Document:

Exhibit 10.8

 

[LOGO]

October 19th, 2006

140 BW LLC

c/o Hines Interests Limited Partnership

29th Floor

140 Broadway

New York, NY 10005

Copies to:

140 BW LLC

c/o Deutsche Immobilen Funds AG

Caffa Macherreihe 8

Hamburg, 20355

Germany

Attention: Mr. Michael Montebaur

140 BW LLC

Rottenberg Lipman Rich, P.C.

369 Lexington Avenue, 15th floor

New York, NY 10017

Attention: Charles Rich

RE: “Consent Request” as
provided in Rider Section 41 C in Lease (“Lease”) dated as of December 31,1998
between MSDW 140 Broadway Property. L.L.C. as predecessor in interest to 140 BW
L.L.C. (“Landlord”) and Platinum Technology International, Inc. (“Tenant).

Ladies and Gentlemen,

Tenant previously sent a
A/S Notice dated September 15th, 2006 to Landlord. Tenant received a Landlord response,
dated October 6th, to
the A/S Notice in which Landlord waived its Recapture Right.

 

Tenant now seeks Landlord
consent to enter into the sublease with ACA Financial Guaranty Corporation.
Attached is a photo copy of the fully executed sublease. Terms of the sublease
are consistent with the terms contained within the A/S Notice.

Please prepare the
Sublease Consent Agreement and e-mail to Matthew Ruffing at
matthew.ruffing@am.jll.com

[LOGO]

	
  Yours truly,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Charles Quinn

  	
   

  	
   

  	
   

  
	
  Charles Quinn

  Vice President Finance and Adminstration

  	
   

  	
   

  	
   

  
					

 

SUBLEASE

THIS SUBLEASE is made and entered into this 19th day of October, 2006, by and between PLATINUM
TECHNOLOGY INTERNATIONAL, INC., a Delaware corporation (“Landlord”) and ACA
FINANCIAL GUARANTY CORPORATION, a Maryland insurance corporation (“Tenant”).

1.         BASIC SUBLEASE
PROVISIONS.

A. Property Address: 140 Broadway, New York, New York

B. Tenant’s Address (for notices): 140 Broadway, 47th Floor, New York, New York 10005, Attention:
General Counsel

C. Landlord’s Address (for notices): c/o CA, Inc., One
CA Plaza, Islandia, New York 11749, Attention: Lease Administration, with a
copy to Landlord c/o CA, Inc., One CA Plaza, Islandia, New York 11749,
Attention: Legal-Real Estate Notice

D. Prime Landlord: 140 BW LLC (as successor in
interest to MSDW 140 Broadway Property, L.L.C.)

E. Prime Landlord’s Address (for notices): 140 BW LLC,
c/o Hines Interests Limited Partnership, 29th Floor, 140 Broadway, New York,
New York 10005, with copies to (i) 140 BW LLC, c/o Deutsche Immobilen Funds AG,
Caffa Macherreihe 8, Hamburg 20355, Germany, Attention: Mr. Michael
Montebaur, and (ii) 140 BW LLC, c/o Latham & Watkins LLP, 885 Third Avenue,
Suite 1000, New York, New York 10022-4802, Attention: Joshua Stein, Esq.

F. Identification of Prime Lease and all amendments
thereto: Lease dated as of December 31,1998 between MSDW 140 Broadway Property,
L.L.C., as landlord, and Platinum Technology International, Inc., as tenant;
First Amendment of Lease dated as of

 

December 31, 1999 between MSDW 140 Broadway Property, L.L.C., as
landlord, and Platinum Technology International, Inc., as tenant.

G. Sublease Term: The
period beginning on the Commencement Date and ending on the Expiration Date.

H. Commencement Date: The
date Landlord receives from Prime Landlord written notice that Prime Landlord
has approved this Sublease. Landlord will notify Tenant of such approval as
soon as may be practicable after receipt thereof.

I.          Expiration Date: October 24, 2009 (subject to Section 38)

J.         Base Rent: $396,900 per annum

K.        Payee of Rent: Platinum Technology International, Inc.

L.         Address for Payment of Rent: c/o CA, Inc., One CA Plaza,
Islandia, New York 11749, Attention: Treasurer –  Rent Collection. Landlord will not, and is not
obligated to, recognize the receipt of any payments not directed to the
Treasurer — Rent Collection. Failure to address payments in this manner will be
considered a default of payment under this Sublease and subject to the
penalties and other remedies contained herein.

M.       Sublease Share: Fourteen and 2,029/10,000 percent (14.2029%)

N.        Description of Premises: The portion of the 48th floor in the building located at 140 Broadway,
New York, New York shown in the diagram attached hereto as

Exhibit A.

O.        Security Deposit: $66,150

P.         Tenant’s Use: General and executive offices.

Q.        Broker: Jones Lang LaSalle Americas, Inc. and Studley, Inc.

 2
 

 

2.         PRIME LEASE. Landlord is the tenant under a Prime Lease (the
“Prime Lease”) with the Prime Landlord identified in Section I(D),
bearing the date specified in Section 1(F). Landlord represents to
Tenant that (a) Landlord has delivered to Tenant a full and complete copy of
the Prime Lease (with certain economic provisions not relevant to this Sublease
redacted) and all other agreements between Prime Landlord and Landlord relating
to the leasing, use or occupancy of the Premises, and (b) the Prime Lease is,
as of the date hereof, in full force and effect.

3.         SUBLEASE. Landlord, for and in consideration of the rents
herein reserved and of the covenants and agreements herein contained on the
part of the Tenant to be performed, hereby subleases to the Tenant, and the
Tenant accepts from the Landlord, certain space described in Section 1(N)
(the “Premises”) and located in the building (the “Building”), situated on and
a part of the property (the “Property”) located at the address set forth in Section
1(A).

4.         TERM. The term of this Lease (hereinafter, the “Term”) shall
commence on the date specified in Section I(H). The Term shall expire on
the date (the “Expiration Date”) specified in Section 1(I), unless
sooner terminated or extended as otherwise provided elsewhere in this Sublease.

5.         POSSESSION. Landlord agrees to deliver possession of the
Premises on or before the date specified in Section 1(H) in their
condition as of the execution and delivery hereof, reasonable wear and tear
excepted; that is to say, AS IS.

6.         TENANT’S USE. The Premises shall be used and occupied only
for the Tenant’s Use set forth in Section 1(P).

7.         RENT. Beginning on November 1, 2006 (the “Rent Commencement
Date”), Tenant agrees to pay the Base Rent set forth in Section I(J) to
the Payee specified in Section

 3
 

 

1(K),
at the address specified in Section I(L), or to such other payee or at
such other address as may be designated by notice in writing from Landlord to
Tenant, without prior demand therefor and without any deduction whatsoever.
Base Rent shall be paid in equal monthly installments in advance on the first
day of each month of the Term, except that the first installment of Base Rent
shall be paid by Tenant to Landlord within five (5) days after Landlord
notifies Tenant of Prime Landlord’s approval of this Sublease. Base Rent shall
be pro-rated for partial months at the beginning and end of the Term. All
charges, costs and sums required to be paid by Tenant to Landlord under this
Sublease in addition to Base Rent shall be deemed “Additional Rent”, and Base
Rent and Additional Rent shall hereinafter collectively be referred to as “Rent”.
No Rent shall be payable if Prime Landlord does not approve this Sublease, but
if such approval is obtained, Rent shall be payable as of November 1, 2006
regardless of whether such approval is obtained prior to, on or after such
date. Tenant’s covenant to pay Rent shall be independent of every other
covenant in this Lease. If any item of Rent is not paid when due (or within
five (5) days of the due date in the case of the first two late payments in any
twelve (12)-month period), Tenant shall pay, relative to the delinquent
payment, a late charge equal to five percent (5%) of the unpaid amount.

8.         ADDITIONAL RENT. Beginning on the Rent Commencement Date, to
the extent that Landlord is obligated to pay additional rent under the Prime
Lease, whether such additional rent is to reimburse Prime Landlord for taxes,
operating expenses, common area maintenance charges or other expenses incurred
by the Prime Landlord in connection with the Property or increases therein
(including, without limitation, those set forth in Articles 39 and 40 of the
Prime Lease, with no adjustment to the “Base Year” set forth in such Articles
39 and 40 of the Prime Lease), Tenant shall pay to Landlord the percentage of
such additional rent (to the

 4
 

 

extent such additional rent is attributable to the
term of this Sublease) which is set forth in Section I(M) as the
Sublease Share. Such payment shall be due from Tenant to Landlord no fewer than
five (5) days prior to the date upon which Landlord’s payment of such
additional rent is due to the Prime Landlord.

9.         TENANT’S OBLIGATIONS. Tenant shall be responsible for, and
shall, beginning on the Commencement Date, pay the following:

A.        The cost of electricity furnished to the Premises in
accordance with Article 46 of the Prime Lease. If electricity is furnished to
the Premises on a “submetering” basis as set forth in subsection B(1) of Article
46 of the Prime Lease, Subtenant shall pay the “Electricity Additional Rent” as
determined under such subsection B(1) in accordance with invoices therefor
submitted by Landlord or Prime Landlord. If the Premises is separately
submetered and Prime Landlord agrees that Landlord shall not be liable or
responsible for payment of the costs of electricity for the Premises pursuant
to the submeter, then Tenant may arrange with Prime Landlord for direct
payments of electricity charges pursuant to the submeter. If electricity is
furnished to the Premises on a “rent inclusion” basis as set forth in
subsection B(2) of Article 46 of the Prime Lease, Subtenant shall pay the
percentage of the “Electric Rent Inclusion Factor” or “ERIF” set forth therein
which is set forth in Section I(M) as the Sublease Share (provided,
however, that if the “Electric Rent Inclusion Factor” or “ERIF” is increased as
a result of excess consumption of electricity by Tenant, as determined by any
electrical survey performed by Landlord or Prime Landlord, Tenant shall pay the
entire amount of such increase). Payments by Tenant for electricity provided on
a “rent inclusion” basis shall be made monthly by Tenant together with payments
of Base Rent under this Sublease. Tenant

 5
 

 

shall hold Landlord harmless from all costs or
expenses Landlord may incur from Tenant’s failure to pay invoices or to perform
any of its obligations with respect to the purchase of electricity.

B.        All maintenance, repairs and replacements as to the Premises
and its equipment, and cleaning and refuse removal, to the same extent Landlord
is obligated to perform the same under the Prime Lease.

10.       QUIET ENJOYMENT. Landlord represents that
it has full power and authority to enter into this Sublease, subject to the
consent of the Prime Landlord if required under the Prime Lease. So long as
Tenant is not in default in the performance of its covenants and agreements in
this Sublease, Tenant’s quiet and peaceable enjoyment of the Premises shall not
be disturbed or interfered with by Landlord, or by any person claiming by,
through, or under Landlord.

11.       TENANT’S INSURANCE. Tenant shall procure
and maintain, at its own cost and expense, such liability insurance as is
required to be carried by Landlord under the Prime Lease, naming Landlord, as
well as Prime Landlord, in the manner required therein and such property
insurance as is required to be carried by Landlord under the Prime Lease to the
extent such property insurance pertains to the Premises. If the Prime Lease
requires Landlord to insure leasehold improvements or alterations, then Tenant
shall insure such leasehold improvements which are located in the Premises, as
well as alterations in the Premises made by Tenant. Tenant shall furnish to
Landlord a certificate of Tenant’s insurance required hereunder not later than
ten (10) days prior to Tenant’s taking possession of the Premises. Each party
hereby waives claims against the other for property damage provided such waiver
shall not invalidate the waiving party’s property insurance; each party shall
attempt to obtain from its insurance carrier a waiver

 6
 

 

of its right of subrogation. Tenant hereby waives claims against Prime
Landlord and Landlord for property damage to the Premises or its contents if
and to the extent that Landlord waives such claims against Prime Landlord under
the Prime Lease. Tenant agrees to obtain, for the benefit of Prime Landlord and
Landlord, such waivers of subrogation rights from its insurer to the extent the
same are required of Landlord under the Prime Lease.

12.       ASSIGNMENT OR SUBLETTING.

A. Tenant shall not (i)
assign, convey or mortgage this Sublease or any interest under it; (ii) allow
any transfer thereof or any lien upon Tenant’s interest by operation of law;
(iii) further sublet the Premises or any part thereof; or (iv) permit the
occupancy of the Premises or any part thereof by anyone other than Tenant.
Transfers of fifty percent (50%) or more of the stock or other ownership
interests in Tenant, whether in one transaction or in the aggregate, shall be deemed
to be an assignment of this Sublease. The preceding sentence shall not apply to
shares of stock in Tenant sold to the public in an initial public offering, or
to transfers of shares publicly traded in a recognized securities exchange or
over-the-counter market. Subject to the provisions of the Prime Lease and Prime
Landlord’s rights thereunder, Tenant shall have the same rights as are
available to Landlord pursuant to Sections D(1), D(2) and F of Article 41 of
the Prime Lease, which provisions are incorporated herein by reference and
shall be deemed to apply to transactions by Tenant. If Tenant desires to assign
its interest in this Sublease, or further sublet all or part of the Premises,
then Tenant shall submit a written request to Landlord accompanied by such
financial and other information concerning the proposed assignee or subtenant,
and the terms of the assignment or further sublease, as Landlord may reasonably
request. Any such request made by Tenant to assign this

 7
 

 

Sublease or enter into a further sublease of all or
any portion of the Premises shall be deemed an offer by Tenant which shall be
irrevocable for a period of thirty (30) days to surrender all of the Premises
to Landlord. If such offer is accepted, such surrender shall be effective as of
the date that the proposed assignment or further sublease would have commenced.
Tenant shall quit and surrender the Premises as if this Sublease by its terms
expired on such date, and the Base Rent and Additional Rent under Section 8
shall be apportioned as of such date. If Tenant’s offer to surrender the
Premises in connection with a proposed assignment or further sublease of all or
a portion of the Premises is not accepted by Landlord within thirty (30) days,
or if Landlord declines such offer, then Landlord’s consent to such an
assignment of this Sublease or such a further sublease of the Premises shall
not be unreasonably withheld. If Landlord consents to any assignment of this
Lease or further subletting of all or any portion of the Premises, Landlord
shall request the consent of Prime Landlord and deliver to Prime Landlord any
information that Tenant submits in connection with its proposal to assign or
sublet.

B.        No permitted assignment shall be effective and no permitted
sublease shall commence unless and until any defaults by Tenant hereunder shall
have been cured. No permitted assignment or subletting shall relieve Tenant
from Tenant’s obligations and agreements hereunder and Tenant shall continue to
be liable as a principal and not as a guarantor or surety to the same extent as
though no assignment or subletting had been made (unless Landlord shall have
accepted a surrender of the Premises pursuant to Section 12(A) above).

 8
 

 

C.        The consent of Landlord or Prime Landlord to an assignment or
a subletting shall not relieve Tenant from its obligation to obtain the express
consent in writing of Landlord and Prime Landlord to any other assignment or
subletting.

D.        If Tenant’s interest in this Sublease is assigned, or if the
Premises or any part hereof is sublet or occupied by anyone other than Tenant,
Landlord may collect rent from the assignee, subtenant or occupant and apply
the net amount collected to the Base Rent and all Additional Rent herein
reserved, but no such assignment, subletting, occupancy or collection shall be
deemed a waiver of the provisions of this Section 12 or of any default
hereunder or the acceptance of the assignee, subtenant or occupant as Tenant,
or a release of any of the covenants, conditions, terms and provisions on the
part of Tenant to be performed or observed.

13.       RULES. Tenant agrees to comply with all
rules and regulations that Prime Landlord has made or may hereafter from time
to time make for the Building. Landlord shall not be liable in any way for
damage caused by the non-observance by any of the other tenants of such similar
covenants in their leases or of such rules and regulations.

14.       REPAIRS AND COMPLIANCE. Tenant shall
promptly pay for the repairs set forth in Section 9(B) hereof and Tenant
shall, at Tenant’s own expense, comply with all laws and ordinances, and all
orders, rules and regulations of all governmental authorities and of all
insurance bodies and their fire prevention engineers at any time in force,
applicable to the Premises or to Tenant’s use thereof.

15.       FIRE OR CASUALTY OR EMINENT DOMAIN. In
the event of a fire or other casualty affecting the Building or the Premises,
or of a taking of all or a part of the Building or Premises under the power of
eminent domain, Tenant shall promptly notify Landlord thereof in

 9
 

 

writing. If Landlord receives a rent abatement under
the Prime Lease as a result of a fire or other casualty or as a result of a
taking under the power of eminent domain, then Tenant shall be entitled to the
Sublease Share of such rent abatement unless the effect on the Premises of such
fire or other casualty or such taking shall be substantially disproportionate
to the amount of the abatement, in which event the parties shall equitably
adjust the abatement as between themselves, based on the relative impact of the
fire or other casualty, or the taking, as the case may be. To the extent the
Prime Lease gives Landlord the right to terminate the Prime Lease in the event
of damage or destruction to the Building or the Premises or a taking of all or
part thereof by eminent domain, Landlord may, in its sole discretion, exercise
any such right and shall notify Tenant of such exercise, in which case this
Sublease shall terminate one day prior to the date of termination of the Prime
Lease. If the Prime Lease imposes on Landlord the obligation to repair or
restore leasehold improvements or alterations in the Premises, Tenant shall be
responsible for repair or restoration of such leasehold improvements or
alterations.

16.       ALTERATIONS. Tenant shall not make any alterations
in or additions to the Premises (“Alterations”) without the prior written
consent of Landlord (which shall not be unreasonably withheld, conditioned or
delayed by Landlord) and Prime Landlord (if required). Landlord consents to the
proposed Alterations described in Exhibit B annexed hereto, subject to
Tenant providing detailed drawings and plans for submission to Prime Landlord
as necessary to seek Prime Landlord’s consent to such proposed Alterations. If
Landlord consents to any proposed Alteration, Landlord shall request the
consent of Prime Landlord, if such consent is required under the Prime Lease.
If Alterations by Tenant are consented to as aforesaid, Tenant shall comply
with all of the covenants of Landlord contained in the Prime Lease pertaining
to the performance of such Alterations. In addition, Tenant shall indemnify,
defend and hold harmless

 10
 

 

Landlord and Prime Landlord against liability, loss,
cost, damage, liens and expense imposed on Landlord arising out of the
performance of Alterations by Tenant, including, without limitation, the
removal of the Alterations as contemplated pursuant to Section 20
hereof.

17.       SURRENDER. Upon the expiration of this
Sublease, or upon the termination of the Sublease or of the Tenant’s right to
possession of the Premises, Tenant will at once surrender and deliver up the
Premises, together with all improvements thereon, to Landlord in good condition
and repair, reasonable wear and tear excepted; conditions existing because of
Tenant’s failure to perform maintenance, repairs or replacements as required of
Tenant under this Sublease shall not be deemed “reasonable wear and tear”. Said
improvements shall include all plumbing, lighting, electrical, heating, cooling
and ventilating fixtures and equipment used in the operation of the Premises
(as distinguished from operations incident to the business of Tenant). Tenant
shall surrender to Landlord all keys, security codes and the like to the
Premises and make known to Landlord the combinations for all combination locks
which Tenant is permitted to leave on the Premises. All Alterations in or upon
the Premises made by Tenant shall become a part of and shall remain upon the
Premises upon such termination without compensation, allowance or credit to
Tenant; provided, however, that Landlord shall have the right to require Tenant
to remove any Alterations made by Tenant, or portion thereof. Tenant shall also
remove any Alterations made by Tenant, or portion thereof, which Prime Landlord
may require Landlord to remove, pursuant to the terms of the Prime Lease. In
any such event, Tenant shall restore the Premises to their condition prior to
the making of such Alteration, repairing any damage occasioned by such removal
or restoration. If Landlord or Prime Landlord requires removal of any
Alteration made by Tenant, or a portion thereof, and Tenant does not make such
removal in accordance with this Section, Landlord may remove the same (and
repair any damage occasion

 11
 

 

thereby), and dispose thereof, or at its election,
deliver the same to any other place of business of Tenant, or warehouse the
same. Tenant shall pay the costs of such removal, repair, delivery and
warehousing on demand, together with interest thereon from the date any such
cost is incurred by Landlord at the interest rate set forth in Section 52(F) of
the Prime Lease, which costs and interest shall be Additional Rent under this
Sublease. The provisions of this Section 17 shall be subject to the
provisions of Section 38 hereof.

18.       REMOVAL OF TENANT’S PROPERTY. Subject to Section
38 of this Sublease, upon the expiration of this Sublease, Tenant shall
remove Tenant’s articles of personal property incident to Tenant’s business (“Trade
Fixtures”); provided, however, that Tenant shall repair any injury or damage to
the Premises which may result from such removal, and shall restore the Premises
to the same condition as prior to the installation thereof. If Tenant does not
remove Tenant’s Trade Fixtures from the Premises prior to the expiration or
earlier termination of the Term, Landlord may, at its option, remove the same
(and repair any damage occasioned thereby and restore the Premises as
aforesaid) and dispose thereof or deliver the same to any other place of
business of Tenant, or warehouse the same, and Tenant shall pay the cost of
such removal, repair, restoration, delivery or warehousing to Landlord on
demand, which cost, together with interest thereon from the date incurred by
Landlord at the interest rate set forth in Section 52(F) of the Prime Lease,
which cost and interest shall be Additional Rent under this Sublease.

19.       HOLDING OVER. Subject to Section 38
of this Sublease, Tenant shall have no right to occupy the Premises or any
portion thereof after the expiration of this Sublease or after termination of
this Sublease or of Tenant’s right to possession in consequence of an Event of
Default hereunder. In the event Tenant or any party claiming by, through or
under Tenant holds over, Landlord may exercise any and all remedies available
to it at law or in equity to recover

 12
 

 

possession of the Premises, and to recover damages,
including without limitation, damages payable by Landlord to Prime Landlord by
reason of such holdover. For each and every month or partial month that Tenant
or any party claiming by, through or under Tenant remains in occupancy of all
or any portion of the Premises after the expiration of this Sublease or after
termination of this Sublease or Tenant’s right to possession, Tenant shall pay,
as minimum damages and not as a penalty, monthly rental at a rate equal to
double the rate of Base Rent and Additional Rent payable by Tenant hereunder
immediately prior to the expiration or other termination of this Sublease or of
Tenant’s right to possession. The acceptance by Landlord of any lesser sum
shall be construed as payment on account and not in satisfaction of damages for
such holding over.

20.       ENCUMBERING TITLE. Tenant shall not do
any act which shall in any way encumber the title of Prime Landlord in and to
the Building or the Property, nor shall the interest or estate of Prime
Landlord or Landlord be in any way subject to any claim by way of lien or
encumbrance, whether by operation of law by virtue of any express or implied
contract by Tenant, or by reason of any other act or omission of Tenant. Any
claim to, or lien upon, the Premises, the Building or the Property arising from
any act or omission of Tenant shall accrue only against the subleasehold estate
of Tenant and shall be subject and subordinate to the paramount title and
rights of Prime Landlord in and to the Building and the Property and the
interest of Landlord in the premises leased pursuant to the Prime Lease.
Without limiting the generality of the foregoing, Tenant shall not permit the
Premises, the Building or the Property to become subject to any mechanics’,
laborers, or materialmen’s lien on account of labor or material furnished to
Tenant or claimed to have been furnished to Tenant in connection with work of
any character performed or claimed to have been performed on the Premises by, or
at the direction or

 13
 

 

sufferance of, Tenant. If any such lien (as a result
of the matters described in the immediately preceding sentence) is filed
against the Premises, the Building or the Property on which it is situated,
Tenant shall cause the same to be discharged, by payment, bonding or otherwise,
within thirty (30) days after the filing thereof, and shall indemnify and hold
harmless Landlord and Prime Landlord with respect to any costs, expenses
(including, without limitation, attorneys’ fees and expenses), losses, damages
and liabilities in connection therewith. Landlord shall give Tenant prompt
notice of any such lien upon receiving notice thereof. If Tenant fails to have
any such lien discharged as provided above, Landlord may take any actions it deems
appropriate to have such lien discharged, including, without limitation,
payment of any sums claimed to be due, and Tenant shall reimburse Landlord on
demand for any such sums expended by Landlord, together with interest thereon
from the date incurred by Landlord at the rate set forth in Section 52(F) of
the Prime Lease, all of which amounts shall be Additional Rent under this
Sublease.

21.       INDEMNITY. Tenant agrees to indemnify
Landlord and hold Landlord harmless from all losses, damages, liabilities and
expenses which Landlord may incur, or for which Landlord may be liable to Prime
Landlord, arising from the acts or omissions of Tenant which are the subject
matter of any indemnity or hold harmless of Landlord to Prime Landlord under
the Prime Lease.

22.       LANDLORD’S RESERVED RIGHTS. Landlord
reserves the right, on reasonable prior notice, to inspect the Premises during
the Term, or to exhibit the Premises to persons to whom Landlord is required to
give access pursuant to the terms of the Prime Lease.

23.       DEFAULTS. Tenant further agrees that any
one or more of the following events shall be considered Events of Default as
said term is used herein, that is to say, if:

 14
 

 

A.        Tenant shall be adjudged an involuntary bankrupt, or a decree
or order approving, as properly filed, a petition or answer filed against
Tenant asking reorganization of Tenant under the Federal bankruptcy laws as now
or hereafter amended, or under the laws of any State, shall be entered, and any
such decree or judgment or order shall not have been vacated or stayed or set
aside within sixty (60) days from the date of the entry or granting thereof; or

B.        Tenant shall file, or admit the jurisdiction of the court and
the material allegations contained in, any petition in bankruptcy, or any
petition pursuant or purporting to be pursuant to the Federal bankruptcy laws
now or hereafter amended, or Tenant shall institute any proceedings for relief
of Tenant under any bankruptcy or insolvency laws or any laws relating to the
relief of debtors, readjustment of indebtedness, reorganization, arrangements,
composition or extension; or

C.        Tenant shall make any assignment for the benefit of creditors
or shall apply for or consent to the appointment of a receiver for Tenant or
any of the property of Tenant; or

D.        Tenant shall admit in writing its inability to pay its debts
as they become due; or

E.         The Premises are levied on by any revenue officer or similar
officer; or

F.         A decree or order appointing a receiver of the property of
Tenant shall be made and such decree or order shall not have been vacated,
stayed or set aside within sixty (60) days from the date of entry or granting
thereof; or

G.        Tenant shall abandon the Premises during the Term hereof; or

 15

 

H.        Tenant shall default in any payment of Rent required to be
made by Tenant hereunder when due as herein provided and such default shall
continue for five (5) days after notice thereof in writing to Tenant; or

I.          A violation of any provision of Section 12 of this
Sublease shall occur; or

J.         Tenant shall default in securing insurance or in providing
evidence of insurance as set forth in Section 11 of this Sublease or
shall default with respect to lien claims as set forth in Section 20 of
this Sublease and either such default shall continue for five (5) days after
notice thereof in writing to Tenant; or

K.        Tenant shall, by its act or omission to act, cause a default
under the Prime Lease and such default shall not be cured within the time, if
any permitted for such cure under the Prime Lease, less five (5) days; or

L.         Tenant shall default in any of the other covenants and
agreements herein contained to be kept, observed and performed by Tenant, and
such default shall continue for thirty (30) days after notice thereof in
writing to Tenant.

24.       REMEDIES. Upon the occurrence of any one
or more Events of Default, Landlord may exercise any remedy against Tenant
which Prime Landlord may exercise for default by Landlord under the Prime Lease
and any remedy available at law or in equity for a breach of this Sublease.

25.       SECURITY DEPOSIT. To secure the faithful
performance by Tenant of all the covenants, conditions and agreements in this
Sublease set forth and contained on the part of Tenant to be fulfilled, kept,
observed and performed including, but not by way of limitation, such covenants
and agreements in this Sublease which become applicable upon the termination of
the same by re-entry or otherwise, Tenant has deposited with Landlord the
Security Deposit as

 16
 

 

specified in Section 1(O) on the understanding
that: (a) the Security Deposit or any portion thereof not previously applied,
or from time to time, such one or more portions thereof, may be applied to the
curing of any default by Tenant that may then exist, without prejudice to any
other remedy or remedies which Landlord may have on account thereof, and upon
such application Tenant shall pay Landlord on demand the amount so applied
which shall be added to the Security Deposit so the same may be restored to its
original amount; (b) should the Prime Lease be assigned by Landlord, the
Security Deposit or any portion thereof not previously applied may be turned
over to Landlord’s assignee and if the same be turned over as aforesaid, Tenant
hereby releases Landlord from any and all liability with respect to the
Security Deposit and/or its application or return; (c) if Tenant shall
faithfully fulfill, keep, perform and observe all of the covenants, conditions
and agreements in this Sublease set forth and contained on the part of Tenant
to be fulfilled, kept, performed and observed, the sum deposited or the portion
thereof not previously applied, shall be returned to Tenant without interest no
later than thirty (30) days after the expiration of the Term of this Sublease
or any renewal or extension thereof, provided (subject to Section 38 of
this Sublease) that Tenant has vacated the Premises and surrendered possession
thereof to Landlord at the expiration of the Term or any extension or renewal
thereof as provided herein; (d) in the event that Landlord terminates this
Sublease or Tenant’s right to possession by reason of an Event of Default by
Tenant, Landlord may apply the Security Deposit against damages suffered to the
date of such termination and/or may retain the Security Deposit to apply
against such damages as may be suffered or shall accrue thereafter by reason of
Tenant’s default; (e) in the event any bankruptcy, insolvency, reorganization
or other creditor-debtor proceedings shall be instituted by or against Tenant,
or its successors or assigns, the Security Deposit shall be deemed to be
applied first to the payment of any Rent due Landlord for all periods prior to
the

 17
 

 

institution of such proceedings, and the balance, if
any, of the Security Deposit may be retained or paid to Landlord in partial
liquidation of Landlord’s damages; and (f) Landlord shall not be required to
deposit the Security Deposit in an interest-bearing account.

26.       NOTICES AND CONSENTS. All notices,
demands, requests, consents or approvals which may or are required to be given
by either party to the other shall be in writing and shall be deemed given when
received or refused if sent by United States registered or certified mail,
postage prepaid, return receipt requested or if sent by overnight commercial
courier service (a) if to Tenant, addressed to Tenant at the address specified
in Section 1(B) or at such other place as Tenant may from time to time
designate by notice in writing to Landlord or (b) if for Landlord, addressed to
Landlord at the address specified in Section 1(C) or at such other place
as Landlord may from time to time designate by notice in writing to Tenant.
Each party agrees promptly to deliver a copy of each notice, demand, request,
consent or approval from such party to Prime Landlord relating to this Sublease
or the Premises and promptly to deliver to the other party a copy of any
notice, demand, request, consent or approval received from Prime Landlord
relating to this Sublease or the Premises. Such copies shall be delivered by overnight
commercial courier.

27.       PROVISIONS REGARDING SUBLEASE. This
Sublease and all the rights of parties hereunder are subject and subordinate to
the Prime Lease. Tenant agrees that it will not, by its act or omission to act,
cause a default under the Prime Lease. In furtherance of the foregoing, the
parties hereby confirm, each to the other, that it is not practical in this
Sublease agreement to enumerate all of the rights and obligations of the
various parties under the Prime Lease and specifically to allocate those rights
and obligations in this Sublease agreement. Accordingly, in order to afford to
Tenant the benefits of this Sublease and of those provisions of

 18
 

 

the Prime Lease which by their nature are intended to
benefit the party in possession of the Premises, and in order to protect
Landlord against a default by Tenant which might cause a default or event of
default by Landlord under the Prime Lease:

A.        Except as otherwise expressly provided herein, Landlord shall
perform its covenants and obligations under the Prime Lease which do not
require for their performance possession of the Premises and which are not
otherwise to be performed hereunder by Tenant on behalf of Landlord.

B.        Except as otherwise expressly provided herein, Tenant shall
perform all affirmative covenants and shall refrain from performing any act
which is prohibited by the negative covenants of the Prime Lease, where the
obligation to perform or refrain from performing is by its nature imposed upon
the party in possession of the Premises. If reasonably practicable, Tenant
shall perform affirmative covenants which are also covenants of Landlord under
the Prime Lease at least five (5) days prior to the date when Landlord’s
performance is required under the Prime Lease. Landlord shall have the right to
enter the Premises to cure any default by Tenant under this Section, and Tenant
shall reimburse Landlord on demand for any actual out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys’ fees and
expenses, incurred by Landlord in connection with any such entry and cure. To
the extent Landlord becomes liable to Prime Landlord under the Prime Lease as a
result of any act or omission of Tenant, Tenant’s agents, representatives,
contractors, employees or invitees, or any other person claiming by, through or
under Tenant, then Tenant shall pay to Landlord immediately upon demand the
amount so payable by Landlord to Prime Landlord. Amounts payable by Tenant
under the preceding two sentences shall bear interest from

 19
 

 

the date of demand to the date of payment in full at
the rate set forth in Section 52(F) of the Prime Lease.

C.        Landlord hereby grants to Tenant the right to receive all of
the services and benefits with respect to the Premises which are to be provided
by Prime Landlord under the Prime Lease. Landlord shall have no duty to perform
any obligations of Prime Landlord which are, by their nature, the obligation of
an owner or manager of real property. For example, Landlord shall not be
required to provide the services or repairs which the Prime Landlord is
required to provide under the Prime Lease. Landlord shall have no
responsibility for or be liable to Tenant for any default, failure or delay on
the part of Prime Landlord in the performance or observance by Prime Landlord
of any of its obligations under the Prime Lease, nor shall such default by
Prime Landlord affect this Sublease or waive or defer the performance of any of
Tenant’s obligations hereunder. Notwithstanding the foregoing, the parties
contemplate that Prime Landlord shall, in fact, perform its obligations under
the Prime Lease and in the event of any default or failure of such performance
by Prime Landlord, Landlord agrees that it will, upon notice from Tenant, make
demand upon Prime Landlord to perform its obligations under the Prime Lease.

28.       PRIME LANDLORD’S CONSENT. This Sublease
and the obligations of the parties hereunder are expressly conditioned upon
Landlord’s obtaining prior written consent hereto by Prime Landlord and Prime
Landlord not exercising its right to recapture the Premises pursuant to Article
41 of the Prime Lease. Tenant shall promptly deliver to Landlord any
information reasonably requested by Prime Landlord (in connection with Prime
Landlord’s approval of this Sublease) with respect to the nature and operation
of Tenant’s business and/or

 20
 

 

the financial condition of Tenant. Landlord and Tenant
hereby agree, for the benefit of Prime Landlord, that this Sublease and Prime
Landlord’s consent hereto shall not (a) create privity of contract between
Prime Landlord and Tenant; (b) be deemed to have amended the Prime Lease in any
regard; or (c) be construed as a waiver of Prime Landlord’s right to consent to
any assignment of the Prime Lease by Landlord or any further subletting of
premises leased pursuant to the Prime Lease, or as a waiver of Prime Landlord’s
right to consent to any assignment by Tenant of this Sublease or any
sub-subletting of the Premises or any part thereof. If Prime Landlord fails to
consent to this Sublease within thirty (30) days after a written request for
consent is delivered to Prime Landlord, either party shall have the right to
terminate this Sublease by giving written notice thereof to the other at any
time thereafter, but before Prime Landlord grants such consent. Such written
request shall be delivered by Landlord to Prime Landlord within three (3)
business days after this Sublease is executed and delivered by the parties, and
Landlord shall promptly send Tenant a copy of such request for consent
(specifying the date on which the request was delivered to Prime Landlord).

29.       [INTENTIONALLY OMITTED]

30.       BROKERAGE. Each party represents and
warrants to the other that it has had no dealings with any broker or agent in
connection with this Sublease other than the Broker as specified in Section
1(Q), whose commission shall be paid by Landlord, and covenants to pay,
hold harmless and indemnify the other party from and against (i) any and all
costs (including, without limitation, attorneys’ fees and expenses), expense or
liability for any compensation, commissions or charges claimed by any other
broker or other agent with whom such party is alleged to have dealt with
respect to this Sublease or the negotiation thereof on behalf of such

 21
 

 

party, or the breach by such party of the foregoing
representation and warranty, and (ii) the costs and expenses of the indemnified
party in connection with any such claim.

31.       GOVERNING LAW. This Sublease shall be
governed by and construed in accordance with the laws of the State of New York.

32.       JURY TRIAL WAIVER. Landlord and Tenant
hereby waive trial by jury in any action or proceeding brought by either of the
parties hereto against the other on any matters arising out of or in any way
connected with this Sublease or Tenant’s use or occupancy of the Premises.

33.       NUMBER AND GENDER. All terms used herein
shall include any number or gender, as the context may require.

34.       NO WAIVER; CUMULATIVE REMEDIES.

A.        No receipt of moneys by Landlord from Tenant after the
termination or cancellation of this Sublease shall reinstate, continue or
extend the Term, or operate as a waiver of the right of Landlord to enforce the
payment of Base Rent or Additional Rent then due, or thereafter falling due, or
operate as a waiver of the right of Landlord to recover possession of the
Premises by proper suit, action, proceeding or remedy.

B.        The failure of Landlord or Tenant to enforce any agreement,
condition, covenant or term of this Sublease shall not be deemed to waive or
affect the right of Landlord or Tenant to enforce the same or any other
agreement, condition, covenant or term of this Sublease in the event of a
subsequent default or breach.

 22
 

 

C.        The receipt by Landlord of Rent with knowledge of the breach
of any of the terms, covenants or conditions of this Sublease shall not be
deemed a waiver of such breach. The acceptance of any check or payment bearing
or accompanied by any endorsement, legend or statement shall not be deemed an
accord and satisfaction. No surrender of the Premises by Tenant (prior to the expiration
or termination of this Lease) shall be valid unless consented to in writing by
Landlord.

D.        Tenant, for itself and any and all persons claiming through
or under Tenant, including its creditors, upon the termination of this Lease or
expiration of the Term in accordance with the terms hereof, or in the event of
entry of judgment for the recovery of the possession of the Premises in any
action or proceeding, or if Landlord shall reenter the Premises by process of
law or otherwise lawfully, hereby waives any right of redemption provided or
permitted by any statute, law or decision now or hereafter in force, and does
hereby waive, surrender and give up all rights or privileges which it or they
may or might have under and by reason of any present or future law or decision,
to redeem the Premises or for a continuation of this Lease for the Term of this
Lease after having been dispossessed or ejected therefrom by process of law
after a final, non-appealable order.

E.         The rights and remedies given to the parties in this
Sublease are distinct, separate and cumulative, and none of them, whether or
not exercised by a party, shall be deemed to be in exclusion of any of the
others, or of any rights or remedies otherwise provided at law or in equity. In
addition to the other remedies in this Sublease provided, either party shall be
entitled to pursue the restraint by injunction of the violation or attempted or
threatened violation of any of the terms, covenants or conditions of this
Sublease or to a decree compelling performance of any of such terms, covenants
or conditions.

 23
 

 

F.         This Sublease contains the entire agreement of the parties
with respect to the subject matter hereof, and any prior agreements or
understandings, oral or written, are merged herein. This Sublease may not be
extended, renewed, terminated or modified, nor may any provision hereof be
waived, except by an instrument in writing executed by the party against whom
enforcement of the same is sought.

G.        There shall be no allowance or credit or abatement or
diminution of Rent or liability on the part of Landlord or Prime Landlord by
reason of inconvenience, injury or annoyance to business or otherwise arising
from or in connection with the making of any repairs, alterations, additions or
improvements in or to any portion of the Premises, the Building or the Property
(except that if Landlord actually receives an allowance, credit or abatement
under the Prime Lease with respect to the Premises, Tenant shall receive a
corresponding credit under this Sublease).

H.        Tenant shall, at any time and from time to time, as requested
by Landlord, execute and deliver to Landlord within ten (10) days after receipt
of such request a statement (a) certifying that this Sublease is unmodified and
in full force and effect (or if modified, that same is in full force and effect
as modified and stating the modifications), (b) certifying the dates to which
Base Rent and Additional Rent have been paid, (c) stating whether or not, to
the best knowledge of Tenant, either party is in default in the performance of
any of its obligations under this Sublease, and, if so, specifying each such
default of which Tenant has knowledge, and (d) stating whether or not, to the
best knowledge of Tenant, any condition or event exists which with the giving
of notice or the passage of time, or both, would constitute such a default,
and, if so, specifying each such condition or event.

 24
 

 

36.     REPRESENTATIONS OF THE PARTIES. Landlord
and Tenant represent to each other that, subject to obtaining the consent of
Prime Landlord to this Sublease and the provisions of any agreement pursuant to
which such consent is granted, each party has the power and authority to
execute and deliver this Sublease and perform its obligations hereunder.
Landlord and Tenant represent to each other that the execution, delivery and
performance of this Sublease by such party does not (i) violate any agreement
to which such party is a party or by which such party or any of its respective
properties is bound, or (ii) result in a breach of or constitute a default
under any such agreement.

37.       SUCCESSORS AND ASSIGNS. The agreements,
terms, covenants and conditions herein shall bind and inure to the benefit of
Landlord and Tenant and their respective successors and assigns.

38.       POSSIBLE SIX-DAY EXTENSION OF SUBLEASE.
Provided that not later than September 1, 2009 (i) Tenant enters into a lease
agreement with Prime Landlord pursuant to which Tenant will lease the Premises
from Prime Landlord for a term beginning on November 1, 2009 and Tenant
delivers to Landlord written evidence of such agreement in a form reasonably
acceptable to Landlord, and (ii) Tenant delivers to Landlord a written
agreement from Prime Landlord providing that Landlord need not deliver vacant
possession of the Premises to Prime Landlord as of the expiration date of the
Prime Lease as provided in the Prime Lease and Landlord is not required to
remove or restore any property, improvements or Alterations in the Premises as
of the expiration date of the Prime Lease, and further provided that no Event
of Default shall have occurred and then be continuing, Tenant may, by written
notice given to Landlord not later than September 1, 2009, extend the Term to
October 30, 2009. In such case, Tenant shall not be required to deliver vacant
possession of the Premises or remove Alterations

 25
 

 

as provided in Section 17 hereof or remove
property as provided in Section 18 hereof, and Landlord agrees that it
shall not exercise remedies for holdover based on Tenant’s remaining in the
Premises on October 31, 2009. Notwithstanding the foregoing, the provisions of
this Section 38 shall be null and void, and of no effect, if such new lease
between Prime Landlord and Tenant is not in effect as of October 24, 2009 or
Tenant is not entitled to remain in possession of the Premises on November 1,
2009 pursuant to an agreement with Prime Landlord.

39.       ARRANGEMENTS FOR BUILDING SERVICES.
Tenant may deal directly with Prime Landlord for the procurement of building
services for the Premises.

40.       WAIVER OF CERTAIN EXTENSION RIGHTS.
Landlord hereby waives any options it may have to extend the term of the Prime
Lease with respect to the Premises beyond October 31, 2009.

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 26
 

 

The parties have executed this
Sublease the day and year first above written.

	
  

  	
   

  	
  LANDLORD

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PLATINUM TECHNOLOGY INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ JAY H. DIAMOND

  	
   

  
	
   

  	
   

  	
  Name:

  	
  JAY H. DIAMOND

  	
   

  
	
   

  	
   

  	
  Title:

  	
  VP & Secretary

  	
   

  
							

 

 

	
  

  	
   

  	
  TENANT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ACA FINANCIAL GUARANTY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Edward U.
  Gilpin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Edward U. Gilpin

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
							

 

 27

 

EXHIBIT A

DIAGRAM
OF SUBLEASED PREMISES

 

EXHIBIT A

[GRAPHIC]

 

EXHIBIT B

APPROVED
ALTERATIONS

 29

 

EXHIBIT B

[GRAPHIC]Exhibit 10.10

LUMP SUM DESIGN-BUILD AGREEMENT

BETWEEN

ADVANCED BIOENERGY, LLC (“OWNER”)

AND

FAGEN, INC. (“DESIGN-BUILDER”)

March 16, 2006

*Portions omitted pursuant to a request for confidential treatment and
filed separately with the SEC.

 

 

TABLE OF CONTENTS

	
   

   	
    

   	
   

   	
    

   	
   Page

   
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 1

  	
   

  	
  Definitions, Rules of Interpretation

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  Rules of Construction

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Defined Terms

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 2

  	
   

  	
  The Project

  	
   

  	
  6

  
	
  2.1

  	
   

  	
  Services to be Performed

  	
   

  	
  6

  
	
  2.2

  	
   

  	
  Extent of Agreement

  	
   

  	
  6

  
	
  2.3

  	
   

  	
  Conflicting Provisions

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 3

  	
   

  	
  Design-Builder Responsibilities

  	
   

  	
  7

  
	
  3.1

  	
   

  	
  Design-Buider’s Services in General

  	
   

  	
  7

  
	
  3.2

  	
   

  	
  Design Development and Service

  	
   

  	
  7

  
	
  3.3

  	
   

  	
  Standard of Care

  	
   

  	
  8

  
	
  3.4

  	
   

  	
  Government Approvals and Permits

  	
   

  	
  9

  
	
  3.5

  	
   

  	
  Subcontractors

  	
   

  	
  9

  
	
  3.6

  	
   

  	
  Maintenance of Site

  	
   

  	
  9

  
	
  3.7

  	
   

  	
  Project Safety

  	
   

  	
  9

  
	
  3.8

  	
   

  	
  Submission of Reports

  	
   

  	
  10

  
	
  3.9

  	
   

  	
  Training

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 4

  	
   

  	
  Owner’s Responsibilities

  	
   

  	
  11

  
	
  4.1

  	
   

  	
  Duty to Cooperate

  	
   

  	
  11

  
	
  4.2

  	
   

  	
  Furnishing of Services and Information

  	
   

  	
  11

  
	
  4.3

  	
   

  	
  Financial Information; Cooperation with Lenders;
  Failure to Obtain Financial Closing

  	
   

  	
  12

  
	
  4.4

  	
   

  	
  Owner’s Representative

  	
   

  	
  12

  
	
  4.5

  	
   

  	
  Government Approvals and Permits

  	
   

  	
  13

  
	
  4.6

  	
   

  	
  Owner’s Separate Contractors

  	
   

  	
  13

  
	
  4.7

  	
   

  	
  Security

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 5

  	
   

  	
  Ownership of Work Product; Risk of Loss

  	
   

  	
  13

  
	
  5.1

  	
   

  	
  Work Product

  	
   

  	
  13

  
	
  5.2

  	
   

  	
  Owner’s Limited License Upon Payment in Full

  	
   

  	
  13

  
	
  5.3

  	
   

  	
  Owner’s Limited License Upon Owner’s Termination for
  Convenience or Design-Builder’s Election to Terminate

  	
   

  	
  14

  
	
  5.4

  	
   

  	
  Owner’s Limited License Upon Design-Builder’s
  Default

  	
   

  	
  15

  
	
  5.5

  	
   

  	
  Owner’s Indemnification for Use of Work Product

  	
   

  	
  15

  
	
  5.6

  	
   

  	
  Risk of Loss

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 6

  	
   

  	
  Commencement and Completion of the Project

  	
   

  	
  15

  
	
  6.1

  	
   

  	
  Work Schedule

  	
   

  	
  15

  
	
  6.2

  	
   

  	
  Phase I and Phase II Engineering

  	
   

  	
  16

  
	
  6.3

  	
   

  	
  Notice to Proceed; Commencement

  	
   

  	
  16

  

 i
 

 

 

	
  6.4

  	
   

  	
  Project Start-Up and Testing

  	
   

  	
  16

  
	
  6.5

  	
   

  	
  Substantial Completion

  	
   

  	
  17

  
	
  6.6

  	
   

  	
  Final Completion

  	
   

  	
  18

  
	
  6.7

  	
   

  	
  Additional Labor

  	
   

  	
  19

  
	
  6.8

  	
   

  	
  Post-Completion Support

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 7

  	
   

  	
  Performance Testing and Liquidated Damages

  	
   

  	
  20

  
	
  7.1

  	
   

  	
  Performance Guarantee

  	
   

  	
  20

  
	
  7.2

  	
   

  	
  Performance Testing

  	
   

  	
  20

  
	
  7.3

  	
   

  	
  Liquidated Damages

  	
   

  	
  21

  
	
  7.4

  	
   

  	
  Bonds and Other Performance Security

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 8

  	
   

  	
  Warranties

  	
   

  	
  22

  
	
  8.1

  	
   

  	
  Design-Builder Warranty

  	
   

  	
  22

  
	
  8.2

  	
   

  	
  Correction of Defective Work

  	
   

  	
  23

  
	
  8.3

  	
   

  	
  Warranty Period Not Limitation to Owner’s Rights

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 9

  	
   

  	
  Contract Price

  	
   

  	
  24

  
	
  9.1

  	
   

  	
  Contract Price

  	
   

  	
  24

  
	
  9.2

  	
   

  	
  Effect of Construction Cost Index Increase on
  Contract Price

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 10

  	
   

  	
  Payment Procedures

  	
   

  	
  24

  
	
  10.1

  	
   

  	
  Payment at Financial Closing

  	
   

  	
  24

  
	
  10.2

  	
   

  	
  Progress Payments

  	
   

  	
  24

  
	
  10.3

  	
   

  	
  Final Payment

  	
   

  	
  26

  
	
  10.4

  	
   

  	
  Failure to Pay Amounts Due

  	
   

  	
  26

  
	
  10.5

  	
   

  	
  Deign-Builder’s Payment Obligations

  	
   

  	
  26

  
	
  10.6

  	
   

  	
  Record Keeping and Finance Controls

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 11

  	
   

  	
  Hazardous Conditions and Differing Site
  Conditions

  	
   

  	
  27

  
	
  11.1

  	
   

  	
  Hazardous Conditions

  	
   

  	
  27

  
	
  11.2

  	
   

  	
  Differing Site Conditions; Inspection

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 12

  	
   

  	
  Force Majeure; Change in Legal Requirements

  	
   

  	
  28

  
	
  12.1

  	
   

  	
  Force Majeure Event

  	
   

  	
  28

  
	
  12.2

  	
   

  	
  Effect of Force Majeure Event

  	
   

  	
  28

  
	
  12.3

  	
   

  	
  Change in Legal Requirements

  	
   

  	
  29

  
	
  12.4

  	
   

  	
  Time Impact and Availability

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 13

  	
   

  	
  Changes to the Contract Price and Scheduled
  Completion Dates

  	
   

  	
  30

  
	
  13.1

  	
   

  	
  Change Orders

  	
   

  	
  30

  
	
  13.2

  	
   

  	
  Contract Price Adjustments

  	
   

  	
  30

  
	
  13.3

  	
   

  	
  Emergencies

  	
   

  	
  31

  
	
  13.4

  	
   

  	
  Requests for Contract Adjustments and Relief

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 14

  	
   

  	
  Indemnity

  	
   

  	
  31

  
	
  14.1

  	
   

  	
  Tax Claim Indemnification

  	
   

  	
  31

  

 ii
 

 

 

	
  14.2

  	
   

  	
  Payment Claim Indemnification

  	
   

  	
  32

  
	
  14.3

  	
   

  	
  Design Builder’s General Indemnification

  	
   

  	
  32

  
	
  14.4

  	
   

  	
  Owner’s General Indemnification

  	
   

  	
  32

  
	
  14.5

  	
   

  	
  Patent and Copyright Infringement

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 15

  	
   

  	
  Stop Work; Termination for Cause

  	
   

  	
  34

  
	
  15.1

  	
   

  	
  Owner’s Right to Stop Work

  	
   

  	
  34

  
	
  15.2

  	
   

  	
  Owner’s Right to Perform and Terminate for Cause

  	
   

  	
  34

  
	
  15.3

  	
   

  	
  Owner’s Right to Terminate for Convenience

  	
   

  	
  35

  
	
  15.4

  	
   

  	
  Design-Builder’s Right to Stop Work

  	
   

  	
  35

  
	
  15.5

  	
   

  	
  Dsign-Builder’s Right to Terminate for Causee

  	
   

  	
  36

  
	
  15.6

  	
   

  	
  Bankruptcy of Owner or Design-Builder

  	
   

  	
  37

  
	
  15.7

  	
   

  	
  Lenders’ Right to Cure

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 16

  	
   

  	
  Representatives of the Parties

  	
   

  	
  37

  
	
  16.1

  	
   

  	
  Designation of Owner’s Representatives

  	
   

  	
  37

  
	
  16.2

  	
   

  	
  Deignation of Design-Builder’s Representatives

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 17

  	
   

  	
  Insurance

  	
   

  	
  38

  
	
  17.1

  	
   

  	
  Insurance

  	
   

  	
  38

  
	
  17.2

  	
   

  	
  Deign-Builder’s Insurance Requirements

  	
   

  	
  39

  
	
  17.3

  	
   

  	
  Owner’s Liability Insurance

  	
   

  	
  40

  
	
  17.4

  	
   

  	
  Owner’s Property Insurance

  	
   

  	
  40

  
	
  17.5

  	
   

  	
  Coordination with Loan Documents

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 18

  	
   

  	
  Representations and Warranties

  	
   

  	
  42

  
	
  18.1

  	
   

  	
  Design-Builder and Owner Representations and
  Warranties

  	
   

  	
  42

  
	
  18.2

  	
   

  	
  Design-Builder Representations and Warranties

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 19

  	
   

  	
  Dispute Resolution

  	
   

  	
  43

  
	
  19.1

  	
   

  	
  Dispute Avoidance and Mediation

  	
   

  	
  43

  
	
  19.2

  	
   

  	
  Arbitration

  	
   

  	
  43

  
	
  19.3

  	
   

  	
  Duty to Continue Performance

  	
   

  	
  44

  
	
  19.4

  	
   

  	
  Consequential Damages

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 20

  	
   

  	
  Confidentiality of Shared Information

  	
   

  	
  44

  
	
  20.1

  	
   

  	
  Non-Disclosure Obligation

  	
   

  	
  44

  
	
  20.2

  	
   

  	
  Publicity and Advertising

  	
   

  	
  45

  
	
  20.3

  	
   

  	
  Term of Obligation

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 21

  	
   

  	
  Miscellaneous

  	
   

  	
  45

  
	
  21.1

  	
   

  	
  Assignment

  	
   

  	
  45

  
	
  21.2

  	
   

  	
  Successors

  	
   

  	
  45

  
	
  21.3

  	
   

  	
  Governing Law

  	
   

  	
  45

  
	
  21.4

  	
   

  	
  Severability

  	
   

  	
  45

  
	
  21.5

  	
   

  	
  No Waiver

  	
   

  	
  46

  

 iii
 

 

 

	
  21.6

  	
   

  	
  Headings

  	
   

  	
  46

  
	
  21.7

  	
   

  	
  Notice

  	
   

  	
  46

  
	
  21.8

  	
   

  	
  No Privity with Design Consultant/Subcontractors

  	
   

  	
  47

  
	
  21.9

  	
   

  	
  Amendments

  	
   

  	
  47

  
	
  21.10

  	
   

  	
  Entire Agreement

  	
   

  	
  47

  
	
  21.11

  	
   

  	
  Third-Party Beneficiaries

  	
   

  	
  47

  
	
  21.12

  	
   

  	
  Counterparts

  	
   

  	
  47

  
	
  21.13

  	
   

  	
  Survival

  	
   

  	
  47

  

 

	
  EXHIBIT A — Performance Guarantee Criteria

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B — General Project Scope

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C — Owner’s Responsibilities

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT D — ICM License Agreement

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E — Schedule of Values

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F — Form of Progress Report

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT G — Required Permits

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT H — Form of Performance Bond

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT I — Form of Payment Bond

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT J — Work Schedule

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT K — Preliminary Construction Documents

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT L — Draw (Payment) Schedule

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT M — Construction Permit

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  EXHIBIT N — Phase I and Phase II Engineering
  Services Agreement

  	
   

  	
  1

  

 

 iv

 

LUMP SUM DESIGN-BUILD
CONTRACT

This LUMP SUM DESIGN-BUILD CONTRACT (the “Agreement”)
is made as of March 16, 2006, (the “Effective Date”) by and between
Advanced BioEnergy, LLC, a Delaware Limited Liability Company (the “Owner”)
and Fagen, Inc., a Minnesota corporation (the “Design-Builder”).

RECITALS

A.    The Owner
desires to develop, construct, own and operate a one hundred (100) million
gallons per year (“MGY”) dry grind ethanol production facility located
at Fairmont, Nebraska (the “Plant”); and

B.    Design-Builder
desires to provide design, engineering, procurement and construction services
for the Plant.

NOW, THEREFORE, in consideration of the mutual
covenants and obligations contained herein and for other good and valuable
consideration, Owner and Design-Builder agree as follows.

AGREEMENT

Article
1

Definitions; Rules of
Interpretation

1.1          Rules of
Construction.   The capitalized terms listed in this
Article shall have the meanings set forth herein whenever the terms appear in
this Agreement, whether in the singular or the plural or in the present or past
tense.  Other terms used in this
Agreement but not listed in this Article shall have meanings as commonly used
in the English language and, where applicable, in generally accepted
construction and design-build standards of the fuel ethanol industry in the
Midwest United States.  Words not
otherwise defined herein that have well known and generally accepted technical
or trade meanings are used herein in accordance with such recognized
meanings.  In addition, the following
rules of interpretation shall apply:

(a)                                  The
masculine shall include the feminine and neuter.

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

(c)                                  This
Agreement was negotiated and prepared by each of the Parties with the advice
and participation of counsel.  The
Parties have agreed to the wording of this Agreement and none of the provisions
hereof shall be construed against one Party on the ground that such Party is
the author of this Agreement or any part hereof.

 

 

 

1.2          Defined
Terms.   In addition to definitions appearing
elsewhere in this Agreement, the following terms have the following meanings:

AAA is
defined in Section 19.1.

Agreement is defined in the Preamble.

Air Emissions Tester means a third party
entity engaged by Owner meeting all required state and federal requirements for
such testing entities, to conduct air emissions testing of the Plant in
accordance with Exhibit A.

Applicable
Law means

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

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

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

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

Application for Payment is defined in
Section 10.2.1.

As Built
Plans is defined in
Section 5.2.

Bankrupt Party is defined in
Section 15.6.1.

Baseline Index is defined in Section 9.2.1.

Change Order is defined in Section 13.1.1.

CCI is defined in Section 9.2.

Certificate of Substantial Completion is
defined in Section 6.5.3

Construction Documents is defined in
Section 3.2.2.

Contract Documents is defined in Section 2.2.

Contract Price is defined in Section 9.1.

Damages is defined in Section 14.3.1.

 

 2
 

 

 

Day or Days
shall mean calendar days unless otherwise specifically noted in the Contract
Documents.

Design-Builder is defined in the Preamble.

Design-Builder’s Representative is defined in
Section 16.2.

Design-Builder’s Senior Representative is
defined in Section 16.2.

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

Differing Site Conditions is defined in
Section 11.2.1.

Early Completion Bonus is defined in
Section 6.5.4.

Effective Date is defined in the Preamble.

Final Application for Payment is defined in
Section 10.3.

Final Completion is defined in Section 6.6.2.

Final Completion Date is the date that is 90 Days after the Substantial Completion Date.

Final
Payment is defined
in Section 10.3.

Financial
Closing means the execution of the Financing Documents by all
the parties thereto, and the fulfillment of all conditions precedent thereunder
necessary to permit the advance of funds to pay amounts due under this
Agreement.

Financing
Documents means the final loan documents with the lender or
lenders providing financing for the construction or term financing of the
Plant.

Force Majeure Event is defined in
Section 12.1.

Governmental
Approvals are any material authorizations or permissions
issued or granted by any Governmental Authority to the Project, its Owner, the
Design-Builder, Subcontractors and their affiliates in connection with any
activity related to the Project.

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

 

 3
 

 

 

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

ICM
is defined in Section 5.2.1.

ICM License Agreement means the license
agreement to be executed between Owner and ICM, Inc., substantially in the form
attached hereto as Exhibit D.

Indemnified Parties is defined in Section 5.2.

Independent Engineer means Owner’s and Lenders’
independent engineer.

Legal Requirements or Laws are all applicable federal, state
and local statutes, laws, codes, ordinances, rules, regulations, judicial
decisions, orders, decrees plans, injunctions, permits, tariffs, governmental
agreements and governmental restrictions, whether now or hereafter in effect,
of any government or quasi-government entity having jurisdiction over the
Project or Site, the practices involved in the Project or Site, or any Work,
including any consensus standards for materials, products, systems, and
services established by ASTM International, any successor organization thereto,
or any Governmental Authority.

Lenders means the lenders that are party to
the Financing Documents.

Lenders’ Agent means an agent or agents acting
on behalf of the Lenders.

Manufacturer’s Warranty shall mean a warranty provided by the original manufacturer or vendor
of equipment used by Design-Builder in the Plant.

MGY
is defined in the Recitals.

Notice to Proceed is defined in
Section 6.3.

Oversight Items is defined in
Section 4.3.

Owner
is defined in the Preamble.

Owner
Indemnified Parties is defined in Section 14.3.1.

Owner Milestones is defined in Section 4.2.1.

Owner’s Representative is defined in Section 16.1.

Owner’s Senior Representative is defined in
Section 16.1.

Pass Through Warranties mean any warranties
provided to Design-Builder by a Subcontractor which are assigned to Owner.

Pay Period means, with respect to a given
Application for Payment or Progress Report, the one month period following the
last day of the previous Pay Period to which the immediately prior Application
for Payment or Progress Report is applied; provided that the initial Pay Period
shall 

 

 4
 

 

 

commence on the date of
delivery of the Notice to Proceed and end on the 24th day of the calendar month during which the
Notice to Proceed is issued.

Payment Bond is defined in Section 7.4.2.

Performance Bond is defined in
Section 7.4.1.

Performance Guarantee Criteria means the
criteria listed in Exhibit A.

Performance Tests is defined in
Section 7.2.1.

Phase I is defined in Exhibit C.

Phase II is defined in Exhibit C.

Plant is defined in the Recitals.

Preliminary Construction Documents is defined in Section 3.2.1.

Progress Report is defined in
Section 3.8.

Project is
defined in Section 2.1.

Project Scope is defined in Exhibit B.

Punch List is defined in Section 6.5.3.

Qualified Independent Expert means an expert
retained by Owner and approved by Design-Builder pursuant to Section 11.1.2.

Safety Representative is defined in
Section 3.7.1.

Schedule of Values is defined in
Section 10.2.5.

Scheduled Substantial Completion Date is
defined in Section 6.5.1.

Site is the land or premises on which the
Project is located.

Subcontractor is any person or entity retained
by Design-Builder, or by any person or entity retained directly or indirectly
by Design-Builder, in each case as an independent contractor to perform a
portion of the Work and shall include materialmen and suppliers.

Substantial Completion is defined in
Section 6.5.2.

Work is defined in Section 3.1.

Work Product is defined in Section 5.1.

Work Schedule is defined in Section 6.1.

 

 5
 

 

 

Article 2

The
Project

2.1          Services to be Performed.   Pursuant to this Agreement,
Design-Builder shall perform all work
and services in connection with the engineering, design, procurement,
construction startup, testing and training for the operation and maintenance of
the Plant, and provide all material, equipment, tools and labor necessary to
complete the Plant in accordance with the terms of this Agreement.   The Plant, together with all equipment,
labor, services and materials furnished hereunder is defined as the “Project.”

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

2.2.1       All
written modifications, amendments and change orders to this Agreement.

2.2.2       This
Agreement, including all exhibits and attachments, executed by Owner and
Design-Builder, including those below:

	
   

  	
  List of Exhibits

  	
   

  	
   

  
	
   

  	
  Exhibit A

  	
   

  	
  Performance Guarantee Criteria

  
	
   

  	
  Exhibit B

  	
   

  	
  General Project Scope

  
	
   

  	
  Exhibit C

  	
   

  	
  Owner’s Responsibilities

  
	
   

  	
  Exhibit D

  	
   

  	
  ICM License Agreement

  
	
   

  	
  Exhibit E

  	
   

  	
  Schedule of Values

  
	
   

  	
  Exhibit F

  	
   

  	
  Progress Report

  
	
   

  	
  Exhibit G

  	
   

  	
  Permits Required

  
	
   

  	
  Exhibit H

  	
   

  	
  Form of Performance Bond

  
	
   

  	
  Exhibit I

  	
   

  	
  Form of Payment Bond

  
	
   

  	
  Exhibit J

  	
   

  	
  Work Schedule

  
	
   

  	
  Exhibit K

  	
   

  	
  Preliminary Construction Documents

  
	
   

  	
  Exhibit L

  	
   

  	
  Draw (Payment) Schedule

  
	
   

  	
  Exhibit M

  	
   

  	
  Construction Permit

  
	
   

  	
  Exhibit N

  	
   

  	
  Phase I and Phase II Engineering Services Agreement

  

 

2.2.3       Preliminary
Construction Documents prepared by Design-Builder pursuant to Section 3.2.1 and
the Construction Documents to be prepared by Design-Builder pursuant to Section
3.2.2 shall be incorporated in this Agreement.

2.3          Conflicting Provisions.   In the event of any conflict
or inconsistency between the body of this Agreement and any Exhibit or Schedule
hereto, the terms and provisions of this Agreement, as amended from time to
time, shall prevail and be given priority. 
Subject to the 

 

 6
 

 

 

foregoing, the several documents and instruments forming part of this
Agreement are to be taken as mutually explanatory of one another and in the
case of ambiguities or discrepancies within or between such parts the same
shall be explained and interpreted, if possible, in a manner which gives effect
to each part and which avoids or minimizes conflicts among such parts.  No oral representations or other agreements
have been made by the parties except as specifically stated in the Contract
Documents.

Article 3

Design-Builder
Responsibilities

3.1          Design-Builder’s Services in General.   Except for
services and information to be provided by Owner and specifically set forth in
Article 4 and Exhibit C, Design-Builder shall perform or cause to be performed
all design, engineering, procurement, construction services, supervision,
labor, inspection, testing, start-up, material, equipment, machinery, temporary
utilities and other temporary facilities to complete construction of the
Project consistent with the Contract Documents (the “Work”).  All design and engineering and construction
services and other Work of the Design-Builder shall be performed in accordance
with (i) the Project Scope as set forth in Exhibit B, (ii) the
Construction Documents, (iii) all Legal Requirements, and (iv) generally
accepted construction and design-build standards of the fuel ethanol industry
in the Midwest United States.  Any design
and engineering or other professional service to be performed pursuant to this
Agreement, which under Applicable Law must be performed by licensed personnel,
shall be performed by licensed personnel as required by Law.  The enumeration of specific duties and
obligations to be performed by the Design-Builder under the Contract Documents
shall not be construed to limit in any way the general undertakings of the
Design-Builder as set forth herein. 
Design-Builder’s Representative shall be reasonably available to Owner
and shall have the necessary expertise and experience required to supervise the
Work.  Design-Builder’s Representative
shall communicate regularly with Owner and shall be vested with the authority to
act on behalf of Design-Builder.

3.2          Design Development and Services.

3.2.1    As
of the Effective Date, but in no event later than thirty (30) Days from the
Effective Date, Design-Builder has or shall have provided to Owner the
following documents, and any other documents reasonably agreed to by
Design-Builder and Owner as applying to the conceptual design of the Project
and required to apply for the construction air permit or completion of the Site
layout in cooperation with Owner’s rail engineer (collectively, the “Preliminary
Construction Documents”), which shall be consistent with the Project Scope
and once approved by Owner, shall be part of this Agreement:

a)         major
equipment lists, with sizes;

b)        process
flow diagram;

c)         process
design criteria and/or process description; and

d)        Site
layout.

 

 7
 

 

 

Owner shall have thirty (30)
Days from the date it receives the Preliminary Construction Documents to review
and approve such documents.  The
Preliminary Construction Documents shall establish performance standards for
the completed Project and identify components required to meet those
performance standards.  Any changes to
the Preliminary Construction Documents shall be subject to the prior review and
approval by Owner, such approval not to be unreasonably withheld or delayed.

3.2.2       Where
required by Law, Design-Builder shall provide through qualified, licensed
design professionals employed by Design-Builder, or procured from qualified,
independent licensed Design Consultants, the necessary design services, including
architectural, engineering and other design professional services, for the
preparation of the required drawings, specifications and other design
submittals required to permit construction of the Work in accordance with this
Agreement and the Preliminary Construction Documents (such drawings,
specifications and design submittals collectively and together with the
Preliminary Construction Documents, the “Construction Documents”). To
the extent not prohibited by Legal Requirements, Design-Builder may prepare
Construction Documents for a portion of the Work to permit construction to
proceed on that portion of the Work prior to completion of the Construction
Documents for the entire Work.

3.2.3       
Construction of the Plant shall be consistent with the Construction Documents.

3.2.4       Design-Builder
shall maintain a current, complete set of drawings and specifications at the
Site.  Owner shall have the right to
review such drawings and specifications. 
Owner and Independent Engineer may not make copies of the available
drawings and specifications without Design-Builder’s written permission, and,
granted such permission, may only do so to the extent such drawings and
specifications directly pertain to the Plant; provided however that, pursuant
to Section 5.1 of this Agreement, Design-Builder retains ownership of and
property interests in any drawing or specifications made available and/or
copied.

3.2.5       Except
as provided elsewhere in this Agreement, it is understood and agreed that
review, comment and/or approval by Owner (or its designees) or Independent
Engineer of any documents or submittals that Design-Builder is required to
submit to Owner (or its designees) or Independent Engineer hereunder for their
review, comment and/or approval (including without limitation the Preliminary
Construction Documents pursuant to Section 3.2.1 hereof or other Construction
Documents pursuant to Sections 3.2.2 and 3.2.4 hereof) shall not relieve or
release Design-Builder from any of its duties, obligations or liabilities
provided for under the terms of this Agreement or transfer any design liability
from Design-Builder to Owner.

3.3          Standard of Care.   All services performed by the
Design-Builder and its Subcontractors pursuant to the Construction Documents
shall be performed in accordance with the 
standard of care and skill generally accepted in the fuel ethanol
industry in the Midwest United States during the relevant time period or in
accordance with any of the practices, methods and acts that in the exercise of
reasonable judgment in light of the facts known at the time the decision was
made, could have been expected to accomplish the desired result at a reasonable
cost consistent with good business practices, safety and expedition.  This standard of care is not intended to be
limited to the optimum practice, method or act to the exclusion of all others,
but rather to be acceptable practices, methods or acts generally accepted in
the construction and 

 

 8
 

 

 

design-build standards of the fuel ethanol industry in
the Midwest United States. 
Design-Builder and its Subcontractors shall perform all construction
activities efficiently and with the requisite expertise, skill, competence,
resources and care to satisfy the requirements of the Contract Documents and
all applicable Legal Requirements. 
Design-Builder shall at all times exercise complete and exclusive
control over the means, methods, sequences and techniques of construction.

3.4          Government Approvals and Permits.   Except as identified
in Exhibit C and, with respect to items identified as Owner’s responsibility,
in Exhibit G (which items shall be obtained by Owner pursuant to Section 4.5),
Design-Builder shall obtain and pay for all necessary permits, approvals,
licenses, government charges and inspection fees required for the prosecution
of the Work by any government or quasi-government entity having jurisdiction
over the Project. Design-Builder shall provide reasonable assistance to Owner
in obtaining those permits, approvals and licenses that are Owner’s
responsibility.

3.5          Subcontractors.

3.5.1       Design-Builder
may subcontract portions of the Work in accordance with the terms hereof.

3.5.2       Design-Builder
assumes responsibility to Owner for the proper performance of the Work of
Subcontractors and any acts and omissions in connection with such
performance.  Nothing in the Contract
Documents is intended or deemed to create any legal or contractual relationship
between Owner and any Subcontractor, including but not limited to any
third-party beneficiary rights.

3.5.3       Design-Builder
shall coordinate the activities of all of Design-Builder’s Subcontractors.  If Owner performs other work on the Project
or at the Site with separate contractors under Owner’s control, Design-Builder
agrees to reasonably cooperate and coordinate its activities with those
separate contractors so that the Project can be completed in an orderly and
coordinated manner without unreasonable disruption.

3.5.4       Design-Builder
shall ensure that each subcontract with a Subcontractor is assignable to Owner
without consent of the Subcontractor or any other person or entity in the event
that Design-Builder shall be in an uncured default or terminated with cause
under the terms of this Agreement.

3.6          Maintenance of Site.   Design-Builder shall keep the
Site reasonably free from debris, trash and construction wastes to permit
Design-Builder to perform its construction services efficiently, safely and
without interfering with the use of adjacent land areas.  Upon Substantial Completion of the Work, or portion of the Work, as
applicable, Design-Builder shall remove all debris, trash, construction
wastes, materials, equipment, machinery and tools arising from the Work or
applicable portions thereof to permit Owner to occupy the Project for its
intended use.

3.7          Project Safety.

 

 9
 

 

 

3.7.1       Design-Builder
recognizes the importance of performing the Work in a safe manner so as to
prevent damage, injury or loss to (i) any individuals at the Site, whether
working or visiting, (ii) the Work, including materials and equipment
incorporated into the Work or stored on-Site or off-Site, and (iii) any other
property at the Site or adjacent thereto. 
Design-Builder assumes responsibility for implementing and monitoring
all safety precautions and programs related to the performance of the
Work.  Design-Builder shall, prior to
commencing construction, designate a representative (the “Safety
Representative”) with the necessary qualifications and experience to
supervise the implementation and monitoring of all safety precautions and
programs related to the Work. Unless otherwise required by the Contract
Documents, Design-Builder’s Safety Representative shall be an individual
stationed at the Site who may have responsibilities on the Project in addition
to safety.  The Safety Representative
shall make routine daily inspections of the Site and shall hold weekly safety
meetings with Design-Builder’s personnel, Subcontractors and others as
applicable.

3.7.2       Design-Builder
and Subcontractors shall comply with all Legal Requirements relating to safety,
as well as any Owner-specific safety requirements set forth in the Contract
Documents; provided, that such Owner-specific requirements do not violate any
applicable Legal Requirement.  As
promptly as practicable, Design-Builder will report in writing any
safety-related injury, loss, damage or accident arising from the Work to Owner’s
Representative and, to the extent mandated by Legal Requirements, to all
government or quasi-government authorities having jurisdiction over
safety-related matters involving the Project or the Work.

3.7.3       Design-Builder’s
responsibility for safety under this Section 3.7 is
not intended in any way to relieve Subcontractors of their own contractual and
legal obligations and responsibility for (i) complying with all Legal
Requirements, including those related to health and safety matters, and (ii)
taking all necessary measures to implement and monitor all safety precautions
and programs to guard against injury, losses, damages or accidents resulting
from their performance of the Work.

3.8          Submission of Reports.   Design-Builder shall provide
Owner with regular communication regarding the progress (“Progress Report”)
and any revisions to the drawings and specifications of the Work, including
whether (i) the Work is proceeding according to schedule, (ii) discrepancies,
conflicts, or ambiguities exist in the Contract Documents that require
resolution, (iii) health and safety issues exist in connection with the Work,
and (iv) other items require resolution so as not to jeopardize Design-Builder’s
ability to complete the Work for the Contract Price and within the contract
time(s).  Progress Reports shall be in the form of Exhibit F attached hereto.

3.9          Training.   At a mutually agreed time prior to start-up,
Design-Builder shall provide two (2) weeks of training at a plant in Russell,
Kansas (or other location) for all of Owner’s employees required for the
operation and maintenance of the Plant in accordance with all design
specifications therefor contained in the Contract Documents and necessary in
order to maintain the Performance Guarantee Criteria, including operators,
laboratory personnel, general, plant and maintenance managers. Other personnel
of Owner may receive such off-site training by separate arrangement between
Owner and Design-Builder and as time is available.  All training personnel and costs associated
with such training personnel, including labor and all training materials will
be provided to Owner within the Contract Price at no additional cost. Owner
will 

 

 10
 

 

 

be responsible for all travel and expenses of their
employees and the Owner will pay all wages and all other expenses for their
personnel during the training. The training services will include training on
computers, laboratory procedures, field operating procedures, and overall plant
section performance expectations.  Prior
to the start-up training, Design-Builder shall provide Owner training manuals
and operating manuals and other documents reasonably necessary for the start-up
process.

Article 4

Owner’s
Responsibilities

4.1          Duty to Cooperate.

4.1.1       Owner shall,
throughout the performance of the Work, cooperate with Design-Builder and
perform its responsibilities, obligations and services in a timely manner to
facilitate Design-Builder’s timely and efficient performance of the Work and so
as not to delay or interfere with Design-Builder’s performance of its
obligations under the Contract Documents.

4.1.2       Owner shall
provide timely review and approval of Preliminary Construction Documents
subject to Section 3.2.1.

4.1.3       Owner shall pay
all reasonable costs incurred by Design-Builder for frost removal so that
winter construction can proceed.  Such
costs may include but are not limited to, equipment costs, equipment rental
costs, sheltering costs, special material costs, fuel costs and associated
labor costs.  Owner acknowledges and
agrees that such costs are in addition to, and not included in, the Contract Price.

4.2          Furnishing of Services and Information.

4.2.1       Prior to the
issuance of the Notice to Proceed, Owner shall provide to Design-Builder, at
Owner’s own cost and expense, for Design-Builder’s information and use, the
following, all of which Design-Builder is entitled to rely upon in performing
the Work:

(a)                                  surveys
describing the property, boundaries, topography and reference points for use
during construction, including existing service and utility lines;

(b)                                 geotechnical
studies describing subsurface conditions including soil borings, and other
surveys describing other latent or concealed physical conditions at the Site;

(c)                                  temporary
and permanent easements, zoning and other requirements and encumbrances
affecting land use, or necessary to permit the proper design and construction
of the Project and enable Design-Builder to perform the Work;

(d)           A
legal description of the Site;

 

 11

 

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

(f)                                    environmental
studies, reports and impact statements describing the environmental conditions,
including Hazardous Conditions, in existence at the Site.

4.2.2       Owner
shall provide to Design-Builder all Owner’s deliverables under Exhibit C
pursuant to the owner’s milestones listed in Exhibit J.  Such deliverables shall be provided, at Owner’s
own cost and expense, for Design-Builder’s information and use.  Design-Builder is entitled to rely upon such
deliverables in performing the Work.

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

4.3          Financial Information; Cooperation with Lenders; Failure to Obtain
Financial Closing.  Design-Builder acknowledges that Owner is seeking
financing for the Project. 
Design-Builder agrees to cooperate with Owner in good faith in order to
satisfy the requirements of Owners’ financing arrangements, including, where
appropriate, the execution and delivery of documents or instruments necessary
to accommodate the Financial Closing. 
Owner agrees to pay all documented costs incurred by Design-Builder
incurred prior to and at Financial Closing, and thereafter during the term of
this Agreement, in connection with satisfying the requirements of Owners’
financing arrangements including all documented attorney’s fees.  Design-Builder and Owner also
acknowledge that the Lenders, as a condition to providing financing for the
Plant, shall require Owner to provide the Independent Engineer with certain
participation and review rights with respect to Design-Builder’s performance of
the Work.  Design-Builder acknowledges
and agrees that such participation and review rights shall consist of the right
to (i) enter the Site and inspect the Work upon reasonable notice to
Design-Builder; (ii) attend all start-up and testing procedures; and (iii)
review and approve such other items for which Owner is required by Lenders to
obtain the concurrence, opinion or a certificate of the Independent Engineer or
the Lenders pursuant to the Financing Documents which items do not alter the
rights or impose additional obligations on Design-Builder (collectively, the “Oversight
Items”).  Nothing in this Section 4.3 shall be deemed
to require Design-Builder to agree to any amendments to this Agreement that
would adversely affect Design-Builder’s risks, rights or obligations under this
Agreement.  Upon Financial Closing, Owner
shall promptly provide to Design-Builder an officer’s certificate certifying
that Financial Closing has occurred and such Owner’s officer’s certificate
shall constitute evidence satisfactory to Design-Builder that Owner has
adequate funds available and committed to fulfill its obligations under the
Contract Documents for all purposes hereunder. 
Owner must obtain Financial Closing prior to issuing the Notice to
Proceed.

4.4          Owner’s
Representative.  Owner’s Representative, as set forth in
Section 16.1 hereof, shall be responsible for providing Owner-supplied
information and approvals in a timely manner to permit Design-Builder to
fulfill its obligations under the Contract Documents.  Owner’s Representative shall also provide
Design-Builder with prompt notice if it observes any

 12
 

 

failure on the part of Design-Builder to fulfill its contractual
obligations, including any errors, omissions or defects in the performance of
the Work.  Owner’s Representative shall
be vested with the authority to act on behalf of Owner and Design-Builder shall
be entitled to rely on written communication from Owner’s Representative with
respect to a Project matter.

4.5          Government Approvals and Permits.    Owner shall obtain and pay for all
necessary Governmental Approvals required by Law, including permits, approvals,
licenses, government charges and inspection fees set forth in Exhibit C
and, to the extent identified as Owner’s responsibility, Exhibit G.  Owner shall provide reasonable assistance to
Design-Builder in obtaining those permits, approvals and licenses that are
Design-Builder’s responsibility pursuant to Exhibits G and Section 3.4.

4.6          Owner’s Separate Contractors.  Owner is responsible for all work, including
such work listed on Exhibit C, performed on the Project or at the Site by
separate contractors under Owner’s control. 
Owner shall contractually require its separate contractors to cooperate
with, and coordinate their activities so as not to interfere with,
Design-Builder in order to enable Design-Builder to timely complete the Work
consistent with the Contract Documents.

4.7          Security.

4.7.1       Owner
shall be responsible for Site security (including fencing, alarm systems,
security guarding services and the like) at all times during the term of this
Agreement to prevent vandalism, theft and danger to the Project, the Site, and
personnel.  Owner shall coordinate and
supervise ingress and egress from the Site so as to minimize disruption to the
Work.

4.7.2       Design-Builder
shall at all times conduct its operations in a manner to minimize the risk of
loss, theft, or damage by vandalism, sabotage, or any other means.  Design-Builder shall continuously inspect all
Work, materials, and equipment to discover and determine any conditions that
might involve such risks and shall be solely responsible for discovery,
determination, and correction of any such conditions.

Article 5

Ownership
of Work Product; Risk of Loss

5.1          Work Product.    All
drawings, specifications, calculations, data, notes and other materials and
documents, including electronic data furnished by Design-Builder to Owner under
this Agreement (“Work Product”) shall be instruments of service and
Design-Builder shall retain the ownership and property interests therein,
including the copyrights thereto.

5.2          Owner’s
Limited License Upon Payment in Full.  Upon
Owner’s payment in full for all Work performed under the Contract Documents,
Design-Builder shall grant Owner a limited license to use the Work Product in
connection with Owner’s occupancy and repair of the Plant.  Design-Builder acknowledges and agrees that
the limited license to use the Work Product granted hereby shall provide Owner
sufficient rights in and to the Work Product as shall be necessary for Owner to
operate and maintain the Plant and shall include any Pass Through Warranties in
connection therewith.  Design-Builder
shall provide Owner with a copy of the

 13
 

 

 

plans of the Plant, as built, (the “As Built Plans”) conditioned
on Owner’s express understanding that its use of the Work Product and its acceptance
of the As Built Plans is at Owner’s sole risk and without liability or legal
exposure to Design-Builder or anyone working by or through Design-Builder,
including Design Consultants of any tier (collectively the “Indemnified
Parties”); provided, however, that any performance guarantees, and
warranties (of equipment or otherwise) shall remain in effect according to the
terms of this Agreement.

5.2.1       Owner
shall be entitled to use the Work Product solely for purposes relating to the
Plant, but shall not be entitled to use the Work Product for any other purposes
whatsoever, including without limitation, expansion of the Plant.  Notwithstanding the foregoing sentence, Owner
shall be entitled to use the Work Product for the operation, maintenance and
repair of the plant including the interconnection of, but not the design of,
any future expansions to the Plant.  The
limited license granted to Owner under Sections 5.2, 5.3 or 5.4 to use the Work
Product shall be limited by and construed according to the same terms contained
in the ICM License Agreement between Owner and ICM, Inc., attached hereto as
Exhibit D and incorporated herein by reference thereto, except (i)
references in such ICM License Agreement to ICM and Proprietary Property shall
refer to Design-Builder and Work Product, respectively, (ii) the Laws of the
State of Minnesota shall govern such limited license, and (iii) the dispute
resolution provisions contained in Article 19 hereof shall apply to any breach
or threatened breach of Owner’s duties or obligations under such limited
license, except that Design-Builder shall have the right to seek injunctive
relief in a court of competent jurisdiction against Owner or its
Representatives for any such breach or threatened breach.  Design-Builder is utilizing certain
proprietary property and information of ICM, Inc., a Kansas corporation (“ICM”),
in the design and construction of the Project, and Design-Builder may
incorporate proprietary property and information of ICM into the Work
Product.  Owner’s use of the proprietary
property and information of ICM shall be governed by the terms and provisions
of the License Agreement between Owner and ICM, attached hereto as Exhibit D,
to be executed by such parties in connection with the execution of this
Agreement.  This paragraph also applies
to Articles 5.3 and 5.4 below.

5.3          Owner’s
Limited License Upon Owner’s Termination for Convenience or Design-Builder’s
Election to Terminate.   If Owner terminates the Project for its
convenience as set forth in Section 15.3 hereof, or if Design-Builder
elects to terminate this Agreement in accordance with Section 15.5,
Design-Builder shall, upon Owner’s payment in full of the amounts due
Design-Builder under this Agreement, grant Owner a limited license to use the
Work Product to complete the Plant and subsequently occupy and repair the
Plant, subject to the following:

(i)                                     Use
of the Work Product is at Owner’s sole risk without liability or legal exposure
to any Indemnified Party; provided, however, that any Pass Through Warranties
regarding equipment or express warranties regarding equipment provided by this
Agreement shall remain in effect according to their terms; and

(ii)                                  If
the termination for convenience is by Owner in accordance with
Section 15.3 hereof, or if Design-Builder elects to terminate this
Agreement in accordance with Section 15.5, then Owner agrees to pay
Design-Builder the additional sum of Two Million Five Hundred Thousand Dollars
($2,500,000.00) as compensation for the limited right to use the Work Product completed
“as is” on the date of termination in accordance with this Article 5.

 14
 

 

5.4          Owner’s Limited License Upon Design-Builder’s Default.  If this Agreement is terminated due to
Design-Builder’s default pursuant to Section 15.2 and (i) it is adjudged
that Design-Builder was in default, and (ii) Owner has fully satisfied all of
its obligations under the Contract Documents through the time of Design-Builder’s
default, then Design-Builder shall grant Owner a limited license to use the
Work Product in connection with Owner’s completion and occupancy and repair of
the Plant.  This limited license is
conditioned on Owner’s express agreement that its use of the Work Product is at
Owner’s sole risk without liability or legal exposure to any Indemnified Party;
provided, however, that any Pass Through Warranties regarding equipment or
express warranties regarding equipment provided by this Agreement shall remain
in effect according to their terms.  This
limited license grants Owner the ability to repair the Plant at Owner’s
discretion.

5.5          Owner’s Indemnification for Use of Work Product.  If Owner uses the Work Product or Plant under any of the circumstances
identified in this Article 5, to the fullest extent allowed by Law, Owner shall
defend, indemnify and hold harmless the Indemnified Parties from and against
any and all claims, damages, liabilities, losses and expenses, including
attorneys’ fees, arising out of or resulting from the use of the Work Product
and Plant; provided, however, that any Pass Through Warranties regarding
equipment or express warranties regarding equipment provided by this Agreement
shall remain in effect according to their terms.

5.6          Risk of Loss. 
Design-Builder shall have no liability for a physical loss of or damage
to the Work unless such loss or damage is caused by Design-Builder or someone
acting under its direction or control. Design-Builder shall not be liable for
physical loss of or damage to the Work where such loss or damage is caused by
the willful misconduct or gross negligence of Owner’s employees or third
parties who are not Subcontractors. 
Design-Builder shall have no liability for losses or damages for which
insurance coverage under this Agreement is available to Owner; in such
circumstances, Design Builder’s liability for losses and damages as described
in this Section 5.6 shall be limited to losses or damages which exceed
insurance coverage available to the Owner.

Article 6

Commencement
and Completion of the Project

6.1          Work Schedule.    The
preliminary schedule for the execution of the Work is attached as Exhibit J
hereto (the “Work Schedule”).  The
final schedule for execution of the Work shall be provided within thirty (30)
Days after receipt of the Notice to Proceed. 
The Work Schedule provides the scheduled dates for the commencement and
completion of the various stages of Work, including the dates when Owner’s
obligations are required to be complete to enable Design-Builder to achieve the
contract time(s).  The Work Schedule
shall be revised as required by conditions and progress of the Work but such
revisions shall not relieve Design-Builder of its obligations to complete the
Work within the contract time(s), unless such revisions to the Work Schedule
are required as a result of any delay in the completion of Owner’s obligations
or as a result of a Force Majeure Event.   
In such event, the Work Schedule shall be revised to provide, without
penalty to Design-Builder, a Day-for-Day extension of the contract time(s) for
completion of the Work for each Day during which Owner’s failure to complete
its obligations or a Force Majeure Event causes such delay.

 15
 

 

6.2          Phase
I and Phase II Engineering.   Owner and Design-Builder have entered into that certain Phase I
and Phase II Engineering Services Agreement dated November 4, 2005, and attached
hereto as Exhibit N. The Phase I and Phase II Engineering Services Agreement
provides for Design-builder to commence work on the Phase I and Phase II
engineering for the Project as set forth therein.  Owner has agreed to pay Design-Builder
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 Section 6.3, or Financial Closing
is not obtained pursuant to Section 4.3, then Design-Builder shall keep the
full amount paid under the Phase I and Phase II Engineering Services Agreement
as compensation for the services provided thereunder.

6.3          Notice to Proceed; Commencement. 
 The Work shall
commence within five (5) Days of Design-Builder’s receipt of Owner’s written
valid notice to proceed (“Notice to Proceed”) unless the parties
mutually agree otherwise in writing.  The
parties agree that a valid Owner’s Notice to Proceed cannot be given
until:  (1) Owner has title to the real
estate on which the project will be constructed; (2) the Phase I site work
required of Owner, as described in Exhibit “C” is completed along with Phase II
sufficiently completed, at Design-Builder’s reasonable determination, so as to
permit Design-Builder to commence construction, and all relevant redline
drawings have been provided by Owner and deemed adequate by Design-Builder;
(3) the air permit(s) and/or other applicable local, state or federal
permits necessary so that construction can begin, as listed on Exhibit G,
have been obtained; (4) Owner has obtained Financial Closing pursuant to
Section 4.3; (5) if applicable, Owner has executed a sales tax exemption
certificate and provide same to Design-Builder; (6) Owner has provided 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 insurance
pursuant to Section 17.4.3 hereof, and (8) Design-Builder provides Owner
written notification of its acceptance of the Notice to Proceed. Owner and
Design-Builder mutually agree that time is of the essence with respect to the
dates and times set forth in the Contract Documents.  Design-Builder must receive a valid Owner’s
Notice to Proceed within one hundred and eighty (180) Days of the Effective
Date; otherwise, this Agreement may be terminated, at Design-Builder’s sole
option.  If Design-Builder chooses to
terminate this Agreement pursuant to its right under the immediately preceding
sentence, then Design-Builder shall have no further obligations hereunder.

6.3.1       Notice
to Proceed shall be delivered by Owner to Design-Builder pursuant to the notice
requirements set forth in Section 21.7 hereof, with a copy to:

Fagen Inc.

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Attention: Becky Dahl

Fax: (320) 564-3278

6.4          Project Start-Up and Testing.  Owner
shall provide, at Owner’s cost, equipment, tools, instruments and materials
necessary for Owner to comply with its obligations under Exhibit C, raw
materials, consumables and personnel, necessary for start-up and testing

 16
 

 

of the Plant, and Design-Builder shall provide supervision, standard
and special test instruments, tools, equipment and materials required to
perform component and equipment checkout and testing, initial start-up,
operations supervision and corrective maintenance of all permanent Plant
equipment within the scope of the Work. 
Notwithstanding the foregoing sentence, Design-Builder shall be
responsible for raw materials and consumables to the extent such amounts
provided by Owner are destroyed or damaged (as opposed to consumed in the
ordinary course of start-up and testing) by Design-Builder or its personnel
during start-up and testing. Design-Builder shall supervise and direct Owner’s
personnel who shall participate in the start-up activities with Design-Builder’s
personnel to become familiar with all aspects of the Plant. Owner and the
Independent Engineer may witness start-up and testing activities.  Performance testing will be conducted in
accordance with the provisions of Section 7.2 hereof.

6.5          Substantial
Completion.

6.5.1       Substantial
Completion of the entire Work shall be achieved no later than Four Hundred
Eighty-five (485) Days after the date of the Notice to Proceed, subject to
adjustment in accordance with the Contract Documents hereof (the “Scheduled
Substantial Completion Date”).

6.5.2       “Substantial
Completion” shall be deemed to occur on the date on which the Work is
sufficiently complete that the Plant is ready to grind the first batch of corn
for producing ethanol and begin operation for its intended use as a 100 MGY dry
grind ethanol production facility.  No
production capacity is guaranteed on the Substantial Completion date, but the
Plant shall be largely completed as of that date and the Owner can occupy and
use the Plant for its intended purposes.

6.5.3       Procedures.  Design-Builder shall notify Owner in writing
when it believes Substantial Completion has been achieved with respect to the
Work.  Within five (5) Days of Owner’s
receipt of Design-Builder’s notice, Owner and Design-Builder will jointly inspect
such Work to verify that it is substantially complete in accordance with the
requirements of the Contract Documents. 
If such Work is deemed substantially complete, Design-Builder shall  prepare and issue and Owner shall approve in
writing, which approval shall not be unreasonably withheld, a “Certificate
of Substantial Completion” for the Work that will set forth (i) the
date of Substantial Completion, (ii) the
remaining items of Work that have to be completed before Final Payment (“Punch
List”), (iii) provisions (to the extent not already provided in this
Agreement) establishing Owner’s and Design-Builder’s responsibility for the
Project’s security, maintenance, utilities and insurance pending Final Payment,
and (iv) an acknowledgment that warranties with respect to the Work
commence on the date of Substantial Completion, except as may otherwise be
noted in the Certificate of Substantial Completion.  Upon Substantial Completion of the entire
Work and satisfaction of the Performance Guarantee Criteria listed in Exhibit
A, Owner shall release to Design-Builder all retained amounts relating, as
applicable, to the entire Work or completed portion of the Work, less an amount
equal to One Hundred and Fifty Percent (150%) of the reasonable value of all
remaining or incomplete items of Work as noted in the Certificate of
Substantial Completion, and less an amount equal to the value of any
Subcontractor lien waivers not yet obtained.

(a)                                  Owner,
at its option, may use a portion of the Work prior to completion of the entire
Work; provided, that (i) a Certificate of Substantial completion

 17
 

 

 has been
issued for the portion of Work addressing the items set forth in Section 6.5.3
above, (ii) Design-Builder and Owner have, to the extent required, obtained the
consent of their sureties and insurers and the appropriate government
authorities having jurisdiction over the Project, and (iii) Owner and
Design-Builder agree that Owner’s use or occupancy will not interfere with
Design-Builder’s completion of the remaining Work in accordance with the
Contract Documents.

6.5.4       Early
Completion Bonus. 
If Substantial Completion is attained within Four Hundred Eighty-five
(485) Days after the date of the Notice to Proceed, Owner shall pay
Design-Builder at the time of Final Payment under Section 10.3 hereof an early
completion bonus (“Early Completion Bonus”) of [*] Dollars ($[*]) per Day for each Day that Substantial
Completion occurred in advance of the Scheduled Substantial Completion Date up
to a maximum Early Completion Bonus of [*]
Dollars ($[*]).

6.5.5       In
all events, payment of said bonus, if applicable, at the time of Final Payment
is subject to release of funds by senior lender.  If senior lender does not allow release of
funds at the time of Final Payment to pay said early completion bonus in full,
any unpaid balance shall be converted to an unsecured promissory note payable
by Owner to Design-Builder, accruing interest at Ten Percent (10%).  On each anniversary of the note, any unpaid
accrued interest shall be converted to principal and shall accrue interest as
principal thereafter.  Owner shall pay
said promissory note as soon as allowed by senior lender; in any event, the
note, plus accrued interest, shall be paid in full before Owner pays or makes
any distributions to or for the benefit of its owners (shareholders, members,
partners, etc.).  All payments shall be
applied first to accrued interest and then to principal.

6.6          Final
Completion.

6.6.1       Final
Completion of the Work shall be achieved within Ninety (90) Days after the date
of Substantial Completion.

6.6.2       “Final
Completion” shall be achieved when the Owner reasonably determines that the
following conditions have been met:

(a)           Substantial
Completion has been achieved;

(b)                                 any
outstanding amounts owed by Design-Builder to Owner have been paid in full;

(c)                                  the
items identified on the Punch List have been completed by Design-Builder;

(d)                                 clean-up
of the Site has been completed;

(e)                                  all
permits required to have been obtained by Design-Builder have been obtained;

 

*                  Portions omitted pursuant to a
request for confidential treatment and filed separately with the SEC.

 18
 

 

 

(f)                                    the
information in Section 6.6.4 has been provided to Owner;

(g)                                 certificates
of insurance confirming that required coverages will remain in effect consistent
with the requirements of the Contract Documents have been obtained;

(h)           release and waiver of all claims and
liens from Design-Builder and                                                            Subcontractors have been
provided; and

(i)            the Performance Tests have been
successfully completed.

6.6.3       After
receipt of a Final Application for Payment from Design-Builder, Owner shall
make Final Payment in accordance with Section 10.3, less an amount equal
to the value of any Subcontractor lien waivers not yet obtained.

6.6.4       At
the time of submission of its Final Application for Payment, Design-Builder
shall provide the following information:

(a)                                  an
affidavit that there are no claims, obligations or liens outstanding or
unsatisfied for labor, services, material, equipment, taxes or other items
performed, furnished or incurred for or in connection with the Work which will
in any way affect Owner’s interests;

(b)                                 a
general release executed by Design-Builder waiving, upon receipt of final
payment by Design-Builder, all claims for payment, additional compensation, or
damages for delay, except those previously made to Owner in writing and
remaining unsettled at the time of Final Payment provided such general release
shall not waive defenses to claims that may be asserted by Owner after payment
or claims arising after payment;

(c)                                  consent
of Design-Builder’s surety, if any, to Final Payment; and

(d)                                 a
hard copy of the As Built Plans; provided, however, that such plans will remain
the Work Product of the Design-Builder and subject in all respects to Article
5.

6.6.5       Upon
making Final Payment, Owner waives all claims against Design-Builder except
claims relating to (i) Design-Builder’s failure to satisfy its payment
obligations, (ii) Design-Builder’s failure to complete the Work consistent with
the Contract Documents, including defects appearing within one year after
Substantial Completion, and (iii) the terms of any warranties required by the
Contract Documents.

6.7          Additional
Labor.  Design-Builder shall include, at no
additional cost to Owner, four (4) sixty (60)-hour work weeks.

6.8          Post Completion Support.  Adequate
personnel to complete all Work within the Work Schedule will be maintained
on-Site by Design-Builder or a Subcontractor until Final Completion has been
achieved.  In addition to prosecuting the
Work until Final Completion has been achieved, Design-Builder or its
Subcontractor will provide one month of on-Site

 19
 

 

operational support for Owner’s personnel after successful completion
of the Performance Tests and, from the date of Substantial Completion, will
provide six (6) months of off-Site technical and operating procedure support by
telephone and other electronic data transmission and communication.

Article 7

Performance
Testing and Liquidated Damages

7.1          Performance
Guarantee.  The Design-Builder guarantees that
the Plant will meet the performance criteria listed in Exhibit A (the “Performance
Guarantee Criteria”) during a performance test conducted and concluded
pursuant to the terms hereof not later than Ninety (90) Days after the date of
Substantial Completion.  If there is a
performance shortfall, Design-Builder will pay all design and construction
costs associated with making the necessary corrections.  Design-Builder retains the right to use its
sole discretion in determining the method (which shall be in accordance with
generally accepted construction and design-build standards of the fuel ethanol
industry in the Midwest United States) to remedy any performance related
issues.

7.1.1       If
Owner, for whatever reason, prevents Design-Builder from demonstrating the
Performance Guarantee Criteria within thirty (30) Days of Design-Builder’s
notice that the Plant is ready for Performance Testing, then Design-Builder
shall be excused from demonstrating compliance with the Performance Guarantee
Criteria during such period of time that Design-Builder is prevented from
demonstrating compliance with the Performance Guarantee Criteria; provided
however that Design-Builder will be deemed to have fulfilled all of its
obligations to demonstrate that the Plant meets the Performance Guarantee
Criteria should such period of time during which Design-Builder is prevented
from demonstrating the Performance Criteria exceed thirty (30) Days or extend
beyond Final Completion.

7.2          Performance Testing.

7.2.1       The
Design-Builder shall direct and supervise the tests and, if necessary, the
retests of the Plant using Design-Builder’s supervisory personnel and the Air
Emissions Tester shall conduct the air emissions test, in each case, in
accordance with the testing procedures set forth in Exhibit A (the “Performance
Tests”), to demonstrate, at a minimum, compliance with the Performance
Guarantee Criteria. Design-Builder shall cooperate with the Air Emissions
Tester to facilitate performance of all air emissions tests.  Design-Builder shall not be held responsible
for the actions of Owner’s employees and third parties involved in the
Performance Testing.

7.2.2       No
later than thirty (30) Days prior to the earlier of the Scheduled Substantial
Completion Date or Substantial Completion, Design-Builder shall provide to
Owner for review a detailed testing plan for the Performance Tests (other than
for air emissions).  Owner and
Design-Builder shall agree upon a testing plan that shall be consistent with
the Performance Test Protocol contained in Exhibit A hereto.  After such agreement has been reached,
Design-Builder shall notify the Owner five (5) business days prior to the date
Design-Builder intends to commence the Performance Tests and shall notify the
Owner upon commencement of the Performance Tests. Owner and Independent
Engineer each have the right

 20
 

 

to witness all testing, including the Performance Tests and any
equipment testing, whether at the Site or at the Subcontractor’s or equipment
supplier’s premises during the course of this Agreement.  Notwithstanding the foregoing sentence, Owner
shall bear the costs of providing a witness to any such testing and all such
witnesses shall comply at all times with Design-Builder’s, Subcontractor’s or
equipment supplier’s safety and security procedures and other reasonable
requirements, and otherwise conduct themselves in a manner that does not
interfere with Design-Builder’s, Subcontractor’s or equipment supplier’s
activities or operations.

7.2.3       Design-Builder
shall provide to Owner a performance test report (excluding results from air
emissions testing), including all applicable test data, calculations and
certificates indicating the results of the Performance Tests and, within five
(5) business days of Owner’s receipt of such results, Owner and Design-Builder
will jointly inspect such Work and review the results of the Performance Tests
to verify that the Performance Guarantee Criteria have been met.   If Owner reasonably determines that the
Performance Guarantee Criteria have not been met, Owner shall notify
Design-Builder the reasons why Owner determined that the Performance Guarantee
Criteria have not been met and Design-Builder shall promptly take such action
or perform such additional work as will achieve the Performance Guarantee
Criteria and shall issue to the Owner another notice in accordance with Section
7.2.2; provided however that if the notice relates to a retest, the notice may
be provided no less than two (2) business days prior to the Performance
Tests.  Such procedure shall be repeated
as necessary until Owner verifies that the Performance Guarantee Criteria have
been met.

7.3          Liquidated Damages.

7.3.1       Design-Builder
understands that if Final Completion is not attained by the Final Completion
Date, Owner will suffer damages which are difficult to determine and accurately
specify.  Design-Builder agrees that if
Final Completion is not attained by the end of the Final Completion Date,
Design-Builder shall pay Owner [*] Dollars ($[*])
as liquidated damages, and not as a penalty, for each Day that Final Completion
extends beyond the Final Completion Date. 
Owner, at its discretion, may elect to offset any such liquidated
damages from any retainage.  Liquidated
damages shall be paid by Design-Builder by the 15th Day of the month following the month in which
the liquidated damages were incurred. 
The liquidated damages provided herein shall be in lieu of all liability
for any and all extra costs, losses, loss of profits, expenses, claims,
penalties and any other damages, whether special or consequential, and of
whatsoever nature incurred by Owner which are occasioned solely by any delay in
achieving Final Completion.

7.3.2       Maximum Liquidated Damages. 
Design-Builder’s liability for liquidated damages under Section 7.3.1
shall be capped at and shall not exceed [*]
Dollars ($[*]).

7.3.3       Design-Builder
shall not be liable for liquidated damages during any period of time for which
an extension of the Scheduled Substantial Completion Date and/or Final
Completion Date is available pursuant to Article 12.

*                  Portions omitted pursuant to a
request for confidential treatment and filed separately with the SEC.

 21

 

7.4          Bonds and Other Performance Security.

7.4.1       On
or prior to the date of Financial Closing, if requested by Owner, the
Design-Builder shall deliver to Owner a bond substantially in the form attached
as Exhibit H (the “Performance Bond”) in an initial amount equivalent to
the Contract Price.  Owner shall pay on the date of
Financial Closing all costs of obtaining such bond, plus pay Design-Builder a
fee of 7.5% for obtaining such bond, such fee to be calculated by multiplying
7.5% times the cost of the Performance Bond. 
Any amounts payable to the surety due to Design-Builder’s default under
this Agreement or the Performance Bond shall be for the account of
Design-Builder.

(a)                                  Design-Builder
shall post additional bonds or security (which must be in form and substance
satisfactory to Owner and the Lenders) or shall increase the amount of the
Performance Bond by the amount of any increases to the Contract Price;
provided, however, that Owner shall pay all costs of obtaining such bonds or
security, plus pay Design-Builder a fee of 7.5% for obtaining such bonds or
security, such fee to be calculated by multiplying 7.5% times the cost of the
bonds or security.

(b)                                 The
Performance Bond shall secure the Design-Builder’s obligations to complete the
Work in accordance with this Agreement.

7.4.2       On
or prior to the date of Financial Closing, if requested by Owner, the
Design-Builder shall deliver to Owner a bond substantially in the form attached
as Exhibit I (the “Payment Bond”) in an initial amount equivalent to the
Contract Price.  Owner
shall pay on the date of Financial Closing all costs of obtaining such bond,
plus pay Design-Builder a fee of 7.5% for obtaining such bond, such fee to be
calculated by multiplying 7.5% times the cost of the Payment Bond but any
amounts payable to the surety due to Design-Builder’s default under this
Agreement or the Payment Bond shall be for the account of Design-Builder.

(a)                                  Design-Builder
shall post additional bonds or security (which must be in form and substance
reasonably satisfactory to Owner and the Lenders) or shall increase the amount
of the Payment Bond by the amount of any increase to the Contract Price.

(b)                                 The
Payment Bond shall secure the Design-Builder’s obligations to pay its
Subcontractors, vendors and suppliers.

(c)                                  The
Payment Bond shall provide the conditions upon which Subcontractors, vendors
and suppliers may draw upon such Payment Bond following Design-Builder’s
failure to pay amounts due such Subcontractors, vendors and suppliers.

Article 8

Warranties

8.1          Design-Builder Warranty.  Design-Builder warrants to Owner
that the construction, including all materials and equipment furnished as part
of the construction, shall be

 22
 

 

new, of good quality, in conformance with the Contract Documents and
all Legal Requirements, free of defects in materials and workmanship.  Design-Builder’s warranty obligation excludes
defects caused by abuse, alterations, or failure to maintain the Work by
persons other than Design-Builder or anyone for whose acts Design-Builder may
be liable. Nothing in this warranty is intended to limit any Manufacturer’s
Warranty which provides Owner with greater warranty rights than set forth in
this Section 8.1 or the Contract Documents.  Design-Builder will provide to Owner all
manufacturers’ and Subcontractors’ warranties upon the earlier of Substantial
Completion or termination of this Agreement.  
Owner’s failure to comply with all Operating Procedures shall void those
guarantees, representations and warranties, whether expressed or implied, that
were given by Design-Builder to Owner, concerning the performance of the Plant
that are reasonably determined by Design-Builder to be affected by such
failure.  If Design-Builder reasonably
determines that all damage caused by such failure can be repaired and Owner makes
all repairs needed to correct such damage, as reasonably determined by
Design-Builder, all guarantees, representations and warranties shall be
reinstated for the remaining term thereof, if any, from the date of the repair.

8.2          Correction of Defective Work.

8.2.1       Design-Builder
agrees to correct any Work that is found to not be in conformance with the
Contract Documents, including that part of the Work subject to Section 8.1,
within a period of one year from the date of Substantial Completion of the Work;
provided that such one-year period shall be extended one Day for any part of
the Work that is found to be not in conformance with the Contract Documents for
each Day that such part of the Work is not operating in conformity with the
Contract Documents, including any  time
during which any part of the Work is repaired or replaced pursuant to this
Article 8.

8.2.2       Design-Builder
shall, within seven (7) Days of receipt of written notice from Owner that the
Work is not in conformance with the Contract Documents, take meaningful steps
to commence correction of such nonconforming Work, including the correction,
removal or replacement of the nonconforming Work and correction or replacement
of any Work damaged by such nonconforming Work. 
If Design-Builder fails to commence the necessary steps within such
seven (7) Day period or fails to continue to perform such steps through
completion, Owner, in addition to any other remedies provided under the
Contract Documents, may provide Design-Builder with written notice that Owner
will commence or assume correction of such nonconforming Work and repair of
such damaged Work with its own resources. 
If, following such written notice, Owner performs such corrective and
repair Work, Design-Builder shall be responsible for all reasonable costs
incurred by Owner in performing the correction. 
If the nonconforming Work creates an emergency requiring an immediate
response, the seven (7) Day periods identified herein shall be inapplicable and
Design-Builder shall immediately correct, remove or replace the nonconforming
Work.

8.3          Warranty Period Not Limitation to Owner’s Rights.  The one-year period referenced in
Section 8.2 above applies only to Design-Builder’s obligation to correct
nonconforming Work and is not intended to constitute a period of limitations
for any other rights or remedies Owner may have regarding Design-Builder’s
other obligations under the Contract Documents.

 23
 

 

Article 9

Contract
Price

9.1          Contract Price.  As
full consideration to Design-Builder for full and complete performance of the
Work and all costs incurred in connection therewith, Owner shall pay
Design-Builder in accordance with the terms of Article 10, the sum of
Ninety-eight Million Dollars ($98,000,000.00) (“Contract Price”),
subject to adjustments made in accordance with Articles 12.4 and 13.  The
Contract Price does not include the water pre-treatment system and the fire
protection system which shall be provided by Design-Builder pursuant to a
separate side-letter agreement executed by Owner and Design-Builder at
Design-Builder’s standard time plus material rates during the relevant time
period and at the relevant locale.  Owner acknowledges that it has taken
no action which would impose a union labor or prevailing wage requirement on
Design-Builder, Owner or the Project. The Parties acknowledge and agree that if
after the date hereof, an Owner’s action, a change in Applicable Law or a
Governmental Authority acting pursuant to a change in Applicable Law shall
require Design-Builder to employ union labor or compensate labor at prevailing
wages, the Contract Price shall be adjusted upwards to include any increased
costs associated with such labor or wages.

9.2          Effect
of Construction Cost Index Increase on Contract Price.   If Notice to Proceed is not received by June
30, 2006, the Contract Price shall be adjusted to reflect any increase in the
Construction Cost Index published by Engineering News-Record Magazine (“CCI”)
over the Baseline Index established in Section 9.2.1.  If Notice to Proceed is not received by June
30, 2006 and the CCI increases over the Baseline Index, between the Effective
Date and the date on which a Notice to Proceed is given to Design-Builder,
Design-Builder shall notify Owner in writing that it is adjusting the Contract
Price.

9.2.1       The
Baseline Index for this Agreement shall be 7660.29 (“Baseline Index”).

9.2.2       In
the event that Notice to Proceed is not received by June 30, 2006 and the CCI
as of the date on which the Notice to Proceed is given increases over the
Baseline Index, the Contract Price shall be increased by a percentage amount
equal thereto.

Article
10

Payment
Procedures

10.1        Payment at Financial Closing.  As part of the Contract Price, Owner shall
pay Design-Builder Eight Million Dollars ($8,000,000.00) as soon as allowed by
its organizational documents and any other agreements or Laws and at the
latest, at Financial Closing, as a mobilization fee. The Eight Million Dollars
($8,000,000.00) mobilization fee payment shall be subject to retainage as
provided by Section 10.2.7.

10.2        Progress
Payments.

 24
 

 

10.2.1     Application for Payment.  On
or before the twenty-fifth (25th)
Day of each month beginning with the first month following the Notice to
Proceed, Design-Builder shall submit to Owner its request for payment for all
Work performed and not paid for during the previous Pay Period (the “Application
for Payment”).  Design-Builder shall
submit to Owner, along with each Application for Payment, signed lien waivers
received from Subcontractors and suppliers for the Work included in the
Application for Payment submitted for the immediately preceding Pay Period and
for which payment has been received.

10.2.2     The
Application for Payment shall constitute Design-Builder’s representation that
the Work has been performed consistent with the Contract Documents and has
progressed to the point indicated in the Application for Payment.  The Parties agree that the work completed at
the Site and the comparison of the Application for Payment against the work schedule,
the Schedule of Values, and the Progress Report shall provide sufficient
substantiation of the accuracy of the Application for Payment and that no
additional documentation will be provided to Owner or to Independent Engineer
in support of an Application for Payment. 
Title to the Work shall pass to Owner free and clear of all claims,
liens, encumbrances, and security interests upon Design-Builder’s receipt of
payment therefor.

10.2.3     Within
fifteen (15) Days after Owner’s receipt of each properly submitted Application
for Payment, Owner shall pay Design-Builder all amounts properly due, but in
each case less the total of payments previously made, and less amounts properly
withheld under this Agreement.

10.2.4     The
Application for Payment may request payment for equipment and materials not yet
incorporated into the Project; provided that (i) Owner is satisfied that the
equipment and materials are suitably stored at either the Site or another
acceptable location, (ii) the equipment and materials are protected by suitable
insurance, and (iii) upon payment, Owner will receive the equipment and
materials free and clear of all liens and encumbrances except for liens of the
Lenders and other liens and encumbrances permitted under the Financing
Documents.

10.2.5     Schedule of Values.  Attached as Exhibit E is the “Schedule
of Values” for all of the Work.  The
Schedule of Values (i) subdivides the Work into its respective parts, (ii)
includes values for all items comprising the Work, and (iii) serves as the
basis for monthly progress payments made to Design-Builder throughout the Work.

10.2.6     Withholding of Payments. 
On or before the date set forth in Section 10.2.3, Owner shall pay
Design-Builder all amounts properly due. 
If Owner determines that Design-Builder is not entitled to all or part
of an Application for Payment, it will notify Design-Builder in writing at
least five (5) Days prior to the date payment is due.  The notice shall indicate the specific
amounts Owner intends to withhold, the reasons and contractual basis for the
withholding, and the specific measures Design-Builder must take to rectify
Owner’s concerns.  Design-Builder and
Owner will attempt to resolve Owner’s concerns prior to the date payment is
due.  If the Parties cannot resolve such
concerns, Design-Builder may pursue its rights under the Contract Documents,
including those under Article 19. 
Notwithstanding anything to the
contrary in the Contract Documents, Owner shall pay Design-Builder all
undisputed amounts in an Application for Payment within the times required by
the Agreement.

 25
 

 

10.2.7     Retainage on Progress Payments.  Owner
will retain ten percent (10%) of each payment up to a maximum of $4,900,000.00.
Once $4,900,000.00 has been retained, in total, Owner will not retain any
additional amounts from any subsequent payments. Owner will also reasonably
consider reducing retainage for Subcontractors completing their work early in
the Project.  Upon Substantial Completion
of the entire Work pursuant to Section 6.5, Owner shall release to Design-Builder
all retained amounts relating, as applicable, to the entire Work, less an
amount equal to the reasonable value of all remaining or incomplete items of
Work and less an amount equal to the value of any Subcontractor lien waivers
not yet obtained, as noted in the Certificate of Substantial Completion,
provided that such payment shall only be made if Design-Builder has met the
Performance Guarantee Criteria listed in Exhibit A.

10.3        Final Payment. 
Design-Builder shall deliver to Owner a request for final payment (the “Final
Application for Payment”) when Final Completion has been achieved in
accordance with Section 6.6. Owner shall make final payment within thirty (30)
Days after Owner’s receipt of the Final Application for Payment (“Final
Payment”).

10.4        Failure
to Pay Amounts Due.

10.4.1     Interest.  Payments
which are due and unpaid by Owner to Design-Builder, whether progress payments
or Final Payment, shall bear interest at the rate of eighteen percent (18%) per
annum, or  the maximum rate allowed by
Law.

10.4.2     Right to Suspend Work. 
If Owner fails to pay Design-Builder any undisputed amount that becomes
due, Design-Builder, in addition to all other remedies provided in the Contract
Documents, may stop Work pursuant to Section 15.4 hereof.  All payments properly due and unpaid shall
bear interest at the rate set forth in Section 10.4.1.

10.5        Design-Builder’s Payment Obligations.  Design-Builder will pay Design Consultants
and Subcontractors, in accordance with its contractual obligations to such
parties, all the amounts Design-Builder has received from Owner on account of
their work.  Design-Builder will impose
similar requirements on Design Consultants and Subcontractors to pay those
parties with whom they have contracted. 
Design-Builder will indemnify and defend Owner against any claims for
payment and mechanic’s liens as set forth in Section 14.2 hereof.

10.6        Record Keeping and Finance Controls.  With respect to changes in the Work performed
on a cost basis by Design-Builder pursuant to the Contract Documents,
Design-Builder shall keep full and detailed accounts and exercise such controls
as may be necessary for proper financial management, using accounting and
control systems in accordance with generally accepted accounting principles and
as may be provided in the Contract Documents. 
During the performance of the Work and for a period of three (3) years
after Final Payment, Owner and Owner’s accountants shall be afforded access
from time to time, upon reasonable notice, to Design-Builder’s records, books,
correspondence, receipts, subcontracts, purchase orders, vouchers, memoranda
and other data relating to changes in the Work performed on a cost basis in
accordance with the Contract Documents, all of which Design-Builder shall
preserve for a period of three (3) years after Final Payment.

 26
 

 

Article
11

Hazardous
Conditions and Differing Site Conditions

11.1        Hazardous
Conditions.

11.1.1     Unless
otherwise expressly provided in the Contract Documents to be part of the Work,
Design-Builder is not responsible for any Hazardous Conditions encountered at
the Site.  Upon encountering any
Hazardous Conditions, Design-Builder will stop Work immediately in the affected
area and as promptly as practicable notify Owner and, if Design-Builder is
specifically required to do so by Legal Requirements, all government or
quasi-government entities with jurisdiction over the Project or Site.  Design-Builder shall not remove, remediate or
handle in any way (except in case of emergency) any Hazardous Conditions
encountered at the Site without prior written approval of Owner.

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

11.1.3     Design-Builder
shall be obligated to resume Work at the affected area of the Project only
after Owner’s Qualified Independent Expert provides it with written
certification that (i) the Hazardous Conditions have been removed or rendered
harmless, and (ii) all necessary approvals have been obtained from all
government entities having jurisdiction over the Project or Site and a
remediation plan has been undertaken permitting the Work to proceed.

11.1.4     Design-Builder
will be entitled, in accordance with this Article 11, to an adjustment in its
Contract Price and/or contract time(s) to the extent Design-Builder’s cost
and/or time of performance have been adversely impacted by the presence of
Hazardous Conditions, provided that such Hazardous Materials were not
introduced to the Site by Design-Builder, Subcontractors or anyone for whose
acts they may be liable.

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

11.1.6     Notwithstanding
the preceding provisions of this Section 11.1, Owner is not responsible
for Hazardous Conditions introduced to the Site by Design-Builder, Subcontractors
or anyone for whose acts they may be liable. 
Design-Builder shall indemnify, defend and hold harmless Owner and Owner’s
officers, directors, employees and agents from

 27
 

 

and against all claims, losses, damages, liabilities and expenses,
including attorneys’ fees and expenses, arising out of or resulting from those
Hazardous Conditions introduced to the Site by Design-Builder, Subcontractors
or anyone for whose acts they may be liable.

11.2        Differing Site Conditions; Inspection.

11.2.1     Concealed
or latent physical conditions or subsurface conditions at the Site that (i)
differ from the conditions indicated in the Contract Documents, or (ii) are of
an unusual nature, differing from the conditions ordinarily encountered and
generally recognized as inherent in the Work are collectively referred to
herein as “Differing Site Conditions.” 
If Design-Builder encounters a Differing Site Condition, Design-Builder
will be entitled to an adjustment in the Contract Price and/or contract time(s)
to the extent Design-Builder’s cost and/or time of performance are adversely
impacted by the Differing Site Condition.

11.2.2     Upon
encountering a Differing Site Condition, Design-Builder shall provide prompt
written notice to Owner of such condition, which notice shall not be later than
fourteen (14) business days after such condition has been encountered.  Design-Builder shall, to the extent
reasonably possible, provide such notice before the Differing Site Condition
has been substantially disturbed or altered.

Article
12

Force
Majeure; Change in Legal Requirements

12.1        Force
Majeure Event.  Shall mean a 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 (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 (any such event, a
“Force Majeure Event”).

12.2        Effect
of Force Majeure Event.  Neither
party shall be considered in default in the performance of any of the
obligations contained in the Contract Documents, except for the Owners or the
Design-Builder’s obligations to pay money (including but not limited to,
Progress Payments and payments of liquidated damages which become due and
payable with respect to the period prior to the occurrence of the Force Majeure
Event), when and to the extent the failure of performance shall be caused by a
Force Majeure Event.  If either party is
rendered wholly or partly unable to perform its obligations under the Contract
Documents because of a Force Majeure Event, such party will be excused from
performance affected by the Force Majeure Event to the extent and for the period
of time so affected; provided that:

 28
 

 

(a)                                  the
nonperforming party, within forty-eight (48) hours after the nonperforming
party actually becomes aware of the occurrence and impact of the Force Majeure
Event, gives the other party written notice describing the event or
circumstance in detail, including an estimation of its expected duration and
probable impact on the performance of the affected party’s obligations
hereunder, and continues to furnish timely regular reports with respect thereto
during the continuation of and upon the termination of the Force Majeure Event;

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

(c)                                  the
obligations of either party that arose before the occurrence causing the
suspension of performance and the performance that is not prevented by the
occurrence, shall not be excused as a result of such occurrence;

(d)                                 the
nonperforming party uses its best efforts to remedy its inability to perform and
mitigate the effect of such event and resumes its performance at the earliest
practical time after cessation of such occurrence or until such time that
performance is practicable;

(e)                                  when
the nonperforming party is able to resume performance of its obligations under
the Contract Documents, that party shall give the other party written notice to
that effect; and

(f)                                    Design-Builder
shall be entitled to a Day for Day time extension for those events set forth in
Section 12.1 to the extent the occurrence of such event delayed Design-Builder’s
performance of its obligations under this Agreement.

12.3        Change in Legal Requirements.  The
Contract Price and/or the contract time(s) shall be adjusted to compensate
Design-Builder for the effects of any changes to the Legal Requirements that
occur after the date of this Agreement and as a result of such change, the
performance of the Work is adversely affected. 
Such effects may include, without limitation, revisions Design-Builder
is required to make to the Construction Documents because of changes in Legal
Requirements.

12.4        Time
Impact And Availability.  If
the Design-Builder 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 to the Project as a result of a Force Majeure Event, the
Design-Builder shall be entitled to an equitable extension of the Contract Time
on a day-for-day basis equal to such delay. 
The Owner and Design-Builder shall undertake reasonable steps to
mitigate the effect of such delays. 
Notwithstanding any other provision to the contrary, the Design-Builder
shall not be liable to the Owner for any expenses, losses or damages arising
from a delay, or unavailability of, essential materials to the Project as a result
of a Force Majeure Event.

 29
 

 

Article
13

Changes
to the Contract Price and Scheduled Completion Dates

13.1        Change
Orders.

13.1.1     A
change order (“Change Order”) is a written instrument issued after
execution of this Agreement signed by Owner and Design-Builder, stating their
agreement upon all of the following:

(a)                                  the
scope of the change in the Work;

(b)                                 the
amount of the adjustment to the Contract Price; and

(c)                                  the
extent of the adjustment to the contract time(s).

13.1.2     All
changes in the Work authorized by an applicable Change Order shall be performed
under the applicable conditions of the Contract Documents.  Owner and Design-Builder shall negotiate in
good faith and as expeditiously as possible the appropriate adjustments for
such changes.  Prior to incurring any
costs with respect to estimating services, design services and any other
services involved in the preparation of the proposed revisions to the Contract
Documents, Design-Builder must obtain the written approval of Owner for such
costs.

13.1.3     If
Owner requests a proposal for a change in the Work from Design-Builder and
subsequently elects not to proceed with the change, a Change Order shall be
issued to reimburse Design-Builder for reasonable costs incurred for estimating
services, design services and any other services involved in the preparation of
proposed revisions to the Contract Documents; provided that such costs were
previously approved by Owner pursuant to Section 13.1.2.

13.2        Contract
Price Adjustments.

13.2.1     The
increase or decrease in Contract Price resulting from a change in the Work
shall be a mutually accepted lump sum, properly itemized and supported by
sufficient substantiating data to permit evaluation by Owner.

13.2.2     If
Owner and Design-Builder disagree upon whether Design-Builder is entitled to be
paid for any services required by Owner, or if there are any other
disagreements over the scope of Work or proposed changes to the Work, Owner and
Design-Builder shall resolve the disagreement pursuant to Article 19
hereof.  As part of the negotiation
process, Design-Builder shall furnish Owner with a good faith estimate of the
costs to perform the disputed services in accordance with Owner’s
interpretations.  If the Parties are
unable to agree and Owner expects Design-Builder to perform the services in
accordance with Owner’s interpretations, Design-Builder shall proceed to
perform the disputed services, conditioned upon Owner issuing a written order
to Design-Builder (i) directing Design-Builder to proceed, and (ii) specifying
Owner’s interpretation of the services that are to be performed.  If this occurs, Design-Builder shall be
entitled to submit in its Applications for Payment an amount equal to fifty
percent (50%) of its reasonable estimated direct cost to perform the services,
and Owner

 30
 

 

agrees to pay such amounts, with the express understanding that
(x) such payment by Owner does not prejudice Owner’s right to argue that
it has no responsibility to pay for such services, and (y) receipt of such
payment by Design-Builder does not prejudice Design-Builder’s right to seek
full payment of the disputed services if Owner’s order is deemed to be a change
to the Work.

13.3        Emergencies.  In any emergency
affecting the safety of persons and/or property, Design-Builder shall act, at
its discretion, to prevent threatened damage, injury or loss and shall notify
the Owner as soon as practicable and in any event within forty-eight (48) hours
after Design-Builder becomes aware of the emergency.  The notice to Owner shall describe the
emergency in detail, including a reasonable estimation of its expected duration
and impact, if any, on the performance of Design-Builder’s obligations
hereunder.  Any change in the Contract
Price and/or the contract time(s) on account of emergency work shall be determined
as provided in this Article 13.

13.4        Requests for Contract Adjustments and Relief.   If either Design-Builder or Owner
believes that it is entitled to relief against the other for any event arising
out of or related to the Work or Project, such party shall provide written
notice to the other party of the basis for its claim for relief.  Such notice shall, if possible, be made prior
to incurring any cost or expense and in accordance with the notice requirements
contained in Section 21.7.  In the
absence of any specific notice requirement, written notice shall be given
within a reasonable time, not to exceed twenty-one (21) Days, after the
occurrence giving rise to the claim for relief or after the claiming party
reasonably should have recognized the event or condition giving rise to the
request, whichever is later.  Such notice
shall include sufficient information to advise the other party of the
circumstances giving rise to the claim for relief, the specific contractual
adjustment or relief requested and the basis of such request.

Article
14

Indemnity

14.1        Tax
Claim Indemnification.   If,
in accordance with Owner’s direction, an exemption for all or part of the Work
is claimed for taxes, Owner shall indemnify, defend and hold harmless
Design-Builder from and against any liability, penalty, interest, fine, tax
assessment, attorneys’ fees or other expenses or costs incurred by
Design-Builder as a result of any action taken by Design-Builder in accordance
with Owner’s directive.

 31

 

14.2        Payment Claim Indemnification.    To the extent Design-Builder has
received payment for the Work, Design-Builder shall indemnify, defend and hold
harmless Owner Indemnified Parties from any claims or mechanic’s liens brought
against Owner Indemnified Parties or against the Project as a result of the
failure of Design-Builder, or those for whose acts it is responsible, to pay
for any services, materials, labor, equipment, taxes or other items or
obligations furnished or incurred for or in connection with the Work.  Within three (3) business days of receiving
written notice from Owner that such a claim or mechanic’s lien has been filed,
Design-Builder shall commence to take the steps necessary to discharge such
claim or lien, including, if necessary, the furnishing of a mechanic’s lien
bond.  If Design-Builder fails to do so,
Owner will have the right to discharge the claim or lien and hold
Design-Builder liable for costs and expenses incurred, including attorneys’
fees.

14.3        Design-Builder’s
General Indemnification.

14.3.1     Design-Builder,
to the fullest extent permitted by Law, shall indemnify, hold harmless and
defend Owner, Lenders, Lenders’ Agent, and their successors, assigns, officers,
directors, employees and agents (“Owner Indemnified Parties”) from and
against any and all losses, costs, damages, injuries, liabilities, claims,
demands, penalties, interest and causes of action, including without limitation
attorney’s fees (collectively, the “Damages”) for bodily injury,
sickness or death, and property damage or destruction (other than to the Work
itself) to the extent resulting from the negligent or intentionally wrongful
acts or from omissions of Design-Builder, Design Consultants, Subcontractors,
anyone employed directly or indirectly by any of them or anyone for whose acts
any of them may be liable.

14.3.2     If
an employee of Design-Builder, Design Consultants, Subcontractors, anyone
employed directly or indirectly by any of them or anyone for whose acts any of
them may be liable has a claim against Owner Indemnified Parties,
Design-Builder’s indemnity obligation set forth in Section 14.3.1 above
shall not be limited by any limitation on the amount of damages, compensation
or benefits payable by or for Design-Builder, Design Consultants,
Subcontractors, or other entity under any employee benefit acts, including
workers’ compensation or disability acts.

14.3.3     Without
limiting the generality of Section 14.3.1 hereof, Design-Builder shall fully
indemnify, save harmless and defend the Owner Indemnified Parties from and
against any and all Damages in favor of any governmental authority or other
third party to the extent caused by (a) failure of Design-Builder or any
Subcontractor to comply with Legal Requirements as required by this Agreement,
or (b) failure of Design-Builder or any Subcontractor to properly
administer and pay any taxes or fees required to be paid by Design-Builder
under this Agreement.

14.3.4     Nothing
in the Design-Builder’s General Indemnification contained in this Section 14.3
shall be read to limit in any way any entitlement Design-Builder shall have to
insurance coverage under any insurance policy, including any insurance policy
required by either Party under this Agreement.

14.4        Owner’s
General Indemnification.   Owner, to the fullest extent permitted by
Law, shall indemnify, hold harmless and defend Design-Builder and any of
Design-Builder’s officers, directors, employees, or agents from and against
claims, losses, damages, liabilities,

 32
 

 

including attorneys’ fees and expenses, for bodily injury, sickness or
death, and property damage or destruction (other than to the Work itself) to
the extent resulting from the negligent acts or intentionally wrongful acts or
from omissions of Owner, its officers, directors, employees, agents, or anyone
for whose acts any of them may be liable.

14.4.1     Without
limiting the generality of Section 14.4 hereof, Owner shall fully indemnify,
save harmless and defend the Design-Builder and any of Design-Builder’s
officers, directors, employees, or agents from and against any and all Damages
in favor of any governmental authority or other third party to the extent
caused by (a) failure of Owner or any of Owner’s agents to comply with
Legal Requirements as required by this Agreement, or (b) failure of Owner
or Owner’s agents to properly administer and pay any taxes or fees required to
be paid by Owner under this Agreement.

14.4.2     Nothing
in the Owner’s General Indemnification contained in this Section 14.4 shall be
read to limit in any way any entitlement Design-Builder shall have to insurance
coverage under any insurance policy, including any insurance policy required by
either Party under this Agreement.

14.5        Patent
and Copyright Infringement.

14.5.1     Design-Builder
shall indemnify, hold harmless and defend Owner Indemnified Parties from and
against any and all Damages based on any claim that the Work, the Work Product,
or any part thereof, or the operation or use of the Work or any part thereof,
constitutes infringement of any United States or foreign patent, copyright or
other intellectual property, now or hereafter issued.  Owner shall give prompt written notice to
Design-Builder of any such action or proceeding and will reasonably provide
authority, information and assistance in the defense of same.  Design-Builder shall indemnify and hold
harmless Owner Indemnified Parties from and against all damages and costs,
including but not limited to, attorneys’ fees and expenses awarded against
Owner or Design-Builder in any such action or proceeding.

14.5.2     If
Owner is enjoined from the operation or use of the Work, Work Product, the
Project, or any part thereof, as the result of any patent or copyright suit,
claim, or proceeding, Design-Builder shall at its sole expense take reasonable
steps to procure the right to operate or use the Work, Work Product or the
Project.  If Design-Builder cannot so
procure such right within a reasonable time, Design-Builder shall promptly, at
Design-Builder’s option and at Design-Builder’s expense, (i) modify the Work or
Work Product so as to avoid infringement of any such patent or copyright or
(ii) replace the Work or Work Product with Work or Work Product that does not
infringe or violate any such patent, copyright, trade secret, proprietary
right, confidential information or intellectual property right.

14.5.3     Sections
14.5.1 and 14.5.2 above shall not be applicable to any suit, claim or
proceeding based on infringement or violation of a patent or copyright (i)
relating solely to a particular process or product of a particular manufacturer
specified by Owner and not offered or recommended by Design-Builder to Owner,
or (ii) arising from modifications to the Work by Owner or its agents after
acceptance of the Work, or (iii) relating to the operation or use of the Work
by the Owner in a manner not permitted by this Agreement or the ICM License
Agreement.  If the suit, claim or
proceeding is based upon events set forth in the preceding sentence, Owner
shall defend, indemnify and hold harmless Design-Builder to the same extent 

 33
 

 

Design-Builder is obligated to defend, indemnify and hold harmless
Owner in Section 14.5.1 above.

Article
15

Stop
Work; Termination for Cause

15.1        Owner’s Right to Stop Work.    Owner may, without cause and for
its convenience, order Design-Builder in writing to stop and suspend the
Work.  Such suspension shall not exceed
sixty (60) consecutive Days or aggregate more than ninety (90) Days during the
duration of the Project.  Design-Builder
is entitled to seek an adjustment of the Contract Price and/or the contract
time(s) if its cost or time to perform the Work has been adversely impacted by
any suspension or stoppage of work by Owner.

15.2        Owner’s
Right to Perform and Terminate for Cause.

15.2.1     If
Design-Builder persistently fails to: (i) provide a sufficient number of
skilled workers; (ii) supply the materials required by the Contract Documents;
(iii) comply with applicable Legal Requirements; (iv) timely pay, without
cause, Design Consultants or Subcontractors; (v)  perform the Work with
promptness and diligence to ensure that the Work is completed by the contract
time(s), as such times may be adjusted in accordance with this Agreement; or
(vi) perform material obligations under the Contract Documents; then Owner, in
addition to any other rights and remedies provided in the Contract Documents or
by law or equity, shall have the rights set forth in Sections 15.2.2 and 15.2.3
below.

15.2.2     Upon
the occurrence of an event set forth in Section 15.2.1 above, Owner may
provide written notice to Design-Builder that it intends to terminate the
Agreement unless the problem cited is cured, or commenced to be cured within
seven (7) Days of Design-Builder’s receipt of such notice.  If Design-Builder fails to cure, or
reasonably commence to cure such problem and thereafter diligently pursue such
cure to completion, then Owner may give a second written notice to
Design-Builder of its intent to terminate following an additional seven (7) Day
period.  If Design-Builder, within such
second seven (7) Day period, fails to cure, or reasonably commence to cure such
problem and thereafter diligently pursue such cure to completion, then Owner
may declare the Agreement terminated for default by providing written notice to
Design-Builder of such declaration.  If (i) the insurance coverage required by Design-Builder
pursuant Article 17 hereof is suspended or cancelled without Design-Builder
providing immediate replacement coverage (and, in any case, within fourteen
(14) Days of the occurrence thereof) meeting the requirements specified in
Section 17 hereof; (ii) a default occurs under the Performance Bond or the
Payment Bond, or the Performance Bond or Payment Bond is revoked or terminated
and such Performance Bond or the Payment Bond is not immediately replaced (and,
in any case, within fourteen (14) Days of the occurrence thereof) by
Design-Builder with a Performance Bond or a Payment Bond providing at least the
same level of coverage in a form and from a surety acceptable to Owner and
Lenders, or the surety under the Performance Bond or Payment Bond institutes or
has instituted against it a case under the United States Bankruptcy Code; (iii)
Design-Builder purports to make an assignment of this Agreement in breach of
the provisions of Section 21.1 hereof, or (iv) any representation or warranty
made by Design-Builder under Section 18.1 hereof was false or materially
misleading when made, then Owner may terminate this Agreement upon written
notice to Design-Builder.

 34
 

 

15.2.3     Upon
declaring the Agreement terminated pursuant to Section 15.2.2 above, Owner
may enter upon the premises and take possession, for the purpose of completing
the Work, of all materials, equipment, scaffolds, tools, appliances and other
items thereon, which have been purchased for the performance of the Work, all
of which Design-Builder hereby transfers, assigns and sets over to Owner for
such purpose, and to employ any person or persons to complete the Work and
provide all of the required labor, services, materials, equipment and other
items.  In the event of such termination,
Design-Builder shall not be entitled to receive any further payments under the
Contract Documents until the Work shall be finally completed in accordance with
the Contract Documents.  At such time, if
the unpaid balance of the Contract Price exceeds the cost and expense incurred
by Owner in completing the Work, Design-Builder will be paid promptly by Owner
for Work performed prior to its default. 
If Owner’s cost and expense of completing the Work exceeds the unpaid
balance of the Contract Price, then Design-Builder shall be obligated to
promptly pay the difference to Owner. 
Such costs and expense shall include not only the cost of completing the
Work, but also losses, damages, costs and expenses, including attorneys’ fees
and expenses, incurred by Owner in connection with the re-procurement and
defense of claims arising from Design-Builder’s default, subject to the waiver
of consequential damages set forth in Section 19.4 hereof.

15.2.4     If
Owner improperly terminates the Agreement for cause, the termination for cause
will be converted to a termination for convenience in accordance with the
provisions of Section 15.3.

15.3        Owner’s
Right to Terminate for Convenience.

15.3.1     Upon
ten (10) Days’ written notice to Design-Builder, Owner may, for its convenience
and without cause, elect to terminate this Agreement.  In such event, Owner shall pay Design-Builder
for the following:

(a)                                  to
the extent not already paid, all Work executed, and for proven loss, cost or
expense in connection with the Work;

(b)                                 the
reasonable costs and expenses attributable to such termination, including
demobilization costs;

(c)                                  amounts
due in settlement of terminated contracts with Subcontractors and Design
Consultants;

(d)                                 overhead and profit
margin in the amount of fifteen percent (15%) on the sum of items (a) and (b)
above; and

(e)                                  all retainage
withheld by Owner on account of Work that has been completed in accordance with
the Contract Documents.

15.3.2     If
Owner terminates this Agreement pursuant to this Section 15.3 and proceeds
to design and construct the Project through its employees, agents or third
parties, Owner’s rights to use the Work Product shall be as set forth in
Section 5.3.

15.4        Design-Builder’s
Right to Stop Work.

 35
 

 

15.4.1     Design-Builder
may, in addition to any other rights afforded under the Contract Documents or
at Law, stop work for Owner’s failure to pay amounts properly due under
Design-Builder’s Application for Payment.

15.4.2     If
any of the events set forth in Section 15.4.1 above occur, Design-Builder
has the right to stop work by providing written notice to Owner that
Design-Builder will stop work unless such event is cured within seven (7) Days
from Owner’s receipt of Design-Builder’s notice. If Owner fails to cure or
reasonably commence to cure such problem and thereafter diligently pursue such
cure to completion, then Design-Builder may give a second written notice to
Owner of its intent to stop work within an additional seven (7) Day
period.  If Owner, within such second
seven (7) Day period, fails to cure, or reasonably commence to cure such
problem and thereafter diligently pursue such cure to completion, then
Design-Builder may stop work.  In such
case, Design-Builder shall be entitled to make a claim for adjustment to the
Contract Price and contract time(s) to the extent it has been adversely
impacted by such stoppage.

15.5        Design-Builder’s
Right to Terminate for Cause.

15.5.1     Design-Builder,
in addition to any other rights and remedies provided in the Contract Documents
or by Law, may terminate the Agreement for cause for the following reasons:

(a)                                  The
Work has been stopped for sixty (60) consecutive Days, or more than ninety (90)
Days during the duration of the Project, because of court order, any government
authority having jurisdiction over the Work, or orders by Owner under
Section 15.1 hereof, provided that such stoppages are not due to the acts
or omissions of Design-Builder, Design Consultant and their respective
officers, agents, employees, Subcontractors or any other person for whose acts
the Design-Builder may be liable under Law..

(b)                                 Owner’s
failure to provide Design-Builder with any information, permits or approvals
that are Owner’s responsibility under the Contract Documents which result in
the Work being stopped for sixty (60) consecutive Days, or more than ninety (90)
Days during the duration of the Project, even though Owner has not ordered
Design-Builder in writing to stop and suspend the Work pursuant to
Section 15.1 hereof.

(c)                                  Owner
fails to meet its obligations under Exhibit C and such failure results in the Work
being stopped for sixty (60) consecutive Days, or more than ninety (90) Days
during the duration of the Project even though Owner has not ordered
Design-Builder in writing to stop and suspend the Work pursuant to
Section 15.1 hereof.

(d)                                 Owner’s
failure to cure the problems set forth in Section 15.4.1 above within
seven (7) Days after Design-Builder has stopped the Work.

15.5.2     Upon the
occurrence of an event set forth in Section 15.5.1 above, Design-Builder
may elect to terminate this Agreement by providing written notice to Owner that
it intends to terminate the Agreement unless the problem cited is cured within
seven (7) Days of Owner’s receipt of such notice.  If Owner fails to cure, or reasonably
commence to cure, such problem, then Design-Builder may give a second written
notice to Owner of its intent to 

 36
 

 

terminate within an additional seven (7) Day
period.  If Owner, within such second
seven (7) Day period, fails to cure such problem, then Design-Builder may
declare the Agreement terminated for default by providing written notice to
Owner of such declaration.  In such case,
Design-Builder shall be entitled to recover in the same manner as if Owner had
terminated the Agreement for its convenience under Section 15.3.

15.6        Bankruptcy of Owner or Design-Builder.

15.6.1     If either Owner or
Design-Builder institutes or has instituted against it a case under the United
States Bankruptcy Code (such party being referred to as the “Bankrupt  Party”),
such event may impair or frustrate the Bankrupt Party’s ability to perform its
obligations under the Contract Documents. 
Accordingly, should such event occur:

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

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

15.6.2     If the Bankrupt
Party fails to comply with its foregoing obligations, the non-Bankrupt Party
shall be entitled to request the bankruptcy court to reject the Agreement,
declare the Agreement terminated and pursue any other recourse available to the
non-Bankrupt Party under this Article 15.

15.6.3     The rights and
remedies under this Section 15.6 shall not be deemed to limit the ability
of the non-Bankrupt Party to seek any other rights and remedies provided by the
Contract Documents or by Law, including its ability to seek relief from any
automatic stays under the United States Bankruptcy Code or the right of
Design-Builder to stop Work under any applicable provision of this Agreement.

15.7        Lenders’ Right to Cure.  At any time after
the occurrence of any event set forth in Section 15.4.1 or Section 15.5.1, the
Lenders shall have the right, but not the obligation, to cure such default on
behalf of Owner.

Article
16

Representatives
of the Parties

16.1        Designation of Owner’s Representatives.    Owner designates
the individual listed below as its senior representative (“Owner’s Senior
Representative”), which individual has the authority and responsibility for
avoiding and resolving disputes under Article 19:

 37
 

 

[Owner’s Representative

Title

Address

Telephone:

Facsimile:]

Owner designates the individual
listed below as its representative (“Owner’s Representative”), which
individual has the authority and responsibility set forth in Section 4.4:

[Owner’s Senior Representative

Title

Address

Telephone:

Facsimile:]

16.2        Designation of Design-Builder’s
Representatives.  Design-Builder designates the individual listed
below as its senior representative (“Design-Builder’s Senior Representative”),
which individual has the authority and responsibility for avoiding and
resolving disputes under Article 19:

Roland “Ron” Fagen

CEO and President

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Telephone:  (320) 564-3324

Design-Builder designates the
individual listed below as its representative (“Design-Builder’s  Representative”),
which individual has the authority and responsibility set forth in
Section 3.1:

Aaron Fagen

Chief Operating Officer

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Telephone:  (320) 564-3324

Article
17

Insurance

17.1        Insurance.  
Design-Builder shall procure and maintain in force through the Final
Completion Date the following insurance coverages with the policy limits
indicated, and otherwise in compliance with the provisions of this Agreement:

 38
 

 

 

	
  Commercial General
  Liability:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  General Aggregate

  	
   

  	
   

  	
   

  
	
  Products-Comp/Op AGG

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Personal & Adv Injury

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Each Occurrence

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Fire Damage (Any one fire)

  	
   

  	
  $

  	
  50,000

  	
   

  
	
  Med Exp (Any one person)

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Automobile
  Liability:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Combined Single Limit

  	
   

  	
   

  	
   

  
	
  Each Occurrence

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Excess Liability
  — Umbrella Form:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Each Occurrence

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  Aggregate

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Workers’
  Compensation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Statutory limits as required by the state in which
  the Work is performed.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Employers’
  Liability:

  	
   

  	
   

  	
   

  
	
  Each Accident

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Disease-Policy Limit

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Disease-Each Employee

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Professional
  Errors and Omissions

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Per Claim

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
  Annual

  	
   

  	
  $

  	
  5,000,000

  	
   

  

 

17.2        Design-Builder’s Insurance Requirements.

17.2.1     Design-Builder is
responsible for procuring and maintaining from insurance companies authorized
to do business in the state in which the Project is located, and with the
minimum rating set forth below, the following insurance coverages for certain
claims which may arise from or out of the performance of the Work and
obligations under the Contract Documents:

(a)                                  coverage for claims
arising under workers’ compensation, disability and other similar employee
benefit Laws applicable to the Work;

(b)                                 coverage for claims by
Design-Builder’s employees for bodily injury, sickness, disease, or death;

(c)                                  coverage for claims
by any person other than Design-Builder’s employees for bodily injury,
sickness, disease, or death;

(d)                                 coverage for usual
personal injury liability claims for damages sustained by a person as a direct
or indirect result of Design-Builder’s employment of the person, or sustained
by any other person;

 39
 

 

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

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

(g)                                 coverage for
contractual liability claims arising out of Design-Builder’s obligations under
Section 14.2.

17.2.2     Design-Builder’s
liability insurance required by this Section 17.2 shall be written for the
coverage amounts set forth in Section 17.1 and shall include completed
operations insurance for the period of time set forth in the Agreement.

17.2.3     Design-Builder’s
liability insurance set forth in Sections 17.2.1 (a) through (g) above shall
specifically delete any design-build or similar exclusions that could
compromise coverages because of the design-build delivery of the Project.

17.2.4      To the extent
Owner requires Design-Builder or any Design Consultant to provide professional
liability insurance for claims arising from the negligent performance of design
services by Design-Builder or the Design Consultant, the coverage limits,
duration and other specifics of such insurance shall be as set forth in the
Agreement.  Any professional liability
shall specifically delete any design-build or similar exclusions that could
compromise coverages because of the design-build delivery of the Project.  Such policies shall be provided prior to the
commencement of any design services hereunder.

17.2.5     Prior to
commencing any construction services hereunder, Design-Builder shall provide
Owner with certificates evidencing that (i) all insurance obligations required
by the Contract Documents are in full force and in effect and will remain in
effect for the duration required by the Contract Documents and (ii) no
insurance coverage required hereunder will be canceled, renewal refused, or changed
unless at least thirty (30) Days prior written notice is given to Owner.

17.3        Owner’s Liability Insurance.   Owner shall procure and maintain from
insurance companies authorized to do business in the state in which the Project
is located such liability insurance to protect Owner from claims which may
arise from the performance of Owner’s obligations under the Contract Documents
or Owner’s conduct during the course of the Project.  The general and professional liability
insurance obtained by Owner shall name Design-Builder, Design Consultants,
Subcontractors, the Lenders and Lenders’ Agent as additional insureds, without
application of deductible, retention or retrospective premiums as to the
additional insureds.

17.4        Owner’s Property Insurance.

17.4.1     Unless otherwise
provided in the Contract Documents, Owner shall procure from insurance
companies authorized to do business in the state in which the Project is
located, and maintain through Final Completion, property insurance upon the
entire Project in a minimum amount equal to the full insurable value of the
Project, including professional fees, 

 40
 

 

overtime premiums and all other
expenses incurred to replace or repair the insured property.  The property insurance obtained by Owner
shall include as additional insureds the interests of Owner, Design-Builder,
Design Consultants, Subcontractors, the Lenders and Lenders’ Agent and shall
insure against the perils of fire and extended coverage, theft, vandalism,
malicious mischief, collapse, flood, earthquake, debris removal and other
perils or causes of loss as called for in the Contract Documents and without
application of any deductible, retention or retrospective premium.  Owner shall maintain coverage equal to or in
excess of the value of each of Design-Builder’s, Design Consultants’, and
Subcontractors’ property on the Site. 
The property insurance shall include physical loss or damage to the
Work, including materials and equipment in transit, at the Site or at another
location as may be indicated in Design-Builder’s Application for Payment and
approved by Owner.

17.4.2     Unless the
Contract Documents provide otherwise, Owner shall procure and maintain boiler
and machinery insurance that will include as additional insureds the Owner,
Design-Builder, Design Consultants, and Subcontractors, in an amount not less
than Contract Price and without application of any deductible, retention or
retrospective premium as to the additional insureds. Owner shall maintain
coverage equal to or in excess of the value of each of Design-Builder’s, Design
Consultants’, and Subcontractors’ interest or investment in boiler or machinery
equipment on the Site.

17.4.3     Prior to
Design-Builder commencing any Work, Owner shall obtain a builder’s risk
insurance policy naming Owner as the insured, with Design-Builder, Design
Consultants and Subcontractors as additional insureds, in an amount not less
than the Contract Price and without application of deductible, retention or
retrospective premium as to the additional insureds.

17.4.4     Owner shall also
obtain, prior to Design-Builder commencing any Work, terrorism coverage as
described by the Terrorism Risk Insurance Act of 2002, Pub. L. No. 107-297, 116
Stat. 2322 (2002) or any successor act or renewing act for the period during
which the Terrorism Risk Insurance Act or any successor act or renewing act is
in effect.

17.4.5     Prior to
Design-Builder commencing any Work, Owner shall provide Design-Builder with
copies of the insurance certificates reflecting coverages required under this
Section 17.4 evidencing that (i) all Owner’s insurance obligations required by
the Contract Documents are in full force and in effect and will remain in
effect until Design-Builder has completed all of the Work and has received
Final Payment from Owner, and (ii) no insurance coverage will be canceled,
renewal refused, or changed unless at least thirty (30) Days prior written
notice is given to Design-Builder.  Owner’s
property insurance shall not lapse or be cancelled if Owner occupies a portion
of the Work pursuant to Section 6.5.3. 
Promptly after Owner’s receipt thereof, Owner shall be required to
provide Design-Builder with copies of all insurance polices to which
Design-Builder, Design Consultants, and Subcontractors are named as additional
insureds.  In the event Owner replaces
insurance providers for any policy required under this Section, revises policy
coverages, or otherwise modifies any applicable insurance policy in any way,
owner shall provide Design-Builder, for its review or possession as provided
under this Section 17.4.5, the certificate of insurance and a copy of such new,
revised or modified policy when available.

 41

 

 

17.4.6   Any
loss covered under Owner’s property insurance shall be adjusted with Owner and
Design-Builder and made payable to both of them as trustees for the insureds as
their interests may appear, subject to any applicable mortgage clause.  All insurance proceeds received as a result
of any loss will be placed in a separate account and distributed in accordance
with such agreement as the interested parties may reach.  Any disagreement concerning the distribution
of any proceeds will be resolved in accordance with Article 19 hereof.

17.4.7   Owner
and Design-Builder waive against each other and Owner’s separate contracts,
Design Consultants, Subcontractors, agents and employees of each and all of
them all damages covered by property insurance provided herein, except such
rights as they may have to the proceeds of such insurance.  Design-Builder and Owner shall, where
appropriate, require similar waivers of subrogation from Owner’s separate
contractors, Design Consultants Subcontractors, and insurance providers and
shall require each of them to include similar waivers in their contracts or
policies.

17.5        Coordination with Loan Documents.   Notwithstanding
anything herein to the contrary, all provisions relating to insurance and
insurance proceeds shall be conformed to the requirements of the Lenders in
connection with any financing.

Article
18

Representations
and Warranties

18.1        Design-Builder
and Owner Representations and Warranties.   Each
of Design-Builder and Owner represents that:

(i)                                     it
is duly organized, validly existing and in good standing under the Laws of its
formation  and has all requisite power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby;

(ii)                                  this
Agreement has been duly executed and delivered by such party and constitutes
the legal, valid and binding obligations of such party, enforceable against
such party in accordance with their respective terms, except as enforcement may
be limited by bankruptcy, insolvency, moratorium or similar Laws affecting
creditor’s rights or by general equitable principles;

(iii)                               the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby do not and will not conflict with or
violate (a) the certificate of incorporation or bylaws or equivalent
organizational documents of such party, or (b) any Law applicable to such party
and other than the permits listed on Exhibit G,
such execution, delivery and performance of this Agreement does not require any
governmental approval; and

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

 

 42
 

 

 

18.2        Design-Builder Representations and Warranties.   Design-Builder
further represents that it has the necessary financial resources to fulfill its
obligations under this Agreement.

Article
19

Dispute Resolution

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

Design-Builder and Owner will
first attempt to resolve disputes or disagreements at the field level through
discussions between Design-Builder’s Representative and Owner’s Representative.

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

If, after meeting, the Senior
Representatives determine that the dispute or disagreement cannot be resolved
on terms satisfactory to both Parties, the Parties shall submit the dispute or
disagreement to non-binding mediation. 
The mediation shall be conducted in Minneapolis, Minnesota by a mutually
agreeable impartial mediator, or if the Parties cannot so agree, a mediator
designated by the American Arbitration Association (“AAA”) pursuant to
its Construction Industry Arbitration Rules and Mediation Procedures.  The mediation will be governed by and
conducted pursuant to a mediation agreement negotiated by the Parties or, if
the Parties cannot so agree, by procedures established by the mediator.

19.2        Arbitration.   Any
claims, disputes or controversies between the Parties arising out of or
relating to the Agreement, or the breach thereof, which have not been resolved
in accordance with the procedures set forth in Section 19.1 above shall be
decided by arbitration to be conducted in Minneapolis, Minnesota in accordance
with the Construction Industry Arbitration Rules and Mediation Procedures of
the AAA then in effect, unless the Parties mutually agree otherwise.

The award of the arbitrator(s)
shall be final and binding upon the Parties without the right of appeal to the
courts.  Judgment may be entered upon it
in accordance with Applicable Law by any court having jurisdiction thereof.

Design-Builder and Owner
expressly agree that any arbitration pursuant to this Section 19.2 may be
joined or consolidated with any arbitration involving any other person or
entity (i) necessary 

 

 43
 

 

 

to resolve the claim, dispute
or controversy, or (ii) substantially involved in or affected by such claim,
dispute or controversy.  Both Design-Builder
and Owner will include appropriate provisions in all contracts they execute
with other parties in connection with the Project to require such joinder or
consolidation.

The prevailing party in any arbitration, or
any other final, binding dispute proceeding upon which the Parties may agree,
shall be entitled to recover from the other party reasonable attorneys’ fees
and expenses incurred by the prevailing party.

19.3        Duty to Continue Performance.   Unless provided to the
contrary in the Contract Documents, Design-Builder shall continue to perform
the Work and Owner shall continue to satisfy its payment obligations to
Design-Builder, pending the final resolution of any dispute or disagreement
between Design-Builder and Owner.

19.4        Consequential Damages.

19.4.1     Notwithstanding
anything herein to the contrary (except as set forth in Section 19.4.2 below),
neither Design-Builder nor Owner shall be liable to the other for any
consequential losses or damages, whether arising in contract, warranty, tort
(including negligence), strict liability or otherwise, including but not
limited to, losses of use, profits, business, reputation or financing, except
that Design-Builder does not waive any such damages resulting from or arising
out of any breach of Owner’s duties and obligations under the limited license
granted by Design-Builder to Owner pursuant to Article 5.

19.4.2     The consequential
damages limitation set forth in Section 19.4.1 above is not intended to
affect the payment of liquidated damages, if any, set forth in Section 7.3 of
the Agreement, which both Parties recognize has been established, in part, to
reimburse Owner for some damages that might otherwise be deemed to be
consequential.

Article
20

Confidentiality of
Shared Information

20.1        Non-Disclosure Obligation.   Except as required by court
order, subpoena, or Applicable Law, neither party shall disclose to third
parties any confidential or proprietary information regarding the other party’s
business affairs, finances, technology, processes, plans or installations,
product information, know-how, or other information that is received from the
other party pursuant to this Agreement or the parties’ relationship prior
thereto or is developed pursuant to this Agreement, without the express written
consent of the other party, which consent shall not be unreasonably
withheld.  The Parties shall at all times
use their respective reasonable efforts to keep all information regarding the
terms and conditions of this Agreement confidential and shall disclose such
information to third persons only as reasonably required for the permitting of
the Project; financing the development, construction, ownership, operation and
maintenance of the Plant; or as reasonably required by either party for
performing its obligations hereunder and if prior to such disclosure, the
disclosing party informs such third persons of the existence of this
confidentiality obligation and only if such third persons agree to maintain the
confidentiality of any information received. 
This Article 20 shall not apply to information that was already in the
possession of one party prior to receipt from the other, that is now or
hereafter 

 

 44
 

 

 

becomes a part of the public domain through no fault
of the party wishing to disclose, or that corresponds in substance to information
heretofore or hereafter furnished by third parties without restriction on
disclosure.

20.2        Publicity and Advertising.   Neither Owner nor
Design-Builder shall  make or permit any
of their subcontractors, agents, or vendors to make any external announcement
or publication, release any photographs or information concerning the Project or
any part thereof, or make any other type of communication to any member of the
public, press, business entity, or any official body which names the other
Party unless prior written consent is obtained from the other Party, which
consent shall not be unreasonably withheld.

20.3        Term of Obligation.   The confidentiality obligations of
the Parties pursuant to this Article 20 shall survive the expiration or
other termination of this Agreement for a period of two (2) years.

Article
21

Miscellaneous

21.1        Assignment.   This Agreement shall be binding upon, shall inure to
the benefit of, and may be performed by, the successors and permitted assigns
of the Parties, except that neither Design-Builder nor Owner shall, without the
written consent of the other, assign or transfer this Agreement or any of the
Contract Documents.  Design-Builder’s
subcontracting portions of the Work in accordance with this Agreement shall not
be deemed to be an assignment of this Agreement.  Owner may assign all of its rights and
obligations under the Contract Documents to its Lenders or Lenders’ Agent as
collateral security in connection with Owner obtaining or arranging any
financing for the Project; provided, however, Owner shall deliver, at least ten
(10) Days prior to any such assignment, to Design-Builder (i) written notice of
such assignment and (ii) a copy of the instrument of assignment.  The Lenders or Lenders’ Agent may assign the
Contract Documents or their rights under the Contract Documents, including
without limitation in connection with any foreclosure or other enforcement of
their security interest.  Design-Builder
shall execute, if requested, a consent to assignment for the benefit of the
Lenders and/or the Lenders’ Agent, provided that with respect to any such
assignments such assignee demonstrates to Design-Builder’s satisfaction that it
has the capability to fulfill Owner’s obligations under this Agreement.

21.2        Successors.   Design-Builder and Owner intend that the provisions
of the Contract Documents are binding upon the Parties, their employees,
agents, heirs, successors and assigns.

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

21.4        Severability.   If any provision or any part of a provision of the
Contract Documents shall be finally determined to be superseded, invalid,
illegal, or otherwise unenforceable pursuant to any applicable Legal
Requirements, such determination shall not impair or otherwise affect the
validity, legality, or enforceability of the remaining provision or 

 45
 

 

 

parts of the provision of the Contract Documents,
which shall remain in full force and effect as if the unenforceable provision
or part were deleted.

21.5        No
Waiver.   The
failure of either Design-Builder or Owner to insist, in any one or more
instances, on the performance of any of the obligations required by the other
under the Contract Documents shall not be construed as a waiver or
relinquishment of such obligation or right with respect to future performance.

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

21.7        Notice.   Whenever the Contract Documents require that notice
be provided to a party, notice shall be delivered in writing to such party at
the address listed below.  Notice will be
deemed to have been validly given if delivered (i) in person to the individual
intended to receive such notice, (ii) by registered or by certified mail,
postage prepaid to the address indicated in the Agreement within four (4) Days
after being sent, or (iii) by facsimile, by the time stated in a
machine-generated confirmation that notice was received at the facsimile number
of the intended recipient.

If to
Design-Builder, to:

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN  56241

Attention: Aaron Fagen

Fax:  (320) 564-3278

with a copy to:

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN  56241

Attention:  Jennifer Johnson

Fax:  (320) 564-3278

and a copy to:

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN  56241

Attention:  Wayne Mitchell

Fax:  (320) 564-3278

 

 46
 

 

 

If to Owner, to:

[Owner Contact]

[Address]

and

Lender’s Agent at the address provided for Lender’s Agent to
Design-Builder by Owner by notice within five Days following the Financial
Closing.

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

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

21.10      Entire
Agreement.               This
Agreement consists of the terms and conditions set forth herein, as well as the
Exhibits hereto, which are incorporated by reference herein and made a part
hereof.  This Agreement sets forth the
full and complete understanding of the Parties as of the Effective Date with
respect to the subject matter hereof.

21.11      Third-Party Beneficiaries.   Except as expressly
provided herein, this Agreement is intended to be solely for the benefit of the
Owner, the Design-Builder and permitted assigns, and is not intended to and
shall not confer any rights or benefits on any person not a signatory hereto.

21.12      Counterparts.    This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original and all of
which together shall be deemed one and the same Agreement, and may be executed
and delivered by facsimile signature, which shall be considered an original.

21.13      Survival.   Notwithstanding any provisions herein to the
contrary, the Work Product provisions set forth in Article 5 and the indemnity
obligations set forth herein shall survive (in full force) the expiration or
termination of this Agreement, and shall continue to apply to the Parties to
this Agreement even after termination of this Agreement or the transfer of such
Party’s interest in this Agreement.

[The next page is
the signature page.]

 

 47
 

 

 

IN
WITNESS WHEREOF, the Parties hereto have caused their names
to be hereunto subscribed by their officers thereunto duly authorized,
intending thereby that this Agreement shall be effective as of this March 13,
2006.

	
  OWNER:DESIGN

  	
   

  	
  BUILDER:

  
	
   

  	
   

  	
   

  
	
  Advanced
  BioEnergy, LLC

  	
   

  	
  Fagen, Inc.

  
	
  (Name
  of Owner)

  	
   

  	
  (Name of Design-Builder)

  
	
   

  	
   

  	
   

  
	
        /s/
  Revis L. Stephenson III

  	
   

  	
        /s/ Ron Fagen

  
	
  (Signature)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
        Revis
  L. Stephenson III

  	
   

  	
  Roland “Ron” Fagen

  
	
  (Printed
  Name)

  	
   

  	
  (Printed Name)

  
	
   

  	
   

  	
   

  
	
        Chairman

  	
   

  	
  CEO and President

  
	
  (Title)

  	
   

  	
  (Title)

  
	
   

  	
   

  	
   

  
	
  Date:          3/16/06

  	
   

  	
  Date:               
  3/20/06

  

 

 48

 

EXHIBIT A

Performance Guarantee
Criteria

	
  Criteria

  	
   

  	
  Specification

  	
   

  	
  Testing Statement

  	
   

  	
  Documentation

  
	
  Plant Capacity — fuel grade ethanol

  	
   

  	
  Operate at a rate of 

  100 million gallons per year of denatured fuel grade ethanol meeting the
  specifications of ASTM 4806 based on 353 days of operation per calendar year
  and 4.76% denaturant.

  	
   

  	
  Seven day performance test

  	
   

  	
  Production records and a written report by
  Design-Builder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dried Distillers Grains with Solubles (DDGS)

  	
   

  	
  Dry all DDGS to produce 11% moisture DDGS

  	
   

  	
  Seven day performance test

  	
   

  	
  Production records and written analysis by
  Design-Builder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Corn to Ethanol Conversion ratio; Corn must be #2 Yellow or better, 54.6#/bushel min., 16% or less
  moisture, zero aflatoxin tolerance

  	
   

  	
  Not be less than 2.80 denatured gallons of ethanol
  per bushel (56#) of ground corn

  	
   

  	
  As determined by meter readings during a seven day
  performance test.

  	
   

  	
  Production records and written analysis by
  Design-Builder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Electrical Energy

  	
   

  	
  [*] kWh per denatured gallon of fuel grade ethanol.
  (less CO2 plant and chiller and water supply and
  treatment)

  	
   

  	
  As determined by meter readings during a seven day
  performance test.

  	
   

  	
  Production records and written analysis by
  Design-Builder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Natural Gas

  	
   

  	
  Shall not exceed [*] Btu per denatured gallon of
  fuel grade ethanol and 100% of all DDG with syrup to 11% moisture. (This
  Performance 

  	
   

  	
  As determined by meter readings during a seven day
  performance test.

  	
   

  	
  Production records and written analysis by Design-Builder.

  

* Portions omitted
pursuant to a request for confidential treatment and filed separately with the
SEC.

 

 A-1
 

 

 

 

	
  

  	
   

  	
  Criteria relates to production of ethanol and
  excludes any natural gas usage that may occur for drying corn).

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Process Water Discharge

  	
   

  	
  Zero gallons under normal operations

  	
   

  	
  Process discharge meter

  	
   

  	
  Control System reports

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Air Emissions

  	
   

  	
  Must meet the requirements prescribed as of the date
  hereof by the State of Nebraska Department of Environmental Quality, Air
  Quality Division for a synthetic minor source.

  	
   

  	
  Must meet the requirements as prescribed in the
  Construction Permit attached hereto as Exhibit M as revised by
  Design-Builder.

  	
   

  	
  Written report by Owner’s Air Emission Tester.

  

 

DISCLAIMER:  Owner’s failure to materially
comply with the operating procedures issued by ICM, Inc./Fagen, Inc. shall void
all performance guaranties and warranties set forth in this Design-Build
Agreement.

Owner understands that
the startup of the plant requires resources and cooperation of the Owner,
vendors and other suppliers to the project. 
Design-Builder disclaims any liability and Owner indemnifies
Design-Builder for non-attainment of the Performance Guarantee Criteria directly
or indirectly caused by material non-performance or negligence of third parties
not retained by Design-Builder.

 

 A-2

 

 

EXHIBIT
B

General Project Scope

Construct a 100
million-gallon per year (MGY) dry mill fuel ethanol plant near Fairmont,
Nebraska.  The plant will grind
approximately 35.8 million bushels of corn per year to produce approximately
100 MGY of denatured fuel ethanol.  The
plant will also produce approximately 321,000 tons per year of 11% moisture
dried distillers grains with solubles (DDGS), and approximately 285,700 tons
per year of raw carbon dioxide (CO2) gas.

Delivered corn will be
dumped in the receiving building.  The
receiving building will have two truck grain receiving bays and a rail
receiving bay, including an underground conveyor from the rail pit to the
second truck receiving bay both of which share a common receiving leg.  The truck driver will drive onto the pitless
scale located near the administration building, be weighed and sampled, then
drive to the receiving building, dump the grain, then proceed back to the
pitless scale and obtain a final weight ticket from the scale operator.  Two independent 15,000-bushel legs will lift
the corn to one of two 500,000 — bushel concrete storage bins.  A dust collection system will be installed on
the grain receiving system to limit particulate emissions as described in the
Air Quality Permit application.

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

Alcohol streams are
dehydrated in the rectifier column, the side stripper and the molecular sieve
system.  Two hundred proof alcohol is
pumped to the tank farm day tank and blended with five percent natural gasoline
as the product is being pumped into one of two 1,500,000 gallon final storage
tanks.  Loading facilities for truck and
rail cars will be provided.  Tank farm
tanks include:  one tank for 190 proof
storage, one tank for 200 proof storage, one tank for denaturant storage and
two 1,500,000 gallon tanks for denatured ethanol storage.

Corn mash from the beer
stripper is dewatered in the centrifuge(s). 
Wet cake from the centrifuge(s) is conveyed to the natural gas driven
DDGS dryer system. Wet cake is conveyed from the centrifuges to the dryer(s)
where the water is removed from the cake and the product is dried to 11% moisture.  A modified wet or wet cake pad is located
along side the DDGS dryer building to divert modified wet or wet cake to the
pad when necessary or for limited production of modified wet or wet cake for
sales.  Water in the thin stillage is
evaporated and recycled by the Bio-Methanation system.  Syrup is added to the wet cake entering the
dryer(s).  DDGS is cooled and conveyed to
flat storage in the DDGS storage building. 
Shipping is accomplished by scooping and pushing the product with a
front-end loader into an in-floor conveyor system.  The DDGS load out pit has capacity for
approximately one semi-trailer load. 
DDGS is weighed as it is loaded for shipment through a bulk-weigh system.

 

 B-1
 

 

 

Fresh water for the
boilers, cooking, cooling tower and other processes will be obtained from the
Owner supplied water pretreatment system. 
Boiler water conditioned in regenerative softeners will be pumped
through a deaerator scrubber and into a deaerator tank.  Appropriate boiler chemicals will be added as
preheated water is sent to the boiler.

Steam energy will be
provided by two Thermal Oxidizer (TO) driven boiler systems utilizing a high
percentage of condensate return to a condensate receiver tank.

The TO/Heat Recovery
Steam Generator is used to thermally oxidize the exhaust gasses from the
Dryers.  This process will be used to
reduce VOCs and particulates that are in the dryer exhaust and ensure
compliance with environmental regulations. 
The energy required to complete the thermal oxidization will be provided
by natural gas.

The process will be
cooled by circulating water through heat exchangers, a chiller, and a cooling
tower.

The design includes a
compressed air system consisting of air compressor(s), a receiver tank,
pre-filter, coalescing filter, and double air dryer(s).

The design also
incorporates the use of a clean-in-place (CIP) system for cleaning cook,
fermentation, distillation, evaporation, centrifuges, and other systems.  Fifty percent caustic soda is received by
truck and stored in a tank.

Under normal operating
circumstances, the plant will not have any wastewater discharges that have been
in contact with corn, corn mash, cleaning system, or contact process
water.  An ICM/Phoenix Bio-Methanator
will reduce the BOD in process water allowing complete reuse within the
plant.  The plant will have blowdown
discharges from the cooling tower and may have water discharge from any water
pre-treatment processes.  Owner shall
provide on-site connection to sanitary sewer or septic system.

Most plant processes are
computer controlled by a Siemens/Moore APACS distributed control system with
graphical user interface and three workstations.  The control room control console will have
dual monitors to facilitate operator interface between two graphics screens at
the same time.  Additional programmable
logic controllers (PLCs) will control certain process equipment.  Design Builder provides lab equipment.

The cooking system
requires the use of anhydrous ammonia, and other systems require the use of
sulfuric acid.  Therefore, a storage tank
for ammonia and a storage tank for acid will be on site to provide the
quantities necessary.  The ammonia
storage requires that plant management implement and enforce a Process Safety
Management (PSM) program.  The plant
design may require additional programs to ensure safety and to satisfy
regulatory authorities.

 

 B-2

 

EXHIBIT
C

Owner’s Responsibilities

The Owner shall perform and
provide the permits, authorizations, services and construction as specifically
described hereafter:

1)              Land and Grading — Owner
shall provide a site near Fairmont, Nebraska. 
Owner shall obtain all legal authority to use the site for its intended
purpose and perform technical due diligence to allow Design-Builder to perform
including, but not limited to, proper zoning approvals, building permits,
elevation restrictions, soil tests, and water tests. The site shall be rough
graded per Design-Builder specifications and be +/- three inches of final grade
including the rough grading for Site roadways. 
The site soils shall be modified as required to provide a minimum
allowable soil bearing pressure as described in Table 1.

Other items to be provided by the Owner include, but
are not limited to, the following: initial site survey (boundary and
topographic) as required by the Design-Builder, layout of the property corners
including two construction benchmarks, Soil Borings and subsequent Geotechnical
Report describing recommendation for Roads, foundations and if required, soil
stabilization/remediation, land disturbance permit, erosion control permit,
site grading as described above with minimum soil standards, placement of
erosion control measures, plant access road from a county, state or federal
road designed to meet local county road standards, plant storm and sanitary
sewers, fire water system with hydrants and plant water main branches taken
from the system to be within five feet of the designated building locations,
all tanks, motors and other equipment associated with or necessary to operate
the fire water loop and associated systems, plant roads as specified and
designed for the permanent elevations and effective depth, “construction”
grading plan as drawn (including site retention pond), plant water well and
associated permit(s).  Owner shall also
provide the final grading, seeding, and mulching, and the site fencing at the
site.

Owner is encouraged to obtain preliminary
designs/information and estimates of the cost of performing all Owner required
permits and services as stated in this Exhibit C.  Specifically, the cost of the fire water
systems (including associated fire water pumps, required tank, building (if
required), sprinklers, and all other equipment and materials associated with
the fire water delivery systems) is estimated being in excess of
$2,000,000.  The requirements of each
state and the decisions of each Owner will increase or decrease the actual
cost.Owner shall prepare site according to Design-Builder’s engineering plans
provided for the site work under the Phase I and Phase II Engineering
Agreement.

2)              Permits
— Owner shall obtain all Operating
Permits including, but not limited to, air quality permits, in a timely manner
to allow construction and startup of the plant as scheduled by Design-Builder.

 

 C-1
 

 

 

3)              Storm Water
Runoff Permit — Owner shall obtain the construction storm-water
runoff permit and permanent storm-water runoff permit. Design-Builder shall
obtain the erosion control/land disturbance permit.

4)              Nebraska
Pollutant Elimination Discharge Permit — Owner shall obtain a permit
to discharge cooling tower water, boiler blowdown water, reverse osmosis (“R.O.”)
reject water, and any other waste water directly to a designated waterway or
other location.  If required by item 8
below, Owner will secure appropriate permits for emergency process water
discharges.

5)              Natural Gas
Supply and Service Agreement — Continuous supply of natural gas of
at least 3.2 billion cubic feet per year, at a minimum rate of 450 - 550 MCF
per hour and at a minimum pressure of 75 - 200 psig at the plant site.  Pressure reducing stations must be located so
as to provide stable pressure at the point of use.  Owner shall provide all gas piping to the use
points and supply meters and regulators to provide burner tip pressures as
specified by Design-Builder.  Owner shall
also supply a digital flowmeter on-site with appropriate output for monitoring
by the plant’s computer control system.

6)              Temporary
Electrical Service — Owner shall secure electrical service to supply
a minimum 750 KW of 3 phase, 480/277 volt electrical power during
construction.  Owner shall procure,
install, and maintain temporary service to up to three 3 phase, 480/277 volt
temporary service transformers located throughout the site.  The transformer sizing, locations, and
underground electrical feed routing layout are to be determined jointly by the
Owner, the Design-Builder and the energy supplier.  Design-Builder shall pay energy demand and
usage charges up to Substantial Completion.

7)              Permanent Electrical
Service — (1) Owner is responsible to secure continuous service from an
energy supplier to serve the facility. 
The service from the energy supplier shall be of sufficient size to
provide at a minimum 12.5 MW of electrical capacity to the site.  (2) The Owner is responsible for procurement,
installation and maintenance of the site supply and distribution system,
including but not limited to the required substation and all associated
distribution lines.  An on-site digital
meter is also to be supplied for monitoring of electrical usage.  (3) The responsibility of the Design-Builder
starts at the secondary electrical terminals of the site distribution system
transformers that have been installed by Owner (i.e., the 480 volt terminals
for the process building transformers; the 480 volt terminals for the energy
center transformers; the 480 volt terminals for the grains transformer; the 480
volt terminals for the pumphouse transformer; and the 4160 volt terminals for
the chiller transformer; and the 4160 volt terminals of the thermal oxidizer
transformer). (4)  The site distribution
system requirements, layout, and meters are to be determined jointly by the
Owner, the Design-Builder and the energy supplier.

Design-Builder will be providing soft start motor
controllers for all motors greater than 150 horsepower and where demanded by
process requirements.  Owner is
encouraged to discuss with its electrical supplier whether additional soft
start motor controllers are advisable for this facility and such can be added,
with any increased cost being an Owner’s cost.

 

 C-2
 

 

 

Design-Builder will provide power factor correction to
0.92 lagging at plant nameplate capacity. 
Owner is encouraged to discuss with its electrical service supplier any
requirements for power factor correction above 0.92 lagging.  Additional power factor correction can be
added with any increased cost being an Owner’s cost.

8)              Water
Supply, Service Agreement, and Pre-Treatment System — Owner shall
supply on-site process wells or other water source that is capable of providing
a quantity of raw water satisfying the needs of the Plant.  Owner should consider providing a redundant
water supply source.  Design-Builder
shall provide the standard zeolite water softener system for boiler feedwater
polishing.  Owner will supply one process
fresh water supply line terminating within five (5) feet of the point of entry
designated by Design-Builder, and one potable supply line terminating within
five (5) feet of the process building and to the administration building at a
point of entry designated by administration building contractor.

Owner shall pay for a water pre-treatment system to be
designed and constructed by Design-Builder and to be integrated into the
Plant.  The pre-treatment system will be
designed to provide the Plant with the quantity and quality of raw and treated
water needed to supply the Plant’s process needs. The water pre-treatment
system design will also consider and recommend to Owner equipment required to
meet the discharge requirements under the Plant’s wastewater discharge
permit.  Owner is to execute side-letter
agreements as necessary for the design and construction of such water pre-treatment
system.  Design-Builder shall recover
costs for the design and construction of such system from the Owner at
Design-Builder’s standard time plus material rates during the relevant time
period and at the relevant locale.    A
side-letter agreement between Owner and Design-Builder shall be executed by
Owner and Design-Builder to compensate Design-Builder, at Design-Builder’s
standard time plus materials rates during the relevant time period and at the
relevant locale, for any costs  and
expenses related to such water pre-treatment system.

9)              Wastewater
Discharge System, Permits and/or Service Agreement — Owner to
provide discharge piping, septic tank and drainfield system or connect to
municipal system as required for the sanitary sewer requirements of the
Plant.  These provisions shall comply
with all federal, state, and local regulations, including any permitting
issues.

10)        Roads and
Utilities — Owner shall provide and maintain the ditches and
permanent roads, including the gravel, pavement or concrete, with the roads
passing standard compaction tests. 
(Design-Builder will maintain aggregate construction roads during
construction of the Plant and will return to original pre-construction
condition prior to Owner completing final grade and surfacing.)

Except as otherwise specifically stated herein the
Owner shall install all utilities so that they are within five (5) feet of the
designated building/structure locations.

11)        Administration
Building — The administration building — one story free standing,
office computer system, telephone system, office copier and fax machine and
office furniture and any other office equipment and personal property for the
administration building shall be the 

 

 C-3
 

 

 

sole and absolute cost
and responsibility of Owner and Design-Builder shall have no responsibility in
regards thereto.

12)        Maintenance and Power
Equipment — The maintenance and power equipment as described in Table 2 and
any other maintenance and power equipment as required by the plant or desired
by Owner shall be the sole and absolute cost and responsibility of Owner and
Design-Builder shall have no responsibility in regards thereto.

13)        Railroads — Owner is
responsible for any costs associated with the railroads including, but not
limited to, all rail design and engineering and construction and Design-Builder
shall have no responsibility in regards thereto.  Owner shall supply drawings and Phase II
redline drawings to Design-Builder.

14)        Drawings — Owner shall
supply drawings to Design-Builder of items supplied under items 11) and 13) and
also supply Phase II redline drawings.

15)        Fire Protection System —
Fire Protection System requirements vary by governmental requirements per
location and by insurance carrier requirements. 
Owner is responsible to provide the required fire protection system for
the Plant.  This may include storage
tanks, pumps, underground fire water mains, fire hydrants, foam or water
monitor valves, sprinkler systems, smoke and heat detection, deluge systems, or
other provisions as required by governmental codes or Owner’s insurance carrier’s
fire protection criteria.

Owner shall pay for a
Fire Protection System to be designed and constructed by Design-Builder and to
be integrated into the Plant.  The Fire
Protection System shall be designed and constructed to meet the governmental
and insurance requirements.  Owner is to
execute side-letter agreements as necessary for the design and construction of
such Fire Protection System. 
Design-Builder shall recover costs for the design and construction of
such system from Owner at Design-Builder’s standard time plus material rates
during the relevant time period and at the relevant locale.  A side-letter agreement between Owner and
Design-Builder shall be executed by Owner and Design-Builder to compensate
Design-Builder, at Design-Builder’s standard time plus materials rates during
the relevant time period and at the relevant locale, for any costs and expenses
related to such Fire Protection System.

 

 C-4
 

 

 

Table 1 Minimum Soil Bearing Pressure —
Responsibility of Owner

** Subject to revision based on detailed design and engineering.

	
  Description

  	
   

  	
  Required Allowable Soil Bearing 

  Pressure (pounds per square foot)

  	
   

  
	
  Grain Storage
  Silos

  	
   

  	
  7,000

  	
   

  
	
  DDGS Storage
  Silos

  	
   

  	
  5,000

  	
   

  
	
  Cook Water Tank

  	
   

  	
  4,500

  	
   

  
	
  Methanator Feed
  Tank

  	
   

  	
  4,500

  	
   

  
	
  Liquefaction
  Tank #1

  	
   

  	
  3,500

  	
   

  
	
  Liquefaction
  Tank #2

  	
   

  	
  3,500

  	
   

  
	
  Fermentation
  Tank #1

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #2

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #3

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #4

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #5

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #6

  	
   

  	
  5,000

  	
   

  
	
  Fermentation
  Tank #7

  	
   

  	
  5,000

  	
   

  
	
  Beerwell

  	
   

  	
  5,000

  	
   

  
	
  Whole Stillage
  Tank

  	
   

  	
  4,500

  	
   

  
	
  Thin Stillage
  Tank

  	
   

  	
  4,500

  	
   

  
	
  Syrup Tank

  	
   

  	
  4,500

  	
   

  
	
  190 Proof Day
  Tank

  	
   

  	
  3,000

  	
   

  
	
  200 Proof Day
  Tank

  	
   

  	
  3,000

  	
   

  
	
  Denaturant Tank

  	
   

  	
  3,000

  	
   

  
	
  Fire Water Tank

  	
   

  	
  3,000

  	
   

  
	
  Denatured
  Ethanol Tank #1

  	
   

  	
  3,000

  	
   

  
	
  Denatured
  Ethanol Tank #2

  	
   

  	
  3,000

  	
   

  
	
  Distillation Mat
  Foundation

  	
   

  	
  4,500

  	
   

  
	
  All Other Areas

  	
   

  	
  3,000

  	
   

  

 

 C-5
 

 

 

Table 2 Maintenance and Power Equipment —
Responsibility of Owner

	
  Description

  	
   

  	
  Additional Description

  	
   

  	
   

  
	
  Spare Parts

  	
   

  	
  Spare parts 

  Parts bins 

  Misc. materials, supplies and equipment

  	
   

  	
   

  
	
  Shop supplies and equipment

  	
   

  	
  One shop welder

  One portable gas welder 

  One plasma torch 

  One acetylene torch 

  One set of power tools 

  Two sets of hand tools with tool boxes 

  Carts and dollies Hoists (except centrifuge overhead crane) 

  Shop tables 

  Maintenance office furnishings & supplies 

  Fire Extinguishers Reference books 

  Safety manuals 

  Safety cabinets & supplies, etc. 

  Safety showers as required

  	
   

  	
   

  
	
  Rolling stock

  	
   

  	
  Used 11⁄2 yard front end loader 

  New Skid loader 

  Used Fork lift 

  Used Scissors lift, 

  30 foot Used Pickup truck 

  Track Mobile

  	
   

  	
   

  

 

 

 C-6

 

EXHIBIT
D

ICM License Agreement

THIS LICENSE AGREEMENT (this “License Agreement”) is entered into
and made effective as of the 13th day of March, 2006 (“Effective Date”)
by and between Advanced BioEnergy, LLC, a Delaware Limited Liability Company (“OWNER”),
and ICM, Inc., a Kansas corporation (“ICM”).

WHEREAS, OWNER has entered into that certain
Design-Build Lump Sum Contract dated March 13, 2006 (the “Contract”) with
Fagen, Inc., a Minnesota corporation (“Fagen”), under which Fagen is to design
and construct a 100 million gallon per year ethanol plant for OWNER to be
located in or near Fairmont, Nebraska (the “Plant”);

WHEREAS, ICM has granted Fagen the right to use
certain proprietary technology and information of ICM in the design and
construction of the Plant; and

WHEREAS, OWNER desires from ICM, and ICM desires to
grant to OWNER, a license to use such proprietary technology and information in
connection with OWNER’s ownership, operation, maintenance and repair of the
Plant, all upon the terms and conditions set forth herein;

NOW, THEREFORE, the parties, in consideration of the
foregoing premises and the mutual promises contained herein and for other good
and valuable consideration, receipt of which is hereby acknowledged, agree as
follows:

1.     Upon substantial completion
of the Plant by Fagen pursuant to the terms of the Contract or, if later,
payment by OWNER of all amounts due and owing to Fagen under the Contract, ICM
grants to OWNER a perpetual limited license to use the Proprietary Property
(hereinafter defined) solely in connection with the ownership, operation,
maintenance and repair of the Plant, subject to the limitations provided herein
(the “Purpose”).

2.     The “Proprietary Property”
means, without limitation, documents, Operating Procedures (hereinafter
defined), materials and other information that are furnished by ICM to OWNER in
connection with the Purpose, whether orally, visually, in writing, or by
any other means, whether tangible or intangible, directly or indirectly
(including, without limitation, through Fagen) and in whatever form or medium including, without limitation, the design,
arrangement, configuration, and specifications of (i) the combinations of
distillation, evaporation, and alcohol dehydration equipment (including, but
not limited to, pumps, vessels, tanks, heat exchangers, piping, valves and
associated electronic control equipment) and all documents supporting those
combinations; (ii) the combination of the distillers grain drying (DGD), and
heat recovery steam generation (HRSG) equipment (including, but not limited to,
pumps, vessels, tanks, heat exchangers, piping and associated electronic
control equipment) and all documents supporting those combinations; and (iii)
the computer system, known as the distributed control system (DCS and/or PLC)
(including, but not limited to, the software configuration, programming,
parameters, set points, alarm points, ranges, graphical interface, and system
hardware connections) and all documents supporting that system. The “Operating
Procedures” means, without limitation, the process equipment and specifications
manuals, standards of quality, service protocols, data collection methods,
construction specifications, training methods, engineering standards and any
other information prescribed by ICM from time to time concerning the
Purpose.  Proprietary Property shall not
include any information or materials that OWNER can demonstrate by clear and
convincing written evidence:  (i) was
lawfully in the possession of OWNER prior to 

 

 D-1
 

 

 

disclosure by ICM or Fagen; (ii) was in the public domain prior to
disclosure by ICM or Fagen; (iii) was disclosed to OWNER by a third party other
than Fagen having the legal right to possess and disclose such information or
materials; or (iv) after disclosure by ICM or Fagen comes into the public
domain through no fault of OWNER or its members, directors, officers,
employees, agents, contractors, consultants or other representatives
(hereinafter collectively referred to as “Representatives”).  Information and materials shall not be deemed
to be in the public domain merely because such information is embraced by more
general disclosures in the public domain, and any combination of features shall
not be deemed to be within the foregoing exceptions merely because individual features
are in the public domain if the combination itself and its principles of
operation are not in the public domain.

3.    OWNER shall not use the
Proprietary Property for any purpose other than the Purpose.  OWNER shall not use the Proprietary Property
in connection with any expansion or enlargement of the Plant.  ICM and its Representatives shall have the
express right at any time to enter upon the premises of the Plant to inspect
the Plant and its operation to ensure that OWNER is complying with the terms of
this License Agreement.

4.    OWNER’s failure to
materially comply with the Operating Procedures shall void all guarantees,
representations and warranties, whether expressed or implied, if any, that were
given by ICM to OWNER, directly or indirectly through Fagen, concerning the
performance of the Plant that ICM reasonably determines are materially affected
by OWNER’s failure to materially comply with such Operating Procedures.  OWNER agrees to indemnify, defend and hold
harmless ICM, Fagen and their respective Representatives from any and all
losses, damages and expenses including, without limitation, reasonable
attorneys’ fees resulting from, relating to or arising out of Owner’s or its
Representatives’ (a) failure to materially comply with the Operating
Procedures  or (b) negligent use of the
Proprietary Property.

5.    Any and all modifications to
the Proprietary Property by OWNER or its Representatives shall be the property
of ICM.  OWNER shall promptly notify ICM
of any such modification and OWNER agrees to assign all right, title and
interest in such modification to ICM; provided, however, OWNER shall retain the
right, at no cost, to use such modification in connection with the Purpose.

6.     ICM has the exclusive right
and interest in and to the Proprietary Property and the goodwill associated
therewith.  OWNER will not, directly or
indirectly, contest ICM’s ownership of the Proprietary Property.  OWNER’s use of the Proprietary Property does
not give OWNER any ownership interest or other interest in or to the
Proprietary Property except for the limited license granted to OWNER
herein.  Goodwill created by the
operation of the plant and all financial benefits therefrom shall be the
property of the Owner.

7.    OWNER shall pay no license
fee or royalty to ICM for OWNER’s use of the Proprietary Property pursuant to
this License Agreement, the consideration for the perpetual limited license
granted herein is included in the amounts payable by OWNER to Fagen for the
construction of the Plant under the Contract.

8.    OWNER
may not assign the perpetual limited license granted herein, in whole or in
part, without the prior written consent of ICM, which will not be unreasonably
withheld or delayed.  Prior to any
assignment, OWNER shall obtain from such assignee a written instrument, in form
and substance reasonably acceptable to ICM, agreeing to be bound by all the
terms and provisions of this License Agreement. 
Any assignment of this License Agreement shall not release OWNER from (i)
its duties and obligations hereunder concerning the disclosure and use of the
Proprietary Property by OWNER or its Representatives, or (ii) damages to ICM
resulting from, or arising out of, a breach of such duties 

 

 D-2
 

 

 

or obligations by OWNER or its Representatives.  ICM may assign its right, title and interest
in the Proprietary Property, in whole or part, subject to the limited license
granted herein.

9.    The Proprietary Property is
confidential and proprietary.  OWNER
shall keep the Proprietary Property confidential and shall use all reasonable
efforts to maintain the Proprietary Property as secret and confidential for the
sole use of OWNER and its Representatives for the Purpose.  OWNER shall retain all Proprietary Property
at its principal place of business and/or the Plant.  OWNER shall not at any time without ICM’s
prior written consent, copy, duplicate, record, or otherwise reproduce the
Proprietary Property, in whole or in part, or otherwise make the same available
to any unauthorized person provided, OWNER shall be permitted to copy, duplicate
or otherwise reproduce the Proprietary Property in whole or in part in
connection with, and to the extent it is necessary and essential for, the
Purpose so long as all such copies, duplicates or reproductions are kept at its
principal place of business and/or the Plant and are treated the same as any
other Proprietary Property.  OWNER shall
not disclose the Proprietary Property except to its Representatives who are
directly involved with the Purpose, and even then only to such extent as is
necessary and essential for such Representative’s involvement.  OWNER shall inform such Representatives of
the confidential and proprietary nature of such information and, if requested
by ICM, OWNER shall obtain from such Representative a written instrument, in form
and substance reasonably acceptable to ICM, agreeing to be bound by all of the
terms and provisions of this License Agreement to the same extent as
OWNER.  OWNER shall make all reasonable
efforts to safeguard the Proprietary Property from disclosure by its
Representatives to anyone other than permitted hereby.  OWNER shall notify ICM immediately
upon discovery of any unauthorized use or disclosure of the Proprietary
Property, or any other breach of this License Agreement by OWNER or its
Representatives, and shall cooperate with ICM in every reasonable way to help
ICM regain possession of the Proprietary Property and prevent its further
unauthorized use or disclosure.  In the event that OWNER or its
Representatives are required by law to disclose the Proprietary Property, OWNER
shall provide ICM with prompt written notice of same so that ICM may seek a
protective order or other appropriate remedy. 
In the event that such protective order or other appropriate remedy is
not obtained, OWNER or its Representatives will furnish only that portion of
the Proprietary Property which in the reasonable opinion of its or their legal
counsel is legally required and will exercise its reasonable efforts to obtain
reliable assurance that the Proprietary Property so disclosed will be accorded
confidential treatment.

10.     OWNER agrees to indemnify
ICM for any and all damages (including, without limitation, reasonable
attorneys’ fees) arising out of or resulting from any unauthorized disclosure
or use of the Proprietary Property by OWNER or its Representatives.  OWNER agrees that ICM would be irreparably
damaged by reason of a violation of the provisions contained herein and that
any remedy at law for a breach of such provisions would be inadequate.  OWNER agrees that ICM shall be entitled to
seek injunctive or other equitable relief in a court of competent jurisdiction
against OWNER or its Representatives for any unauthorized disclosure or use of
the Proprietary Property without the necessity of proving actual monetary loss
or posting any bond.  It is expressly
understood that the remedy described herein shall not be the exclusive remedy
of ICM for any breach of such covenants, and ICM shall be entitled to seek such
other relief or remedy, at law or in equity, to which it may be entitled as a
consequence of any breach of such duties or obligations.

11.     The duties and obligations
of OWNER under this License Agreement, and all provisions relating to the
enforcement of such duties and obligations shall survive and remain in full
force and effect notwithstanding any termination or expiration of the Contract
or this License Agreement.

12.     ICM may terminate this
License Agreement upon written notice to OWNER if OWNER willfully or wantonly
(a) uses the Proprietary Property for any purpose, or (b) discloses the
Proprietary Property to anyone, in each case other than permitted herein.  Upon termination of this License 

 

 D-3
 

 

 

Agreement, OWNER shall cease using the Proprietary Property for any
purpose (including the Purpose) and, upon request by ICM, shall promptly return
to ICM all documents or other materials in OWNER’s or its Representatives’
possession that contain Proprietary Property in whatever format, whether
written or electronic, including any and all copies or reproductions of the
Proprietary Property.  OWNER shall
permanently delete all such Proprietary Property from its computer hard drives
and any other electronic storage medium (including any backup or archive
system).  OWNER shall deliver to ICM a
written certificate which certifies that all electronic copies or reproductions
of the Proprietary Property have been permanently deleted.

13.      The laws of the State of
Kansas, United States of America (or US), shall govern the validity of the
provisions contained herein, the construction of such provisions, and the
interpretation of the rights and duties of the parties.  Any legal action brought to enforce or
construe the provisions of this License Agreement shall be brought in the
federal or state courts located in Wichita, Kansas, and the parties agree to
and hereby submit to the exclusive jurisdiction of such courts and agree that
they will not invoke the doctrine of forum non conveniens or other similar
defenses in any such action brought in such courts.  Notwithstanding the foregoing, nothing in
this License Agreement will affect any right ICM may otherwise have to bring
any action or proceeding relating to this License Agreement against OWNER or
its properties in the courts of any jurisdiction.

14.      OWNER hereby agrees to
waive all claims against ICM and ICM’s Representatives for any consequential
damages that may arise out of or relate to this License Agreement, the Contract
or the Proprietary Property whether arising in contract, warranty, tort
(including negligence), strict liability or otherwise, including but not
limited to losses of use, profits, business, reputation or financing.  OWNER further agrees that the aggregate
recovery of OWNER and Fagen (and everyone claiming by or through OWNER and Fagen),
as a whole, against ICM and ICM’s Representatives, collectively, for any and
all claims that arise out of, relate to or result from this License Agreement,
the Proprietary Property or the Contract, whether arising in contract,
warranty, tort (including negligence), strict liability or otherwise,  shall not exceed One Million US Dollars
($1,000,000).

15.       The terms and conditions
of this License Agreement constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede any prior
understandings, agreements or representations by or between the parties,
written or oral.  Any rule of
construction to the effect that any ambiguity is to be resolved against the
drafting party shall not be applicable in the interpretation of this License
Agreement.  This License Agreement may
not be modified or amended at any time without the written consent of the
parties.

16.       All notices, requests,
demands, reports, statements or other communications (herein referred to
collectively as “Notices”) required to be given hereunder or relating to this
License Agreement shall be in writing and shall be deemed to have been duly
given if transmitted by personal delivery or mailed by certified mail, return
receipt requested, postage prepaid, to the address of the party as set forth
below.  Any such Notice shall be deemed
to be delivered and received as of the date so delivered, if delivered
personally, or as of the third business day following the day sent, if sent by
certified mail.  Any party may, at any
time, designate a different address to which Notices shall be directed by
providing written notice in the manner set forth in this paragraph.

17.       In the event that any of
the terms, conditions, covenants or agreements contained in this License
Agreement, or the application of any thereof, shall be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable, such term,
condition, covenant or agreement shall be deemed void ab initio and shall be
deemed severed from this License Agreement. 
In such event, and except if such determination by a court of competent
jurisdiction materially changes the rights, benefits and obligations of the
parties under this License Agreement, the remaining provisions of this License 

 

 D-4
 

 

 

Agreement shall remain unchanged unaffected and unimpaired thereby and,
to the extent possible, such remaining provisions shall be construed such that
the purpose of this License Agreement and the intent of the parties can be
achieved in a lawful manner.

18.       The duties and
obligations herein contained shall bind, and the benefits and advantages shall
inure to, the respective successors and permitted assigns of the parties
hereto.

19.       The waiver by any party
hereto of the breach of any term, covenant, agreement or condition herein
contained shall not be deemed a waiver of any subsequent breach of the same or
any other term, covenant, agreement or condition herein, nor shall any custom,
practice or course of dealings arising among the parties hereto in the
administration hereof be construed as a waiver or diminution of the right of
any party hereto to insist upon the strict performance by any other party of
the terms, covenants, agreement and conditions herein contained.

20.       In this License
Agreement, where applicable, (i) references to the singular shall include the
plural and references to the plural shall include the singular, and (ii)
references to the male, female, or neuter gender shall include references to
all other such genders where the context so requires.

IN WITNESS WHEREOF, the parties hereto have executed
this License Agreement, the Effective Date of which is indicated on page 1 of
this License Agreement.

	
  OWNER:

  	
   

  	
  ICM:

  
	
   

  	
   

  	
   

  
	
  Advanced
  BioEnergy, LLC

  	
   

  	
  ICM, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:       /s/
  Revis L. Stephenson III

  	
   

  	
  By:       /s/ Dave Vander Griend

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:   Chairman

  	
   

  	
  Title:   CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date Signed:      3/16/06

  	
   

  	
  Date Signed:      3/24/06

  
	
   

  	
   

  	
   

  
	
  Address for
  giving notices

  	
   

  	
  Address for giving notices

  
	
   

  	
   

  	
   

  
	
  137 N. 8th St

  	
   

  	
  301 N First Street

  
	
  Geneva, NE  68361

  	
   

  	
  Colwich, KS  67030

  

 

 

 

 D-5

 

EXHIBIT E

Schedule
of Values

ADVANCED BIO-ENERGY, LLC

Fairmount, NE

100 MGY Dry Grind Ethanol Plant

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DESCRIPTION

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  MOBILIZATION

  	
   

  	
  $[*]

  	
   

  
	
  2

  	
   

  	
  ENGINEERING

  	
   

  	
  $[*]

  	
   

  
	
  3

  	
   

  	
  GENERAL CONDITIONS

  	
   

  	
  $[*]

  	
   

  
	
  4

  	
   

  	
  SITEWORK

  	
   

  	
  $[*]

  	
   

  
	
  5

  	
   

  	
  CONCRETE

  	
   

  	
  $[*]

  	
   

  
	
  6

  	
   

  	
  MASONRY / ARCHITECTURAL

  	
   

  	
  $[*]

  	
   

  
	
  7

  	
   

  	
  STRUCTURAL STEEL - MISC. METALS

  	
   

  	
  $[*]

  	
   

  
	
  8

  	
   

  	
  PRE-ENGINEERED BUILDINGS

  	
   

  	
  $[*]

  	
   

  
	
  9

  	
   

  	
  GRAIN HANDLING SYSTEM

  	
   

  	
  $[*]

  	
   

  
	
  10

  	
   

  	
  PROCESS TANKS & VESSELS

  	
   

  	
  $[*]

  	
   

  
	
  11

  	
   

  	
  FIELD ERECTED TANKS

  	
   

  	
  $[*]

  	
   

  
	
  12

  	
   

  	
  HEAT EXCHANGERS

  	
   

  	
  $[*]

  	
   

  
	
  13

  	
   

  	
  PROCESS EQUIPMENT

  	
   

  	
  $[*]

  	
   

  
	
  14

  	
   

  	
  CENTRIFUGES

  	
   

  	
  $[*]

  	
   

  
	
  15

  	
   

  	
  CHILLER

  	
   

  	
  $[*]

  	
   

  
	
  16

  	
   

  	
  TRUCK SCALES & PROBE

  	
   

  	
  $[*]

  	
   

  
	
  17

  	
   

  	
  ETHANOL LOADOUT & FLARE SYSTEM

  	
   

  	
  $[*]

  	
   

  
	
  18

  	
   

  	
  COOLING TOWER

  	
   

  	
  $[*]

  	
   

  
	
  19

  	
   

  	
  DRYER SYSTEM

  	
   

  	
  $[*]

  	
   

  
	
  20

  	
   

  	
  THERMAL OXIDIZER

  	
   

  	
  $[*]

  	
   

  
	
  21

  	
   

  	
  METHANATOR

  	
   

  	
  $[*]

  	
   

  
	
  22

  	
   

  	
  PROCESS PIPING & VALVES

  	
   

  	
  $[*]

  	
   

  
	
  23

  	
   

  	
  PAINTING

  	
   

  	
  $[*]

  	
   

  
	
  24

  	
   

  	
  INSULATION

  	
   

  	
  $[*]

  	
   

  
	
  25

  	
   

  	
  PLUMBING & HVAC

  	
   

  	
  $[*]

  	
   

  
	
  26

  	
   

  	
  ELECTRICAL

  	
   

  	
  $[*]

  	
   

  
	
  27

  	
   

  	
  START-UP

  	
   

  	
  $[*]

  	
   

  
	
  28

  	
   

  	
  DEMOBILIZATION

  	
   

  	
  $[*]

  	
   

  
	
  29

  	
   

  	
   

  	
   

  	
  $[*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TOTAL

  	
   

  	
  $98,000,000

  	
   

  

 

*Portions omitted
pursuant to a request for confidential treatment and filed separately with the
SEC.

 

 E-1

 

 

EXHIBIT
F

Progress
Report (Example)

A.  Project Overview — Brief description of
project including plant capacity, major contractors (if applicable), completion
dates (including Substantial Completion, Final Completion Date, estimated
performance testing start, etc.), etc. 
Should also include progress reporting period.

B.  Project Status — Divided into engineering,
construction, and Owner responsibilities as well as a summary describing
project status as a whole.  Subsections
include:

B1 —
Engineering — Current month progress and status as compared to plan, 1-month
look ahead/goals, issues being worked, critical path activities, and statement
regarding support of construction activities.

B2 —
Construction - Current month progress and status as compared to plan, 1-month
look ahead/goals, issues being worked, critical path activities, procurement
activities (if applicable), subcontracting activities (if applicable), and
statement regarding completion of owner responsibilities as it relates to
Design-Builder completion of work schedule. 
In addition, it should include:

A. Site Work and Utilities — Owner Responsibility

1.               Plant Fire Water Loop - 98% Complete.

2.               Railroad: 
Rail ties on tracks A and B are up to Rail Load out; tracks C and D are
installed past DDG building to rail car storage area. Tracks A and B to be
complete when Grains building is complete.

3.               Power Company is 100% complete on permanent
power.

4.               Gas line to plant has commenced, gas to be on
site by Oct. 21.

5.               City water main from main entrance to tank is
installed, awaiting word from City.

6.               Road work has started at main entrance and
Admin. Area, final grading has started in these areas as well.

B. Grains Storage & Handling

1.               Grains receiving building is 95% complete.

2.               Continuing to installing all miscellaneous
ladders and platforms for collectors and bag houses. Continuing to install dust
collection system for Grains receiving.

3.               Electrical is right behind installing conduit
and wire to equipment.

4.                Pit area 95% complete.

5.               Continue to install main legs for Grain to
Silos.

6.               HVAC equipment on site, yet to be installed.

C. Energy Building

1.               99% of Equipment installed.

2.               Electrical nearly 94% complete. Have started
bumping motors and conveyors for rotation.

3.               Steel 100% complete.

4.               All end walls are complete with siding. Half
of the roof is installed.

 

 F-1
 

 

 

5.               Mechanical piping is at 30% complete.

6.               All RO equipment is installed. All totes are
installed. Tubing to Boiler and DA has started. Electrical completing
installation for power and controls to RO equipment.

D. Process / Fermentation
Building

1.               99% of the Equipment is installed.

2.               Piping is 98% complete.

3.               Vinyl Composite tile 70% complete. Ceramic
tile to bathrooms is complete.

4.               HVAC equipment installation is complete.
Final tie ins for office area, server room and maintenance room continuing.

E. Distillation and Evap
Area

1.               Mechanical is about 98% complete. Complete
small bore piping where needed.

2.               Electrical is behind Mechanical installing
instruments and wiring.

F. Tank Farm

1.               Mechanical is 98% complete, waiting on
Specialty items to arrive for installation.

2.               All pumps have been installed and piping is
complete to and from.

3.               Electrical continuing installation of cable
tray, 95% of instruments are installed, wire is about 85% complete.

G. Chiller — Cooling
Tower

1.               Chiller Building —Overhead doors have been
completed.

2.               Cooling Tower erection is 100% complete.

3.               HVAC unit on site, yet to be installed.

B3 — Commissioning and
Start-up — Activities related to commissioning and start-up including training
completed, turnover packages completed, status of testing procedures, etc.

B4 -
Total Project — Overall project status, including critical path activities.

C — Health and
Safety — Summary including number of craft, number of first aid cases, number
of recordable cases, and number of lost time accidents.  If applicable, safety programs implemented at
site, etc.

D — Schedule —
Including most recent updated schedule accompanied with schedule overview,
comparison to baseline, and critical path activities.  The schedule should correspond to application
for payment.

E — Financial —
Including total of invoices submitted to date as well as change orders
submitted and status.

 

 F-2

 

EXHIBIT
G

Required Permits

	
  No.

  	
   

  	
  Type of Application/Permit

  	
   

  	
  Responsibility for Obtaining Permit

  	
   

  	
  Assistance in Preparation

  	
   

  	
  Notes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Underground Utility Locating Service

  	
   

  	
  Design-Builder/Owner

  	
   

  	
   

  	
   

  	
  Notification service for underground work.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Septic Tank & Drain Field Permit

  	
   

  	
  Owner

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Railroad Permit/Approval

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Archeological Survey

  	
   

  	
  Owner

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Highway Access Permit

  	
   

  	
  Owner

  	
   

  	
   

  	
   

  	
  State Department of Transportation or County

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  Building Permits

  	
   

  	
  Design-Builder

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mechanical

  	
   

  	
  Design-Builder

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Electrical

  	
   

  	
  Design-Builder

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Structures

  	
   

  	
  Design-Builder

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  Construction Air Permit

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  Construction Permit

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  Operations Permit

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  Wastewater Permit

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  Water Appropriation Permit

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  Fire Protection

  	
   

  	
  Owner

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Above Ground Storage Tank Permit

  	
   

  	
  Design-Builder

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  TTB Permit

  	
   

  	
  Owner

  	
   

  	
   

  	
   

  	
   

  

 

 

 G-1

 

EXHIBIT
H

PERFORMANCE BOND

The American Institute of Architects,

AIA Document No. A312 (December, 1984 Edition)

Any singular reference to Contractor, Surety, Owner or other

party shall be considered plural where applicable.

	
  CONTRACTOR (Name and Address):

  Fagen, Inc.

  P. O. Box 159

  Granite Falls, MN 56241

  CONSTRUCTION CONTRACT

  Date:

  	
  Amount: [Amount]

  Description (Name and Location):

  [Project Name and Location]

  OWNER (Name and Address):

  [Owner Name/Address]

  SURETY (Name and Principal Place of Business): [Name/Place of Business]

  

BOND# 

Date (Not earlier than Construction Contract Date): 

Amount:

Modifications to this Bond:         o
None         o See Page 2

	
  CONTRACTOR AS PRINCIPAL

  Company:            (Corporate Seal)

  Fagen, Inc.

  	
  SURETY

  Company:            (Corporate Seal)

  
	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  
	
  Name and Title:

  	
   

  	
   

  	
  Name and Title:

  	
   

  
	
  (Any additional signatures appear an page 2.)

  (FOR INFORMATION Only- Name, Address and Telephone)

  AGENT or BROKER:

  	
  

  OWNER’S REPRESENTATIVE (Architect,

  Engineer or other party):

  
							

1.             The Contractor and
the Surety, jointly and severally, bind themselves, their heirs, executors,
administrators, successors and assigns to the Owner for the performance of the
Construction Contract, which is incorporated herein by reference.

2.             If the Contractor
performs the Construction Contract, the Surety and the Contractor shall have no
obligation under this Bond, except to participate in conferences as provided in
Subparagraph 3.1.

3.             If there is no
Owner Default, the Surety’s obligation under this Bond shall arise after:

3.1           The Owner has
notified the Contractor and the Surety at its address described in Paragraph 10
below that the Owner is considering declaring a Contractor Default and has
requested and attempted to arrange a conference with the Contractor and the
Surety to be held not later than fifteen days after receipt of such notice to
discuss methods of performing the Construction Contract.  If the Owner, the Contractor and the Surety
agree, the Contractor shall be allowed a reasonable time to perform the
Construction Contract, but such an agreement shall not waive the Owner’s right,
if any, subsequently to declare a Contractor Default; and

3.2           The Owner has
declared a Contractor Default and formally terminated the Contractor’s right to
complete the contract.  Such Contractor
Default shall not be declared earlier than twenty days after the Contractor and
Surety have received notice as provided in Subparagraph 3.1; and

3.3           The Owner has agreed to pay the
Balance of the Contract Price to the Surety in accordance with the terms of the
Construction Contract or to a contractor selected to perform the Construction
Contract in accordance with the terms of the contract with the Owner.

 H-1
 

 

4.             When the Owner has
satisfied the conditions of Paragraph 3, the Surety shall promptly and at the
Surety’s expense take one of the following actions:

4.1           Arrange for the
Contractor with consent of the Owner, to perform and complete the Construction
Contract; or

4.2           Undertake to perform
and complete the Construction Contract itself, through its agents or through
independent contractors; or

4.3           Obtain bids or
negotiated proposals from qualified contractors acceptable to the Owner for a
contract for performance and completion of the Construction Contract, arrange
for a contract to be prepared for execution by the Owner and the contractor
selected with the Owner’s concurrence, to be secured with performance and
payment bonds executed by a qualified surety equivalent to the bonds issued on
the Construction Contract, and pay to the Owner the amount of damages as
described in Paragraph 6 in excess of the Balance of the Contract Price
incurred by the Owner resulting from the Contractor’s default; or

4.4           Waive its right to
perform and complete, arrange for completion, or obtain a new contractor and
with reasonable promptness under the circumstances:

.1             After
investigation, determine the amount for which it may be liable to the Owner
and, as soon as practicable after the amount is determined, tender payment
therefor to the Owner; or

.2             Deny liability in
whole or in part and notify the Owner citing reasons therefor.

5.             If the Surety does
not proceed as provided in Paragraph 4 with reasonable promptness, the Surety
shall be deemed to be in default on this Bond fifteen days after receipt of an
additional written notice from the Owner to the Surety demanding that the
Surety perform its Obligations under this Bond, and the Owner shall be entitled
to enforce any remedy available to the Owner. 
If the Surety proceeds as provided in Subparagraph 4.4, and the Owner
refuses the payment tendered or the Surety has denied liability, in whole or in
part, without further notice the Owner shall be entitled to enforce any remedy
available to the Owner.

6.             After the Owner has
terminated the Contractor’s right to complete the Construction Contract, and if
the Surety elects to act under Subparagraph 4.1, 4.2, or 4.3 above, then the
responsibilities of the Surety to the Owner shall not be greater than those of
the Contractor under the Construction Contract, and the responsibilities of the
Owner to the Surety shall not be greater than those of the Owner under the
Construction Contract.  To the limit of
the amount of this Bond, but subject to commitment by the Owner of the Balance
of the Contract Price to mitigation of costs and damages on the Construction
Contract, the Surety is obligated without duplication for:

6.1           The responsibilities
of the Contractor for correction of defective work and completion of the
Construction Contract;

6.2           Additional legal
design professional and delay costs resulting from the Contractor’s Default,
and resulting from the actions or failure to act of the Surety under Paragraph
4; and

6.3           Liquidated damages,
or if no liquidated damages are specified in the Construction Contract, actual
damages caused by delayed performance or non-performance of the Contractor.

7.             The Surety shall not be liable to the Owner or others
for obligations of the Contractor that are unrelated to the Construction
Contract and the Balance of the Contract Price shall not be reduced or set off
on account of any such unrelated obligations. No right of action shall accrue 

 H-2
 

 

on this Bond to any person or entity other than the Owner or its heirs,
executors, administrators or successors.

8.             The Surety hereby
waives notice of any change, including changes of time, to the Construction
Contract or to related subcontracts, purchase orders and other obligations.

9.             Any proceeding,
legal or equitable, under this Bond may be instituted in any court of competent
jurisdiction in the location in which the work or part of the work is located
and shall be instituted within two years after Contractor Default or within two
years after the Contractor ceased working or within two years after the Surety
refuses or fails to perform its obligations under this Bond, whichever occurs
first.  If the provisions of this
Paragraph are void or prohibited by law, the minimum period of limitation
available to sureties as a defense in the jurisdiction of the suit shall be
applicable.

10.           Notice to the
Surety, the Owner or the Contractor shall be mailed or delivered to the address
shown on the signature page.

11.           When this Bond has
been furnished to comply with a statutory or other legal requirement in the
location where the construction was to be performed, any provision in this Bond
conflicting with said statutory or legal requirement shall be deemed deleted
herefrom and provisions conforming to such statutory or other legal requirement
shall be deemed incorporated herein. The intent is that this Bond shall be
construed as a statutory bond and not as a common law bond.

12.           DEFINITIONS

12.1         Balance of the
Contract Price: The total amount payable by the Owner to the Contractor under
the Construction Contract after all proper adjustments have been made,
including allowance to the Contractor of any amounts received or to be received
by the Owner in settlement of insurance or other claims for damages to which
the Contractor is entitled, reduced by all valid and proper payments made to or
on behalf of the Contractor under the Construction Contract.

12.2         Construction
Contract: The agreement between the Owner and the Contractor identified on the
signature page, including all Contract Documents and changes thereto.

12.3         Contractor Default:
Failure of the Contractor, which has neither been remedied nor waived, to
perform or otherwise to comply with the terms of the Construction Contract.

12.4         Owner Default:
Failure of the Owner, which has neither been remedied nor waived, to pay the
Contractor as required by the Construction Contract or to perform and complete
or comply with the other terms thereof.

MODIFICATIONS TO THIS BOND ARE AS
FOLLOWS:

	
  This bond is subject to the attached Dual
  Obligee Rider dated

  	
   

  
	
   

  	 

	
  

  

  	 

	
   

  	 

	
   

  	 

	
   

  	 

	
   

  	 

	
   

  	 

	
   

  	 

			

(Space is provided below for additional signatures of
added parties other than those appearing on the cover page.)

 

	
  CONTRACTOR AS PRINCIPAL

  	
   

  	
  Name and Title:

  	
   

  
	
  (Corporate Seal)

  	
   

  	
  Signature:

  	
   

  
	
  Company:

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
							

 

 H-3
 

 

 

	
  SURETY

  	
   

  	
  Name and Title:

  	
   

  
	
  (Corporate Seal)

  	
   

  	
  Signature:

  	
   

  
	
  Company:

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
							

 

 H-4
 

 

DUAL OBLIGEE RIDER

(TO BE ATTACHED TO BOND AT TIME OF ISSUANCE)

TO BE ATTACHED TO AND FORM PART
OF Performance and Payment Bond NO. __________,
dated concurrently with the execution of this Rider, issued by the _______________, a _____________
corporation, as Surety, on behalf of Fagen,
Inc., as Principal, and in favor of _________________, as Obligee.

IT IS HEREBY UNDERSTOOD AND AGREED that the above
described bond(s) are hereby amended to include the following paragraph:

Notwithstanding anything contained herein to the
contrary, there shall be no liability on the part of the Principal or Surety
under this bond to the Obligees, or either of them, unless the Obligees, or
either of them, shall make payments to the Principal or to the Surety in case
it arranges for completion of the Contract upon default of the Principal,
strictly in accordance with the terms of said Contract as to payments, and shall
perform all the other obligations required to be performed under said Contract
at the time and in the manner therein set forth.

IT IS FURTHER UNDERSTOOD AND AGREED that nothing
herein contained shall be held to change, alter or vary the terms of the above
described bond(s) except as hereinbefore set forth.

SIGNED, SEALED AND DATED this ____ day of
_____________, 200_.

	
  

  	
  Fagen, Inc.

  
	
   

  	
   

  
	
   

  	
  (Contractor)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                              ]

  
	
   

  	
   

  
	
   

  	
  (Surety)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  

 

 H-5

 

EXHIBIT
I

PAYMENT BOND

The American Institute of Architects,

AIA Document No. A312 (December, 1984 Edition)

Any singular reference to Contractor, Surety, Owner or other

party shall be considered plural where applicable.

	
  CONTRACTOR (Name and Address):

  Fagen, Inc.

  P. O. Box 159

  Granite Falls, MN  56241

  	
  SURETY (Name and Principal Place of Business):

  
	
  OWNER (Name and Address):

  [NAME AND ADDRESS] 

  	
   

  
	
  CONSTRUCTION CONTRACT

  Date: 

  Amount: 

  Description (Name and Location):

  	
   

  
	
  BOND #

  Date (Not earlier than Construction Contract Date): 

  Amount:

  	
   

  
	
  Modifications to this Bond:               o
  None  o
  See Page 2

  
	
  CONTRACTOR AS PRINCIPAL       SURETY

  	
   

  
	
  Company:                              (Corporate
  Seal)   Company:                              (Corporate Seal)

  
	
  Fagen, Inc.

  	
   

  
	
  Signature:                                                                              

  Name and Title:                                                                    

  	
  Signature:                                                                              

  Name and Title:                                                                    

  
	
  (Any
  additional signatures appear an page 2.)

  
	
  (FOR INFORMATION
  Only—Name, Address and Telephone)

  	
  OWNER’S REPRESENTATIVE (Architect, Engineer or other
  party):

  
	
  AGENT or BROKER:

  	
   

  

 

1.             The Contractor and the Surety, jointly and severally,
bind themselves, their heirs, executors, administrators, successors and assigns
to the Owner to pay for labor, materials and equipment furnished for use in the
performance of the Construction Contract, which is incorporated herein by
reference.

2.             With respect to the Owner, this obligation shall be null
and void if the Contractor:

2.1           Promptly makes payment, directly or
indirectly, for all sums due Claimants, and

2.2           Defends, indemnifies and holds
harmless the Owner from claims, demands, liens or suits by any person or entity
whose claim, demand, lien or suit is for the payment for labor, materials or
equipment furnished for use in the performance of the Construction Contract,
provided the Owner has promptly notified the Contractor and the Surety (at the
address described in Paragraph 12) of any claims; demands, liens or suits
and tendered

 I-1
 

 

defense of such claims, demands, liens or suits to the Contractor and
the Surety, and provided there is no Owner Default.

3.             With respect to Claimants, this obligation shall be null
and void if the Contractor promptly makes payment, directly or Indirectly, for
all sums due.

4.             The Surety shall have no obligation to Claimants under
this Bond until:

4.1           Claimants who are employed by or have
a direct contract with the Contractor have given notice to the Surety (at the
address described in Paragraph 12) and sent a copy, or notice thereof, to the
owner, stating that a claim is being made under this Bond and, with substantial
accuracy, the amount of the claim.

4.2           Claimants who do not have a direct
contract with the Contractor:

4.2.1        Have furnished written notice to the
Contractor and sent a copy, or notice thereof, to the Owner, within 90 days
after having last performed labor or last furnished materials or equipment
included in the claim stating, with substantial accuracy, the amount of the
claim and the name of the party to whom the materials were furnished or
supplied or for whom the labor was done or performed; and

4.2.2        Have either received a rejection in
whole or in part from the Contractor, or not received within 30 days of
furnishing the above notice any communication from the Contractor by which the
Contractor has indicated the claim will be paid directly or Indirectly; and

4.2.3        Not having been paid within the above 30
days, have sent a written notice to the Surety (at the address described in
Paragraph 12) and sent a copy, or notice thereof, to the Owner, stating that a
claim is being made under this Bond and enclosing a copy of the previous
written notice furnished to the Contractor.

5.             If a notice required by Paragraph 4 is given by the
Owner to the Contractor or to the Surety that is sufficient compliance.

6.             When the Claimant has satisfied the conditions of
Paragraph 4, the Surety shall promptly and at the Surety’s expense take the
following actions:

6.1           Send an answer to the Claimant, with
a copy to the Owner, within 45 days after receipt of the claim, stating the
amounts that are undisputed and the basis for challenging any amounts that are
disputed.

6.2           Pay or arrange for payment of any
undisputed amounts.

7.             The Surety’s total obligation shall not exceed the
amount of this Bond, and the amount of this Bond shall be credited for any
payments made in good faith by the Surety.

8.                                                                                             Amounts
owed by the Owner to the Contractor under the Construction Contract shall be
used for the performance of the Construction

 I-2
 

 

Contract and to satisfy claims, if any, under any
Construction Performance Bond.  By the
Contractor furnishing and the Owner accepting this Bond, they agree that all
funds earned by the Contractor in the performance of the Construction Contract
are dedicated to satisfy obligations of the Contractor and the Surety under
this Bond, subject to the Owner’s priority to use the funds for the completion
of the work.

9.             The Surety shall not be liable to the Owner, Claimants
or others for obligations of the Contractor that are unrelated to the
Construction Contract.  The Owner shall
not be liable for payment of any costs or expenses of any Claimant under this
Bond, and shall have under this Bond no obligation to make payments to, give
notices on behalf of, or otherwise have obligations to Claimants under this
Bond.

10.           The Surety hereby waives notice of
any change, including changes of time, to the Construction Contract or to
related subcontracts, purchase orders and other obligations.

11.           No suit or action shall be commenced
by a Claimant under this Bond other than in a court of competent jurisdiction
in the location in which the work or part of the work is located or after the
expiration of one year from the date (1) on which the Claimant gave the notice
required by Subparagraph 4.1 or Clause 4.2.3, or (2) on which the last labor or
service was performed by anyone or the last materials or equipment were
furnished by anyone under the Construction Contract, whichever of (1) or (2)
first occurs. If the provisions of this Paragraph are void or prohibited by
law, the minimum period of limitation available to sureties as a defense in the
jurisdiction of the suit shall be applicable.

12.           Notice to the Surety, the Owner or
the Contractor shall be mailed or delivered to the address shown on the
signature page. Actual receipt of notice by Surety, the Owner or the
Contractor, however accomplished, shall be sufficient compliance as of the date
received at the address shown on the signature page.

13.           When this Bond has been furnished to
comply with a statutory or other legal requirement in the location where the
construction was to be performed, any provision in this Bond conflicting with
said statutory or legal requirement shall be deemed deleted herefrom and
provisions conforming to such statutory or other legal requirement shall be
deemed incorporated herein.  The intent
is that this Bond shall be construed as a statutory bond and not as a common
law bond.

14.           Upon request by any person or entity
appearing to be a potential beneficiary of this Bond, the Contractor shall
promptly furnish a copy of this Bond or shall permit a copy to be made.

15.           DEFINITIONS

15.1         Claimant: An individual or entity
having a direct contract with the Contractor or with a subcontractor of the
Contractor to furnish labor, materials or equipment for use in the performance
of the Contract. The intent of this Bond shall be to include without limitation
in the terms “labor, materials or equipment” that part of water, gas, power,
light, heat, oil, gasoline, telephone service or rental equipment used in the
Construction Contract, architectural and engineering services required for
performance of the work of the Contractor

 I-3
 

 

and the Contractor’s subcontractors, and all other items for which a
mechanic’s lien may be asserted in the jurisdiction where the labor, materials
or equipment were furnished.

15.2         Construction Contract: The agreement
between the Owner and the Contractor identified on the signature page,
including all Contract Documents and changes thereto.

15.3         Owner Default: Failure of the Owner,
which has neither been remedied nor waived, to pay the Contractor as required
by the Construction Contract or to perform and complete or comply with the other
terms thereof.

MODIFICATIONS
TO THIS BOND ARE AS FOLLOWS:

This bond is subject to
the attached Dual Obligee Rider dated [                   ].

	
  

  
	
   

  
	
  (Space is provided below for additional signatures
  of added parties other than those appearing on the cover page.)

  
	
   

  
	
  CONTRACTOR AS
  PRINCIPAL

  	
   

  	
   

  	
  SURETY

  	
   

  	
   

  
	
  (Corporate Seal)

  	
   

  	
  (Corporate Seal)

  
	
  Company:

  	
   

  	
   

  	
  Company:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
  Name and Title:

  	
   

  	
   

  	
  Name and Title:

  	
   

  
	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
											

 

 I-4
 

 

DUAL
OBLIGEE RIDER

(TO BE ATTACHED TO
BOND AT TIME OF ISSUANCE)

TO BE ATTACHED TO AND
FORM PART OF Performance and Payment Bond NO.
__________, dated concurrently with the execution of this Rider,
issued by the _______________, a
_____________ corporation, as Surety, on behalf of Fagen, Inc., as Principal, and in favor of _________________, as Obligee.

IT IS HEREBY UNDERSTOOD
AND AGREED that the above described bond(s) are hereby amended to include the
following paragraph:

Notwithstanding
anything contained herein to the contrary, there shall be no liability on the
part of the Principal or Surety under this bond to the Obligees, or either of
them, unless the Obligees, or either of them, shall make payments to the
Principal or to the Surety in case it arranges for completion of the Contract
upon default of the Principal, strictly in accordance with the terms of said
Contract as to payments, and shall perform all the other obligations required
to be performed under said Contract at the time and in the manner therein set
forth.

IT IS FURTHER UNDERSTOOD
AND AGREED that nothing herein contained shall be held to change, alter or vary
the terms of the above described bond(s) except as hereinbefore set forth.

SIGNED, SEALED AND DATED
this ____ day of _____________, 200_.

	
  

  	
   

  	
  Fagen, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Contractor)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [                                   ]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Surety)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  

 

 I-5

 

EXHIBIT J

Work
Schedule

 

	
  OWNER’S RESPONSIBILITIES

  	
  NUMBER OF DAYS TO

  BE COMPLETED AFTER

  NOTICE TO PROCEED

  
	
  Notice to Proceed

  	
  [*]

  
	
  Storm Water Permits Complete

  	
  [*]

  
	
  Natural Gas/Propane Supply Agreements Complete

  	
  [*]

  
	
  Water Supply and Service Agreements Complete

  	
  [*]

  
	
  Risk Insurance Provider Selected/Fire Protection
  Requirements Known

  	
  [*]

  
	
  NPDES Discharge Point Selected

  	
  [*]

  
	
  Electrical Service

  	
  [*]

  
	
  Water Pre-Treatment System Design Complete

  	
  [*]

  
	
  Wastewater Discharge System Complete

  	
  [*]

  
	
  Operating Permits Complete

  	
  [*]

  
	
  Discharge Permits Complete

  	
  [*]

  
	
  Pumphouse/Water Pre-treatment System Complete

  	
  [*]

  
	
  Fire Protection System Complete

  	
  [*]

  
	
  Administration Building Complete

  	
  [*]

  
	
  Paving (Plant Roads) Complete

  	
  [*]

  
	
  Rail Spur Complete

  	
  [*]

  
	
  Employees Hired and Ready for Training

  	
  [*]

  
	
  Natural Gas Pipeline Complete

  	
  [*]

  

 

	
  DESIGN-BUILDER’S RESPONSIBILITIES

  	
  NUMBER OF DAYS TO

  BE COMPLETED AFTER

  NOTICE TO PROCEED

  
	
  Substantial Completion

  	
  [*]

  
	
  Final Completion

  	
  [*]

  

 

*Portions omitted
pursuant to a request for confidential treatment and filed separately with the
SEC.

 

 J-1

 

EXHIBIT K

Preliminary
Construction Documents

To be furnished at
a later date per Section 3.2.1

 K-1

 

EXHIBIT L

Draw
(Payment) Schedule

ADVANCED
BIO-ENERGY, LLC

Fairmont, NE

Monthly Draw Schedule - 16 Month Project (485 Days)

	
  Month #

  	
   

  	
  This Month

  	
   

  	
  Previously

  Completed

  	
   

  	
  Total

  	
   

  	
  % of Total

  	
   

  
	
   

  	
  1

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  0

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  2

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  3

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  4

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  5

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  6

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  7

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  8

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  9

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  10

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  11

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  12

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  13

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  14

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  15

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
  16

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

***
$8,000,000 Mobilization Fee included in 1st Billing

*Portions omitted pursuant to a request for confidential
treatment and filed separately with the SEC.

 L-1

 

EXHIBIT
M

Construction
Permit

See Construction Permit attached hereto

 M-1

 

EXHIBIT
N

Phase
I and Phase II Engineering Services Agreement

See Phase I and Phase II Engineering Services Agreement attached hereto

 N-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]