**Exhibit 10.9**

 

CONSTRUCTION AGREEMENT

 

BETWEEN

 

AVENTINE RENEWABLE ENERGY -AURORA WEST, LLC (“**Owner**”)

 

AND

 

FAGEN, INC. (“**Fagen**”)

 

April 12, 2010

 

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**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**                                 |     | **5** |
| ** **         | ** **                                      |     | ** ** |
| 2.1                | Services to be Performed                        |     | 5 |
| 2.2                | Extent of Agreement                             |     | 6 |
| 2.3                | Conflicting Provisions                          |     | 6 |
|               |                                            |     |   |
| **Article 3** | **Fagen  Responsibilities**                     |     | **6** |
|               |                                            |     |   |
| 3.1                | Fagen’s Services in General                |     | 6 |
| 3.2                | Standard of Care                                |     | 7 |
| 3.3                | Government Approvals and Permits                |     | 7 |
| 3.4                | Subcontractors                                  |     | 7 |
| 3.5                | Maintenance of Site                             |     | 8 |
| 3.6                | Project Safety                                  |     | 8 |
| 3.7                | Submission of Reports                           |     | 9 |
| 3.8                | Startup and Performance Testing                 |     | 9 |
| 3.9                | Decisions Involving the Work                    |     | 9 |
| 3.10               | Performance of Work                             |     | 9 |
|               |                                            |     |   |
| **Article 4** | **Owner’s  Responsibilities**              |     | **9** |
|               |                                            |     |   |
| 4.1                | Duty to Cooperate                               |     | 9 |
| 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               |     | 11 |
| 4.6                | Security                                        |     | 11 |
|               |                                            |     |   |
| **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** |     | **12** |
|               |                                            |     |   |
| 6.1                | Reserved                                        |     | 12 |
| 6.2                | Notice to Proceed; Commencement                 |     | 12 |
| 6.3                | Project Start-Up                                |     | 13 |
| 6.4                | Mechanical Completion                           |     | 13 |
| 6.5                | Final Completion                                |     | 14 |
| 6.6                | Post Completion Support                         |     | 14 |
|               |                                            |     |   |
| **Article 7** | **Waiver of Damage  Claims**                    |     | **14** |

 

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Table of Contents(continued)

 
| ** **          | ** **                                                        | **Page** |
|---------------------|-------------------------------------------------------------------|----------|
| 7.1                 | Waiver of Damage Claims                                           |     | 14 |
|                |                                                              |     |   |
| **Article 8**  | **Warranties**                                                    |     | **15** |
| ** **          | ** **                                                        |     | ** ** |
| 8.1                 | Fagen Warranty                                                    |     | 15 |
| 8.2                 | Correction of Defective Work                                      |     | 15 |
| 8.3                 | Warranty Period Not Limitation to Owner’s  Rights            |     | 16 |
| 8.4                 | Disclaimer                                                        |     | 16 |
|                |                                                              |     |   |
| **Article 9**  | **Contract Price**                                                |     | **16** |
|                |                                                              |     |   |
| 9.1                 | Payment Basis                                                     |     | 16 |
| 9.2                 | Fagen’s Fee                                                  |     | 19 |
| 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**           |     | **24** |
|                |                                                              |     |   |
| 11.1                | Hazardous Conditions                                              |     | 24 |
| 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                                     |     | 26 |
| 12.3                | Change in Legal Requirements                                      |     | 26 |
|                |                                                              |     |   |
| **Article 13** | **Changes to the  Contract Price and Scheduled Completion Dates** |     | **27** |
|                |                                                              |     |   |
| 13.1                | Change Orders                                                     |     | 27 |
| 13.2                | Emergencies                                                       |     | 27 |
| 13.3                | Failure to Complete Owner’s Milestones                       |     | 28 |
|                |                                                              |     |   |
| **Article 14** | **Indemnity**                                                     |     | **28** |
|                |                                                              |     |   |
| 14.1                | Tax Claim Indemnification                                         |     | 28 |
| 14.2                | Payment Claim Indemnification                                     |     | 28 |
| 14.3                | Fagen’s General Indemnification                              |     | 28 |
| 14.4                | Owner’s General Indemnification                              |     | 29 |
| 14.5                | Indemnification                                                   |     | 30 |
|                |                                                              |     |   |
| **Article 15** | **Stop Work;  Termination for Cause**                             |     | **30** |
|                |                                                              |     |   |
| 15.1                | Owner’s Right to Stop Work                                   |     | 30 |

 

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Table of Contents(continued)

 
| ** **          | ** **                                             | **Page** |
|---------------------|--------------------------------------------------------|----------|
| 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              |     | 32 |
| 15.5                | Bankruptcy of Owner or Fagen                           |     | 33 |
|                |                                                   |     |   |
| **Article 16** | **Representatives of  the Parties**                    |     | **34** |
| ** **          |                                                   |     |   |
| 16.1                | Designation of Owner’s Representatives            |     | 34 |
| 16.2                | Designation of Fagen’s Representatives            |     | 34 |
| ** **          |                                                   |     |   |
| **Article 17** | **Insurance**                                          |     | **35** |
| ** **          |                                                   |     |   |
| 17.1                | Insurance                                              |     | 35 |
| 17.2                | Fagen’s Insurance Requirements                    |     | 36 |
| 17.3                | Owner’s Liability Insurance                       |     | 37 |
| 17.4                | Owner’s Property Insurance                        |     | 38 |
|                |                                                   |     |   |
| **Article 18** | **Representations and  Warranties**                    |     | **39** |
|                |                                                   |     |   |
| 18.1                | Fagen and Owner Representations and  Warranties        |     | 39 |
| 18.2                | Fagen Representations and Warranties                   |     | 40 |
|                |                                                   |     |   |
| **Article 19** | **Dispute Resolution**                                 |     | **40** |
|                |                                                   |     |   |
| 19.1                | Dispute Avoidance and Mediation                        |     | 40 |
| 19.2                | Arbitration                                            |     | 40 |
| 19.3                | Duty to Continue Performance                           |     | 41 |
| 19.4                | No Consequential Damages                               |     | 41 |
| 19.5                | Limitation of Liability                                |     | 41 |
|                |                                                   |     |   |
| **Article 20** | **Confidentiality of  Shared Information**             |     | **42** |
|                |                                                   |     |   |
| 20.1                | Non-Disclosure Obligation                              |     | 42 |
| 20.2                | Publicity and Advertising                              |     | 43 |
| 20.3                | Term of Obligation                                     |     | 43 |
|                |                                                   |     |   |
| **Article 21** | **Miscellaneous**                                      |     | **43** |
|                |                                                   |     |   |
| 21.1                | Assignment                                             |     | 43 |
| 21.2                | Successors                                             |     | 43 |
| 21.3                | Governing Law                                          |     | 44 |
| 21.4                | Severability                                           |     | 44 |
| 21.5                | No Waiver                                              |     | 44 |
| 21.6                | Headings                                               |     | 44 |
| 21.7                | Notice                                                 |     | 44 |
| 21.8                | No Privity with Design Consultant/Subcontractors       |     | 46 |
| 21.9                | Amendments                                             |     | 46 |
| 21.10               | Entire Agreement                                       |     | 46 |
| 21.11               | Third-Party Beneficiaries                              |     | 46 |
| 21.12               | Counterparts                                           |     | 46 |
| 21.13               | Survival                                               |     | 46 |

 

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Table ofContents(continued)

 
| ** **         | ** **                                | **Page**   |
|--------------------|-------------------------------------------|------------|
| ** **         | ** **                                | ** ** |
| **EXHIBIT A** | **Owner’s Scope of  Work**           | **A-1**    |
|               |                                      |       |
| **EXHIBIT B** | **General Scope of  Work for Fagen**      | **B-1**    |
|               |                                      |       |
| **EXHIBIT C** | **Owner’s  Requirements**            | **C-1**    |
|               |                                      |       |
| **EXHIBIT D** | **Fagen’s Standard  Rates**          | **D-1**    |
|               |                                      |       |
| **EXHIBIT E** | **Form of  Informational Report**    | **E-1**    |
|               |                                      |       |
| **EXHIBIT F** | **Required Permits**                      | **F-1**    |
|               |                                      |       |
| **EXHIBIT G** | **Fagen’s Time and  Material Rates** | **G-1**    |
|               |                                      |       |
| **EXHIBIT H** | **Reserved**                              | **H-1**    |
|               |                                      |       |
| **EXHIBIT I** | **Reserved**                              | **I-1**    |
|               |                                      |       |
| **EXHIBIT J** | **Form of  Summary of Payment**      | **J-1**    |
|               |                                      |       |
| **EXHIBIT K** | **Form of Lien  Waiver**             | **K-1**    |
|               |                                      |       |
| **EXHIBIT L** | **APTI License**                          | **L-1**    |

 

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**CONSTRUCTION AGREEMENT**

 

This CONSTRUCTION AGREEMENT (the “Agreement”)is made and entered into effective as of April 12, 2010, (the “EffectiveDate”) by and between Aventine Renewable Energy-Aurora West, LLC, aDelaware limited liability company (the “Owner”) and Fagen, Inc., aMinnesota corporation (“Fagen”) (each a “Party” and collectively,the “Parties”).

 

**RECITALS**

 

A.    TheOwner desires to complete construction of a dry grind ethanol productionfacility in Aurora, Nebraska (the “Plant”);

 

B.    Fagendesires to provide construction services for the Plant; and

 

C.    TheParties desire to enter into this Agreement to set forth their respectiverights and obligations with respect to the Plant.

 

NOW, THEREFORE, in consideration of themutual covenants and obligations contained herein and for other good andvaluable 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 shallinclude the feminine and neuter.

 

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

 

(c)                                  ThisAgreement was negotiated and prepared by each of the Parties with the adviceand participation of counsel.  TheParties have agreed to the wording of this Agreement and none of the provisionshereof shall be construed against one Party on the ground that such Party isthe author of this Agreement or any part hereof.

 

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**1.2         ****Defined Terms. **Inaddition to definitions appearing elsewhere in this Agreement, the followingterms have the following meanings:

 

*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 legallybinding announcements, directives or published practices or interpretations,regarding any of the foregoing in (a) or (b) of this definition,enacted, issued or promulgated by a Governmental Authority;

 

to the extent, for each of the foregoing in (a), (b) and (c) ofthis definition, applicable to or binding upon (i) a Party, itsaffiliates, its shareholders, its members, its partners or their respectiverepresentatives, to the extent any such person is engaged in activities relatedto the Project; or (ii) the property of a Party, its affiliates, itsshareholders, its members, its partners or their respective representatives, tothe extent such property is used in connection with the Project or an activityrelated to the Project.

 

*APTI*is defined in Section 20.1.

 

*Bankrupt Party*isdefined in Section 15.5.1.

 

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

 

*Change Order*isdefined in Section 13.1.1.

 

*Confidential Information* is defined in Section 20.1.

 

*Contract Documents* is defined in Section 2.2.

 

*Contract Time(s) *meansscheduled dates provided for in the Contract Documents including ScheduledMechanical Completion Date and Final Completion Date.

 

*Damages* is definedin Section 14.3.1.

 

*Day* or *Days* shall mean calendar days unlessotherwise specifically noted in the Contract Documents.

 

*Design Consultant*isa qualified, licensed design professional that is not an employee of Fagen, butis retained by Fagen, or employed or retained by anyone under contract withFagen or Subcontractor, to furnish design services required under the ContractDocuments.

 

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*Differing Site Conditions*is defined in Section 11.2.1.

 

*Effective Date* isdefined in the Preamble.

 

*Enhancements* is defined in Section 10.2

 

*Fagen*is defined inthe Preamble.

 

*Fagen’s Fee*is defined in Section 9.2.

 

*Fagen’s Representative*isdefined in Section 16.2.

 

*Fagen’s Senior Representative*isdefined in Section 16.2.

 

*Final Completion* is defined in Section 6.5.2.

 

*Final Completion Date*is defined in Section 6.5.1.

 

*Final Payment* is defined in Section 10.4.

 

*Final Summary of Payment*isdefined in Section 10.4.

 

*Force Majeure Event*isdefined in Section 12.1.

 

*Governmental Approvals*are any material authorizations or permissions issued or granted by any GovernmentalAuthority to the Project, its Owner, Fagen, Subcontractors and their affiliatesin connection with any activity related to the Project.

 

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

 

*Hazardous Conditions*are any materials, wastes, substances and chemicals deemed to be hazardousunder applicable Legal Requirements, or the handling, storage, remediation, ordisposal of which are regulated by applicable Legal Requirements.

 

*Informational Report*is defined in Section 3.7.

 

*Legal Requirements*or*Laws*are all applicable federal, stateand local statutes, laws, codes, ordinances, rules, regulations, judicialdecisions, orders, decrees, plans, injunctions, permits, tariffs, governmentalagreements and governmental restrictions, whether now or hereafter in 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

 

3

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materials, products, systems, and services established by ASTMInternational, any successor organization thereto, or any GovernmentalAuthority.

 

*License*is defined in Section 20.1.

 

*Manufacturer’s Warranty* shall mean a warranty provided by theoriginal manufacturer or vendor of equipment used in the Plant.

 

*Mechanical Completion*is defined in Section 6.4.2.

 

*Notice to Proceed*isdefined in Section 6.2.

 

*Operating Procedures*means, without limitation, theprocess equipment and specifications manuals, standards of quality, serviceprotocols, data collection methods, construction specifications, trainingmethods, engineering standards and any other information prescribed by Fagen,Subcontractors, or any other party who provided, or will provide, equipment orother materials to the Project, from time to time concerning the ownership,operation, maintenance and repair of the Plant, subject to the limitationsprovided in the Agreement.

 

*Owner* is defined in the Preamble.

 

*Owner Indemnified Parties* is defined in Section 14.3.1.

 

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

 

*Owner’s Operator* means, if applicable, theentity that Owner identifies, upon written notice to Fagen, as operator ofthe Project or any other entity that Owner chooses, upon noticeto Fagen, to replace such entity as operator of the Project.

 

*Owner’s Representative*isdefined in Section 16.1.

 

*Owner’s Senior Representative*isdefined in Section 16.1.

 

*Party or Parties* is defined in the Preamble.

 

*Pass Through Warranties*meanany warranties provided to Fagen by a Subcontractor, which will all be assignedto Owner.

 

*Pay Period*means,with respect to a given Summary of Payment, the two (2) week periodfollowing the last day of the previous Pay Period to which the immediatelyprior Summary of Payment is applied; provided that the initial Pay Period shallcommence on the date of delivery of the Notice to Proceed and end on theearlier of the ninth (9th) ortwenty-fourth (24th) dayof the calendar month during which the Notice to Proceed is issued.

 

*Payment Basis*is defined in Section 9.1.

 

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*Plant* is defined in the Recitals.

 

*Prior Work* is defined in Section 10.2.

 

*Project*is defined in Section 2.1.

 

*Punch List*isdefined in Section 6.4.3.

 

*Qualified Independent Expert*meansan expert retained by Owner and approved by Fagen pursuant to Section 11.1.2.

 

*Reimbursable Costs*is defined in Section 9.1.1.

 

*Safety Representative*isdefined in Section 3.6.1.

 

*Scheduled Mechanical Completion Date*isdefined in Section 6.4.1.

 

*Site* is the land orpremises on which the Plant is located.

 

*Subcontractor* is anyperson or entity retained by Fagen, or by any person or entity retaineddirectly or indirectly by Fagen, in each case as an independent contractor toperform a portion of the Work, and shall include materialmen and suppliers.

 

*Summary of Payment*isdefined in Section 10.3.1.

 

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

 

*Work*is defined inSection 3.1.

 

*Work Product*isdefined in Section 5.1.

 

**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 Project statusto Owner periodically. The Plant, together with all equipment, labor, servicesand materials to be furnished hereunder is defined as the “Project.”

 

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

 

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**2.2.1   **All written modifications, amendments and changeorders to this Agreement.

 

**2.2.2   **This Agreement, including all exhibits andattachments, executed by Owner and 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 between such parts the sameshall be explained and interpreted, if possible, in a manner which gives effectto each part and which avoids or minimizes conflicts among such parts.  No oral representations or other agreementshave been made by the Parties except as specifically stated in the ContractDocuments.

 

**Article 3**

 

**Fagen Responsibilities**

 

**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

 

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performed by Fagen under the ContractDocuments shall not be construed to limit in any way the general undertakingsof Fagen as set forth herein.  Fagen’sRepresentative shall be reasonably available to Owner and shall have thenecessary expertise and experience required to supervise the Work.  Fagen’s Representative shall communicateregularly with Owner and shall be vested with the authority to act on behalf ofFagen.

 

**3.2         ****Standard of Care.**  All services performed by Fagen and itsSubcontractors shall be performed in accordance with the standard of care andskill generally accepted in the ethanol industry during the relevant timeperiod and in accordance with any of the practices, methods and acts that inthe exercise of reasonable judgment in light of the facts known at the time thedecision was made, would have been expected to accomplish the desired result ata reasonable cost consistent with good business practices, safety andexpedition.  This standard of care is notintended to be limited to the optimum practice, method or act to the exclusionof all others, but rather to be acceptable practices, methods or acts generallyaccepted in the construction and 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 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 inaccordance with the terms hereof.  Fagenshall coordinate with Owner its selection of any Subcontractors, and the scopeof work for such Subcontractors, for any portion of the Work for which Fagensubcontracts.  Fagen shall solicit Owner’sinput to the selection process for Subcontractors and their scope of work,however the Parties agree that the ultimate selection of any Subcontractor, andits scope of work, shall be determined solely by Fagen.

 

**3.4.2   **Fagen assumes responsibility to Owner for theproper performance of the Work of Subcontractors and any acts and omissions inconnection with such performance. Nothing in the Contract Documents is intended or deemed to create anylegal or contractual relationship between Owner and any Subcontractor,including but not limited to any third-party beneficiary rights.

 

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**3.4.3   **Fagen shall coordinate the activities of all ofFagen’s Subcontractors.  If Ownerperforms other work on the Project or at the Site with separate contractorsunder Owner’s control, Fagen agrees to reasonably cooperate and coordinate itsactivities with those separate contractors so that the Project can be completedin an orderly and coordinated manner without unreasonable disruption.

 

**3.4.4   **Fagen shall ensure that each subcontract with aSubcontractor is assignable to Owner without consent of the Subcontractor orany other person or entity in the event that Fagen shall be in an uncureddefault or terminated with cause under the terms of this Agreement.

 

**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 theWork in a safe manner so as to prevent damage, injury or loss to (i) anyindividuals at the Site, whether working or visiting, (ii) the Work,including materials and equipment incorporated into the Work or stored on-Siteor off-Site, and (iii) any other property at the Site or adjacentthereto.  Fagen assumes responsibilityfor implementing and monitoring all safety precautions and programs related tothe performance of the Work.  Fagenshall, prior to commencing construction, designate a representative (the “SafetyRepresentative”) with the necessary qualifications and experience tosupervise the implementation and monitoring of all safety precautions andprograms related to the Work. Unless otherwise required by the ContractDocuments, Fagen’s Safety Representative shall be an individual stationed atthe Site who may have responsibilities on the Project in addition to safety.

 

**3.6.2   **Fagen and Subcontractors shall comply with allLegal Requirements relating to safety, as well as any Owner-specific safetyrequirements set forth in the Contract Documents; provided, that suchOwner-specific requirements do not violate any applicable LegalRequirement.  Fagen will promptly reportin writing any safety-related injury, loss, damage or accident arising from theWork to Owner’s Representative and, to the extent mandated by LegalRequirements, to all government or quasi-government authorities havingjurisdiction over safety-related matters involving the Plant or the Work.

 

**3.6.3   **Fagen’s responsibility for safety under thisSection 3.6****is not intendedin any way to relieve Subcontractors of their own contractual and legalobligations and responsibility for (i) complying with all LegalRequirements, including those related to health and safety matters, and (ii) takingall necessary measures to

 

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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 and Performance Testing.** Fagenshall provide such services as Owner may request in writing in conjunction withthe startup of the Plant after Mechanical Completion and any performance testsof the Plant. All such services shall be provided by Fagen on a time andmaterials basis.

 

**3.9         ****Decisions Involving the Work.** Fagen’son-site project manager will consult with Owner’s on-site project manager in thedecisions regarding the performance of the Work on a  daily basis. In this regard, Owner’s on-site project manager will have equal input insuch decisions.  If there is disagreementbetween Fagen’s on-site project manager and Owner’s on-site project manager onany decision, the matter will immediately be referred to Fagen’s Representativeand Owner’s Representative for resolution. In the event of disagreement between Fagen’s Representative and Owner’sRepresentative, the Parties shall proceed pursuant to Article 19.

 

**3.10       ****Performance of 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 performanceof the Work, reasonably cooperate with Fagen and perform its responsibilities,obligations and services in a timely manner to facilitate Fagen’s timely andefficient performance of the Work and so as not to delay or interfere withFagen’s performance of its obligations under the Contract Documents.

 

**4.2          Furnishing ofServices and Information.**

 

**4.2.1   **Prior to the issuance of the Notice to Proceed,at its own cost and expense, Owner shall provide the following items to Fagenfor Fagen’s information and use and all of which Fagen is entitled to rely uponin performing the Work:

 

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

 

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

 

(c)                                  temporaryand permanent easements, zoning and other requirements and encumbrancesaffecting land use, or necessary to permit the proper design and constructionof the Plant and enable Fagen to perform the Work;

 

(d)                                 legaldescriptions of the Site;

 

(e)                                  tothe extent available, as-built and record drawings of any existing structuresat the Site;

 

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

 

(g)                                 allstandard operating procedures and permits necessary to construct the Plant;

 

(h)                                 allP&IDs, ISOS (Pipe Detail Drawings), ORTHOS (Pipe Layout and GeneralDrawings), Mechanical (Including Plumbing & HVAC), Electrical PowerDrawings (Including all instrument & motor loops), Electrical ControlDrawings, Civil Drawings, Structural Drawings, Architectural Drawings, GeneralArrangement Drawings, and Equipment Arrangement Drawings in each case that arein Owner’s possession;

 

(i)                                     allCivil, Structural, Mechanical (equipment), and Electrical specifications inOwner’s possession; and

 

(j)                                     suchother information as Fagen may reasonably request in order to perform the Work.

 

**4.2.2   **Owner shall provide to Fagen all Ownerdeliverables under Exhibit C pursuant to Owner’s Milestones.  Such deliverables shall be provided, at Owner’sown cost and expense, for Fagen’s information and use. Fagen is entitled torely upon such deliverables in performing the Work.

 

**4.2.3   **Owner is responsible for securing and executingall necessary agreements with adjacent land or property owners that arenecessary to enable Fagen to perform the Work and that have been identified andnotified in writing by Fagen to 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 16.1hereof, shall be responsible for providing Owner-supplied information andapprovals in a timely manner to permit Fagen to fulfill its obligations underthe Contract Documents.  Owner’sRepresentative shall also provide Fagen with prompt notice if it observes anyfailure on the part of Fagen to fulfill its contractual obligations, includingany errors, omissions or defects in the

 

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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 to Fagenin 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 agents, for Owner’s failure tocomply with all Applicable Laws in obtaining or maintaining the requiredPermits.  The denial or revocation of anypermits obtained by Owner as a result of Owner’s failure to comply withApplicable Law or the requirements of the permits and any Owner actionsaffecting the validity of any required permit obtained by Owner, shall bedeemed a failure of Owner to fulfill Owner’s Milestones and shall entitleFagen, to the extent it is adversely impacted thereby, to any and all remediesavailable pursuant to this Agreement 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 shall be responsible for Site securityat the Site (including fencing, alarm systems, security guarding services andthe like) at all times during the term of this Agreement, to prevent vandalism,theft and danger to the Project, the Site, and personnel.  Owner shall coordinate and supervise ingressand egress from the Site so as to minimize disruption to the Work.  Owner shall consult with Contractor and hirea security firm familiar with union picketing and related interferences so asto minimize disruption to the Work.

 

**Article 5**

 

**Ownership of Work Product; Risk of Loss**

 

**5.1         ****Work Product. **Alldrawings, specifications, calculations, data, notes and other materials anddocuments, including electronic data, furnished by Fagen to Owner under thisAgreement (“Work Product”) shall, upon payment in full therefore byOwner, become the property of Owner.  Forthe avoidance of doubt, as Owner pays in full for any portion of the WorkProduct, such portion of the Work Product shall be owned by Owner.  In addition, for any portion of the WorkProduct which Owner so pays in full Fagen shall be given an irrevocable,royalty-free, exclusive license to use such Work Product at any time and forall legal purposes.  Fagen’s use of suchWork Product shall be at its sole risk without liability or legal exposure toOwner, its affiliates, or any of their officers, directors, employees oragents. Transfer of title to the Work Product is conditioned on Owner’s expressagreement that its revision of, modification to, or failure to strictly adhereto or follow, the Work Product by Owner or any party under its

 

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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.**  Fagenshall have no liability for a physical loss of or damage to the Work unlesssuch loss or damage is caused by the misconduct or negligence of Fagen, itsSubcontractors, or someone acting under its direction or control. Fagen shallnot be liable for physical loss of or damage to the Work where such loss ordamage is caused by the misconduct or negligence of Owner’s employees or thirdparties who are not Subcontractors. Except to the extent of a warranty claim, Fagen shall have no liabilityfor a physical loss of or damage to the Work occurring after FinalCompletion.  Fagen shall have no liabilityfor losses or damages for a physical loss of or damage to the Work for whichinsurance coverage obtained by Owner under this Agreement is available for suchloss or damage; 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**

 

**Commencement and Completion of the Project**

 

**6.1         ****Reserved.**

 

**6.2         ****Notice to Proceed; Commencement.**  TheWork shall commence following Fagen’s receipt of Owner’s written valid noticeto proceed (“Notice to Proceed”) unless the Parties mutually agreeotherwise in writing.  The Parties agreethat a valid Owner’s Notice to Proceed cannot be given until:  (1) Owner has title to or has obtainedall necessary rights and permits to the real estate on which the Plant will be constructedand; (2) the Site work required of Owner, as described in Exhibit C,has been reviewed and deemed adequate by Fagen;****(3) the air permit(s) and/or other applicablelocal, state or federal permits necessary so that construction can begin, aslisted on Exhibit F, have been obtained; (4) Owner has provided proofof financing to Fagen; (5) if applicable, Owner has executed a sales taxexemption certificate and provided the same to Fagen; (6) Owner hasprovided the name of its property/all-risk insurance carrier and the specificrequirements for fire protection; (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 toFagen, in a form reasonably acceptable to Fagen, pursuant to the noticerequirements set forth in Section 21.7 hereof, with a copy to:

 

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Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, 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.

 

**6.4          MechanicalCompletion.**

 

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

 

**6.4.2      **“Mechanical Completion” with respect tothe Plant shall be deemed to occur on the date on which the Work has beenphysically completed as provided in this Agreement.  No production is guaranteed on the date ofMechanical Completion.

 

**6.4.3    Procedures**.  Fagenshall prepare and issue a “Certificate of Mechanical Completion” for theWork for the Plant that will set forth (i) the date of MechanicalCompletion, (ii) the remaining items of Work, as reasonably agreed to byFagen and Owner, that have to be completed before Final Payment (“Punch List”),(iii) provisions (to the extent not already provided in this Agreement)establishing Owner’s and Fagen’s responsibility for the Plant’s security,maintenance, utilities and insurance pending Final Payment, and (iv) anacknowledgment that warranties with respect to the Work commence on the date ofMechanical Completion, except as may otherwise be noted in the Certificate ofMechanical Completion.  Upon MechanicalCompletion, Owner shall pay to Fagen all unpaid amounts, less an amount equalto the reasonable value of all remaining or incomplete items of Work as notedin the Certificate of Mechanical Completion, and less an amount equal to thevalue of any Subcontractor lien waivers not yet obtained with respect to suchPlant, and less a portion of the Fee equal to ***** Dollars ($*****).

 

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

 

**6.5.1   **Final Completion of the Work for the Plant mustbe achieved by Fagen within ninety (90) Days after the earlier of the actualdate of Mechanical Completion or the Scheduled Mechanical Completion Date (the “FinalCompletion Date”).

 

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**6.5.2   **“Final Completion” of the Plant shall beachieved when the Owner reasonably determines that the following conditionshave been met:

 

(a)                                  MechanicalCompletion has been achieved;

 

(b)                                 theitems identified on the Punch List have been completed by Fagen, unless and tothe extent of any such Punch List items which Fagen is prevented fromcompleting because of the actions or inactions of Owner or seasonal weatherconditions, provided however that in the event of weather delays, Fagen shallcomplete such items as soon as reasonably practical;

 

(c)                                  clean-upof the Site has been completed;

 

(d)                                 allpermits and inspections required to have been obtained or passed by Fagen havebeen obtained and completed; and

 

(e)                                  releaseand waiver of all claims and liens from Fagen and its Subcontractors andsuppliers have been provided.

 

After receipt of a Final Summary of Payment from Fagen in accordancewith Section 10.4, Owner shall make Final Payment in accordance withSection 10.4, less an amount equal to the value of any Subcontractor lienwaivers not yet obtained.

 

**6.5.3   **Upon making Final Payment, Owner waives all claimsagainst Fagen under this Agreement and relating to the Work except claimsrelating to (i) Fagen’s failure to satisfy its payment or indemnity,defense and/or hold harmless obligations under the Contract Documents, (ii) Fagen’sfailure to complete the Work in accordance with the Contract Documents,including, but not limited to, defects appearing within one (1) year afterMechanical Completion, (iii) the terms of Fagen’s warranties under theContract Documents,  (iv) auditrights of Owner and any claims resulting from the exercise of such auditrights, and (v) Fagen’s failure to comply with its obligations under Article 20.

 

**6.6         ****Post Completion Support.**  Adequatepersonnel to complete all Work within the Contract Time(s) will bemaintained on-Site by Fagen or a Subcontractor until Final Completion has beenachieved.

 

**Article 7**

 

**Waiver of Damage Claims**

 

**7.1         ****Waiver of Damage Claims.**Owner,for itself and its successors and assigns, hereby expressly waives any claims,causes of action (including breach of contract), and right it has, may have, ormay hereafter accrue to pursue or collect any amount of money or damages,including but not limited to those relating to extra costs, losses, loss ofprofits, expenses, claims, penalties and any other damages, whether special orconsequential, and of whatsoever nature

 

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incurred by Owner which arise solely due to a delay in achieving FinalCompletion by the Final Completion Date.

 

**Article 8**

 

**Warranties**

 

**8.1         ****Fagen Warranty.**  Fagen warrants to Owner that theconstruction, including all materials and equipment furnished by Fagen and itsSubcontractors as part of the construction, shall be new, of good quality, inconformance with the Contract Documents and all Legal Requirements, free ofdefects in materials and workmanship. Fagen’s warranty obligation excludes (i) defects caused by abuse,damage, modification, alterations, or failure to maintain the Work by personsother than Fagen or anyone for whose acts Fagen may be liable or responsibleand (ii) defects or errors in any Owner supplied or third party (i.e.other than Fagen Affiliates or Subcontractors) supplied equipment, drawings,deliverables, specifications, materials, labor, or information. Nothing in thiswarranty is intended to limit any Manufacturer’s Warranty which provides Ownerwith greater warranty rights than set forth in this Section 8.1 or theContract Documents.  Fagen will provideto Owner all manufacturers’ and Subcontractors’ warranties upon the earlier ofMechanical Completion or termination of this Agreement.   Owner’s failure to comply with all OperatingProcedures shall void those warranties, whether expressed or implied (if any),that were given by Fagen to Owner that are affected by such failure.  If Fagen reasonably determines that alldamage caused by such failure can be repaired and Owner makes all repairsneeded to correct such damage, such warranties shall be reinstated for theremaining term thereof, if any, from the date of the repair.

 

**8.2          Correction ofDefective Work.**

 

**8.2.1   **Fagen’s warranty obligation extends for a periodof one (1) year from the date of Mechanical Completion of the Work;provided that Owner must report such non-conformance within ten (10) Daysof the date Owner first learns or should have learned of such failure ornon-conformance and that such one (1)-year period shall be extended one (1) Dayfor any part of the warrantied Work that is found to be not in conformance withthe Contract Documents for each Day that such part of the Work is not inconformity with the Contract Documents, including any time during which anypart of the Work is repaired or replaced pursuant to this Article 8.

 

**8.2.2   **Fagen shall, within seven (7) Days ofreceipt of written notice from Owner that the Work is not in conformance withthe Contract Documents, take meaningful steps to commence and completecorrection of such nonconforming Work, including the correction, removal orreplacement of the nonconforming Work and correction or replacement of any Workdamaged by such nonconforming Work.  IfFagen fails to commence the necessary steps within such seven (7) Dayperiod or fails thereafter to continue to diligently perform such steps throughcompletion, Owner, in addition to any other remedies provided under theContract Documents, may provide Fagen with written notice that Owner willcommence or assume correction of such nonconforming Work and repair of suchdamaged Work with its own resources.  If,following such written notice, Owner performs such corrective and repair Work,Fagen

 

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shall be responsible for all reasonable costs incurred by Owner inperforming the correction.

 

**8.3         ****Warranty Period Not Limitation toOwner’s Rights.**  The one(1)-year period referenced in Section 8.2 above applies only to Fagen’sobligation to correct nonconforming Work and is not intended to constitute aperiod of limitations for any other rights or remedies Owner may have regardingFagen’s other obligations under the Contract Documents.

 

**8.4         ****Disclaimer.**  **EXCEPT FOR CONTRACTOR’SWARRANTIES SET FORTH IN SECTION 8.1, CONTRACTOR MAKES NO REPRESENTATIONS,GUARANTEES, WARRANTIES, OR CLAIMS WITH RESPECT TO, AND ASSUMES NORESPONSIBILITY FOR, THE PERFORMANCE OR USE OF THE COMPLETED WORK AND SHALL HAVENO RESPONSIBILITY FOR TESTING OR OPERATION OF THE WORK.  EXCEPT FOR CONTRACTOR’S WARRANTIES SET FORTHIN SECTION 8.1, CONTRACTOR EXPRESSLY DISCLAIMS ALL WARRANTIES ANDGUARANTEES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIEDWARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR USE, INFRINGEMENT,AND OPERABILITY.**

 

**Article 9**

 

**Contract Price**

 

**9.1         ****Payment Basis.**  As full consideration to Fagen for completeperformance of the Work and all costs incurred in connection therewith, Ownershall pay to Fagen the following costs and fees, which shall along with Fagen’sFee, comprise the Contract Price:

 

**9.1.1   **All costs actually incurred by Fagen inconnection with its performance of the Work (“Reimbursable Costs”).

 

**9.1.2   **The Reimbursable Costs include but are notlimited to:

 

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

 

2.               Wages and salariesfor Fagen’s personnel who provide services in connection with the Work,including construction workers and supervisory and administrative personnel forthat portion of their time required for the Work, except for those personnelwhose services are reimbursable pursuant to Section 9.1.2.1;

 

3.               Costs paid orincurred by Fagen for fringe benefits, statutory charges and employmentbenefits, including but not limited to vacation pay, sick leave, per diems andrelated expenses including but not limited to taxes, insurance contributions,assessments and benefits required by law or collective bargaining agreements,

 

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customary benefits such as sick leave,medical and health benefits, holidays, vacations, and pensions, for Fagen’spersonnel who provide services in connection with the Work, except for thosepersonnel whose services are reimbursable pursuant to Section 9.1.2.1;

 

4.               Reasonable lodgingand subsistence 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, temporary facilities, machinery, equipment,and tools (excluding hand tools referenced in item 12 below) that are providedby Fagen at the Plant and used in the performance of the Work and the cost(less salvage value) of such items used, but not consumed, which remain Fagen’sproperty; provided, however, that all materials, supplies, temporaryfacilities, machinery, equipment and tools (excluding hand tools referenced initem 12 below) which are purchased by Fagen for performance of the Work forwhich Fagen receives one hundred percent (100%) reimbursement from Owner shallbe owned by Owner upon completion of the Project.

 

8.               Rental charges fortemporary facilities, machinery, equipment and tools that are provided by Fagenfor the Project 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 fortemporary facilities, machinery, equipment and tools that are provided by Fagenfor the Project, and are rented from Fagen, and costs of transportation,installation, maintenance, repairs and replacements, dismantling and removalthereof at rental 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 handtools purchased by Fagen for the use of its workers on the Site shall bereimbursed by the Owner based on an allowance of 4.0% of base wages ofconstruction workers described in Subparagraph 9.1.2.2 above (excludingbenefits, per

 

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diems, taxes, etc.).  The list of hand tools that apply to thissection shall be agreed to in advance by Owner and Fagen.

 

13.         Costs of blueprinting andother document reproduction, computer services, facsimile transmissions,messenger services, office supplies, payroll services, postage and parceldelivery charges, photographs, fixed and mobile telephone (installation,monthly service, local and long distance calls), word and data processing, andother incidental 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 allinsurance which Fagen is required to procure under the Contract Documents;

 

16.         Any sales, use, exciseand other taxes on materials, labor, receipts, installations or servicesfurnished (including those furnished by Owner), or any other taxes arising outof the performance of the Work (excluding income taxes) imposed by any governmentalauthority, for which Fagen may become liable, to the extent Owner is not exemptfrom such taxes;

 

17.         Costs, fees andassessments for the building permit and other permits, licenses and inspectionsby any Governmental Authority for which Fagen is required to pay under thisAgreement;

 

18.         Fees and expenses relatedto any 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,and other materials left at the Site by third parties prior to Fagen’sacceptance of Notice to Proceed.

 

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

 

(a)   Salariesand other compensation of Fagen’s personnel stationed at Fagen’s principaloffice or offices other than the Site office except as provided in Section 9.1.2;

 

(b)   Expensesof Fagen’s principal office and offices other than the Site office, except asmay be expressly included in Section 9.1.2;

 

(c)   Overheadand general expenses, except as may be expressly included in Section 9.1.2;

 

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

 

(e)   Costs,including costs to repair damage to the Work or defective Work, arising fromthe negligence or misconduct of Fagen, its Subcontractors, or anyone directlyor indirectly employed by them or those for whose acts any of them may beliable.

 

**9.2         ****Fagen’s Fee.** Fagenshall be 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 into consideration any andall adjustments as may be provided herein, Fagen’s Fee shall be increased by anamount equal to *****.

 

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

 

**9.2.3.**      For illustrative purposes only: If *****,then Fagen’s Fee shall be an amount determined as follows;

 

*******

* *

*******

* *

*******

 

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**9.3         ****Additional Costs.**  The Parties agree that any time and materialswork performed by Fagen under this Agreement (i.e. work specifically identifiedin this Agreement as to be performed on a time and material basis orspecifically requested in writing by Owner to be performed on a time and materialbasis) shall not be calculated in, or impact, either the Reimbursable Costs orthe Target Price.  Additionally, ChangeOrder amounts (excluding Change Order amounts involving Change Orders whichexpand the scope of Work to be provided by Fagen under the Contract Documents,with work under such Change Orders to be provided on a time and material basis(unless otherwise agreed in writing by Fagen and Owner)) , or other adjustmentsto Fagen’s Work and/or the Schedule which impact Fagen and are agreed to by theParties, shall be added to, or subtracted from, (as applicable) both theReimbursable Costs and Target Price. Further, any adjustment resulting from a Force Majeure event shall beadded to, or subtracted from, the Reimbursable Costs and the Target Price.

 

**9.4          Books and Records**. Contractor shall keep and maintain such full and detailed books, recordsand accounts as may be reasonably necessary for proper financial management ofthe Project under the Contract Documents, including one set of records showingall payments made to Contractor by Owner. Such records shall be maintained for at least two (2) years afterfinal payment to Contractor.  At anyreasonable time within two (2) years after final payment to Contractor,Owner and its representatives may inspect, copy and audit all such books,records and accounts, including, without limitation, those relating to (i) paymentsto Contractor for Work performed, (ii) Taxes assessed or imposed on theWork or (iii) any regulatory or other proceeding before a GovernmentalAuthority.  All information, books,records and accounts provided to Owner by Contractor pursuant to this Section shallbe subject to the confidentiality requirements of Section 20.1.

 

**Article 10**

 

**Payment Procedures**

 

**10.1       ****Payment Prior to FinancialClosing.**

 

**10.1.1  MobilizationFee. **As part of the Payment Basis, Owner shall payFagen ***** Dollars ($*****), as a mobilization fee as soon as allowed by itsorganizational documents, but in no event later than five (5) days afterthe Effective Date.

 

**10.2       ****Rework and Enhancements.**  Ownerand Fagen acknowledge the Plant has been partially constructed prior to theEffective Date by a third party (“Prior Work”) and Fagen has notverified the Prior Work’s conformance with the Contract Documents.  Accordingly, should Fagen discover anynonconforming or defective Prior Work, Fagen will immediately notify Owner, andfollowing consultation with Owner, repair and/or replace such Prior Work on atime and materials basis, if and to the extent such Work is within Fagen’scapabilities (i.e. within the expertise and capability of Fagen’semployees).  Any such rework not withinFagen’s capabilities may be contracted to a third party by Owner, provided thatsuch third party shall not interfere with Fagen’s Work and/or schedule.  Additionally, should Owner request in writingthat

 

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Fagen design or construct any enhancements tothe Plant’s existing design (“Enhancements”), such Enhancements shall beperformed on a time and materials basis. Fagen’s time and materials rates are attached hereto as Exhibit Gand are incorporated herein by reference.

 

**10.3        Progress Payments.**

 

**10.3.1 **Following the issuance of Notice to Proceedpursuant to Section 6.2, Fagen shall submit to Owner, on or before thetenth (10th) and twenty-fifth (25th) day of each monthfollowing the acceptance of Notice to Proceed requests for payment (each, a “Summaryof Payment”).  Each Summary ofPayment shall seek payment for Reimbursable Costs incurred by Fagen during thepay period for which the Summary of Payment is issued together with theapplicable portion of Fagen’s Fee (excluding *****) of Fagen’s Fee until suchwithheld amount equals ***** Dollars ($*****) (after which time no amount ofFagen’s Fee shall be withheld)).  The *****Dollars ($*****) withheld by Owner pursuant to this paragraph 10.3.1 shall bereferred to herein as “Retainage”.  Alongwith each Summary of Payment Fagen will submit to Owner (1) an itemizedlist of employee labor costs, including benefits, fringe, statutory burdens,and per diem amounts; (2) details of labor hours worked (*e.g.,* copies of timesheets) to the extent not alreadyprovided to Owner during the performance of the work; (3) invoices andpurchase orders for Reimbursable Costs; and (4) a schedule showing rentalequipment used during the relevant pay period. One half of the Retainage ($*****) shall be paid to Fagen uponMechanical Completion and all remaining Retainage shall be paid to Fagen uponFinal Completion.

 

**10.3.2 **The Summary of Payment shall be substantially inthe form attached hereto as Exhibit J.  Along with each Summary ofPayment, Fagen shall submit to Owner, via hardcopy or by electronic meansincluding facsimile or portable document format, signed lien waivers,substantially in the form attached hereto as Exhibit K, received fromSubcontractors and suppliers for the Work included in the Summary of Paymentsubmitted for the immediately preceding Pay Period and for which payment hasbeen received.  Notwithstanding theforegoing, nothing herein requires that signed lien waivers submitted pursuantto this section be notarized or otherwise certified in any manner.

 

**10.3.3 **The Summary of Payment shall constitute Fagen’srepresentation that the Work has been performed in accordance with the ContractDocuments and has progressed to the point indicated in the Summary ofPayment.  No additional documentationwill be provided to Owner in support of the Summary of Payment, provided however,that Fagen will work with Owner to provide such additional information as Ownerneeds to apply for sales tax exemptions and/or refunds.  The Work completed at the Site and thedocumentation provided pursuant to Section 10.3.1 and 10.3.2 hereof shallprovide sufficient substantiation to Owner of the accuracy of the Summary ofPayment for Owner to pay such Summary of Payment.  Title to the Work, including Work reflectedin a Summary of Payment, which is in process, is in transit, is in storage, orhas been incorporated into the Site or is otherwise on Site, shall

 

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passto Owner free and clear of all claims, liens, encumbrances, and securityinterests upon Fagen’s receipt of payment therefore.

 

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

 

**10.3.5 **The Summary of Payment may request payment for: (i) completed Work; (ii) prepaymentsfor materials or equipment for the Project when prepayment is required by themanufacturer or supplier of such materials or equipment; or (iii) equipmentand materials not yet incorporated into the Project provided that (x) theequipment and materials are suitably stored at either the Site or anotherlocation (subject to Owner’s prior approval), (y) the equipment andmaterials are protected by suitable insurance, and (z) upon payment, Ownerwill receive 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 Section 10.3.4,Owner shall pay Fagen all amounts properly due. If Owner determines that Fagen is not entitled to all or part of aSummary of Payment, it will notify Fagen in writing at least five (5) Daysprior to the date payment is due.  Thenotice shall indicate the specific amounts Owner intends to withhold, thereasons and contractual basis for the withholding, and the specific measuresFagen must take to rectify Owner’s concerns. Fagen and Owner will attempt to resolve Owner’s concerns prior to thedate payment is due.  If the Partiescannot resolve such concerns, Fagen may pursue its rights under the ContractDocuments, including those under Article 19.  Notwithstanding anything to the contrary inthe Contract Documents, Owner shall pay Fagen all undisputed amounts in aSummary of Payment within the times required by the Agreement.

 

**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 shallmake final payment (except for amounts in dispute) within thirty (30) Daysafter Owner’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 atthe rate that is the lower of eighteen percent (18%) per annum, or the maximumrate allowed 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 and unpaidshall bear interest at the rate set forth in Section 10.5.1.

 

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**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 Section 9.2.1.

 

**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 Governmental Authorities havingjurisdiction over the Project or Site. Fagen shall not remove, remediate or handle in any way (except in caseof emergency) any Hazardous Conditions encountered at the Site without priorwritten 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 Qualified IndependentExperts to (i) ascertain whether Hazardous Conditions have actually beenencountered, 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 removedor rendered harmless, and (ii) all necessary approvals have been obtainedfrom all government 

 

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entitieshaving jurisdiction over the Project or Site and a remediation plan has beenundertaken 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 timeof performance and costs have been adversely impacted by the presence ofHazardous Conditions, provided that such Hazardous Materials were notintroduced to the Site by Fagen, Subcontractors or anyone for whose acts theymay 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 thepresence, 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.

 

**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 ContractDocuments, or (ii) are of an unusual nature, differing from the conditionsordinarily encountered and generally recognized as inherent in the Work arecollectively referred 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.

 

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**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 under Section 13.2,floods, earthquakes, hurricanes, tornadoes, adverse weather conditions notreasonably anticipated or acts of God; sabotage; vandalism beyond that whichcould reasonably be prevented by a Party claiming Force Majeure; terrorism;war; riots; fire; explosion; blockades; insurrection; strike; slow down orlabor disruptions (even if such difficulties could be resolved by conceding tothe demands of a labor group); economic hardship or delay in the delivery ofmaterials or equipment that is beyond the control of a Party claiming ForceMajeure, and action or failure to take action by any Governmental Authorityafter the Effective Date (including the adoption or change in any rule orregulation or environmental constraints lawfully imposed by such GovernmentalAuthority), but only if such requirements, actions, or failures to act preventor delay performance; and inability, despite due diligence, to obtain anylicenses, permits, or approvals required by any Governmental 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 aForce Majeure Event, such Party will be excused from performance affected bythe Force 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 the other Party written notice describing the event or circumstance indetail, including if known, an estimation of its expected duration and probableimpact on the performance of the affected Party’s obligations hereunder andcontinues to furnish timely regular reports with respect thereto during thecontinuation of and upon the termination 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;

 

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(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 Section 12.1to the extent the occurrence of such event delayed Fagen’s performance of itsobligations under this Agreement.

 

**12.3        Change in Legal Requirements.**  The Contract Time(s) shall be adjustedto compensate Fagen for the effects of any changes to the Legal Requirementsthat occur 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 isrequired to 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).

 

**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, 

 

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including a reasonable estimation of its expectedduration and impact, if any, on the performance of Fagen’s obligationshereunder.  Any change in the TargetPrice 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 forthe emergency, 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 ofthe Work 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 pay for anyservices, materials, labor, equipment, taxes or other items or obligationsfurnished or incurred for or in connection with the Work.  Within three (3) business days ofreceiving written notice from Owner that such a claim or mechanic’s lien hasbeen filed, Fagen shall commence, and shall thereafter diligently,  take the steps necessary to discharge suchclaim 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.

 

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**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, Fagenshall fully indemnify, save harmless and defend the Owner Indemnified Partiesfrom and against any and all Damages in favor of any Governmental Authority orother third 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.

 

**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 bodilyinjury, sickness or death, and property damage or destruction (other than tothe Work itself) to the extent resulting from the negligent acts, willfulmisconduct, or omissions of Owner, its officers, directors, employees, agents,or anyone for whose acts any of them may be liable.

 

**14.4.1 **Without limiting the generality of Section 14.4 hereof, Owner shallfully indemnify, save harmless and defend Fagen and any of Fagen’s officers,directors, employees, or agents from and against any and all Damages in favorof any Governmental 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 to the(i) implementation, (ii) construction, (iii) performance, (iv) maintenance,or (v) lack; in each case, of soil stabilization on  the Site after Final Completion.

 

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**14.4.3 **Nothing in the Owner’s General Indemnification contained in this Section 14.4shall be read to limit in any way any entitlement Owner shall have to insurancecoverage under any insurance policy, including any insurance policy required byeither 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 partyclaims, 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 itsofficers, directors, employees and agents, in each case; arising from orattributable to (a) any Prior Work, and (b) agreements for design,build, procurement, engineering, construction, or related services entered intoby Aventine with third parties which relate to, or were related to, theProject.

 

**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 Time(s) andTarget Price if its time and/or cost to perform the Work has been adverselyimpacted by any suspension or stoppage of work 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 skilledworkers; (ii) supply the materials required by the Contract Documents; (iii) complywith applicable Legal Requirements; (iv) timely pay, without cause,Subcontractors; (v)  perform the Work with promptness and diligence toensure that the Work is completed by the Contract Time(s), as such times may beadjusted in accordance with this Agreement; or (vi) perform materialobligations under the Contract Documents; then Owner, in addition to any otherrights and remedies provided in the Contract Documents or by law or equity,shall have the rights set 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) theinsurance coverage required to be provided by Fagen pursuant to 

 

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Article 17hereof is suspended or cancelled without Fagen providing immediate replacementcoverage (and, in any case, within seven (7) Days of the occurrencethereof) meeting the requirements specified in Article 17 hereof; (ii) Fagenpurports to make an assignment of this Agreement in breach of the provisions ofSection 21.1 hereof, or (iii) any representation or warranty made byFagen under Section 18.1 hereof was false or materially misleading whenmade, then Owner may terminate 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;

 

(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’sreceipt of Fagen’s notice. If Owner fails to cure or reasonably commence tocure such problem and thereafter diligently pursue such cure to completion,then Fagen may give a second written notice to Owner of its intent to stop workwithin an additional seven (7) Day period. If Owner, within such second seven (7) Day period, fails to cure,or reasonably commence to cure such problem and thereafter diligently pursuesuch cure to completion, then Fagen may stop work unless such problem involvesan amount 

 

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disputedin good faith by Owner.  In such case,Fagen shall be entitled to make a claim for adjustment to the Contract Time(s) tothe 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 dueto the acts or omissions of Fagen, Design Consultant and their respectiveofficers, agents, employees, Subcontractors or any other person for whose actsFagen may be liable under Law.

 

(b)                                 Owner’s failure to provide Fagenwith any information, permits or approvals that are Owner’s responsibilityunder the Contract Documents which result in the Work being stopped for thirtyfive (35) consecutive Days, or more than sixty (60) Days, during the durationof the Work, even though Owner has not ordered Fagen in writing to stop andsuspend the Work pursuant to Section 15.1 hereof.

 

(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) Daysafter Fagen 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 declarethe Agreement terminated for default by providing written notice to Owner ofsuch declaration.  In such case, Fagenshall be entitled to recover in the same manner as if Owner had wrongfullyterminated the 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 ability to

 

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perform its obligationsunder the Contract Documents. Accordingly, should such event occur:

 

(a)                                  The Bankrupt Party, its trustee or othersuccessor, shall furnish, upon request of the non-Bankrupt Party, adequateassurance of the ability of the Bankrupt Party to perform all futureobligations under the Contract Documents, which assurances shall be providedwithin ten (10) Days after receiving notice of the request; and

 

(b)                                 The Bankrupt Party shall file anappropriate action within the bankruptcy court to seek assumption or rejectionof the Agreement within sixty (60) Days of the institution of the bankruptcyfiling and shall diligently prosecute such action.

 

**15.5.2 **If the Bankrupt Party fails to comply with itsforegoing obligations, the non-Bankrupt Party shall be entitled to request thebankruptcy court to reject the Agreement, declare the Agreement terminated andpursue any other recourse available to the non-Bankrupt Party under thisArticle 15.

 

**15.5.3 **The rights and remedies under this Section 15.5 shallnot be deemed to limit the ability of the non-Bankrupt Party to seek any otherrights and remedies provided by the Contract Documents or by Law, including itsability to seek relief from any automatic stays under the United StatesBankruptcy Code or the right of Fagen, if it is the non-Bankrupt Party, to stopWork under any applicable provision of this Agreement.

 

**Article 16**

 

**Representativesof the Parties**

 

**16.1        Designation of Owner’s Representatives.** Owner designates the individual listed below as its seniorrepresentative (“Owner’s Senior Representative”), which individual hasthe authority and responsibility for avoiding and resolving disputes underArticle 19:

 

**Tom Manuel**

**Chief Executive Officer**

**Aventine Renewable Energy - AuroraWest, LLC**

**P.O.  Box1800**

**Pekin, IL61555**

**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:

 

**Jeffrey G. See**

**V.P. of Project Development**

**Aventine Renewable Energy - AuroraWest, LLC**

 

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**7201 Port Road**

**Mount Vernon, IN 47620**

**Cell 605-691-9258**

**Facsimile:                              **

 

**16.2        Designation of Fagen’s Representatives.** Fagen designates the individual listed below as its seniorrepresentative (“Fagen’s Senior Representative”), which individual hasthe authority and responsibility for avoiding and resolving disputes underArticle 19:

 

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

 

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 force through the Final CompletionDate the following insurance coverage with the policy limits indicated, andotherwise in compliance with the provisions of this 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     |   |

 

33

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| 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 theWork is performed.

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

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

 
| 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 maintainingfrom insurance companies authorized to do business in the state in which thePlant 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 for claims arising underworkers’ compensation, disability and other similar employee benefit Lawsapplicable to the Work;

 

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

 

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

 

(d)                                 coverage for personal injury liabilityclaims for damages sustained by a person as a direct or indirect result ofFagen’s employment of the person, or sustained by any other person;

 

(e)                                  coverage for claims for damages (otherthan to the Work) because of injury to or destruction of tangible property,including loss of use;

 

34

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(f)                                    coverage for claims of damages because ofpersonal injury or death, or property damage resulting from ownership, use andmaintenance of any motor vehicle; and

 

(g)                                 coverage for contractual liability claimsarising out of Fagen’s obligations under Section 14.3.

 

**17.2.2 **Fagen’s liability insurance required by thisSection 17.2 shall be written for the coverage amounts set forth inSection 17.1 and shall include completed operations insurance for theperiod of time set forth in the Agreement, and shall name Owner as anadditional insured, without application of deductible, retention orretrospective premiums as to the additional insured.

 

**17.2.3 **To the extent Owner requires Fagen or any DesignConsultant to provide professional liability insurance for claims arising fromthe negligent performance of design services by Fagen or the Design Consultant,the coverage limits, duration and other specifics of such insurance shall be asset forth in the Agreement.  Anyprofessional liability shall specifically delete any design-build or similarexclusions that could compromise coverage because of the design-build deliveryof the Project.  Such policies shall beprovided prior to the commencement of any design services hereunder.

 

Promptly followingexecution of this Agreement, Fagen shall provide Owner with copies of insurancecertificates reflecting coverage required under this Section 17.2.evidencing that (i) all of Fagen’s insurance obligations required by theContract Documents are in full force and in effect and will remain in effectfor the duration required by the Contract Documents and (ii) no insurancecoverage required hereunder will be canceled, renewal refused, or changedunless at least thirty (30) Days prior written notice is given to Owner.  **Allinsurance certificates provided by Fagen pursuant to this Section 17.2.3shall, 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 thisSection 17.2.3, prompt notice of such fact and the certificate ofinsurance for such new, revised or modified policy when available.

 

**17.3        Owner’s Liability Insurance.** Owner shall procure and maintain from insurance companies authorized todo business in the state in which the Plant is located the following liabilityinsurance with the policy limits indicated:

 

35

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| 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 |   |

 

The general liability insurance obtained by Ownershall name Fagen, and Subcontractors as additional insured, without applicationof deductible, retention or retrospective premiums as to the additionalinsured.

 

**17.4        Owner’s Property Insurance.**

 

**17.4.1 **Unless otherwise provided in the Contract Documents,Owner shall procure from insurance companies authorized to do business in thestate in which the Plant is located, and maintain through Final Completion,property insurance upon the entire Plant in a minimum amount equal to the fullinsurable value of the Plant, including professional fees, overtime premiumsand all other expenses 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 shallmaintain coverage equal to or in excess of the value of each of Fagen’s andSubcontractors’ property on the Site. The property insurance shall include physical loss or damage to theWork, including materials and equipment in transit, at the Site or at anotherlocation.  Notwithstanding the foregoing,the property insurance 

 

36

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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 sentence of Section 17.4.1 above), (i) Owner shall procureand maintain Work equipment and machinery insurance that will include asadditional insured Owner, Fagen, and Subcontractors, in an amount not less thanthe Contract Price , and without application of any deductible, retention orretrospective premium as to the additional insured and (ii) Owner shallmaintain coverage equal to or in excess of the value of each of Fagen’s, andSubcontractors’ interest or investment in Work equipment or machinery on theSite.

 

**17.4.3 **[Reserved.]

 

**17.4.4 **Promptly following execution of this Agreement, Ownershall provide Fagen with copies of the insurance certificates reflectingcoverage required under this Section 17.4 evidencing that (i) allOwner’s insurance obligations required by the Contract Documents are in fullforce and in effect and will remain in effect until Fagen has completed all ofthe Work and has received Final Payment from Owner, and (ii) no insurancecoverage will be canceled, renewal refused, or changed unless at least thirty(30) Days prior written notice is given to Fagen.  **Allinsurance certificates provided by Owner pursuant to this Section 17.4.4shall, as applicable, clearly identify in writing as additional insured and/orexpressly 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  and Subcontractors are named as 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’sseparate contractors, Subcontractors, agents and employees of each and all ofthem all damages covered by insurance provided herein, except such rights asthey may have to the proceeds of such insurance.  Fagen and Owner shall, where appropriate andwhere agreed to by applicable counterparties, (i) require similar waiversof subrogation from Owner’s separate contractors, Subcontractors, and insuranceproviders and (ii) require each of them to include similar waivers intheir contracts or policies.

 

**Article 18**

 

**Representationsand Warranties**

 

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

 

37

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(a)                                  it is duly organized, validly existingand in good standing under the Laws of its state of formation and has allrequisite power and authority to execute and deliver this Agreement, to performits obligations hereunder and to consummate the transactions contemplatedhereby;

 

(b)                                 this Agreement has been duly executed anddelivered by such Party and constitutes the legal, valid and bindingobligations of such Party, enforceable against such Party in accordance withtheir respective terms, except as enforcement may be limited by bankruptcy,insolvency, moratorium or similar Laws affecting creditor’s rights or bygeneral equitable principles;

 

(c)                                  the execution, delivery and performanceof this Agreement and the consummation of the transactions contemplated herebydo not and will not conflict with or violate (a) the certificate of incorporationor bylaws or equivalent organizational documents of such Party, or (b) anyLaw applicable to such Party and other than the permits listed onExhibit F, such execution, delivery and performance of this Agreement doesnot require any Governmental Approval; and

 

(d)                                 there is no action pending or, to theknowledge of such Party, threatened, which would hinder, modify, delay orotherwise adversely affect such Party’s ability to perform its obligationsunder the Contract Documents.

 

**18.2        Fagen Representations and Warranties.** Fagen further represents that it has the necessary financial resourcesto fulfill its obligations under this Agreement.

 

**Article 19**

 

**DisputeResolution**

 

**19.1        Dispute Avoidance and Mediation.** The Parties are fully committed to working with each other throughoutthe Project and agree to communicate regularly with each other at all times soas to avoid or minimize disputes or disagreements.  If disputes or disagreements do arise, Fagenand Owner each commit to resolving such disputes or disagreements in anamicable, professional and expeditious manner so as to avoid unnecessarylosses, delays and disruptions to the Work.

 

Fagen and Owner will first attempt to resolve disputesor disagreements at the field level through discussions between Fagen’sRepresentative and Owner’s Representative.

 

If a dispute or disagreement cannot be resolvedthrough Fagen’s Representative and Owner’s Representative, Fagen’s SeniorRepresentative and Owner’s Senior Representative, upon the request of either Party,shall meet as soon as conveniently possible, but in no case later than thirty(30) Days after such a request is made, to attempt to resolve such dispute ordisagreement. Prior to any meetings between the Senior Representatives, theParties will exchange relevant information that will assist the Parties inresolving their dispute or disagreement.

 

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If, after meeting, the Senior Representativesdetermine that the dispute or disagreement cannot be resolved on termssatisfactory to both Parties, the Parties shall submit the dispute ordisagreement to non-binding mediation. The mediation shall be conducted in Omaha, Nebraska by a mutuallyagreeable impartial mediator or, if the Parties cannot so agree, a mediatordesignated by the American Arbitration Association (“AAA”) pursuant toits Construction Industry Arbitration Rules and Mediation Procedures.  The mediation will be governed by andconducted pursuant to a mediation agreement negotiated by the Parties or, ifthe Parties cannot so agree, by procedures established by the mediator.  Mediation is a condition precedent toarbitration, unless the Parties agree otherwise.

 

**19.2        Arbitration.** Any claims, disputes or controversies between the Parties arising out ofor relating to the Agreement, or the breach thereof, which have not beenresolved in accordance with the procedures set forth in Section 19.1 aboveshall be decided by arbitration to be conducted in Omaha, Nebraska inaccordance with the Construction Industry Arbitration Rules and MediationProcedures of the AAA then in effect, unless the Parties mutually agreeotherwise.  A demand for arbitrationshall be made within a reasonable time after the dispute has arisen, and in noevent shall it be made after the date when institution of legal or equitableproceedings based on such dispute would be barred by the applicable statute oflimitations. ** **The arbitration shall be governedby the Federal Arbitration Act.

 

The award of the arbitrator(s) shall be final andbinding upon the Parties.  Judgment maybe entered upon it by any court having jurisdiction thereof.

 

Fagen and Owner expressly agree that any arbitrationpursuant to this Section 19.2 may be joined or consolidated with anyarbitration involving any other person or entity (i) necessary to resolvethe claim, dispute or controversy, or (ii) substantially involved in oraffected by such claim, dispute or controversy. Both Fagen and Owner will include appropriate provisions in allcontracts they execute after the date of execution of this Agreement with otherparties in connection with the Project to require arbitration of all disputesand such joinder or consolidation (to the extent such other parties will agreeto such provisions).

 

The prevailing Party in any arbitration, or any otherfinal, binding dispute proceeding upon which the Parties may agree, shall beentitled to recover from the other Party reasonable attorneys’ fees andexpenses incurred by the prevailing Party in such arbitration or such otherdispute proceeding.

 

**19.3        Duty to Continue Performance.** Unless provided to the contrary in the Contract Documents, Fagen shallcontinue to perform the Work and Owner shall continue to satisfy its paymentobligations to Fagen, pending the final resolution of any dispute ordisagreement between Fagen and Owner.

 

**19.4        No Consequential Damages.** Notwithstanding anything herein to the contrary, neither Fagen nor Ownershall be liable to the other for any consequential losses or damages, whetherarising in contract, warranty, tort (including negligence), strict liability orotherwise, including but not limited to, losses of use, profits, business,reputation or financing,

 

39

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**19.5        Limitation of Liability.** Notwithstanding anything else in this Agreement to the contrary, theaggregate liability of Fagen, its Subcontractors, vendors, suppliers, agentsand employees, to Owner (or any successor thereto or assignee thereof) for anyand all claims and/or liabilities arising out of or relating in any manner tothe Work or to Fagen’s performance or non-performance of its obligationshereunder, whether based in contract, tort (including negligence), strictliability, or otherwise, shall not exceed, in the aggregate, the Target Priceand shall be reduced, upon the issuance of each Summary of Payment, by thetotal value of such Summary of Payment until such time as Fagen’s aggregateliability has been reduced to ***** Dollars ($*****).  Upon Final Completion, Fagen’s aggregate liabilityshall be reduced to the greater of (1) Ten Percent (10%) of the TargetPrice or (2) the amount of insurance coverage available to respond to theclaim or liability under any policy of insurance provided by Fagen under thisAgreement. Except for any remaining warranty obligations, Fagen’s aggregateliability shall be reduced to zero on the one year anniversary of the FinalCompletion Date.

 

**Article 20**

 

**Confidentialityof Shared Information**

 

**20.1        Non-Disclosure Obligation.** Except as required by court order, subpoena, or Applicable Law, theParties will hold in confidence, and will use only for the purposes ofcompleting the Project, any and all Confidential Information disclosed to eachother.  Neither Party shall disclose tothird parties any Confidential Information without the express written consentof the other Party, which consent shall not be unreasonably withheld.  The Parties shall at all times use theirrespective reasonable efforts to keep all Confidential Information andinformation regarding the terms and conditions of this Agreementconfidential.  However, the Parties maydisclose Confidential Information to their respective lenders, lenders’ agents,advisors and/or consultants only as reasonably necessary in connection with thefinancing of the Plant or to enable them to advise the Parties with regard tothe Contract Documents and the Project, provided that prior to such disclosureany party to whom Confidential Information is disclosed is informed by thedisclosing Party of the existence of this confidentiality obligation and agreesto be obligated to maintain the confidentiality of any information received.The term “Confidential Information” will mean (i) confidential orproprietary 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 informationwhich one Party, directly or indirectly, may acquire from another Party;however, Confidential Information will not include information falling into anyof the following categories:

 

(a)                                  information that, at the time ofdisclosure hereunder, is in the public domain;

 

(b)                                 information that, after disclosurehereunder, enters the public domain other than by breach of this Agreement orthe obligation of confidentiality;

 

(c)                                  information that, prior to disclosurehereunder, was already in the recipient’s possession, either without limitationon disclosure to others or subsequently 

 

40

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becoming free of suchlimitation;

 

(d)                                 information obtained by the recipientfrom a third party having an independent right to disclose this information;and

 

(e)                                  information that is available throughdiscovery by independent research without use of or access to the ConfidentialInformation acquired from the other Party; and

 

(f)                                    photographs and descriptive informationregarding the Project, including, Owner’s name and Plant location.

 

Each Party’s obligationto maintain Confidential Information in confidence will be deemed performed ifsuch Party observes with respect thereto the same safeguards and precautions,which such Party observes with respect to its own Confidential Information ofthe same or similar kind.  It will not bedeemed to be a breach of the obligation to maintain Confidential Information inconfidence if Confidential Information is disclosed upon the order of a courtor other authorized Governmental Authority, or pursuant to other LegalRequirements.  However, if Owner isrequired to file the Contract Documents or a portion thereof with aGovernmental Authority, it agrees that it will not do so without firstinforming Fagen of the requirement and seeking confidential treatment of theContract Documents, or as much thereof as such Governmental Authority permits,prior to filing the documents or a portion thereof.

 

Notwithstanding theabove, or any other provision of this Agreement, Fagen agrees that any Delta-TTechnology (as defined in the License) it receives from Owner, APTI, or any otherperson or entity in conjunction with the Project is subject to the terms andprovisions of that certain Amended and Restated License of Technology betweenApplied Process Technology International LLC (“APTI”), as successor toDelta-T Corporation, and Aventine Renewable Energy - Aurora West, LLC datedFebruary 26, 2010 (the “License”), a copy of which is attachedhereto as Exhibit L.  As such, Fagenagrees to maintain the confidentiality of, and to use, the Delta-T Technologyin accordance with and as permitted under the terms of the License.

 

**20.2        Publicity and Advertising.** Neither Party shall make, nor permit any of its subcontractors, agents,or vendors to make any external announcement or publication, release anyphotographs or information concerning the Project or any part thereof, or makeany other type of communication to any member of the public, press, businessentity, or any official body which names the other Party unless prior writtenconsent is obtained from such Party, which consent shall not be unreasonablywithheld.

 

**20.3        Term of Obligation.** The confidentiality obligations of the Parties pursuant to thisArticle 20 shall survive the expiration or other termination of thisAgreement for a period of five (5) years, except for the obligationsrelating to the Delta-T Technology, which shall apply as long as the License isin effect.

 

41

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**Article 21**

 

**Miscellaneous**

 

**21.1     ****Assignment.**  This Agreement shall be binding upon, shallinure to the benefit of, and may be performed by, the successors and permittedassigns of the Parties, except that neither Fagen nor Owner shall, without thewritten consent of the other, assign or transfer this Agreement or any of theContract Documents.  Fagen’ssubcontracting portions of the Work in accordance with this Agreement shall notbe deemed to be an assignment of this Agreement.

 

**21.2     ****Successors.**  Fagen and Owner intend that the provisions ofthe Contract Documents are binding upon the Parties, their employees, agents,heirs, successors and assigns.

 

**21.3     ****Governing Law.**  This Agreement shall be governed by andconstrued and enforced in accordance with, the substantive laws of the state ofMinnesota, without regard to the conflict of laws provisions thereof.

 

**21.4     ****Severability.**  If any provision or any part of a provisionof the Contract Documents shall be finally determined to be superseded,invalid, illegal, or otherwise unenforceable pursuant to any applicable LegalRequirements, such determination shall not impair or otherwise affect thevalidity, legality, or enforceability of the remaining provision or parts ofthe provision of the Contract Documents, which shall remain in full force andeffect as if the unenforceable provision or part were deleted.

 

**21.5     ****No Waiver.**  The failure of either Fagen or Owner toinsist, in any one (1) or more instances, on the performance of any of theobligations required by the other under the Contract Documents shall not beconstrued as a waiver or relinquishment of such obligation or right withrespect to future performance.

 

**21.6     ****Headings.**  The table of contents and the headings usedin this Agreement or any other Contract Document, are for ease of referenceonly and shall not in any way be construed to limit, define, extend, describe,alter, or otherwise affect the scope or the meaning of any provision of thisAgreement.

 

**21.7     ****Notice.**  Whenever the Contract Documents require thatnotice be provided to a Party, notice shall be delivered in writing to suchParty at the address listed below, or to such other address as a Party maynotify the other Party in accordance with this Section 21.7.  Notice will be deemed to have been validlygiven if delivered (i) in person to the individual intended to receivesuch notice, (ii) by registered or by certified mail, postage prepaid tothe address indicated in the Agreement within four (4) Days after beingsent, or (iii) by facsimile, by the time stated in a machine-generatedconfirmation that notice was received at the facsimile number of the intendedrecipient.

 

42

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If to Fagen, to:

 

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

 

with a copy to:

 

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

 

and to:

 

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

 

If to Owner, to:

 

AventineRenewable Energy - Aurora West, LLC

**7201 Port Road**

**Mount Vernon, IN 47620**

**Cell 605-691-9258**

Attention:Jeffrey G. See

Fax:                                  

 

with a copy to:

 

AventineRenewable Energy - Aurora West, LLC

P.O. Box1800

Pekin, IL  61555

Attention:John Castle

Fax:    (309) 347-8541

 

43

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and to:

 

AventineRenewable Energy - Aurora West, LLC

P.O. Box 1800

Pekin, IL  61555

Attention: Chris Nichols

Fax:    (309) 347-8541

 

**21.8     ****No Privity with DesignConsultant/Subcontractors.** Nothing in the Contract Documents is intended or deemed to create anylegal or contractual relationship between Owner and any Design Consultant orSubcontractor.

 

**21.9     ****Amendments.**  The Contract Documents may not be changed,altered, or amended in any way except in writing signed by a duly authorizedrepresentative of each Party.

 

**21.10   ****Entire Agreement.**  ThisAgreement consists of the terms and conditions set forth herein, as well as theExhibits hereto, which are incorporated by reference herein and made a parthereof.  This Agreement sets forth thefull and complete understanding of the Parties as of the Effective Date withrespect to the subject matter hereof and shall supersede and replace in allrespects any other agreement entered into by and between the Parties withrespect to the Project.

 

**21.11    Third-PartyBeneficiaries.** Except as expressly provided herein, this Agreement is intended to besolely for the benefit of the Owner, Fagen and permitted assigns, and is notintended to and shall not confer any rights or benefits on any person not asignatory 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.**   Notwithstandingany provisions herein to the contrary, the Work Product provisions set forth inArticle 5, the warranty provisions set forth in Article 8, theindemnity, defense and hold harmless obligations set forth herein, and theconfidentiality and other obligations set forth in Article 20, shallsurvive (in full force and effect) the expiration or termination of thisAgreement and shall continue to apply to the Parties to this Agreement evenafter termination of this Agreement or the transfer of such Party’s interest inthis Agreement.

 

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**INWITNESS WHEREOF**, the Parties hereto have caused theirnames to be hereunto subscribed by their officers thereunto duly authorized,intending thereby that this Agreement shall be effective as of April 12,2010.

 

 
| **OWNER:**                                 | ** **   | **FAGEN:**               |
|--------------------------------------------|--------------|--------------------------|
|                                       |         |                     |
|                                       |         |                     |
| Aventine Renewable Energy-Aurora West, 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 16, 2010 |                     | Date: | May 14, 2010 |
|                                            |              |                          |  |  |

 

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**EXHIBIT A**

 

**Owner’s Scope of Work**

 

Owner’s Scope of Work shall consist of allwork not expressly provided as the responsibility of Fagen in Exhibit Battached to this Agreement or as expressly agreed to by the parties. 

 

A-1

----

 

**EXHIBIT B**

 

**General Scope of Work for Fagen**

 

See attached.

 

B-1

----

 

**EXHIBIT C**

 

**Owner’s Requirements**

 

[To be determined.]

 

C-1

----

 

**EXHIBIT D**

 

**Fagen’s Standard Rates**

 

Home Office Purchasing and Procurement - $*****/hour

 

D-1

----

 

**EXHIBIT E**

 

**Form of Informational Report**

 

E-1

----

 

**EXHIBIT F**

 

**Required Permits**

 

**See attached.**

 

F-1

----

** **

**EXHIBIT G**

 

**Fagen’sTime and Material Rates**

 

See attached.

 

G-1

----

 

**EXHIBITH**

 

**Reserved**

 

H-1

----

 

**EXHIBITI**

 

**Reserved**

 

I-1

----

 

**EXHIBIT J**

 

**Form ofSummary of Payment**

 

See attached.

 

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   )

 

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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:                                                                                                                                                                                                                                                        |   |                |   |

 

 

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**EXHIBIT L**

 

**APTI License**

 

See attached.

 

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