38

----

 

**Article 19**

 

**DisputeResolution**

 

**19.1        Dispute Avoidance and Mediation.**  The Parties are fully committed to workingwith each other throughout the Project and agree to communicate regularly witheach other at all times so as to avoid or minimize disputes ordisagreements.  If disputes ordisagreements do arise, Fagen and Owner each commit to resolving such disputesor disagreements in an amicable, professional and expeditious manner so as toavoid unnecessary losses, delays and disruptions to the Work.

 

Fagenand Owner will first attempt to resolve disputes or disagreements at the fieldlevel through discussions between Fagen’s Representative and Owner’sRepresentative.

 

Ifa dispute or disagreement cannot be resolved through Fagen’s Representative andOwner’s Representative, Fagen’s Senior Representative and Owner’s SeniorRepresentative, upon the request of either Party, shall meet as soon asconveniently possible, but in no case later than thirty (30) Days after such arequest is made, to attempt to resolve such dispute or disagreement.  Prior to any meetings between the SeniorRepresentatives, the Parties will exchange relevant information that willassist the Parties in resolving their dispute or disagreement.

 

If,after meeting, the Senior Representatives determine that the dispute ordisagreement cannot be resolved on terms satisfactory to both Parties, theParties shall submit the dispute or disagreement to non-binding mediation.  The mediation shall be conducted inIndianapolis, Indiana by a mutually agreeable impartial mediator or, if theParties cannot so agree, a mediator designated by the American ArbitrationAssociation (“AAA”) pursuant to its Construction Industry ArbitrationRules and Mediation Procedures.  Themediation will be governed by and conducted pursuant to a mediation agreementnegotiated by the Parties or, if the Parties cannot so agree, by proceduresestablished by the mediator.  Mediationis a condition precedent to arbitration, unless the Parties agree otherwise.

 

**19.2        Arbitration.**  Any claims, disputes orcontroversies between the Parties arising out of or relating to the Agreement,or the breach thereof, which have not been resolved in accordance with theprocedures set forth in Section 19.1 above shall be decided by arbitrationto be conducted in Indianapolis, Indiana in accordance with the ConstructionIndustry Arbitration Rules and Mediation Procedures of the AAA then in effect,unless the Parties mutually agree otherwise. A demand for arbitration shall be made within a reasonable time afterthe dispute has arisen, and in no event shall it be made after the date wheninstitution of legal or equitable proceedings based on such dispute would bebarred by the applicable statute of limitations. ** **The arbitration shall be governedby the Federal Arbitration Act.

 

Theaward of the arbitrator(s) shall be final and binding upon the Parties.  Judgment may be entered upon it by any courthaving jurisdiction thereof.

 

Fagenand Owner expressly agree that any arbitration pursuant to thisSection 19.2 may be joined or consolidated with any arbitration involvingany other person or entity (i) necessary to resolve the claim, dispute orcontroversy, or (ii) substantially involved in or affected by such claim, 

 

39

----

 

disputeor controversy.  Both Fagen and Ownerwill include appropriate provisions in all contracts they execute after thedate of execution of this Agreement with other parties in connection with theProject to require arbitration of all disputes and such joinder orconsolidation (to the extent such other parties will agree to such provisions).

 

Theprevailing Party in any arbitration, or any other final, binding disputeproceeding upon which the Parties may agree, shall be entitled to recover fromthe other Party reasonable attorneys’ fees and expenses incurred by theprevailing Party in such arbitration or such other dispute proceeding.

 

**19.3        Duty to Continue Performance.**  Unless provided to the contrary in theContract Documents, Fagen shall continue to perform the Work and Owner shallcontinue to satisfy its payment obligations to Fagen, pending the finalresolution of any dispute or disagreement between Fagen and Owner.

 

**19.4        No Consequential Damages.**  Notwithstanding anything herein to thecontrary, neither Fagen nor Owner shall be liable to the other for anyconsequential losses or damages, whether arising in contract, warranty, tort(including negligence), strict liability or otherwise, including but notlimited to, losses of use, profits, business, reputation or financing,

 

**19.5        Limitation of Liability.**  Notwithstanding anything else in thisAgreement to the contrary, the aggregate liability of Fagen, itsSubcontractors, vendors, suppliers, agents and employees, to Owner (or anysuccessor thereto or assignee thereof) for any and all claims and/orliabilities arising out of or relating in any manner to the Work or to Fagen’sperformance or non-performance of its obligations hereunder, whether based incontract, tort (including negligence), strict liability, or otherwise, shallnot exceed, in the aggregate, the Target Price and shall be reduced, upon theissuance of each Summary of Payment, by the total value of such Summary of Paymentuntil such time as Fagen’s aggregate liability has been reduced to *****Dollars ($*****).  Upon Final Completion,Fagen’s aggregate liability shall be reduced to the greater of (1) Ten Percent(10%) of the Target Price or (2) the amount of insurance coverage available torespond to the claim or liability under any policy of insurance provided byFagen under this Agreement. Except for any remaining warranty obligations,Fagen’s aggregate liability shall be reduced to zero on the one yearanniversary of the Final Completion Date.

 

**Article 20**

 

**Confidentialityof Shared Information**

 

**20.1        Non-Disclosure Obligation.**  Except as required by court order, subpoena,or Applicable Law, the Parties will hold in confidence, and will use only forthe purposes of completing the Project, any and all Confidential Informationdisclosed to each other.  Neither Partyshall disclose to third parties any Confidential Information without theexpress written consent of the other Party, which consent shall not beunreasonably withheld.  The Parties shallat all times use their respective reasonable efforts to keep all ConfidentialInformation and information regarding the terms and conditions of thisAgreement confidential.  However, theParties may disclose Confidential Information to their respective lenders,lenders’ agents, advisors and/or consultants only as reasonably necessary inconnection with the financing of the

 

40

----

 

Plant or to enable them to advise the Parties withregard to the Contract Documents and the Project, provided that prior to suchdisclosure any party to whom Confidential Information is disclosed is informedby the disclosing Party of the existence of this confidentiality obligation andagrees to be obligated to maintain the confidentiality of any informationreceived. The term “Confidential Information” will mean (i) confidentialor proprietary information regarding the other Party’s business affairs, finances,technology, processes, plans or installations, product information, know-how,or other information that is received from the other Party pursuant to thisAgreement or the Parties’ relationship prior thereto or is developed pursuantto this Agreement, (ii) any and all information concerning the ContractDocuments, the Agreement, or the terms thereof, and (iii) all information whichone Party, directly or indirectly, may acquire from another Party; however,Confidential Information will not include information falling into any of thefollowing categories:

 

(a)                                  informationthat, at the time of disclosure hereunder, is in the public domain;

 

(b)                                 informationthat, after disclosure hereunder, enters the public domain other than by breachof this Agreement or the obligation of confidentiality;

 

(c)                                  informationthat, prior to disclosure hereunder, was already in the recipient’s possession,either without limitation on disclosure to others or subsequently becoming freeof such limitation;

 

(d)                                 informationobtained by the recipient from a third party having an independent right todisclose this information; and

 

(e)                                  informationthat is available through discovery by independent research without use of oraccess to the Confidential Information acquired from the other Party; and

 

(f)                                    photographs anddescriptive information regarding the Project, including, Owner’s name andPlant location.

 

Each Party’s obligation to maintain Confidential Information inconfidence will be deemed performed if such Party observes with respect theretothe same safeguards and precautions, which such Party observes with respect toits own Confidential Information of the same or similar kind.  It will not be deemed to be a breach of theobligation to maintain Confidential Information in confidence if ConfidentialInformation is disclosed upon the order of a court or other authorizedGovernmental Authority, or pursuant to other Legal Requirements.  However, if Owner is required to file theContract Documents or a portion thereof with a Governmental Authority, itagrees that it will not do so without first informing Fagen of the requirementand seeking confidential treatment of the Contract Documents, or as muchthereof as such Governmental Authority permits, prior to filing the documentsor a portion thereof.

 

Notwithstanding the above, or any other provision of this Agreement,Fagen agrees that any Delta-T Technology (as defined in the License) itreceives from Owner, APTI, or any other person or entity in conjunction withthe Project is subject to the terms and provisions of that 

 

41

----

 

certain Amended and Restated License of Technology between AppliedProcess Technology International LLC (“APTI”), as successor to Delta-TCorporation, and Aventine Renewable Energy — Mt Vernon, LLC dated February 26,2010 (the “License”), a copy of which is attached hereto as Exhibit L.  As such, Fagen agrees to maintain theconfidentiality of, and to use, the Delta-T Technology in accordance with andas permitted under the terms of the License.

 

**20.2        Publicity and Advertising.**  Neither Party shall make, nor permit any ofits subcontractors, agents, or vendors to make any external announcement orpublication, release any photographs or information concerning the Project orany part thereof, or make any other type of communication to any member of thepublic, press, business entity, or any official body which names the otherParty unless prior written consent is obtained from such Party, which consentshall not be unreasonably withheld.

 

**20.3        Term of Obligation.**  The confidentiality obligations of theParties pursuant to this Article 20 shall survive the expiration or othertermination of this Agreement for a period of five (5) years, except for theobligations relating to the Delta-T Technology, which shall apply as long asthe License is in effect.

 

**Article 21**

 

**Miscellaneous**

 

**21.1       ****Assignment.**  ThisAgreement shall be binding upon, shall inure to the benefit of, and may beperformed by, the successors and permitted assigns of the Parties, except thatneither Fagen nor Owner shall, without the written consent of the other, assignor transfer this Agreement or any of the Contract Documents.  Fagen’s subcontracting portions of the Workin accordance with this Agreement shall not be deemed to be an assignment ofthis Agreement.

 

**21.2       ****Successors.**  Fagen andOwner intend that the provisions of the Contract Documents are binding upon theParties, their employees, agents, heirs, successors and assigns.

 

**21.3       ****Governing Law.**  ThisAgreement shall be governed by and construed and enforced in accordance with,the substantive laws of the state of Indiana, without regard to the conflict oflaws provisions thereof.

 

**21.4       ****Severability.**  Ifany provision or any part of a provision of the Contract Documents shall befinally determined to be superseded, invalid, illegal, or otherwiseunenforceable pursuant to any applicable Legal Requirements, such determinationshall not impair or otherwise affect the validity, legality, or enforceabilityof the remaining provision or parts of the provision of the Contract Documents,which shall remain in full force and effect as if the unenforceable provisionor part were deleted.

 

**21.5       ****No Waiver.**  The failureof either Fagen or Owner to insist, in any one (1) or more instances, on theperformance of any of the obligations required by the other under the ContractDocuments shall not be construed as a waiver or relinquishment of suchobligation or right with respect to future performance.

 

42

----

 

**21.6       ****Headings.**  The table ofcontents and the headings used in this Agreement or any other ContractDocument, are for ease of reference only and shall not in any way be construedto limit, define, extend, describe, alter, or otherwise affect the scope or themeaning of any provision of this Agreement.

 

**21.7       ****Notice.**  Whenever theContract Documents require that notice be provided to a Party, notice shall bedelivered in writing to such Party at the address listed below, or to suchother address as a Party may notify the other Party in accordance with thisSection 21.7.  Notice will be deemed tohave been validly given if delivered (i) in person to the individual intendedto receive such notice, (ii) by registered or by certified mail, postageprepaid to the address indicated in the Agreement within four (4) Days afterbeing sent, or (iii) by facsimile, by the time stated in a machine-generatedconfirmation that notice was received at the facsimile number of the intendedrecipient.

 

Ifto Fagen, to:

 

Fagen,Inc.501 W. Highway 212P. O. Box 159Granite Falls, MN 56241Attention: Evan FagenFax:  (320) 564-5196

 

witha copy to:

 

Fagen,Inc.501 W. Highway 212P. O. Box 159Granite Falls, MN 56241Attention: Jennifer JohnsonFax:  (320) 564-3278

 

andto:

 

Fagen,Inc.501 W. Highway 212P. O. Box 159Granite Falls, MN 56241Attention: Ryan MantheyFax:  (320) 564-3278

 

Ifto Owner, to:

 

Aventine RenewableEnergy — Mt Vernon, LLC

7201 Port Road

Mount Vernon, IN 47620

 

43

----

 

Cell 605-691-9258

Attention: Jeffrey G.See

Fax:         (309) 478-1892

 

witha copy to:

 

Aventine RenewableEnergy — Mt Vernon, LLC

P.O. Box 1800

Pekin, IL 61555

Attention: John Castle

Fax:         (309) 347-8541

 

andto:

 

AventineRenewable Energy — Mt Vernon, LLC

P.O.Box 1800

Pekin,IL 61555

Attention: ChristopherNichols

Fax:         (309) 347-8541

 

**21.8       ****No Privity with Design Consultant/Subcontractors.**  Nothing in the Contract Documents is intendedor deemed to create any legal or contractual relationship between Owner and anyDesign Consultant or Subcontractor.

 

**21.9       ****Amendments.**  The ContractDocuments may not be changed, altered, or amended in any way except in writingsigned by a duly authorized representative of each Party.

 

**21.10     ****Entire Agreement.**  This Agreement consists ofthe terms and conditions set forth herein, as well as the Exhibits hereto,which are incorporated by reference herein and made a part hereof.  This Agreement sets forth the full andcomplete understanding of the Parties as of the Effective Date with respect tothe subject matter hereof and shall supersede and replace in all respects anyother agreement entered into by and between the Parties with respect to theProject.

 

**21.11      Third-Party Beneficiaries.**  Except as expressly provided herein, thisAgreement is intended to be solely for the benefit of the Owner, Fagen andpermitted assigns, and is not intended to and shall not confer any rights orbenefits on any person not a signatory hereto.

 

**21.12      Counterparts.**  This Agreement may be executed in one (1) ormore counterparts, each of which shall be deemed an original and all of whichtogether shall be deemed one and the same Agreement, and may be executed anddelivered by facsimile signature, which shall be considered an original.

 

**21.13      Survival.**   Notwithstanding anyprovisions herein to the contrary, the Work Product provisions set forth inArticle 5, the warranty provisions set forth in Article 8, the indemnity,defense and hold harmless obligations set forth herein, and the confidentialityand other obligations set forth in Article 20, shall survive (in full force andeffect) the expiration or 

 

44

----

 

termination of this Agreement and shall continue toapply to the Parties to this Agreement even after termination of this Agreementor the transfer of such Party’s interest in this Agreement.

 

[INTENTIONALLY LEFT BLANK]

 

45

----

 

**IN WITNESSWHEREOF**, the Parties hereto have caused their names to be hereunto subscribedby their officers thereunto duly authorized, intending thereby that thisAgreement shall be effective as of April 29, 2010.

 

 
| **OWNER:**                                | ** **    | **FAGEN:**                |
|-------------------------------------------|---------------|---------------------------|
|                                      |          |                      |
|                                      |          |                      |
| Aventine  Renewable Energy-Mt Vernon, LLC |          | Fagen,  Inc.              |
| *(Owner)*                                 |          | *(Name  of Fagen)*        |
|                                      |          |                      |
| /s/  Thomas Manuel                        |          | /s/  Evan Fagen           |
| *(Signature)*                             | * *      | *(Signature)*             |
|                                      |          |                      |
| Thomas  Manuel                            |          | Evan  Fagen               |
| *(Printed  Name)*                         | * *      | *(Printed  Name)*         |
|                                      |          |                      |
| CEO                                       |          | Executive  Vice President |
| *(Title)*                                 | * *      | *(Title)*                 |
|                                      |          |                      |
| Date:                                     | May  17, 2010 |                      | Date: | May  17, 2010 |
|                                           |               |                           |  |  |

 

46

----

 

**EXHIBIT A**

 

**Owner’sScope of Work**

 

Owner’sScope of Work shall consist of all work not expressly provided as theresponsibility of Fagen in Exhibit B attached to this Agreement or as expresslyagreed to by the parties.

 

A-1

----

 

**EXHIBIT B**

 

**GeneralScope of Work for Fagen**

 

See attached.

 

B-1

----

 

**EXHIBIT C**

 

**Owner’sRequirements**

 

[To be determined.]

 

C-1

----

 

**EXHIBIT D**

 

**Fagen’sStandard Rates**

 

HomeOffice Purchasing and Procurement - $*****/hour

 

D-1

----

 

**EXHIBIT E**

 

**Form ofInformational Report**

 

E-1

----

 

**EXHIBIT F**

 

**RequiredPermits**

 

Seeattached.

 

F-1

----

 

**EXHIBIT G**

 

**Fagen’sTime and Material Rates**

 

Seeattached.

 

G-1

----

 

**EXHIBITH**

 

**Reserved**

 

H-1

----

 

**EXHIBITI**

 

**Reserved**

 

I-1

----

 

**EXHIBIT J**

 

**Form ofSummary of Payment**

 

Seeattached.

 

J-1

----

 

**EXHIBIT K**

 

**Form ofLien Waiver**

 

GENERAL CONTRACTOR’S PARTIAL WAIVER OF MECHANIC’S LIEN

RIGHTS AND AFFIDAVIT OF DEBTS AND CLAIMS

CONDITIONAL LIEN WAIVER

 
| STATE:  (    INSERT STATE   )   |   | FAGEN,  INC. |
|----------------------------------------------------------|--------|--------------|
| COUNTY:  (    INSERT COUNTY   ) |   |         |

 

The undersigned is the General Contractor (aka Fagen)regarding labor and materials for construction and maintenance work performedfor (   INSERT CUSTOMER/PLANT NAME   ), at the Facility located at or near (   INSERT PLANT CITY & STATE   ) under the terms of a contract.

 

On condition of receiving full payment for billings up to date hereof under the terms of the above mentionedcontract, and other good and valuable consideration, the receipt of which ishereby acknowledged, the undersigned does hereby waive and release any and allliens, and any and all claims and rights to lien on the Facility (including allbuildings on the premises) under the statutes of the State of (   INSERT STATE   ) relating to mechanic’s liens on account oflabor and materials furnished by the undersigned up to the date hereof at theFacility, as located on real estate legally described as follows:

 

TRACT1:  (  INSERT LEGAL DESCRIPTION   )

 

 

TRACT2:  (  INSERT LEGAL DESCRIPTION   )

 

K-1

----

 

The undersigned further certifies that all obligationsof General Contractor entered into between suppliers/subcontractors and GeneralContractor regarding this Facility are current as of this date, including allobligations of General Contractor for all work, labor and services performed;materials and equipment furnished; and all known indebtedness and claimsagainst General Contractor for damages arising in any manner in connection withGeneral Contractor’s performance of the contract mentioned above for whichGeneral Contractor or property of General Contractor might in any way be heldresponsible.

 

Dated this             day of                                      ,200

 

 
|   |                                                                                                                                                                                                                                                                                                              | GENERAL CONTRACTOR: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|
|   |                                                                                                                                                                                                                                                                                                              | FAGEN, INC.         |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |
|   |                                                                                                                                                                                                                                                                                                              | By (Print):         |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |
|   |                                                                                                                                                                                                                                                                                                              | Title:              |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |
|   |                                                                                                                                                                                                                                                                                                              | (Signature):        |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |
|   |                                                                                                                                                                                                                                                                                                              | Witness (Print):    |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |
|   |                                                                                                                                                                                                                                                                                                              | (Signature):        |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |
|   | In the alternative (or if requested):                                                                                                                                                                                                                                                                             |                |   |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |   |
|   | Subscribed and sworn to before me this                                                                                                                                                                                                                                                                            |                |   |   |
|   |                 day of                                ,  200    . |                |   |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |   |
|   | Notary Public                                                                                                                                                                                                                                                                                                     |                |   |   |
|   |                                                                                                                                                                                                                                                                                                              |                |   |   |
|   | My Commission Expires:                                                                                                                                                                                                                                                                                            |                |   |   |

 

K-2

----

 

**EXHIBIT L**

 

**APTILicense**

 

**See attached.**

 

L-1

----