Document:

exv10w2

 

Exhibit 10.2

	 	 	 
	FAGEN

	 	501 West Hwy. 212, P.O. Box 159
	INC.

	 	Granite Falls, MN 56241
	 

	 	320-564-3324

	 	 	 	 	 
	 
	  

	 	Civil — Mechanical — Electrical Contractors
	 	320-564-3278 fax

July 21, 2006

Matt Sederstrom

Buffalo Ridge Energy, LLC

501 West Highway 212

Granite Falls, MN 56241

     Re: Buffalo Ridge Energy, LLC Ethanol Project

Dear Matt:

     This letter of intent will confirm our discussions regarding the proposed terms and conditions
under which Fagen, Inc. (“Fagen”) will enter into exclusive negotiations with Buffalo Ridge
Energy, LLC (“Owner”) to implement the transaction described in Paragraph 1 below (the
“Transaction”). (Fagen and Owner are referred to herein individually as a “Party”
and collectively as the “Parties”). This letter, if executed and returned by you within
thirty (30) days of the date hereof and payment of the Commitment Fee described in Paragraph 5
below will constitute a letter of intent between us (the “Letter of Intent”).

     The Parties agree to effect the Transaction subject only to the execution and delivery (in
each case in a form satisfactory to Fagen) of a definitive Design-Build Agreement and other
ancillary instruments and agreements (the “Transaction Documents”). The Transaction
Documents will be executed and delivered by the parties thereto no later than December 31, 2008
(the “Closing Date”); provided that the Transaction Documents may, if agreed to by the
Parties, provide for extensions necessary to secure any consents and approvals of persons (other
than affiliates of the Parties) on terms reasonable to the Parties.

	1.	 	The Transaction. The Parties agree that the Transaction will consist of the following:

	 	(a)	 	Fagen agrees to provide Owner with those services as described in this Letter
of Intent which are necessary for Owner to develop a detailed description of a fifty
(50) million gallons per year (“MGY”) natural gas-fired dry grind ethanol
production facility located at a site to be determined in Iowa (the “Plant”)
and to establish a price for which Fagen would provide design, engineering, procurement
of equipment and construction services for the Plant. The description of the Plant
will be sufficiently detailed to permit an analysis of the Owner’s lump-sum cost to
develop the Plant and to develop an economic pro forma sufficient to determine if the
Plant can be financed.

 

 

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	 	(b)	 	Fagen will also provide Owner with assistance in evaluating, from both a
technical and business perspective, Owner’s organizational options, the appropriate
location of the Plant, and business plan development. Fagen will assume no risk or
liability of representation or advice to Owner by assisting in evaluating the above and
all decisions made regarding feasibility, financing, and business risks are the Owner’s
sole responsibility and liability. Owner acknowledges that Fagen has no control over
cost of labor, materials, equipment, or services furnished by others, over other
contractors’ methods of determining prices, or other competitive bidding or market
conditions. Fagen’s estimates of project construction cost will be made on the basis of
its experience and qualifications and will represent Fagen’s best judgment as
experienced and qualified professionals familiar with the construction industry. Fagen
does not guarantee that proposals, bids, or actual construction cost will not vary from
its estimates of project cost and Owner acknowledges the same.
	 
	 	(c)	 	Fagen will also provide Owner with conceptual design and technical information
required to support Owner’s application for a construction air permit prior to the
commencement of Plant Construction.
	 
	 	(d)	 	If Owner determines that the Plant is economically feasible and desires to
proceed with the development of the Plant, then Owner agrees to enter into a Lump Sum
Design-Build contract with Fagen for the design, procurement of equipment and
construction of the Plant (the “Design-Build Agreement”).
	 
	 	(e)	 	Owner shall offer Fagen the right to invest in the project. Unless otherwise
specifically agreed between Fagen and Owner, such investment shall be offered on the
same terms and conditions as all other investors.
	 
	 	(f)	 	Owner agrees that the Design-Build Agreement will be Fagen’s chosen form of
Design-Build Agreement and will contain among other things, those terms and conditions
set forth in the General Terms and Conditions section of this Letter of Intent.

	2.	 	Contract Price. Owner shall pay Fagen Sixty-nine Million Three Hundred Fifty Thousand Four
Hundred Seventy-one Dollars ($69,350,471.00) (the “Contract Price”) as full
consideration to Fagen for full and complete performance of the services described in the
Design-Build Agreement and all costs incurred in connection therewith.

	 	(a)	 	The Contract Price shall not include any costs related to union labor or
prevailing wage requirements. If any action by Owner, a change in Applicable Law, or a
Governmental Authority (as those terms are defined in the Design-Build Agreement)
acting pursuant to a change in Applicable Law, shall require Fagen to employ union
labor or compensate labor at prevailing wages, the Contract Price

 

 

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	 	 	 	shall be adjusted upwards to include any increased costs associated with such labor
or wages. Such adjustment shall include, but not be limited to, increased labor,
subcontractor, and material and equipment costs resulting from any union or
prevailing wage requirement; provided, however, that if an option is made available
to either employ union labor, or to compensate labor at prevailing wages, such
option shall be at Fagen’s sole discretion and that if such option is executed by
Owner without Fagen’s agreement, Fagen shall have the right to terminate this Letter
of Intent or the Design-Build Agreement, as applicable, and receive compensation
pursuant to Paragraph 4(c) hereof or the terms of the Design-Build Agreement,
whichever is applicable.

	 	(b)	 	If the Construction Cost Index published by Engineering News-Record Magazine
(“CCI”) for the month in which a Notice to Proceed is given to Fagen is greater
than 7721.34 (July 2006), the Contract Price shall be increased by a percentage amount
equal to the percentage increase in CCI plus four percent (4%). By way of example, if
the CCI increases two percent (2%), the total adjustment to the Contract Price shall be
six percent (6%).

	3.	 	General Terms and Conditions. The consummation of the Transaction will be subject to the
Design-Build Agreement containing the following conditions:

	 	(a)	 	Fagen will have no responsibility for and will not perform any site preparation
work. Owner’s site responsibilities will include, but will not be limited to:

	 	i.	 	Obtaining land and legal authority to use the site
for its intended purpose;
	 
	 	ii.	 	site grading including soil stabilization and the
costs connected therewith;
	 
	 	iii.	 	final grading, seeding, and mulching;
	 
	 	iv.	 	site security, including any site fencing;
	 
	 	v.	 	procuring boundary and topographic surveys;
	 
	 	vi.	 	procuring soil borings and geotechnical reports;
	 
	 	vii.	 	obtaining all operating permits, including any
fees, bonding, and required testing;
	 
	 	viii.	 	obtaining storm water runoff permit;
	 
	 	ix.	 	obtaining any necessary pollutant elimination
discharge permit;
	 
	 	x.	 	obtaining a natural gas supply and service
agreement and providing all gas piping to the use points, providing
burner tip pressures as specified by Fagen, and supplying a digital
flowmeter;
	 
	 	xi.	 	securing temporary and permanent electrical
service, including all infrastructure design and installation for any
line/service extensions, substation, primary feed and metering system,
and on-site electrical distribution system up to and including the
service transformers;
	 
	 	xii.	 	supplying a water source, storage, and water supply
lines of appropriate quality and quantity;
	 
	 	xiii.	 	paying for a water pre-treatment system should the
project require such a

 

 

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	 	 	 	system (procurement and installation by Fagen);

	 	xiv.	 	providing wastewater discharge piping, septic tank
and drainfield or connect to a municipal system as required for the
sanitary sewer requirements of the Plant;
	 
	 	xv.	 	providing and maintain required ditches and
permanent roads;
	 
	 	xvi.	 	constructing, furnishing, and equipping the
administration building;
	 
	 	xvii.	 	providing maintenance and power equipment and
spare parts;
	 
	 	xviii.	 	providing all rail design, engineering, and construction, including any
railroad permits or approvals;
	 
	 	xix.	 	supplying drawings of rail system and
administration building to Fagen; and
	 
	 	xx.	 	paying for the required fire protection system for
the Plant (procurement and installation by Fagen).

	 	(b)	 	Owner will enter into a Phase I and Phase II Engineering Services Agreement
with Fagen Engineering, LLC. The Phase I and Phase II Engineering Services Agreement
will provide for commencement of work on the Phase I and Phase II engineering for the
project as set forth therein. The Phase I engineering shall consist of engineering and
design of the Plant site and shall include: property layout; grading, drainage and
erosion control plan drawings; roadway alignment drawings; culvert cross sections and
details; and seeding and landscaping, if required. The Phase II engineering shall
consist of engineering and design of site work and utilities for the Plant, all within
the property line of the Plant, including: property layout; site grading and drainage
drawings; roadway alignment; all utility layout including fire loop, potable water,
well water if applicable, sanitary sewer, utility water blowdown, and natural gas;
geometric layout; site utility piping tables; tank farm layout; tank farm details;
sections and details drawing, if required, and miscellaneous details drawing, if
required. Owner will pay Fagen Engineering, LLC Ninety-two Thousand Five Hundred
Dollars ($92,500.00) for such engineering services pursuant to the terms of that
agreement, the full amount of which shall be included in and credited to the Contract
Price. Notwithstanding the foregoing sentence, if a Notice to Proceed is not issued
pursuant to the terms of the Design-Build Agreement, or Financial Closing is not
obtained, then Fagen Engineering, LLC shall keep the full amount paid under the Phase
I and Phase II Engineering Services Agreement as compensation for the services provided
thereunder.
	 
	 	(c)	 	Fagen will provide reasonable assistance to Owner in obtaining Owner’s permits,
approvals and licenses.
	 
	 	(d)	 	Owner will provide: surveys describing the property’s boundaries; geotechnical
studies describing subsurface conditions; temporary and permanent easements, zoning and
other requirements and encumbrances to enable Fagen to perform the

 

 

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	 	 	 	work; a legal
description of the site; as-built and record drawings of any existing
structures; environmental studies, reports, and statements describing the
environmental conditions, including hazardous conditions at the site.

	 	(e)	 	Owner will be responsible for securing and executing all necessary real estate
agreements to secure the site and is responsible for all costs incurred in obtaining
those agreements.
	 
	 	(f)	 	Fagen may subcontract portions of the work.
	 
	 	(g)	 	Fagen will provide two (2) weeks of training for all of Owner’s employees and,
if applicable, Owner’s Operator’s employees required for the operation and maintenance
of the Plant.
	 
	 	(h)	 	Owner must obtain Financial Closing prior to the issuance of a Notice to
Proceed.
	 
	 	(i)	 	Owner will pay all reasonable costs incurred by Fagen for frost removal so that
winter construction can proceed. Such costs will be in addition to, and not included
in, the lump sum price.
	 
	 	(j)	 	All drawings, specifications, calculations, data, notes and other materials and
documents, including electronic data furnished by Fagen to Owner under the Design-Build
Agreement (“Work Product”) will be instruments of service and Fagen will retain
the ownership and property interests therein, including copyrights thereto.
	 
	 	(k)	 	Upon payment in full under the Design-Build Agreement, Fagen will grant Owner a
limited license to the Work Product for use in connection with the operation,
maintenance, and repair of the Plant including the interconnection of, but not design
of, any future expansions to the Plant. The limited license will not permit Owner to
modify the Plant in any way that would increase the distillation, dehydration or
evaporation capacity of the Plant.
	 
	 	(l)	 	Work will commence following receipt of Owner’s written valid notice to proceed
(“Notice to Proceed”). The Notice to Proceed cannot be given until (1) the
Owner has title to the real estate on which the project will be constructed; (2) the
site work required of Owner is completed; (3) the air permit(s) and/or other applicable
local, state or federal permits necessary for construction to begin have been obtained;
(4) Owner has obtained Financial Closing; (5) if applicable, Owner executes a sales tax
exemption certificate and provides to Fagen; (6) Owner provides the name of its
property/all-risk insurance carrier and the specific requirements for fire protection;
(7) Owner has provided an insurance certificate or copy of insurance policy
demonstrating that Owner has obtained builder’s risk

 

 

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	 	 	 	insurance; and (8) Fagen has
provided Owner written notification of its acceptance of the Notice to Proceed. If
Notice to Proceed is not issued within one hundred and eighty
(180) days of the effective date of the Design-Build Agreement,
that agreement shall terminate, thus releasing Fagen of all obligations.

	 	(m)	 	“Substantial Completion” will be the date on which the Plant
construction has been completed to a point that the Plant is ready to grind the first
batch of corn for producing ethanol and begin operation for its intended use as a fifty
(50) MGY dry grind ethanol production facility. No production capacity is guaranteed
on the Substantial Completion date, but the Plant is largely completed as of that date.
	 
	 	(n)	 	Substantial Completion will occur within Five Hundred and Forty-Five (545) days
after the date of the Notice to Proceed.
	 
	 	(o)	 	Fagen will be entitled to an early completion bonus for each day that
Substantial Completion occurs in advance of Five Hundred and Forty-Five (545) days
(“Early Completion Bonus”). The Early Completion Bonus is earned for achieving
Substantial Completion early, but is not due until the final payment.
	 
	 	(p)	 	“Final Completion” will be achieved once Owner reasonably determines
that: Substantial Completion has been achieved; any outstanding amounts owed by Fagen
to Owner have been paid; remaining items of work have been completed; clean-up of the
site has been completed; all permits required to have been obtained by Fagen have been
obtained; certain information including an affidavit stating that there are no
outstanding liens, a release from further compensation, consent to final payment, and a
hard copy of the as-built plans (which will remain Work Product) has been provided to
Owner; releases and waivers of all claims and liens from Fagen and subcontractors have
been provided; and the Performance Tests have been successfully completed. Final
Completion will occur no more than ninety (90) days after the actual Substantial
Completion date. The 90-day period between Substantial Completion and Final Completion
will be tied directly to actual Substantial Completion. By way of example, if
Substantial Completion is achieved 10 days early, then the 90-day period to Final
Completion would begin on that earlier date.
	 
	 	(q)	 	Fagen will demonstrate certain performance guarantee criteria through
performance testing performed following Substantial Completion but prior to Final
Completion (“Performance Tests”). Air permit testing shall be done by a third
party contractor retained by Owner.
	 
	 	(r)	 	Owner will take control of the Plant after completion and acceptance of the

 

 

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	 	 	 	Performance Tests. The Performance Tests will be completed by Owner’s personnel under
Fagen’s direction.

	 	(s)	 	Fagen will pay liquidated damages at a daily amount equal to the daily Early
Completion Bonus amount for each day past 90 days after
Substantial Completion that Final Completion is not attained. Fagen’s liability for liquidated damages
shall be capped at and shall not exceed Two Hundred and Fifty Thousand Dollars
($250,000).
	 
	 	(t)	 	The aggregate liability of Fagen, its Subcontractors, vendors, suppliers,
agents and employees, to Owner (or any successor thereto or assignee thereof) for any
and all claims and/or liabilities arising out of or relating in any manner to the work
or to Fagen’s performance or non-performance of its obligations under the Design-Build
Agreement, whether based on contract, tort (including negligence), strict liability, or
otherwise, shall not exceed in the aggregate, the Contract Price and shall be reduced,
upon the issuance of each Application for Payment, by the total value of such
Application for Payment; provided, however, that upon the earlier of Substantial
Completion or such point in time that requests for payment pursuant to the Design-Build
Agreement have been made for ninety percent (90%) of the Contract Price, Fagen’s
aggregate liability shall be limited to the greater of (1) Ten Percent (10%) of the
Contract Price or (2) the amount of insurance coverage available to respond to the
claim or liability under any policy of insurance provided by Fagen under the
Design-Build Agreement
	 
	 	(u)	 	The warranty period for work completed pursuant to the Design-Build Agreement
will extend for one year past Substantial Completion. The Warranty will not apply to
defects caused by abuse, alterations, or failure to maintain the work by persons other
than Fagen or anyone for whose acts Fagen may be liable. The warranty period will be
extended one day for each day that such part of the work repaired under such warranty
is malfunctioning or not in conformance with project requirements provided that Owner
must report such non-conformance or malfunction within seven (7) days of the appearance
of such non-conformance or malfunction.
	 
	 	(v)	 	Owner will pay Fagen a mobilization fee in the amount of Five Million Dollars
($5,000,000.00) as soon as possible following the execution of the Design-Build
Agreement, and at the latest, at the earlier to occur of financial closing or the
issuance of a Notice to Proceed.
	 
	 	(w)	 	Fagen will request payment and Owner will pay Fagen in accordance with the
following procedures:

	 	i.	 	Fagen will submit to Owner a request for payment
(an “Application for

 

 

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	 	 	 	Payment”) on or before the twenty-fifth
(25th) day of each month beginning with the first month following the
acceptance of Notice to Proceed. Along with each Application for
Payment, Fagen will submit to Owner signed lien waivers for the work
included in the Application for Payment submitted for the immediately
preceding pay period and for which payment has been received.

	 	ii.	 	The Application for Payment will constitute Fagen’s
representation that the work has been performed consistent with the
Transaction Documents and has progressed to the point indicated in the
Application for Payment. No additional documentation will be provided to
Owner in support of the Application for Payment. The work completed at
the site and the comparison of the Application for Payment against the
Schedule of Values shall provide sufficient substantiation to Owner of
the accuracy of the Application for Payment. The Schedule of Values
subdivides the work into its respective parts, includes values for all
items comprising the work, and serves as the basis for the monthly
progress payments.
	 
	 	iii.	 	The Application for Payment may request payment for
equipment and materials not yet incorporated into the project only if
Owner is satisfied that the materials and equipment are suitably stored
at the site or elsewhere and are protected by suitable insurance. Upon
payment, Owner will receive title to such equipment and materials.
	 
	 	iv.	 	Owner shall make payment within ten (10) days of
receipt of the Application for Payment. Failure to make such payment
will result in the accrual of interest at a rate of eighteen percent
(18%) per annum commencing five (5) days after the payment is due.
Failure to make such payment, except if due to appropriate withholding of
payment due to a good faith dispute, entitles Fagen to stop work.
	 
	 	v.	 	If Owner wishes to dispute any portion of the
Application for Payment, Owner must notify Fagen in writing at least five
(5) days prior to the date payment is due. Such notice must state the
specific amounts Owner intends to withhold, the reasons and contractual
basis for withholding, and the specific measures Fagen must take to
rectify Owner’s concerns. Regardless of a dispute as to a portion of the
Application for Payment, Owner must pay all undisputed amounts by the
payment due date.
	 
	 	vi.	 	Retainage on progress payments made pursuant to the
Design-Build Agreement will be capped at five percent (5%) of the total
price. Owner will retain ten percent (10%) of each payment up to a
maximum of five percent (5%) of the total Contract Price. Once five
percent (5%) of the total price has been retained, Owner will not retain
any additional amounts from subsequent payments. Owner will release
retainage, less the amount equal to the value of subcontractor lien
waivers not yet obtained, upon completion of the Performance Tests.
	 
	 	vii.	 	Upon Final Completion, Fagen will deliver to Owner
a request for final

 

 

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payment. Owner will make the final payment within thirty (30) days after the receipt of such request.
Owner’s failure to make Final Payment will void any and all warranties, whether express or implied, provided by Fagen pursuant to the Agreement.

	 	(x)	 	Fagen will not be responsible for any hazardous condition encountered at the
site and may stop work in an affected area until such hazardous condition is removed
by Owner.
	 
	 	(y)	 	Fagen will not be responsible for differing site conditions including concealed
or latent physical conditions or subsurface conditions and will be entitled to a price
adjustment to the Contract Price to the extent that its cost and/or time of performance
is adversely impacted by the differing site conditions.
	 
	 	(z)	 	“Force Majeure Events” shall mean any cause or event beyond the
reasonable control of, and without the fault or negligence of a Party claiming Force
Majeure, including, without limitation, an emergency, floods, earthquakes, hurricanes,
tornadoes, adverse weather conditions not reasonably anticipated or acts of God;
sabotage; vandalism beyond that which could reasonably be prevented by a Party claiming
Force Majeure; terrorism; war; riots; fire; explosion; blockades; insurrection; strike;
slow down or labor disruptions (even if such difficulties could be resolved by
conceding to the demands of a labor group); economic hardship or delay in the delivery
of materials or equipment that is beyond the control of a Party claiming Force Majeure,
and action or failure to take action by any governmental authority after the effective
date of the Design-Build Agreement (including the adoption or change in any rule or
regulation or environmental constraints lawfully imposed by such governmental
authority), but only if such requirements, actions, or failures to act prevent or delay
performance; and inability, despite due diligence, to obtain any licenses, permits, or
approvals required by any governmental authority.
	 
	 	(aa)	 	If Fagen is delayed at any time in the commencement or progress of the work due
to a delay in the delivery of, or unavailability of, essential materials or labor to
the project as a result of a significant industry-wide economic fluctuation or
disruption beyond the control of and without the fault of Fagen or its subcontractors
which is experienced or expected to be experienced by certain markets providing
essential materials, equipment or labor to the project during the performance of the
work and such economic fluctuation or disruption adversely impacts the price,
availability, and delivery timeframes of essential materials and equipment (such event
an “Industry-Wide Disruption”), Fagen shall be entitled to an equitable
extension of the Contract Time on a day-for-day basis equal to such delay. The Owner
and Fagen shall undertake reasonable steps to mitigate the effect of such delays.
Notwithstanding any other provision to the contrary, Fagen

 

 

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	 	 	 	shall not be liable to the
Owner for any expenses, losses or damages arising from a delay, or unavailability of,
essential materials or labor to the project as a result of an Industry-Wide Disruption.

	 	(bb)	 	The Transaction will be governed by the laws of the State of Minnesota.

	4.	 	Exclusivity, No Solicitation or Negotiations.

	 	(a)	 	Neither Owner, nor its affiliates, shareholders, members or other equity
owners, or their officers, representatives, agents or employees will solicit or
negotiate, directly or indirectly, with any third party to obtain the services
contemplated by this Letter of Intent.
	 
	 	(b)	 	During the term of this Letter of Intent the Owner agrees that Fagen will have
the exclusive right to provide to Owner the services contemplated by the Letter of
Intent. Developer and Owner will not disclose any information related to this Letter of
Intent to a competitor or prospective competitor of Fagen.
	 
	 	(c)	 	Should Owner choose not to develop the project or to develop or pursue a
relationship with a company other than Fagen to provide the preliminary engineering or
design-build services for the project, then Owner will reimburse Fagen for all expenses
Fagen has incurred in connection with the project based upon Fagen’s standard rate
schedule plus all third party costs incurred from the date of this Letter of Intent.
Such expenses include, but are not limited to, labor rates and reimbursable expenses
such as legal charges for document review and preparation, travel expenses,
reproduction costs, long distance phone costs, and postage.
	 
	 	(d)	 	In the event Fagen’s services are terminated by Owner, title to the technical
data, which may include preliminary engineering drawings and layouts and proprietary
process related information will remain with Fagen and any copies thereof, will be
returned to Fagen.
	 
	 	(e)	 	Owner acknowledges that the technical data provided by Fagen under this Letter
of Intent is preliminary and may not be suitable for construction. Owner agrees that
any use of such technical data following termination of Fagen’s services will be at
Owner’s sole risk.

	5.	 	Commitment Fee. Immediately upon the execution of this Letter of Intent, Owner shall pay
Fagen Five Hundred Thousand Dollars ($500,000.00) as a non-refundable commitment fee
(“Commitment Fee”). The Commitment Fee will be credited against the Contract Price
upon the occurrence of: (i) the execution of the Transaction documents; and (ii) timely
acceptance of Notice to Proceed pursuant to the Design-Build Agreement. If Owner chooses not
to

 

 

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	 	 	proceed with the project or the Transaction Documents are not executed and delivered by the
Closing Date or Owner fails to provide timely Notice to Proceed pursuant to the Design-Build
Agreement, Fagen shall retain the full amount of the Commitment Fee and Owner shall not be
entitled to any refund or credit. Should Owner fail to pay the Commitment Fee within ten (10)
days of the execution of this Letter of Intent, this Letter of Intent shall terminate and
Fagen shall have the right to receive compensation pursuant to Paragraph 4(c) hereof.

	6.	 	Confidentiality. Owner will hold in confidence and will use only for the purposes of
completing the Transaction any and all confidential information disclosed to it except that
Owner may disclose confidential information to its lenders, lenders’ agents, prospective
investors, advisors and/or consultants as may be reasonably necessary to enable them to advise
Owner on the Transaction, provided that any party to whom confidential information is
disclosed is informed of the existence of this confidentiality obligation and agree to be
obligated to keep such information confidential. The term “confidential information”
will mean (i) any and all information concerning the Transaction, including that Fagen and
Owner are negotiating the consummation of the Transaction, and (ii) all information which
Owner, directly or indirectly, may acquire from Fagen, but confidential information will not
include information falling into any of the following categories:

	 	(a)	 	information that, at the time of disclosure hereunder, is in the public domain;
	 
	 	(b)	 	information that, after disclosure hereunder, enters the public domain other
than by breach of this Agreement or the obligation of confidentiality;
	 
	 	(c)	 	information that, prior to disclosure hereunder, was already in the Owner’s
possession, either without limitation on disclosure to others or subsequently becoming
free of such limitation;
	 
	 	(d)	 	information obtained by the Owner from a third party having an independent
right to disclose this information; and
	 
	 	(e)	 	information that is available through discovery by independent research without
use of or access to the confidential information acquired from Fagen.

	 	 	 	Owner’s obligation to maintain confidential information in confidence will be deemed performed
if Owner observes with respect thereto the same safeguards and precautions which Owner observes
with respect to its own confidential information of the same or similar kind. It will not be
deemed to be a breach of the obligation to maintain confidential information in confidence if
confidential information is disclosed upon the order of a court or other authorized governmental
entity, or pursuant to other legal requirements. However, if Owner is required to file the
Transaction Documents or a portion thereof with a governmental entity, it agrees that it will
not do so without first informing Fagen of the requirement and seeking confidential treatment of
the Transaction Documents prior to filing the documents or a

 

 

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	 	 	 	portion thereof. Owner’s
confidentiality obligations under this section shall survive the expiration or termination of
this Letter of Intent and shall be a legally binding obligation of Owner for five (5) years
following the later to occur of termination of this Letter of Intent or completion of the Plant
contemplated by the Transaction Documents.

	7.	 	Publicity. Neither Owner nor any of its affiliates, shareholders, subcontractors, or vendors
or their officers, representatives, agents and employees will issue any press or publicity
release or otherwise release, distribute, announce, or disseminate any information for publication
concerning the Transaction, the existence of the negotiations among Fagen and Owner, the
participation of Fagen in the Transaction, or any other matter affecting Fagen hereunder,
without the prior written consent of Fagen, which consent may be withheld for any reason, except
where such press or publicity release is required by order of a court or necessary or
appropriate under the rules or regulations of any governmental agency.

	 	 	The Parties will jointly agree on the timing and content of any public disclosure by Owner,
including but not limited to, press releases, relating to Fagen’s involvement in Owner’s
project, and no such disclosure will be made without Fagen’s consent and approval, except as may
be required by applicable law.

	8.	 	Disclaimer of Consequential Damages. In no event will either Fagen or Owner be liable to the
other pursuant to this Letter of Intent, or for activities conducted under this Letter of
Intent, under any theory of recovery for any indirect, special, incidental or consequential
damages (including, without limitation, loss of revenues or profits, loss of use, cost of
replacement, cost of capital and claims of customers, interest charges, or increased costs of
nature whatsoever) .

	9.	 	Legal Effect. Although this Letter of Intent does not contain all matters upon which
agreement must be reached in order for the Transaction to be consummated, Fagen and Owner wish
to set forth, prior to the execution of the Transaction Documents, their mutual agreement as
to the material terms and conditions of the Transaction. Each Party agrees to negotiate in
good faith towards entering into the written, definitive and legally binding Transaction
Documents containing, among other terms and conditions, those terms and conditions set forth
in this Letter of Intent including, without limitation, those terms set forth in Paragraphs 2
and 3 hereof; provided, however, that except as specifically identified and set forth herein,
nothing in this Agreement shall be read to promise, guarantee, or otherwise secure on Owner’s
behalf any specific construction start date with respect to the Plant including but not
limited to any pour concrete date, scheduling slots or dates for the delivery of design
packages or to entitle Owner to any rights, privileges, or claims with respect thereto or any
right, privilege, or claim to any place on Fagen’s construction schedule. Notwithstanding the
foregoing, the provisions of this Paragraph and of Paragraphs 1, 4, 5, 6, 7, 8, 11, 12, 14, 17
and 18 hereof are agreed to be legally binding obligations of the Parties upon the execution
and acceptance of this Letter of Intent.

 

 

Buffalo Ridge Energy, LLC

Letter of Intent

July 21, 2006

Page 13 of 15

	10.	 	Negotiation of Definitive Agreements. The Transaction Documents will contain reasonable terms
and conditions regarding releases, payment obligations, cooperation as to tax planning and
structuring, other financial matters, legal opinions, confidentiality, limitations of
liability, assignment, breach, dispute resolution, events of default, remedies,
representations, warranties, indemnifications and other provisions customary for similar
transactions. Time is of the essence in the performance of this Letter of Intent in all
respects.

	11.	 	Termination. This Letter of Intent will terminate on December 31, 2007 unless the basic size
and design of the Plant have been determined and mutually agreed upon, a specific site or
sites have been determined and mutually agreed upon, and at least 10% of the necessary equity
has been raised. This date may be extended upon mutual written agreement of the Parties.
Furthermore, unless otherwise agreed to by the Parties, this Letter of Intent will terminate:

	 	(a)	 	at the option of either Fagen or Owner if the Design-Build Agreement is not
completed and executed by the Closing Date; or
	 
	 	(b)	 	upon the execution and delivery of the Transaction Documents.

	12.	 	Governing Law. This Letter of Intent is governed by, and will be construed and interpreted in
accordance with the laws of the State of Minnesota, without regard to any conflicts of law or
choice of law rules.

	13.	 	Expenses. Except as set forth in Paragraph 4(c) above, unless otherwise agreed by Fagen and
Owner, each Party will bear its own expenses in connection with the negotiation and execution
of definitive documentation for the transactions contemplated herein.

	14.	 	Indemnification. Each Party will indemnify, defend and hold harmless the other Party and its
respective agents, servants, officers, directors, employees and affiliates from and against
any loss, cost, liability, claim, damage, expense (including reasonable attorneys’ and
consultants’ fees and disbursements), penalty or fine incurred in connection with any claim or
cause of action arising from or in connection with this Letter of Intent to the extent caused
by the negligence, misrepresentation, fraud, fault or misconduct of the indemnifying Party.

	15.	 	Assignability; Binding Effect; Benefit. This Letter of Intent will inure to the benefit of
and be binding upon the Parties and their respective successors and assigns. Nothing in this
Letter of Intent, either expressed or implied, is intended to confer on any person other than
the Parties and their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Letter of Intent. Neither Fagen nor
Owner shall, without the written consent of the other, assign or transfer this Letter of
Intent. Any sale, transfer, or disposition by Owner of over fifty percent (50%) of its assets
or any sale, transfer, or disposition of more than fifty percent (50%) of Owner to any single
entity by one or more entities holding interest in Owner shall be deemed an assignment subject
to this

 

 

Buffalo Ridge Energy, LLC

Letter of Intent

July 21, 2006

Page 14 of 15

	 	 	paragraph. Notwithstanding any consent granted by Fagen to any assignment, Owner shall
remain jointly liable for any failure of any assignee to fulfill its obligations under this
Letter of Intent, including but not limited to any payment and confidentiality obligations established hereunder.
	 
	16.	 	Further Action. Each Party agrees to execute and deliver all further instruments, legal
opinions and documents, and take all further action not inconsistent with the provisions of
this Letter of Intent that may be reasonably necessary to complete performance of the Parties’
obligations hereunder and to effectuate the purposes and intent of this Letter of Intent.

	17.	 	Amendments. The Parties agree that this Letter of Intent may be modified only by written
agreement by the Parties.

	18.	 	Integration; Letter of Intent. This Letter of Intent represents the entire understanding
between the Parties in relation to the subject matter hereof, and supersedes any and all
previous agreements, arrangements or discussions between the Parties (whether written or oral)
in respect of the subject matter hereof. No change, amendment or modification of this Letter
of Intent will be valid or binding upon the Parties unless such change, amendment or
modification will be in writing and duly executed by both Parties.

	19.	 	No Representation, Warranties or Covenants. Notwithstanding anything contained
herein to the contrary, Fagen is not making any representation, warranty or covenant of any
kind with respect to any design, engineering or construction scheduling, or with respect to
projections, estimates or budgets heretofore delivered to or made available to Owner of future
revenues, expenses or expenditures, future results of operations (or any component thereof) or
the future business and operations of the Owner, nor any other commitments or assurances
except as may be provided in the Transaction Documents.

	20.	 	Counterparts. This Letter of Intent may be executed in one or more counterpart, each of
which when so executed and delivered will be deemed an original, but all of which taken
together constitute one and the same instrument. Signatures which have been affixed and
transmitted by facsimile or other electronic means will be binding to the same extent as an
original signature, although the Parties contemplate that a fully executed counterpart with
original signatures will be delivered to each Party.

     If the foregoing terms accurately reflect your understanding of our discussions and are
acceptable to you, please sign and return the enclosed counterpart of this Letter of Intent to the
undersigned.

	 	 	 	 	 
	 	Yours sincerely,

Fagen, Inc.

 	 
	 	 	 
	 	 	 
	 	 	 

 

 

	 	 	 	 	 

Buffalo Ridge Energy, LLC

Letter of Intent

July 21, 2006

Page 15 of 15

	 	 	 	 	 	 	 
	  	 	/s/ Ron Fagen	 	 
	  	 	 	 	  
	 

	 	By:
	 	Roland “Ron” Fagen	 	 
	 

	 	Title:
	 	President and CEO	 	 

Accepted and agreed to this 2nd

day of August, 2006.

Buffalo Ridge Energy, LLC

	 	 	 
	/s/ Gregory Van Zanten
	 	 
	 	 	   
	By:
	 	 
	Title: Chairmanexv10w3

 

Exhibit 10.3

June 29, 2006

Mr. Matt Sederstrom

Marketing and Project and Development

Fagen, Inc.

501 W. Hwy. 212

Granite, Falls, MN 56241

			
	Re:	 	Request for Professional Engineering Services

Ethanol Facility Site — Conceptual Railway Service Plan

Dear Mr. Sederstrom:

TranSystems Corporation is pleased to submit this proposal to Fagen, Inc. that addresses your
Request for Services associated with the above referenced project. This proposal is based upon
preliminary information we discussed via phone about a to be determined ethanol site. We understand
that Fagen, Inc is planning the development of an ethanol production facility to be located
somewhere in the Midwest. We further understand that this facility, when completed, will produce a
minimum 40 million gallons of ethanol annually. Your request for services, that this proposal
addresses, pertains to our development of a conceptual railway service plan that will serve the
proposed ethanol facility. This proposal will adopt the general terms and conditions as set forth
in the Continuous Services Agreement, dated June 29,, 2006 and
executed on July — Aug 2, 2006, in
accordance with the provisions of SECTION 2.1— REQUEST FOR SERVICES.

This letter details the services TranSystems proposes to perform in connection with this project
and the fee at which TranSystems will perform these services. Furthermore, the services will be
performed with regard to the below outlined assumptions. If this proposal, addressing your request
for services, is acceptable to US Bio Energy, please execute this agreement and return to
TranSystems by mail, fax, or e-mail.

All notices or communications pertaining to this Agreement shall be in writing, with reference to
Fagen — Buffalo Ridge Energy and shall be sufficient when mailed or delivered to the address
specified below:

If to OWNER:

          Fagen, Inc.

          501 W. Hwy. 212

          Granite Falls, MN 56241

          Attn: Matt Sederstrom

If to TRANSYSTEMS:

          TranSystems Corporation

          2400 Pershing Road, Suite 400

          Kansas City, MO 64108

          Attn: Paul Hentschke

 

 

	 	 	 
	

	 	Mr. Matt Sederstrom

June 29, 2006

Page 2

TRANSYSTEMS SCOPE OF SERVICES

In connection with the above-referenced project, TranSystems shall perform the following described
Services:

	 	•	 	Develop conceptual railway service plan that would serve an ethanol production facility
earmarked for an annual production of 40 million gallons.
	 
	 	•	 	Prepare exhibits conveying the horizontal layout of railway service plan with aerial
imagery as a background; the rail service plan will be confined to the rough property
limits that have yet to be determined”.
	 
	 	•	 	The proposed rail service plan will be developed in accordance with standards and
specifications of the servicing railroad, that has yet to be determined.
	 
	 	•	 	We anticipate the railway service plan will consist of a series of services tracks and
loadout tracks that will be configured to maximize efficient operations in the area.
	 
	 	•	 	Provide narrative describing the operational movement of rail cars throughout the rail service plan.
	 
	 	•	 	Provide preliminary construction cost estimate based upon conceptual rail service plan.

SERVICES PROVIDED BY OTHERS AND ASSUMPTIONS

These additional services and TranSystems’ agreement to perform the Services is based upon, and
subject to, the following services being provided by others and the listed assumptions:

	 	•	 	We will develop the conceptual plans prior to an overall topographic survey. We assume
that a topographic survey will be completed following the preparation of the conceptual
plans.
	 
	 	•	 	The following services are not included in this Request For Services No. 1:

	 	•	 	Land Survey
	 
	 	•	 	Civil/Site Design
	 
	 	•	 	Final Construction Document Preparation

We can provide these services through subsequent Request For Service Notifications.

SCHEDULE

We understand that the conceptual plan is of high importance for Fagen, Inc. to move forward with
the planning of the proposed ethanol facility. TranSystems will provide our services on a schedule
that is mutually agreeable between Fagen, Inc. and TranSystems and that is consistent with project
requirements. TranSystems will consider the executed Letter Agreement as our notice to proceed.

COMPENSATION

As compensation for the performance of the above-desc~bed Services, Fagen, Inc. will reimburse
TranSystems by payment of a lump sum fee of $6,000.00. Invoices will be sent monthly and will be
based on TranSystems’ estimate of the total services completed at the time of billing, plus
expenses. Our fee includes in-house reproduction supplies and long distance phone calls. Other
reimbursable expenses, such as travel, lodging and meals, will be invoiced at our actual cost.

The proposal outlined in this Letter is valid for 60 calendar days..

 

 

	 	 	 
	

	 	Mr. Matt Sederstrom

June 29, 2006

Page 3

We sincerely appreciate the opportunity to provide these services to Fagen, Inc. If this proposal,
addressing your request for services, is acceptable to Fagen, Inc. please execute this agreement
and return to TranSystems by mail, fax, or e-mail. Please let us know if you have any questions or
need any further information.

Very truly yours,

TRANSYSTEMS CORPORATION

/s/ Timothy P. Rock

Timothy P. Rock

Vice President

ACCEPTANCE

Fagen, Inc. Buffalo Ridge Energy, LLC hereby accepts the proposal outlined above and does hereby
engage TranSystems to perform these services, on the terms and conditions set forth in the
Continuous Service Agreement dated June 29t, 2006 and executed
on JULY ____ Aug 2, 2006.

	 	 	 	 	 
	By:

	 	/s/ Gregory Van Zanten
	 	 
	 

	 	 	 	 
	Printed Name: Greg Van Zanten	 	 
	Title: Chairman	 	 
	Date: 7-19-06 8/2/06

 

 

CONTINUOUS SERVICES AGREEMENT

FOR

ENGINEERING SERVICES

     THIS CONTINUOUS SERVICES AGREEMENT is made this 29th day of June, 2006, between Fagen, Inc.
(‘OWNER”) and TranSystems Corporation (“TRANSYSTEMS”).

     WITNESSETH:

     WHEREAS, OWNER desires to engage TRANSYSTEMS on a non-exclusive basis to provide engineering,
design and other professional services for OWNER in connection with a variety of projects at
various job sites, the general scope of work, duties and responsibilities for which will be
described in separate “Request for Services” for each project; and

     WHEREAS, TRANSYSTEMS desires to provide OWNER with such design, engineering and other
professional services as may be requested by Owner in connection with the various Owner’s projects,
all in accordance with the terms and conditions of this Agreement; and

     WHEREAS, the parties hereto desire to enter into this Agreement to set forth the general terms
and conditions applicable to OWNER’s overall relationship with TRANSYSTEMS with respect to each
project on which OWNER may engage TRANSYSTEMS; and

     WHEREAS, the parties hereto intend that OWNER shall issue a separate “Request for Services”
for each project for which OWNER desires to engage TRANSYSTEMS to provide services pursuant to this
Agreement and each such Request for Services shall describe and define the exact scope of the
project, the scope of work and the exact services to be performed by TRANSYSTEMS on the particular
project; the respective duties of Owner and TRANSYSTEMS on the particular project, any special
pricing or special fees applicable to the particular project, the time for completion of the
particular project and any other special or unique terms and conditions with respect to the
particular project;

     NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, the
parties hereto agree as follows:

	 	 	 
	Fagen, Inc.

	 	1 of 15

 

 

SECTION 1

DESCRIPTION OF AGREEMENT

     Section 1.1 Continuous Services agreement. This Agreement consists of this contract document
that stipulates the general terms and conditions that will govern the services the OWNER has
engaged TRANSYSTEMS to perform as defined in a separate “Request for Services” document.

     Section 1.2 Entire Agreement. This Agreement, as defined in Section 1.1 and as adopted by the
particular Request for Services Agreement, sets forth the full and complete understanding of the
parties responsibilities as of the date first stated above.

     Section 1.3 Conflicting Provisions. Unless expressly agreed to the contrary, in the Request
For Services Agreement, In the event of any conflict between this Agreement and any Requests for
Services issued pursuant to Section 2.1, the Request for Service Agreement shall control.

SECTION 2

SCOPE OF WORK

     Section 2.1 Description of Work; Requests for Services. TRANSYSTEMS shall perform on an “on
call” basis, engineering, design, master planning or other professional services (including, but
not limited to, civil, structural, mechanical, electrical, industrial and railroad engineering
services and architectural design services) in connection with various of OWNER’s projects at
various of OWNER’s facilities all as specified in particular written Requests for Services issued
by OWNER from time to time during the term of this Agreement (the “Services”). Each Request for
Services shall make specific reference to this Agreement and shall not be effective or binding upon
TRANSYSTEMS until such Request for Services has been accepted by TRANSYSTEMS in writing under the
signature of its authorized representative. Requests for Services shall not amend or add to the
general terms and conditions set forth in this Agreement in any respect except to define and
describe: i) the particular project on which TRANSYSTEMS is being engaged to perform Services (the
“Project”); ii) the scope of work and the exact Services to be performed by TRANSYSTEMS on the
particular Project; iii) the respective special or unique responsibilities or duties of OWNER and
TRANSYSTEMS, if any, on the particular Project; iv) any special pricing or special fees, if any,
applicable to the particular Project; v) the time for completion of the particular Project, if any;
and, vi) any other special or unique terms and conditions which are necessary to describe the
particular Project or the Services to be performed by TRANSYSTEMS on the particular Project.
Additional or conflicting contractual terms or conditions may be added only by formal amendment to
this Agreement and not through Requests for Services; any such terms and conditions contained in
Requests for Services shall be of no force or effect.

     In addition, the OWNER agrees, to the fullest extent permitted by law, to indemnify and hold
harmless TRANSYSTEMS, its officers, directors, employees and subconsultants (collectively,
Consultant) against all damages, liabilities or costs, including reasonable attorneys’ fees and
defense costs, arising out of or in any way connected with the performance of such services by
other persons or entities and from any and all claims arising from modifications, clarifications,
interpretations, adjustments or changes made to the Contract Documents to reflect changed field or
other conditions, except for claims, to the extent caused by the negligence or willful misconduct
of TRANSYSTEMS.

     Section 2.2 Agreed Upon Changes in the Services. It is the desire of the parties to keep
changes in the scope of the Services under each approved Request for Services at a minimum, but the
parties recognize that such changes may become necessary and agree that OWNER may initiate
deletions, additions, modifications or changes to the Services by advising TRANSYSTEMS in writing
of the change believed to be necessary. As soon

	 	 	 
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	 	2 of 15

 

 

thereafter as practical, TRANSYSTEMS shall prepare a cost estimate of the change and shall inform
OWNER of the adjustment in the compensation due TRANSYSTEMS under Section 5 hereof (“TRANSYSTEMS’
Compensation”) and/or the Completion Date set forth in Section 4 hereof, if any, applicable to the
Request for Service for which the change is requested. OWNER shall then advise TRANSYSTEMS in
writing of its approval or disapproval of the change. If OWNER approves the change, a written
Contract Amendment shall be executed by both parties and TRANSYSTEMS shall perform the Services as
changed and the adjustment in TRANSYSTEMS’ Compensation and/or the Completion Date set forth in the
executed Contract Amendment shall become effective. TRANSYSTEMS may initiate changes in the
Services by advising OWNER in writing that in its opinion a change is necessary. If OWNER
approves, it shall so advise TRANSYSTEMS and, thereafter, the change shall be handled as if
initiated by OWNER. If a change is not approved, or if a written Contract Amendment is not
executed, by both OWNER and TRANSYSTEMS, the change shall not become effective and TRANSYSTEMS
shall not be obligated to perform the change.

     Section 2.3 Constructive Changes and Other Additional Costs. In the event of (1) the OWNER’s
addition to, modification or change of or deletion from the Services to be performed by TRANSYSTEMS
(other than additions, modifications, changes or deletions handled through the provisions of
Section 2.2 above); (2) a request for or approval from OWNER of performance of Services in excess
of TRANSYSTEMS’ standard work day or work week or such shorter times as are provided by
applicable collective bargaining agreements, or on a holiday customarily observed by TRANSYSTEMS;
(3) the discovery of any subsurface or other conditions, which differ materially from those shown
in or reasonably inferable from the documents or other information on which this Agreement is based
and/or those ordinarily encountered and generally recognized as inherent in the locality of the
Project; (4) a modification of applicable law by which TRANSYSTEMS is required to pay increased or
additional taxes, government-regulated transportation costs,
insurance or other amounts which
are not required as of the date of this Agreement; (5) delay, suspension of, acceleration of or
interference with, TRANSYSTEMS’ performance of the Services by OWNER or by any other person or
entity including, but not limited to national, state or local governments; (6) wage, benefit or
payroll tax increases due to governmental action or area agreements; (7) modification to or delay
in furnishing design criteria or other information supplied by any person or entity, other than
TRANSYSTEMS, if TRANSYSTEMS’ performance of the Services under this Agreement depends upon such
criteria or information; and/or (8) any other increase in
TRANSYSTEMS’ costs, or the time
required for completion of the Services due to “Force Majeure Event” as set forth in Section 4
hereof, a change in applicable law or any other cause beyond TRANSYSTEMS’ reasonable control, then
the TRANSYSTEMS’ Compensation and/or the Completion Date, if any, applicable to that particular
Request for Services effected by said change, shall be equitably adjusted and TRANSYSTEMS shall be
paid, and TRANSYSTEMS’ Compensation under that particular Request for Services shall be adjusted
by, an amount equal to the additional costs to TRANSYSTEMS resulting therefrom.

SECTION 3

DUTIES AND RESPONSIBILITIES

     Section 3.1 TRANSYSTEMS’ Responsibilities. TRANSYSTEMS, subject to the terms and provisions of
this Agreement and each specific Request for Services, shall:

          Section 3.1.1 Furnish the services of all necessary supervisors, engineers, designers,
draftsmen, and other personnel (including independent professional associates and consultants)
which TRANSYSTEMS deems reasonably necessary to provide or perform the Services set forth in an
approved Request for Services;

          Section 3.1.2 Obtain all process and other licenses required to be obtained by TRANSYSTEMS
pursuant to an approved Request for Services;

	 	 	 
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          Section 3.1.3 Perform or provide the Services to be performed or provided by TRANSYSTEMS
pursuant to an approved Request for Services and perform any other specific responsibilities and
duties, if any, set forth in an approved Request for Services,

          Section 3.1.4 Appoint one or more individuals who shall be authorized to act on behalf of
TRANSYSTEMS and with whom OWNER may consult at all reasonable times, and whose instructions,
requests, and decisions will be binding upon TRANSYSTEMS as to all matters pertaining to this
Agreement and the performance of the parties hereunder.

          Section 3.1.5 Upon request by the OWNER, TRANSYSTEMS shall evaluate and make recommendations
regarding substitutions of materials, products or equipment proposed by the OWNER’s consultants or
contractors. TRANSYSTEMS shall be compensated for these services, as well as any services required
to modify and coordinate the construction documents prepared by TRANSYSTEMS with those of
TRANSYSTEMS’s subconsultants and the OWNER’s consultants, as Additional Services. TRANSYSTEMS also
shall be entitled to an adjustment in schedule caused by this additional effort.

          Section 3.1.6 TRANSYSTEMS shall not supervise, direct or have control over the Contractor’s
work nor have any responsibility for the construction means, methods, techniques, sequences or
procedures selected by the Contractor nor for the Contractor’s safety precautions or programs in
connection with the Work. These rights and responsibilities are solely those of the Contractor in
accordance with the Contract Documents.

          TRANSYSTEMS shall not be responsible for any acts or omissions of the Contractor, subcontractor,
any entity performing any portions of the Work, or any agents or employees of any of them.
TRANSYSTEMS does not guarantee the performance of the Contractor and shall not be responsible for
the Contractor’s failure to perform its Work in accordance with the Contract Documents or any
applicable laws, codes, rules or regulations.

          Section 3.1.7 The Contractor may, after exercising due diligence to locate required
information, request from TRANSYSTEMS clarification or interpretation of the requirements of the
Contract Documents. TRANSYSTEMS shall, with reasonable promptness, respond to such Contractor’s
requests for clarification or interpretation. However, if the information requested by the
Contractor is apparent from field observations, is contained in the Contract Documents or is
reasonably inferable from them, the Contractor shall be responsible to the OWNER for all reasonable
costs charged by TRANSYSTEMS to the OWNER for the work required to provide such information.

          Section 3.1.8 If, during the term of this Agreement, circumstances or conditions that were
not originally contemplated by or known to TRANSYSTEMS are revealed, to the extent that they affect
the scope of services, compensation, schedule, allocation of risks or other material terms of this
Agreement, TRANSYSTEMS may call for renegotiation of appropriate portions of this Agreement.
TRANSYSTEMS shall notify the OWNER of the changed conditions necessitating renegotiation, and
TRANSYSTEMS and the OWNER shall promptly and in good faith enter into renegotiation of this
Agreement to address the changed conditions. If terms cannot be agreed to, the parties agree that
either party has the absolute right to terminate this Agreement, in accordance with the Termination
provision hereof.

     Section 3.2 Owner’s Responsibilities. OWNER, subject to the terms and provisions of this
Agreement and each specific Request for Services, shall do the following in a timely manner so as
to not delay the

	 	 	 
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Services of TRANSYSTEMS:

     Section 3.2.1 Designate a person to act as OWNER’s representative with respect to the Services
to be rendered under this Agreement. Such person shall have complete authority to transmit
instructions, receive information, interpret, and define OWNER’S policies and decisions with respect to TRANSYSTEMS’
Services for the particular Project;

     Section 3.2.2 Provide all criteria, all available information pertinent to each Project, and
full information as to OWNER’S requirements for each Project. OWNER agrees that TRANSYSTEMS shall
be entitled to rely upon the accuracy and completeness of all such information;

     Section 3.2.3 Arrange for access to and make all provisions for TRANSYSTEMS to enter upon
public and private property as required for TRANSYSTEMS to perform services under this Agreement.
All such access shall be provided without condition or restriction unacceptable to TRANSYSTEMS nor
shall TRANSYSTEMS be required to indemnify or insure any third party as a condition to such
access.

     Section 3.2.4 Examine all studies, reports, sketches, drawings, specifications, proposals, and
other documents presented by TRANSYSTEMS, obtain advice of an attorney, insurance counselor and
other consultants as OWNER deems appropriate for such examination and render in writing decisions
pertaining thereto within a reasonable time so as not to delay the Services of TRANSYSTEMS;

     Section 3.2.5 Give prompt written notice to TRANSYSTEMS whenever OWNER observes or otherwise
becomes aware of any development that affects the scope or timing of TRANSYSTEMS’ Services, or any
defect or non-conformance in the Services by TRANSYSTEMS (or its independent professional
associates or consultants) or in the work of any other party performing or providing work or
services in connection with the Project;

     Section 3.2.6 When OWNER deems it necessary or appropriate for services in addition to the
Services to be performed in connection with a particular Request for Services, OWNER shall furnish
such additional services or direct TRANSYSTEMS to provide such additional services either by the
issuance of a new and additional Request for Services or by following the provisions set forth in
Section 2.2 of this Agreement;

     Section 3.2.7 Provide TRANSYSTEMS with any necessary governmental allocations or priorities,
obtain all permits and licenses required to be taken out in the name of OWNER which are necessary
for the performance of the Services and, except where such permits, processes or licenses are by
the terms of a particular approved Request for Services the responsibility of TRANSYSTEMS,
obtain any permits, processes and other licenses which are required for the Project or the
Services;

     Section 3.2.8 Perform any other duties, obligations or responsibilities of the OWNER set forth
elsewhere in this Agreement, including, but not limited to, the obligation to make the payments
called for under Section 5 hereof and perform any responsibilities and duties of the OWNER which
may be identified on a particular Request for Services, if any;

     Section 3.2.9 Pay for and be responsible for all taxes incurred in connection with each
Project, regardless of whether such taxes are assessed against OWNER, TRANSYSTEMS or others.

     Section 3.2.10 Bear all costs incident to compliance with the requirements of this Section
3.2.

     Section 3.2.11 The OWNER shall promptly report to TRANSYSTEMS any defects or suspected

	 	 	 
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defects in TRANSYSTEMS’s services of which the OWNER becomes aware, so that TRANSYSTEMS may
take measures to minimize the consequences of such a defect. The OWNER further agrees to impose
a similar notification requirement on all Contractors in its OWNER/Contractor contract and shall
require all subcontracts at any level to contain a like requirement. Failure by the OWNER and the
OWNER’s contractors or subcontractors to notify TRANSYSTEMS shall relieve TRANSYSTEMS of the costs
of remedying the defects above the sum such remedy would have cost had prompt notification been
given when such defects were first discovered;

     Section 3.2.12 In the event OWNER, OWNER’s contractors or subcontractors, or anyone for
whom OWNER is legally liable makes or permits to be made any changes to any reports, plans,
specifications or other construction documents prepared by TRANSYSTEMS without obtaining
TRANSYSTEMS’s prior written consent, OWNER shall assume full responsibility for the results of such
changes; therefore, OWNER agrees to waive any claim against TRANSYSTEMS and to release TRANSYSTEMS
from any liability arising directly or indirectly from such changes.

     In addition, OWNER agrees, to the fullest extent permitted by law, to indemnify and hold
harmless TRANSYSTEMS from any damages, liabilities or costs, including reasonable attorneys’ fees
and costs of defense, arising from such changes.

     In addition, OWNER agrees to include in any contracts for construction appropriate language
that prohibits the Contractor or any subcontractors of any tier from making any changes or
modifications to TRANSYSTEMS’s construction documents without the prior written approval of
TRANSYSTEMS and that further requires the Contractor to indemnify both TRANSYSTEMS and OWNER from
any liability or cost arising from such changes made without such proper authorization.

SECTION 4

PERIODS OF SERVICE, COMPLETION DATE, FORCE MAJEURE

     Section 4.1 Period of Service. This Agreement shall continue until this Agreement is
terminated pursuant to Section 7.1 and all Services under those Requests for Services which are
pending at the time of said termination are completed.

     Section 4.2 Completion Date. Unless a specific Completion Date is expressly set forth in a
particular Request for Services as the date the Services under that Request for Services must be
completed, any date set forth in a Request for Service shall be an estimated, but not guaranteed,
date for the completion of the Services under that particular Request for Services. If any such
Completion Date is exceeded through no fault of TRANSYSTEMS, all rates, measures and compensation
provided herein shall be subject to equitable adjustment. The Completion Date (and TRANSYSTEMS’
obligation to complete the Services by such date, if any) is subject to reasonable extensions for
the performance of additional Services, constructive changes or other extra work and is subject to
reasonable extensions for a Force Majeure Event.

     The OWNER and Consultant are aware that many factors outside TRANSYSTEMS’s control may affect
TRANSYSTEMS’ ability to complete the services to be provided under this Agreement. TRANSYSTEMS will
perform these services with reasonable diligence and expediency consistent with sound professional
practices.

     If TRANSYSTEMS becomes aware of delays due to time allowances for review and approval being
exceeded, delay by the Contractor, the OWNER, the OWNER’s consultants or any other cause beyond the
control of TRANSYSTEMS, which will result in the schedule for performance of TRANSYSTEMS’s services
not being met,

	 	 	 
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TRANSYSTEMS shall promptly notify the OWNER. If the OWNER becomes aware of any delays or other
causes that will affect TRANSYSTEMS’s schedule, the OWNER shall promptly notify TRANSYSTEMS. In
either event, TRANSYSTEMS’s schedule for performance of its services shall be equitably adjusted.

     Section 4.3 Force Majeure. For purposes hereof, a “Force Majeure Event” shall mean the
occurrence of a failure or delay due to circumstances beyond TRANSYSTEMS’ control including,
without limitation, acts of God, acts of a public enemy, fires, floods, earthquakes, wars, civil
disturbances, sabotage, accidents, insurrection, blockages, embargoes, storms, explosions,
catastrophes, epidemics, damage to a particular Project, lack of access to a particular Project,
unavailable utilities and power, water, labor disputes, OWNER’s failure to timely perform its
obligations under this Agreement or other causes beyond TRANSYSTEMS’ control.

SECTION 5

TRANSYSTEMS’ COMPENSATION

     Section 5.1 Compensation for Services and Expenses of TRANSYSTEMS. Unless other compensation
or fee arrangements are expressly set forth in a particular approved Request for Services (in which
case OWNER shall pay TRANSYSTEMS in accordance with any such compensation or fee arrangements),
OWNER shall compensate TRANSYSTEMS for its Services performed or furnished under a particular
Request for Service as follows:

          Section 5.1.1 For Services. As compensation for the performance of the Services rendered by
TRANSYSTEMS under a particular Request for Services, OWNER shall pay TRANSYSTEMS, in accordance
with the provisions of Section 5.3.

          Section 5.1.2 For Reimbursable Expenses. In addition to payments provided for in paragraphs
5.1.1. OWNER shall also pay TRANSYSTEMS for all Reimbursable Expenses incurred in connection with
all Services provided pursuant to a particular Request for Service. For purposes hereof,
“Reimbursable Expenses” are those costs and expenses incurred by TRANSYSTEMS in connection with the
performance of the Services under this Agreement or a particular Request for Service, including,
but not limited to, the costs and expenses incurred by TRANSYSTEMS for travel, reproduction,
mailing costs, computer time, supplies and materials, taxes, transportation, telephone and
communications, independent professional associates and consultants and subconsultants and any
other expense items which are described on TRANSYSTEMS’ Schedule of Rates and Expenses in effect at
the time the Services are provided and the Reimbursable Expenses are incurred.

     Section 5.2 Monthly Invoices. TRANSYSTEMS shall submit monthly statements for Services
rendered and for Reimbursable Expenses incurred under each Request for Services. The statements
will be based upon TRANSYSTEMS’ estimate of the proportion of the total Services actually completed
at the time of billing or upon the time spent and costs incurred by TRANSYSTEMS during the period
covered by such statement. OWNER shall make prompt monthly payments in response to TRANSYSTEMS’
monthly statements.

     Section 5.3 Other Provisions Concerning Payments.

          Section 5.3.1 Interest, Suspension of Services. If OWNER fails to make any payment due
TRANSYSTEMS for services and expenses within thirty (30) days after receipt of TRANSYSTEMS’
statement therefor, TRANSYSTEMS shall be entitled interest on the unpaid amounts due TRANSYSTEMS at
the lesser of: i) 1.5 % per month; or, ii) the highest rate of interest allowed under applicable
law. The entire unpaid balance due TRANSYSTEMS shall bear said rate of interest from the thirtieth
day after OWNER’s receipt of TRANSYSTEMS’ statement, until the entire unpaid balance has been paid
to TRANSYSTEMS. In addition to being entitled to interest,

	 	 	 
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TRANSYSTEMS may, after giving seven (7) days written notice to OWNER, suspend services under
this Agreement until TRANSYSTEMS has been paid in full all amounts due for Services, expenses, and
charges.

          Section 5.3.2 Payments after Termination by OWNER. In the event of termination under Section
7.1, TRANSYSTEMS will be paid for Services rendered and Reimbursable Expenses incurred to the date
of termination on those particular Requests for Services terminated, on the basis of TRANSYSTEMS’
Invoiced Services and Expenses then in effect. TRANSYSTEMS shall also be reimbursed for the charges
of independent professional associates and consultants employed by TRANSYSTEMS to render Services
and all reasonable demobilization costs incurred by TRANSYSTEMS, including any cancellation charges
by independent professional associates, consultants and others performing or furnishing Services
through TRANSYSTEMS under those particular Request for Services terminated, and TRANSYSTEMS shall
be paid all other amounts due it under this Agreement which are earned through the date of the
termination.

          Section 5.3.3 Records. Records of TRANSYSTEMS’ salary costs pertinent to TRANSYSTEMS’
compensation under this Agreement will be kept in accordance with generally accepted accounting
practices. If OWNER desires to have copies of such records, copies will be made available to OWNER
upon OWNER’s request prior to final payment for TRANSYSTEMS’ Services under a particular Request
for Services. TRANSYSTEMS shall be reimbursed the cost of any such copies by OWNER.

          Section 5.3.4 Cost Factors. Whenever a factor is applied to salary costs or other expenses in
determining compensation payable to TRANSYSTEMS that factor will be adjusted periodically and
equitably to reflect changes in the various elements that comprise such factor. All such
adjustments will be in accordance with generally accepted accounting practices as applied on a
consistent basis by TRANSYSTEMS and consistent with TRANSYSTEMS’ overall compensation practices and
procedures.

SECTION 6

OPINIONS OF COST AND SCHEDULE

     Section 6.1 Opinions of Cost and Schedule. Since TRANSYSTEMS has no control over the cost of
labor, materials, equipment or services furnished by others, or over the resources provided by
others to meet construction or other Project schedules, or over the methods of others in
determining prices, or over competitive bidding or market conditions, TRANSYSTEMS’ opinions of
probable costs (including probable Total Project Costs and Construction Cost) and of Project
Schedules shall be made on the basis of TRANSYSTEMS’ experience and qualifications and represent
TRANSYSTEMS’ best judgment as an experienced and qualified professional engineer, familiar with the
construction industry; but TRANSYSTEMS cannot and does not guarantee that proposals, bids or actual
Project Costs (including Total Project Costs or Construction Costs) will not vary from opinions of
probable cost prepared by TRANSYSTEMS or that actual schedules will not vary from the projected
schedules prepared by TRANSYSTEMS. TRANSYSTEMS makes no warranty, express or implied, that the bids
or the negotiated cost of the work will not vary from TRANSYSTEMS’ opinion of probable construction
cost.

SECTION 7

GENERAL CONSIDERATIONS

     Section 7.1 Termination. The obligation to provide further Services under this Agreement may
be terminated by either party upon thirty (30) days written notice to the other party. In the event
such a termination is of a particular Request for Services, then this Agreement shall remain in
effect for all other outstanding requests for services and any future approved Requests for
Services. In the event said termination is for the entire Agreement, then the termination shall
effect and terminate this Agreement and all outstanding Requests for Services.

	 	 	 
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     If TRANSYSTEMS for any reason is not allowed to complete all the services called for by this
Agreement, TRANSYSTEMS shall not be held responsible for the accuracy, completeness or
constructability of the construction documents prepared by TRANSYSTEMS if used, changed or
completed by the OWNER or by another party. Accordingly, the OWNER agrees, to the fullest extent
permitted by law, to indemnify and hold harmless TRANSYSTEMS, its officers, directors, employees
and subconsultants (collectively, Consultant) from any damages, liabilities or costs, including
reasonable attorneys’ fees and defense costs, arising or allegedly arising from such use, change or
completion by any other party of any construction documents prepared by TRANSYSTEMS.

     Section 7.2 Reuse of Documents. All documents, drawings, sketches, studies, analysis,
information, schedules, estimates, reports and other items prepared or furnished by TRANSYSTEMS (or
TRANSYSTEMS’ independent professional associates and consultants) pursuant to this Agreement,
including, but not limited to Drawings and Specifications, are instruments of service in respect of
the particular Project for which they were prepared and TRANSYSTEMS shall retain an ownership and
property interest therein whether or not the particular Project is completed. Provided, however,
that such documents, drawings, sketches, studies, analysis, information, schedules, estimates,
reports and other items are not intended or represented to be suitable for reuse by OWNER or others
on extensions of the particular Project or on any other project. Any reuse without written
verification or adaptation by TRANSYSTEMS for the specific purpose intended will be at OWNER’s sole
risk and without liability or legal exposure to TRANSYSTEMS, or to TRANSYSTEMS’ independent
professional associates or consultants, and OWNER does hereby, to the fullest extent permitted by
law, indemnify and hold harmless TRANSYSTEMS, TRANSYSTEMS’ officers, employees and agents and
TRANSYSTEMS’ independent professional associates and consultants from all claims, suits, demands,
damages, liabilities, losses, expenses and costs, including but not limited to reasonable
attorney’s fees and other costs of defense, arising out of or resulting therefrom. The provisions
of this Section 7.2 shall survive the termination of this Agreement.

Section 7.3 Use of Electronic Media.

     In the event that OWNER requests any electronic deliverables under this agreement, TRANSYSTEMS
and OWNER shall execute a separate CADD agreement. Otherwise, in accepting and utilizing any
drawings, reports and data on any form of electronic media generated and furnished by TRANSYSTEMS,
the OWNER agrees that all such electronic files are instruments of service of TRANSYSTEMS, who
shall be deemed the author, and shall retain all common law, statutory law and other rights,
including copyrights.

     The OWNER agrees not to reuse these electronic files, in whole or in part, for any purpose
other than for the Project. The OWNER agrees not to transfer these electronic files to others
without the prior written consent of TRANSYSTEMS. The OWNER further agrees to waive all claims
against TRANSYSTEMS resulting in any way from any unauthorized changes to or reuse of the
electronic files for any other project by anyone other than TRANSYSTEMS.

     Electronic files furnished by either party shall be subject to an acceptance period of sixty
(60) days during which the receiving party agrees to perform appropriate acceptance tests. The
party furnishing the electronic file shall correct any discrepancies or errors detected and
reported within the acceptance period. After the acceptance period, the electronic files shall be
deemed to be accepted and neither party shall have any obligation to correct errors or maintain
electronic files.

     The OWNER is aware that differences may exist between the electronic files delivered and the
printed hard-copy construction documents. In the event of a conflict between the signed
construction documents prepared by

	 	 	 
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TRANSYSTEMS and electronic files, the signed or sealed hard-copy construction documents shall
govern.

     In addition, the OWNER agrees, to the fullest extent permitted by law, to indemnify and hold
harmless TRANSYSTEMS, its officers, directors, employees and subconsultants (collectively,
Consultant) against all damages, liabilities or costs, including reasonable attorneys’ fees and
defense costs, arising from any changes made by anyone other than TRANSYSTEMS or from any reuse of
the electronic files without the prior written consent of TRANSYSTEMS.

     Under no circumstances shall delivery of electronic files for use by the OWNER be deemed a
sale by TRANSYSTEMS, and TRANSYSTEMS makes no warranties, either express or implied, of
merchantability and fitness for any particular purpose. In no event shall TRANSYSTEMS be liable for
indirect or consequential damages as a result of the OWNER’s use or reuse of the electronic files.

     Section 7.4 Standard of Practice, Warranties. Services performed by TRANSYSTEMS under this
Agreement will be conducted in a manner consistent with the level of care, diligence and skill
ordinarily possessed and exercised by members of the profession currently practicing in the same
locality under similar conditions. Except as expressly set forth above, no other representations,
expressed or implied, and no warranty or guarantee, express or implied, is included in this
Agreement, or in any document, drawing, sketch, study, analysis, schedule, estimate, report,
opinion, specification and other item prepared or furnished by TRANSYSTEMS (or TRANSYSTEMS’
independent professional associates and consultants) pursuant to this Agreement.

     Section 7.5 Limitation of Responsibility, Job Site Safety/Techniques. Neither the professional
activities of TRANSYSTEMS, nor the presence of TRANSYSTEMS or its employees and subconsultants at a
construction/project site, shall relieve the Contractor of its obligations, duties and
responsibilities including, but not limited to, construction means, methods, sequence, techniques
or procedures necessary for performing, superintending and coordinating the Work in accordance with
the Contract Documents and any health or safety precautions required by any regulatory agencies.
TRANSYSTEMS and its personnel have no authority to exercise any control over any construction
contractor or its employees in connection with their work or any health or safety programs or
procedures. The OWNER agrees that the Contractor shall be solely responsible for job site safety,
and warrants that this intent shall be carried out in the OWNER’s contract with the Contractor. The
OWNER also agrees that the OWNER, TRANSYSTEMS and TRANSYSTEMS’ subconsultants shall be indemnified
by the Contractor and shall be made additional insureds under the Contractor’s policies of general
liability insurance. In addition, TranSystems shall not be responsible for (i) the failure of any
other project party to fulfill their respective contractual responsibilities and obligations to
OWNER or to comply with Federal, State or local laws, rules, regulations or codes; (ii) the
schedules of any of the other project parties or the failure of any of the other project parties to
carry out their work in accordance with their respective agreements. TranSystems shall not have
control over or charge of and shall not be responsible for acts or omissions of the other project
parties, or their agents or employees, or of any other persons performing portions of the work on
the project.

     Section 7.6 Insurance.

          Section 7.6.1 TRANSYSTEMS Insurance. TRANSYSTEMS shall maintain throughout the duration of
this Agreement insurance in the following amounts and will, upon request of the OWNER furnish a
copy of certification thereof:

	 	(a)	 	Workers Compensation and Employer’s Liability

Worker’s Compensation Statutory

Employer’s Liability $500,000/$500,000/$500,000

	 	 	 
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	 	(b)	 	Comprehensive Automobile Liability

$1,000,000 combined single limit Bodily Injury and Property Damage
	 
	 	(c)	 	Comprehensive General Liability

$1,000,000 — per occurrence

$2,000,000 — annual aggregate

$2,000,000 product / completed operations per occurrence

$1,000,000 — personal injury / advertising liability
	 
	 	(d)	 	Umbrella/Excess Liability

$1,000,000 — per occurrence

$1,000,000 — annual aggregate
	 
	 	(e)	 	Professional Liability Insurance in an amount of $1,000,000 per claim and
annual aggregate.

     Section 7.6.2 If, pursuant to the provisions of Exhibit A, OWNER is required to obtain certain
insurance coverages, OWNER agrees to obtain and maintain throughout the duration of this Agreement
(or, as applicable, cause its contractors to obtain and maintain) such insurance in the coverages
and the amounts specified on Exhibit A. OWNER will furnish TRANSYSTEMS with a copy of certification
of such insurance. TRANSYSTEMS’ interests shall be covered under any such insurance coverage.

     Section 7.7 Liability and Indemnification.

          Section 7.7.1 General. Having considered the potential liabilities that may exist during the
performance of the Services, the benefits of the Project, and TRANSYSTEMS’ Compensation for the
performance of the Services, and in consideration of the promises contained in this Agreement,
OWNER and TRANSYSTEMS agree to allocate and limit such liabilities in accordance with the
provisions of this Section 7.7.

          Section 7.7.2 TRANSYSTEMS Indemnification. TRANSYSTEMS agrees, to the fullest extent permitted
by law, to indemnify and hold the OWNER harmless from any damage, liability or cost (including
reasonable attorney’s fees and costs of defense) to the extent caused by TRANSYSTEMS’ negligent
acts, errors or omissions in the performance of professional services under this Agreement and
those of its subconsultants or anyone for whom TRANSYSTEMS is legally liable. TRANSYSTEMS is not
obligated to indemnify the OWNER in any manner whatsoever for the OWNER’S own negligence.

          Section 7.7.3 OWNER Indemnification. The OWNER agrees, to the fullest extent permitted by law,
to indemnify and hold TRANSYSTEMS harmless from any damage, liability or cost (including reasonable
attorney’s fees and costs of defense) to the extent caused by the OWNER’S negligent acts, errors or
omissions and those of its contractors, subcontractors or consultants or anyone for whom the OWNER
is legally liable, and arising from the Project that is the subject of this Agreement. The OWNER is
not obligated to indemnify TRANSYSTEMS in any manner whatsoever for TRANSYSTEMS’ own negligence.

          Section 7.7.4 Contractor Indemnification. OWNER agrees to cause each of its other contractors
on each particular Project to include an indemnification provision in OWNER’s contract with each
such contractor that indemnifies and holds harmless TRANSYSTEMS and any of its officers or
employees from all loss, damage, cost or expense to the extent caused by such contractors (or its
employees or subcontractors) negligence or willful misconduct.

	 	 	 
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          Section 7.7.5 Employee Claims. TRANSYSTEMS shall indemnify OWNER against any loss, damage,
cost or expense arising out of claims by TRANSYSTEMS’ employees (unless such claim arises out of or
as a result of the negligence of OWNER, its employees, agents or contractors). OWNER shall
indemnify TRANSYSTEMS against any loss, damage, cost or expense arising out of claims by OWNER’S
employees (unless such claim arises out of or as a result of the negligence of TRANSYSTEMS, its
employees, agents or subcontractors).

          Section 7.7.6 Consequential Damages. To the fullest extent permitted by law, TRANSYSTEMS shall
not, in any event, be liable to OWNER for any special, indirect, incidental or consequential
damages, including, but not limited to, damages from delay, distribution, loss of product, loss of
use, loss of profits or revenue or increased cost of operation, the cost of capital or the cost of
purchased or replacement equipment, systems or power.

          Section 7.7.7 Limitation of Liability. To the fullest extent permitted by law, TRANSYSTEMS’
total liability to OWNER for all claims, losses, damages and expenses resulting or arising in any
way from the performance of the Services (including TRANSYSTEMS’ indemnity obligations hereunder)
shall not exceed the total compensation received by TRANSYSTEMS under this Agreement or the limits
of any professional liability insurance requirements outlined in Section 7.6.1(e), whichever is
less.

          Section 7.7.8 Survival. The terms and conditions of this Section 7.7 shall survive the
termination of this Agreement and/or the completion of the Services.

          Section 7.7.9 Betterment. If, due to TRANSYSTEMS’ negligence, a required item or component of
the Project is omitted from TRANSYSTEMS’ construction documents, TRANSYSTEMS shall not be
responsible for paying the cost required to add such item or component to the extent that such item
or component would have been required and included in the original construction documents. In no
event will TRANSYSTEMS be responsible for any cost or expense that provides betterment or upgrades
or enhances the value of the Project.

     Section 7.7.10 Protection of Supplanting Consultant. In consideration of the risks and rewards
involved in this Project, the OWNER agrees, to the maximum extent permitted by law, to indemnify
and hold harmless TRANSYSTEMS from any damages, liabilities or costs, including reasonable
attorneys’ fees and defense costs, arising or allegedly arising from any negligent acts, errors or
omissions by any prior consultant employed by the OWNER on this project and from any claims of
copyright or patent infringement by TRANSYSTEMS arising from the use of any documents prepared or
provided by the OWNER or any prior consultant of the OWNER’s. The OWNER warrants that any documents
provided to TRANSYSTEMS by the OWNER or by the prior consultant may be relied upon as to their
accuracy and completeness without independent investigation by TRANSYSTEMS and that the OWNER has
the right to provide such documents to TRANSYSTEMS free of any claims of copyright or patent
infringement or violation of any other party’s rights in intellectual property.

SECTION 8

SPECIAL PROVISIONS, EXHIBITS AND SCHEDULES

     Section 8.1 Special Provisions. This Agreement is subject to no special provisions.

     Section 8.2 Entire Agreement. This Agreement together with all approved Requests for Services
constitute the entire agreement between OWNER and TRANSYSTEMS and supersede all prior written or

	 	 	 
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oral understandings. This Agreement may only be amended, supplemented, modified, or
canceled by a duly executed written instrument.

     Nothing contained in this Agreement shall create a contractual relationship with or a cause of
action in favor of a third party against either the OWNER or TRANSYSTEMS. TRANSYSTEMS’ services
under this Agreement are being performed solely for the OWNER’s benefit, and no other party or
entity shall have any claim against TRANSYSTEMS because of this Agreement or the performance or
nonperformance of services hereunder. The OWNER and Consultant agree to require a similar provision
in all contracts with contractors, subcontractors, subconsultants, vendors and other entities
involved in this Project to carry out the intent of this provision.

     TRANSYSTEMS shall not be required to execute any documents subsequent to the signing of this
Agreement that in any way might, in the sole judgment of TRANSYSTEMS, increase TRANSYSTEMS’
contractual or legal obligations or risks, or adversely affect the availability or cost of its
professional or general liability insurance.

     Section 8.3
  Hazardous Materials. Unless otherwise provided in this Agreement, TRANSYSTEMS
shall have no responsibility for the discovery, presence, handling, removal or disposal of or
exposure of persons to hazardous materials in any form at the Project site. However, TRANSYSTEMS
shall report to OWNER the presence and location of any hazardous material which it notices or which
an engineer of similar skill and experience should have noticed.

     Section 8.4
 Attorneys Fees. In the event that either party hereto employs an attorney to
enforce any provision of this Agreement or to collect damages for default or breach of this
Agreement, or pursue claims in litigation or arbitration, the prevailing party in any such action
shall be entitled to recover from the other such attorneys’ fees and costs of collection as the
prevailing party may expend or incur with respect thereto. In the event that a settlement is
reached between the parties before a final decision in any such litigation or arbitration, then
neither party shall be entitled to recover its attorneys fees or costs from the other and neither
party shall be responsible for the other party’s attorney’s fees or costs, unless otherwise agreed
by the parties.

     Section 8.5
 Disputes. In the event a dispute arises between TRANSYSTEMS and OWNER regarding
the application or interpretation of any provision of this Agreement, or quality of Services by
TRANSYSTEMS, the aggrieved party shall promptly notify the other party to this Agreement of the
dispute, but in no event more than 20 days after such dispute arises. If the parties fail to
resolve the dispute within 20 days after receipt of such notice, each party shall, within five days
thereafter, proceed to non-binding mediation, with each party to bear its own costs and attorneys’
fees (except as otherwise provided in Section 8.4 above) and the parties shall share equally in the
cost of the mediator. In the event that the mediation is unsuccessful, the aggrieved party may
elect to litigate its dispute with the other party. All disputes shall be governed by the laws of
the State of Missouri and the jurisdiction and venue for litigation between the parties shall be
solely and exclusively in Jackson County, Missouri, or the United States District Court for the
Western District of Missouri.

     It is intended by the parties to this Agreement that TRANSYSTEMS’ services in connection with
the Project shall not subject TRANSYSTEMS’ individual employees, officers or directors to any
personal legal exposure for the risks associated with this Project. Therefore, and notwithstanding
anything to the contrary contained herein, the OWNER agrees that as the OWNER’s sole and exclusive
remedy, any claim, demand or suit shall be directed and/or asserted only against TRANSYSTEMS, a
Missouri corporation, and not against any of TRANSYSTEMS’ individual employees, officers or
directors.

     Section 8.6
 Independent Contractor. TRANSYSTEMS shall be an independent contractor with

	 	 	 
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respect to the Services to be performed hereunder. Neither TRANSYSTEMS, nor its independent
professional associates, consultants or subcontractors, nor the employees of any of the foregoing, shall be
deemed to be the servants, employees or agents of OWNER.

     Section 8.7 Representations and Remedies. TRANSYSTEMS makes no representations, covenants,
warranties or guarantees, express or implied, other than those expressly set forth herein. IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE SPECIFICALLY EXCLUDED. The
parties’ rights, liabilities, responsibilities and remedies with respect to the Services, whether
in contract or otherwise, shall be exclusively those expressly set forth in this Agreement.

     Section 8.8 Assignment, Subcontractors. This Agreement shall not be assignable by either party
without the prior written consent of the other party hereto, except that it may be assigned without
such consent to the successor of either party, or to a person, firm or corporation acquiring all or
substantially all of the business assets of such party or to a wholly owned subsidiary of either
party, but such assignment shall not relieve the assigning party of any of its obligations under
this Agreement. No assignment of this Agreement shall be valid until this Agreement shall have been
assumed by the assignee. This Agreement shall be binding upon and shall inure to the benefit of
TRANSYSTEMS’ and OWNER’s respective successors and assigns. Nothing in this Section 8.9 shall
prevent or be deemed to prevent TRANSYSTEMS from employing, contracting with or engaging
independent professional associates, consultants and other subcontractors to perform or assist in
the performance of the Services.

Section 8.9
Interpretation.

     (a) This Agreement shall be governed by and interpreted in accordance with the laws of
Missouri.

     (b) Headings and titles of sections, paragraphs and other subparts of this Agreement are for
convenience of reference only and shall not be considered in interpreting the text of this
Agreement. Modifications or amendments to this Agreement must be in writing and executed by duly
authorized representatives of each party.

     (c) Unless specifically stated to the contrary therein, indemnities against, releases from and
limitations on liability expressed in this Agreement shall apply even in the event of the fault,
negligence or strict liability of the party indemnified or released or whose liability is limited
and shall extend to the officers, directors, employees, agents, licensors and related entities of
such party.

     (d) In the event that any portion or all of this Agreement is held to be void or
unenforceable, the parties agree to negotiate in good faith to reach an equitable agreement which
shall effect the intent of the parties as set forth in this Agreement.

     (e) No failure by either party to insist on performance of any term, condition, or
instruction, or to exercise any right or privilege included in this Agreement, and no waiver of any
breach shall constitute a waiver of any other or subsequent term, condition, instruction, breach,
right or privilege.

     (f) The parties acknowledge and agree that the terms and conditions of this Agreement,
including but not limited to those relating to allocations and assumptions of, releases from,
exclusions against and limitations of liability, have been freely and fairly negotiated. Each party
acknowledges that in executing this Agreement they have relied solely on their own judgment,
belief, and knowledge, and such advice as they may have received from their own counsel, and they
have not been influenced by any representation or statements made by any other party or its
counsel. No provision in this Agreement is to be interpreted for or against any party because that
party or its counsel drafted such provision.

	 	 	 
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     Section 8.11
 Certifications, Guarantees and Warranties. TRANSYSTEMS shall not be required to
sign any documents, no matter by whom requested, that would result in TRANSYSTEMS’ having to
certify, guarantee or warrant the existence of conditions whose existence TRANSYSTEMS cannot
ascertain. The OWNER also agrees not to make resolution of any dispute with TRANSYSTEMS or payment
of any amount due to TRANSYSTEMS in any way contingent upon TRANSYSTEMS’ signing any such
certification.

     As used herein, the word “certify” shall mean an expression of TRANSYSTEMS’ professional
opinion to the best of its information, knowledge and belief, and does not constitute a warranty or
guarantee by TRANSYSTEMS.

     I      IN WITNESS WHEREOF, the parties hereto have made and executed this Agreement as of the
2nd day of Aug 2006.

	 	 	 	 	 	 	 
	 	 	 
	Fagen, Inc.
Buffalo Ridge Energy, LLC	 	TranSystems Corporation
	 
	 	 	 	 	 	 
	 	 	 	 	
	 
	 	 	 	 	 	 
	By:

	 	/s/ Greg Van Zanten
	 	By:	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Printed Name:

	 	Greg Van Zanten
	 	Printed Name:
	 	Timothy P. Rock
	 
	 	 	 	 	 	 
	Title:

	 	Chairman
	 	Title:
	 	Assistant Vice President

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