Document:

Exhibit 10.12

REGISTRATION RIGHTS AGREEMENT

THIS
REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made as of November
15, 2006 (the “Effective Date”), by and among Treaty Oak Bancorp, Inc.,
a Texas corporation (the “Company”), and the Company’s warrantholders
set forth on the signature page hereto (each, a “Common Holder” and,
collectively, the “Common Holders”).

R E C I T A L S

WHEREAS,
Treaty Oak Holdings, Inc., a Texas corporation (“TOHI”), effected a
redemption of certain of its shareholders pursuant to a Stock Redemption
Agreement, dated as of August 30, 2006 (the “Redemption Agreement”), and
such TOHI shareholders were issued warrants to acquire shares of TOHI’s Common
Stock (the “TOHI Warrants”); and

WHEREAS, upon
the consummation of the proposed merger between TOHI and the Company (the “Merger”),
the Company is issuing the holders of the TOHI Warrants replacement Warrants to
acquire shares of the Company’s Common Stock (the “Warrants”) and
granting certain S-3 registration rights with respect to the shares of Common
Stock underlying the Warrants, all as more fully set forth herein.

NOW,
THEREFORE, in consideration of the mutual promises and covenants set forth
herein, the parties hereto further agree as follows:

1.             Registration Rights.  The Company covenants and agrees as follows:

1.1.          Definitions.  For purposes of this Agreement:

(a)           The term “1934 Act” shall mean the Securities
Exchange Act of 1934, as amended.

(b)           The term “Act” means the Securities Act of 1933, as
amended.

(c)           The term “Form S-3” means such form under the Act
as in effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC that permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company with
the SEC.

(d)           The term “Holder” means any person owning
Registrable Securities or any assignee thereof in accordance with Section 1.8.

(e)           The terms “register,” “registered,” and “registration”
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document.

(f)            The term “Registrable Securities” means
(i) the Common Stock to be issued to the Common Holders upon the timely
and proper exercise of the Warrants, (ii) any Common Stock of the Company
issued as a dividend or other distribution with respect to, or in 

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exchange for, or in replacement of, the
shares referenced in (i) above, and (iii) any shares of Common Stock
or other securities issued or issuable in respect of the shares described in
(i) or (ii) upon any stock split, stock dividend, recapitalization or similar
event; provided, however, that the term “Registrable
Securities” shall exclude in all cases any Registrable Securities sold by a
person in a transaction in which such person’s rights under this Section 1
are not assigned and provided further that shares of Common Stock or other
securities shall only be treated as Registrable Securities if and so long as
they have not been sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction.

(g)           The number of shares of “Registrable Securities then
outstanding” shall be determined by the number of outstanding Registrable
Securities held of record by the Holders.

(h)           The term “Rule 144” shall mean Rule 144 as
promulgated by the SEC under the Act, as such Rule may be amended from time to
time, or any similar successor rule that may be promulgated by the SEC.

(i)            The term “Rule 145” shall mean Rule 145 as
promulgated by the SEC under the Act, as such Rule may be amended from time to
time, or any similar successor rule that may be promulgated by the SEC.

(j)            The term “SEC” shall mean the Securities and Exchange
Commission.

1.2.          Form
S-3 Registration.  Subject to the
conditions of this Section 1.2, if the Company shall receive from
the Holders of at least fifty percent (50%) of the Registrable Securities then
outstanding and held by the Holders (in the aggregate) a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company will:

(a)           promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and

(b)           use its commercially reasonable efforts to effect, as soon
as practicable, such registration and all such qualifications and compliances
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder’s or Holders’ Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given within fifteen (15)
calendar days of the receipt of the Company’s notice referred to in subsection 1.2(a);
provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this Section 1.2:

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(i)            if Form S-3 is not available for
such offering by the Holders;

(ii)           if the Company shall furnish to the
Holders a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than one hundred twenty (120) calendar days after receipt of
the request of the Holder or Holders under this Section 1.2; provided,
however, that the Company shall not utilize this right more than once in
any twelve (12) month period;

(iii)          if the Company has, within the twelve
(12) month period preceding the date of such request, already effected one (1)
registration on Form S-3 for any of the Holders pursuant to this Section 1.2;
or

(iv)          in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Act.

(c)           If the Holders requesting registration pursuant to this Section 1.2
intend to distribute the Registrable Securities covered by their request by means
of an underwriting, they shall so advise the Company as part of their request
made pursuant to this Section 1.2 and the Company shall include
such information in the written notice referred to in subsection 1.2(a).  The underwriter will be selected by the
Company and shall be reasonably acceptable to a majority in interest of the
Holders requesting registration.  In such
event, the right of any Holder to include such Holder’s Registrable Securities
in such registration shall be conditioned upon such Holder’s participation in
such underwriting and the inclusion of such Holder’s Registrable Securities in
the underwriting to the extent provided herein. 
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company as provided in Section 1.3(e))
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting. 
Notwithstanding any other provision of this Section 1.2, if
the underwriter advises the Holders requesting registration in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Holders requesting registration shall so advise all
Holders of Registrable Securities that would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the underwriting shall be allocated among all Holders thereof, including the
Holders requesting registration, in proportion (as nearly as practicable) to
the amount of Registrable Securities requested by each such Holder to be
included in such underwriting.

(d)           Subject
to the foregoing, the Company shall file a registration statement covering the
Registrable Securities and other securities so requested to be registered as
soon as practicable after receipt of the request or requests of the requisite
number of Holders.  All expenses incurred
in connection with a registration requested pursuant to this Section 1.2
(other than underwriting discounts and commissions and fees and disbursements
of counsel for 

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the Holders), including (without limitation) all registration, filing,
qualification, printer’s fees, accounting fees and fees and disbursements of
counsel for the Company, shall be borne by the Company; provided, however,
that the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses).

1.3.          Obligations
of the Company.  Whenever required
under Section 1.2 to effect the registration of any Registrable
Securities, the Company shall use its commercially reasonable efforts to:

(a)           Prepare and file with the SEC a registration statement on
Form S-3 with respect to such Registrable Securities and use its commercially
reasonable efforts to cause such registration statement to become effective,
and, upon the request of the Holders of a majority of the Registrable
Securities registered thereunder, keep such registration statement effective
for a period of up to ninety (90) calendar days or any less period of time in
the event the distribution described in the registration statement has been
completed;

(b)           Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement;

(c)           Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by them;

(d)           Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions;

(e)           In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering (each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement);

(f)            Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing; and

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(g)           Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.

1.4.          Furnish
Information.  It shall be a condition
precedent to the obligations of the Company to take any action pursuant to Section 1.2
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required by the Company or the managing
underwriters, if any, to effect the registration of such Holder’s Registrable
Securities.

1.5.          Delay
of Registration.  No Holder shall
have any right to obtain or seek an injunction restraining or otherwise
delaying any such registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this Section 1.

1.6.          Indemnification.

(a)           To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, each Holder’s officers, directors, partners,
legal counsel and accountants, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act or other federal or state securities law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a “Violation”): 
(i) any untrue statement or alleged untrue statement of a material
fact contained in a registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto (collectively, the “Filings”), (ii) the
omission or alleged omission to state in the Filings a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of
the Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the Act, the 1934 Act or any state securities law; and the
Company will pay any legal or other expenses reasonably incurred by any person
to be indemnified pursuant to this Section 1.6(a) in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained
in this subsection 1.6(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation that (i) occurs in reliance upon and
in conformity with written information furnished expressly for use in
connection with such registration by any such Holder, underwriter or
controlling person, and (ii) is unknown to any signatory to the applicable
registration statement.

(b)           To the extent permitted by law, each selling Holder,
severally, but not jointly, will indemnify and hold harmless the Company, each
of its directors, each of its officers who has signed the registration
statement, its legal counsel and accountants, each person, if any, who controls
the Company within the meaning of the Act, any underwriter, any other 

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Holder selling securities in such
registration statement and any controlling person of any such underwriter or
other Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Act, the 1934 Act or other federal or state securities law insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will pay, as incurred, any legal
or other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 1.6(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 1.6(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this subsection 1.6(b) exceed the
net proceeds from the offering received by such Holder less the aggregate
amount of any damages which the Holder has otherwise been required to pay in respect
of such loss, claim, damage or liability or any substantially similar loss,
claim, damage or liability arising from the sale of such Registrable
Securities.

(c)           Promptly after receipt by an indemnified party under this Section 1.6
of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.6, deliver
to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually satisfactory
to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding.  The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 1.6, but the
omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 1.6.

(d)           If the indemnification provided for in this Section 1.6
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect of any loss, claim, damage or expense referred
to therein, then the indemnifying party in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or expense in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim or expense as well as any other relevant equitable
considerations.  The relative fault of
the indemnifying party and of the indemnified party shall be determined by 

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reference to, among other things, whether the
untrue or alleged untrue statement of a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.  In
no event shall any Holder be required to contribute an amount in excess of the
net proceeds from the offering received by such Holder less the aggregate
amount of any damages which the Holder has otherwise been required to pay in
respect of such loss, claim, damage or liability or any substantially similar
loss, claim, damage or liability arising from the sale of such Registrable
Securities.

(e)           Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions of the underwriting
agreement shall control.

(f)            The obligations of the Company and Holders under this Section 1.6
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1 and/or the termination
of this Agreement.

1.7.          Reports
Under Securities Exchange Act of 1934. 
With a view to making available the benefits of certain rules and
regulations of the SEC, including Rule 144 that may at any time permit a Holder
to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:

(a)           make and keep public information available, as those terms
are understood and defined in Rule 144, at all times after the effective date
of the first registration statement filed by the Company for the offering of
its securities to the general public;

(b)           take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to
enable the Holders to utilize Form S-3 for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the end of the
fiscal year in which the first registration statement filed by the Company for
the offering of its securities to the general public is declared effective; and

(c)           file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act.

1.8.          Assignment
of Registration Rights.  The rights
to cause the Company to register Registrable Securities pursuant to this Section 1
may be assigned (but only with all related obligations) by a Holder to a
transferee or assignee of such securities who acquires (i) all of the assignor’s
Registrable Securities from such Holder or (ii) is a subsidiary, parent,
constituent partner or other affiliate of the Holder; provided that in the case
of (i) and (ii), (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this Agreement,
and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act. 
For the purposes of 

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determining the number of shares of Registrable
Securities acquired by a transferee or assignee from a Holder, the holdings of
transferees and assignees of a partnership who are partners or retired partners
of such partnership (including spouses and ancestors, lineal descendants and
siblings of such partners or spouses who acquire Registrable Securities by
gift, will or intestate succession) shall be aggregated together and with the
partnership; provided that all assignees and transferees who would not qualify
individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices or
taking any action under this Section 1.

1.9.          “Market
Stand-Off” Agreement.  Each Holder
hereby agrees that it will not, without the prior written consent of the
managing underwriter, during the period commencing on the date of the final
prospectus relating to any public offering by the Company and ending on the
date specified by the Company and the managing underwriter (such period not to exceed
one hundred eighty (l80) calendar days) (i) lend, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any securities of the
Company, including (without limitation) shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(whether now owned or hereafter acquired) or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of any securities of the Company, including
(without limitation) shares of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock (whether now owned or hereafter
acquired), whether any such transaction described in clause (i) or
(ii) above is to be settled by delivery of securities, in cash or
otherwise.  The foregoing covenants shall
apply only to the Company’s initial public offering of equity securities, shall
not apply to the sale of any shares to an underwriter pursuant to an
underwriting agreement and shall only be applicable to the Holders if all
officers and directors and greater than five percent (5%) stockholders of the
Company enter into similar agreements. 
The underwriters in connection with the Company’s initial public
offering are intended third party beneficiaries of the covenants in this Section 1.9
and shall have the right, power and authority to enforce such covenants as
though they were a party hereto.

1.10.        Termination
of Registration Rights.  No Holder
shall be entitled to exercise any right provided for in this Section 1
after such time at which any Registrable Securities held by such Holder can be
sold in any three-month period without registration in compliance with Rule 144
or Rule 145 of the Act.

2.             Miscellaneous.

2.1.          Governing
Law.  THIS AGREEMENT SHALL BE
GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF TEXAS AS SUCH LAWS ARE
APPLIED TO AGREEMENTS BETWEEN TEXAS RESIDENTS ENTERED INTO AND TO BE PERFORMED
ENTIRELY WITHIN TEXAS, WITHOUT REGARD TO CONFLICT OF LAWS RULES.

2.2.          Waivers
and Amendments.  Any term of this
Agreement may be amended or amended and restated and the observance of any term
of this Agreement may be waived (either generally or in a particular instance
and prospectively but not retroactively), only with the 

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written consent of the Company and the written consent of the Holders
of at least sixty six and two-thirds percent (66-2/3%) of the Registrable
Securities held by all of the Holders. 
Any amendment, restatement or waiver affected in accordance with this
paragraph shall be binding upon each holder of Registrable Securities then
outstanding, each future holder of all such Registrable Securities and the
Company; provided, that in the event that such amendment or waiver would treat
a Holder or group of Holders in a manner different from any other Holders, then
such amendment or waiver will require the consent of such Holder or the Holders
of at least sixty-six and two-thirds percent of the Registrable Securities of
such group adversely treated.

2.3.          Successors
and Assigns.  Except as otherwise
expressly provided herein, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.

2.4.          Entire
Agreement.  This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subject matter hereof.

2.5.          Notices.  All notices and other communications required
or permitted hereunder shall be in writing and may be delivered in person or by
facsimile, electronic mail, courier or U.S. mail, in which event it may be
mailed by first-class, certified or registered, postage prepaid, addressed
(a) if to a Common Holder, at the address set forth in the Company’s
records or, at such other address as such Common Holder shall have furnished to
the Company or (b) if to the Company, at its address set forth on the
signature page of this Agreement, or at such other address as the Company shall
have furnished to the Common Holders. 
All such notices and other communications shall be deemed given upon
personal delivery, upon confirmation of facsimile transfer, upon confirmation
of electronic mail transmission, upon delivery by courier or three business
days after deposit in the United States mail.

2.6.          Titles and
Subtitles.  The titles of the
paragraphs and subparagraphs of this Agreement are for convenience of reference
only and are not to be considered in construing this Agreement.

2.7.          Severability.  If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
reformed to the greatest extent possible and limited to any jurisdiction
finding such illegality or, if such reformation is not possible, such provision
shall be excluded from this Agreement, and the balance of the Agreement shall
be interpreted as if such provision were so excluded, and shall be enforceable
in accordance with its terms.

2.8.          Aggregation
of Stock.  All shares of Registrable
Securities of the Company held or acquired by a stockholder and its affiliated
entities shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement.  For purposes of the foregoing, the shares
held by any stockholder that (i) is a partnership or corporation shall be
deemed to include shares held by affiliated partnerships or the partners,
retired partners and stockholders of such holder or members of the “immediate
family” (as defined below) of any such partners, retired partners and
stockholders, and any custodian or trustee for the benefit of any of the
foregoing persons and (ii) is an individual shall be deemed to include
shares held by any members of the stockholder’s immediate family (“immediate
family” shall include any 

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spouse, father, mother, brother, sister, lineal descendant of spouse or
lineal descendant) or to any custodian or trustee for the benefit of any of the
foregoing persons.

2.9.          Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

2.10.        Telecopy Execution
and Delivery.  A facsimile, telecopy
or other reproduction of this Agreement may be executed by one or more parties
hereto, and an executed copy of this Agreement may be delivered by one or more
parties hereto by facsimile or similar electronic transmission device pursuant
to which the signature of or on behalf of such party can be seen, and such
execution and delivery shall be considered valid, binding and effective for all
purposes.  At the request of any party
hereto, all parties hereto agree to execute an original of this Agreement as
well as any facsimile, telecopy or other reproduction hereof.

[Signature
pages follow.]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the
day, month and year first set forth above.

	
  

  	
   

  	
   

  	
  THE COMPANY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  TREATY OAK BANCORP, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Jeffrey L. Nash,

  President

  	
   

  

 

	
  

  	
   

  	
   

  	
  Address:

  	
  101 Westlake Drive

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Austin, Texas 78746

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  With
  a copy (which shall not constitute notice) to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  John
  A. Menchaca, Esq.

  Jenkens & Gilchrist, a Professional Corporation

  	
   

  
	
   

  	
   

  	
   

  	
  401
  Congress Avenue, Suite 2500

  	
   

  
	
   

  	
   

  	
   

  	
  Austin,
  Texas  78701

  	
   

  
	
   

  	
   

  	
   

  	
  Facsimile:
  (512) 499-3810

  	
   

  

 

[Counterpart
Signature Page to Registration Rights Agreement]

 

 

	
  

  	
   

  	
   

  	
  COMMON HOLDERS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
								

 

[Counterpart Signature
Page to Registration Rights Agreement]Exhibit
10.20

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

LUMP SUM DESIGN-BUILD EXPANSION AGREEMENT

BETWEEN

LITTLE SIOUX CORN PROCESSORS, LP (“OWNER”)

AND

FAGEN, INC. (“DESIGN-BUILDER”)

September 20, 2006

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
   

  	
  Page

  	
   

  	
   

  
	
  Article 1 Definitions; Rules of
  Interpertation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Rules of Construction

  	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  Defined Terms

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 2 TheExpansion Project

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Services to be
  Performed

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Extent of Agreement

  	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  Conflicting Provisions

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 3 Design-Builder
  Responsibilities

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Design-Builder’s
  Services in General

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Design Development and
  Services

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Standard of Care

  	
   

  	
   

  	
   

  
	
  3.4

  	
   

  	
  Government Approvals
  and Permits

  	
   

  	
   

  	
   

  
	
  3.5

  	
   

  	
  Subcontractors

  	
   

  	
   

  	
   

  
	
  3.6

  	
   

  	
  Maintenance of Site

  	
   

  	
   

  	
   

  
	
  3.7

  	
   

  	
  Project Safety

  	
   

  	
   

  	
   

  
	
  3.8

  	
   

  	
  Submission of Reports

  	
   

  	
   

  	
   

  
	
  3.9

  	
   

  	
  Training

  	
   

  	
   

  	
   

  
	
  3.10

  	
   

  	
  Integration of
  Expansion Plant into LSCP Plant

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 4 Owner’s
  Responsibilities

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Duty to Cooperate

  	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Furnishing of Services
  and Information

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

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

  	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Owner’s Representative

  	
   

  	
   

  	
   

  
	
  4.5

  	
   

  	
  Government Approvals
  and Permits

  	
   

  	
   

  	
   

  
	
  4.6

  	
   

  	
  Owner’s Separate Contractors

  	
   

  	
   

  	
   

  
	
  4.7

  	
   

  	
  Security

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 5 Ownership of Work
  Product; Risk of Loss

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Work Product

  	
   

  	
   

  	
   

  
	
  5.2

  	
   

  	
  Owner’s Limited License
  Upon Payment in Full

  	
   

  	
   

  	
   

  
	
  5.3

  	
   

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

  	
   

  	
   

  	
   

  
	
  5.4

  	
   

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

  	
   

  	
   

  	
   

  
	
  5.5

  	
   

  	
  Owner’s Indemnification
  for Use of Work Product

  	
   

  	
   

  	
   

  
	
  5.6

  	
   

  	
  Risk of Loss

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 6 Commencement and
  Completion of the Expansion Project

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  [Reserved]

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Notice to Proceed;
  Commencement

  	
   

  	
   

  	
   

  
	
  6.3

  	
   

  	
  Expansion Project
  Start-Up and Testing

  	
   

  	
   

  	
   

  
	
  6.4

  	
   

  	
  Substantial Completion

  	
   

  	
   

  	
   

  
	
  6.5

  	
   

  	
  Final Completion

  	
   

  	
   

  	
   

  
	
  6.6

  	
   

  	
  Post Completion Support

  	
   

  	
   

  	
   

  

 

                                                                      

 

	
  Article 7 Performance Testing and Liquidated Damages

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Performance Guarantee

  	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Performance Testing

  	
   

  	
   

  	
   

  
	
  7.3

  	
   

  	
  Liquidated Damages

  	
   

  	
   

  	
   

  
	
  7.4

  	
   

  	
  Bonds and Other
  Performance Security

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 8 Warranties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Design-Builder Warranty

  	
   

  	
   

  	
   

  
	
  8.2

  	
   

  	
  Correction of Defective
  Work

  	
   

  	
   

  	
   

  
	
  8.3

  	
   

  	
  Warranty Period Not
  Limitation to Owner’s Rights

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 9 Contract Price

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Contract Price

  	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  Effect of Construction
  Cost Index Increase on Contract Price

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 10 Payment Procedures

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Payment of Financial
  Closing

  	
   

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Progress Payments

  	
   

  	
   

  	
   

  
	
  10.3

  	
   

  	
  Final Payment

  	
   

  	
   

  	
   

  
	
  10.4

  	
   

  	
  Failure to Pay Amounts
  Due

  	
   

  	
   

  	
   

  
	
  10.5

  	
   

  	
  Design-Builder’s
  Payment Obligations

  	
   

  	
   

  	
   

  
	
  10.6

  	
   

  	
  Record Keeping and
  Finance Controls

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 11 Hazardous Conditions
  and Differing Site Conditions

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Hazardous Conditions

  	
   

  	
   

  	
   

  
	
  11.2

  	
   

  	
  Differing Site
  Conditions; Inspection

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 12 Force Majeure;
  Change in Legal Requirements

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Force Majeure Event

  	
   

  	
   

  	
   

  
	
  12.22.2006
  

  	
   

  	
  Effect of Force Majeure
  Event

  	
   

  	
   

  	
   

  
	
  12.3

  	
   

  	
  Change in Legal
  Requirements

  	
   

  	
   

  	
   

  
	
  12.4

  	
   

  	
  Time Impact and
  Availability

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 13 Changes to the
  Contract Price and Scheduled Completion Dates

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Change Orders

  	
   

  	
   

  	
   

  
	
  13.2

  	
   

  	
  Contract Price
  Adjustments

  	
   

  	
   

  	
   

  
	
  13.3

  	
   

  	
  Emergencies

  	
   

  	
   

  	
   

  
	
  13.4

  	
   

  	
  Contract Time
  Adjustment

  	
   

  	
   

  	
   

  
	
  13.5

  	
   

  	
  Failure to Complete
  Owner’s Milestones

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 14 Indemnity

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Tax Claim
  Indemnification

  	
   

  	
   

  	
   

  
	
  14.2

  	
   

  	
  Payment Claim
  Indemnification

  	
   

  	
   

  	
   

  
	
  14.3

  	
   

  	
  Design-Builder’s
  General Indemnification

  	
   

  	
   

  	
   

  
	
  14.4

  	
   

  	
  Owner’s General
  Indemnification

  	
   

  	
   

  	
   

  
	
  14.5

  	
   

  	
  Patent and Copyright
  Infringement

  	
   

  	
   

  	
   

  

 

 ii
 

                                                                      

 

	
  Article 15 Stop Work; Termination for Cause

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
   

  	
  Owner’s Right to Stop
  Work

  	
   

  	
   

  	
   

  
	
  15.2

  	
   

  	
  Owner’s Right to
  Perform and Terminate for Cause

  	
   

  	
   

  	
   

  
	
  15.3

  	
   

  	
  Owner’s Right to
  Terminate for Convenience

  	
   

  	
   

  	
   

  
	
  15.4

  	
   

  	
  Design-Builder’s Right
  to Stop Work

  	
   

  	
   

  	
   

  
	
  15.5

  	
   

  	
  Design-Builder’s Right
  to Terminate for Cause

  	
   

  	
   

  	
   

  
	
  15.6

  	
   

  	
  Bankruptcy of Owner or
  Design-Builder

  	
   

  	
   

  	
   

  
	
  15.7

  	
   

  	
  Lenders’ Right to Cure

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 16 Representatives of
  the Parties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.1

  	
   

  	
  Designation of Owner’s
  Representatives

  	
   

  	
   

  	
   

  
	
  16.2

  	
   

  	
  Designation of
  Design-Builder’s Representatives

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 17 Insurance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  17.1

  	
   

  	
  Insurance

  	
   

  	
   

  	
   

  
	
  17.2

  	
   

  	
  Design-Builder’s
  Insurance Requirements

  	
   

  	
   

  	
   

  
	
  17.3

  	
   

  	
  Owner’s Liability
  Insurance

  	
   

  	
   

  	
   

  
	
  17.4

  	
   

  	
  Owner’s Property
  Insurance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 18 Representations and
  Warranties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  18.1

  	
   

  	
  Design-Builder and
  owner Representations and Warranties

  	
   

  	
   

  	
   

  
	
  18.2

  	
   

  	
  Design-Builder
  Representations and Warranties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 19 Dispute Resolution

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  19.1

  	
   

  	
  Dispute Avoidance and
  Mediation

  	
   

  	
   

  	
   

  
	
  19.2

  	
   

  	
  Arbitration

  	
   

  	
   

  	
   

  
	
  19.3

  	
   

  	
  Duty to Continue
  Performance

  	
   

  	
   

  	
   

  
	
  19.4

  	
   

  	
  No Consequential
  Damages

  	
   

  	
   

  	
   

  
	
  19.5

  	
   

  	
  Limitation of Liability

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 20 Confidentiality of Shared
  Information

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  20.1

  	
   

  	
  Non-Disclosure
  Obligation

  	
   

  	
   

  	
   

  
	
  20.2

  	
   

  	
  Publicity and
  Advertising

  	
   

  	
   

  	
   

  
	
  20.3

  	
   

  	
  Term of Obligation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 21 Miscellaneous

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  21.1

  	
   

  	
  Assignment

  	
   

  	
   

  	
   

  
	
  21.2

  	
   

  	
  Successors

  	
   

  	
   

  	
   

  
	
  21.3

  	
   

  	
  Governing Law

  	
   

  	
   

  	
   

  
	
  21.4

  	
   

  	
  Severability

  	
   

  	
   

  	
   

  
	
  21.5

  	
   

  	
  No Waiver

  	
   

  	
   

  	
   

  
	
  21.6

  	
   

  	
  Hearings

  	
   

  	
   

  	
   

  
	
  21.7

  	
   

  	
  Notice

  	
   

  	
   

  	
   

  
	
  21.8

  	
   

  	
  No Privity with Design
  Consultant/Subcontractors

  	
   

  	
   

  	
   

  
	
  21.9

  	
   

  	
  Amendments

  	
   

  	
   

  	
   

  
	
  21.10

  	
   

  	
  Entire Agreement

  	
   

  	
   

  	
   

  
	
  21.11

  	
   

  	
  Third-Party
  Beneficiaries

  	
   

  	
   

  	
   

  
	
  21.12

  	
   

  	
  Counterparts

  	
   

  	
   

  	
   

  
	
  21.13

  	
   

  	
  Survival

  	
   

  	
   

  	
   

  

 

 iii
 

                                                                      

 

	
  EXHIBIT A Performance Guarantee Criteria

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT B Project Scope

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT C Owner’s
  Responsibilities

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT D ICM License Agreement

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT E Schedule of Values

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT F Form of Informational
  Report

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT G Required Permits

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT H Form of Performance
  Bond

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT I Form of Payment Bond

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT J Draw (Payment)
  Schedule

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT K Air Emissions
  Application or Permit

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT L [Reserved]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT M Form of Application
  for Payment

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT N Form of Lien Waiver

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT O Form of Consent to Assignment

  	
   

  	
   

  	
   

  

 

 

 iv

                                                                      

LUMP SUM DESIGN-BUILD CONTRACT

This LUMP SUM DESIGN-BUILD CONTRACT (the “Agreement”)
is made as of September 20, 2006, (the “Effective
Date”) by and between Little Sioux Corn Processors, LP, an Iowa limited
partnership (the “Owner”) and Fagen, Inc., a Minnesota corporation (the “Design-Builder”)
(each a “Party” and collectively, the “Parties”).

RECITALS

A.             The Design-Builder originally
constructed a fifty-two (52) million gallons per year (“MGY”) dry grind
ethanol production facility near Marcus, Iowa (the “LSCP Plant”), under a Design-Build Agreement dated December
26, 2001;

B.              The Owner desires to develop, construct, own
and operate a forty (40) MGY expansion (the “Expansion
Plant”) of the LSCP Plant, which would bring the total nameplate capacity
of the LSCP Plant to ninety-two (92) MGY; and

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

 5
 

                                                                      

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 Expansion 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, its partners or their respective representatives, to the extent
any such person is engaged in activities related to the Expansion 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 Expansion Project or an activity related to the
Expansion 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.

CCI is defined in Section 9.2.

Change Order is defined in Section 13.1.1.

Certificate of Substantial Completion is defined in Section
6.4.

Confidential Information is defined in Section 20.1.

 6
 

                                                                      

Construction Documents is defined in Section
3.2.1.

Contract Documents is defined in Section 2.2.

Contract Price is defined in Section 9.1.

Contract Time(s) means scheduled dates provided for in the
Contract Documents including Scheduled Substantial Completion Date and Final
Completion Date.

Damages is defined in Section 14.3.1.

Day
or Days shall mean calendar days
unless otherwise specifically noted in the 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 6.4.4.

Effective Date is defined in the Preamble.

Expansion Plant is defined in the Recitals.

Expansion Project is defined in Section 2.1.

Expansion Project Scope is defined in Exhibit B.

Final Application for Payment is defined in Section 10.3.

Final Completion is defined in Section 6.5.2.

Final Completion Date is defined in Section 6.5.1.

Final Payment is defined in Section 10.3

Financial
Closing means the execution of the Financing Documents by all the parties
thereto.

 7
 

                                                                      

Financing Documents means the final loan documents with the
Lender or Lenders providing financing for the construction or term financing of
the Expansion Plant and any and all agreements necessary to demonstrate the
binding commitment of Owner or Lenders to fund the construction of the Expansion
Plant.

Force Majeure Event is defined in Section 12.1.

LSCP Plant is defined in the Recitals.

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

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
means ICM, Inc., a Kansas corporation.

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.

Industry-Wide Disruption is defined in Section 12.4.

Informational Report is defined in Section 3.8.

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 Expansion Project or Site, the practices
involved in the Expansion 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.

 8
 

                                                                      

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
Expansion Plant.

MGY
is defined in the Recitals.

Notice to Proceed is defined in Section 6.2.

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 Design-Builder
and ICM from time to time concerning the ownership, operation, maintenance and
repair of the Plant, subject to the limitations provided in the Agreement and
in the ICM License Agreement.

Owner
is defined in the Preamble.

Owner Indemnified Parties is defined in Section 14.3.1.

Owner’s Milestones is defined in Section 13.5.

Owner’s Representative is defined in Section 16.1.

Owner’s Senior Representative is defined in Section 16.1.

Party or Parties is defined in
the Preamble.

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, the one (1)
month period following the last day of the previous Pay Period to which the
immediately prior Application for Payment is applied; provided that the initial
Pay Period shall commence on the date of delivery of the Notice to Proceed and
end on the twenty-fourth (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.

Punch List is defined in Section 6.4.3.

 9
 

                                                                      

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 6.4.1.

Site is the land or premises on which the
Expansion 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 6.4.2.

Work is defined in Section 3.1.

Work Product is defined in Section 5.1.

Article 2

The Expansion 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 Expansion Plant,
and provide all material, equipment, tools and labor necessary to complete the
Expansion Plant in accordance with the terms of this Agreement. The Expansion
Plant, together with all equipment, labor, services and materials furnished
hereunder is defined as the “Expansion 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

  	
  Project Scope

  

 

 10
 

                                                                      

 

	
  Exhibit C

  	
  Owner’s Responsibilities

  
	
  Exhibit D

  	
  ICM License Agreement

  
	
  Exhibit E

  	
  Schedule of Values

  
	
  Exhibit F

  	
  Form of Informational Report

  
	
  Exhibit G

  	
  Required Permits

  
	
  Exhibit H

  	
  Form of Performance Bond

  
	
  Exhibit I

  	
  Form of Payment Bond

  
	
  Exhibit J

  	
  Draw (Payment) Schedule

  
	
  Exhibit K

  	
  Air Emissions Application or Permit

  
	
  Exhibit L

  	
  [Reserved]

  
	
  Exhibit M

  	
  Form of Application for Payment

  
	
  Exhibit N

  	
  Form of Lien Waiver

  
	
  Exhibit 0

  	
  Form of Consent to Assignment

  

 

2.2.3       Construction Documents to be prepared by
Design-Builder pursuant to Section 3.2.1 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 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
Expansion 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, and upon completion the
Plant shall comply with, (i) the Expansion 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 during the relevant time period.
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 

 11
 

                                                                      

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 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 (such
drawings, specifications and design submittals collectively 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.

3.2.2 Construction of the
Expansion Plant shall be consistent with the Construction Documents.

3.2.3 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 Expansion 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.

3.2.4 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 Construction Documents pursuant to Sections
3.2.1 and 3.2.3 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 design-build standards of the fuel ethanol
industry in the Midwest United States. Design-Builder 

 12
 

                                                                      

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 Expansion 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 Any subcontractor employed by
Design-Builder shall be licensed and qualified to perform the Work consistent
with the Contract Documents.

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 Expansion 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 Expansion 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 Design-Builder shall remove all debris,
trash, construction wastes, materials, equipment, machinery and tools arising
from the Work to permit Owner to occupy the Expansion Project for its intended
use.

3.7          Project Safety.

3.7.1 Design-Builder recognizes the importance of
performing the Work in a safe 

 13
 

                                                                      

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 Expansion 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 Expansion 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 a
monthly informational report substantially in the form of Exhibit F attached
hereto (“Informational Report”).

3.9          Training. At a mutually agreed time prior to start-up,
Design-Builder shall provide any necessary training at the LSCP Plant (or other
location) for all of Owner’s employees required for the operation and
maintenance of the Expansion 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 on-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 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.

 14
 

                                                                      

3.10 Integration of Expansion Plant
into LSCP Plant.
Design-Builder shall coordinate with Owner the timely and full integration of
installation and start-up of the Expansion Plant into the LSCP Plant so as to
coincide as much as possible with the periods of non-operation (whether
scheduled or otherwise) of, and to reasonably minimize disruption to, the LSCP
Plant. Design-Builder shall perform all services reasonably necessary to fully
integrate the Expansion Plant into the LSCP Plant so that the Expansion Plant
operates in accordance with the Contract Documents and maintains the
Performance Guarantee Criteria. However, Design-Builder makes no guarantees as to,
and shall not be held liable for, any effect the design, construction, and
integration of the Expansion Plant shall have on the performance of the Plant
during Design-Builder’s performance of the services provided pursuant to this
Agreement.

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 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, and that the payment
of such costs, which shall be billed on a weekly basis, shall not require the
issuance of a Change Order or the obtaining of any Owner approval prior to the
issuance of invoices for such costs.

4.2          Furnishing of Services and
Information.

4.2.1 Prior to the issuance of the Notice to
Proceed, at its own cost and expense, Owner shall provide the following items
to Design-Builder for Design-Builder’s information and use and, 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 Expansion Project and enable
Design-Builder to perform the Work;

 15
 

                                                                      

(d)                                 A legal description of the Site;

(e)                                  to the extent available, as-built and record
drawings of any existing structures at the Site, including modifications since
the original construction of the LSCP Plant; and

(f)                                    all environmental studies, reports and impact
statements describing the environmental conditions, including Hazardous
Conditions, in existence at the Site that have been conducted or performed.

4.2.2 Owner shall provide to Design-Builder all
Owner’s deliverables under Exhibit C pursuant to Owner’s Milestones. 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 Expansion Project. Design-Builder agrees to cooperate
with Owner in good faith in order to satisfy the reasonable requirements of
Owners’ financing arrangements, including, where appropriate and reasonable,
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 Expansion Plant, shall require Owner
to provide the Independent Engineer with certain reasonable participation and
review rights with respect to Design-Builder’s performance of the Work.
Design-Builder acknowledges and agrees that such reasonable 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. 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 provide such officer’s certificate no later than
sixty (60) days after the issuance of Notice to Proceed.

 16
 

                                                                      

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 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 an Expansion 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 Exhibit 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 Expansion 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.
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 Expansion Plant, the
Site, and personnel. Owner shall coordinate and supervise ingress and egress
from the Site so as to minimize disruption to the Work.

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, operation, maintenance and repair of the
Expansion 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 Expansion Plant and shall include any Pass Through Warranties
in connection therewith.  Design-Builder
shall provide Owner with a copy of the plans of the Expansion Plant, as built,
(the “As Built Plans”) conditioned on Owner’s express understanding that its
use of the Work Product and its 

 17
 

                                                                      

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 Design-Builder is utilizing certain
proprietary property and information of ICM in the design and construction of
the Expansion 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 ICM License Agreement, to be executed by Owner and ICM in connection
with the execution of this Agreement. Owner shall be entitled to use the Work
Product solely for purposes relating to the Expansion Plant, but shall not be
entitled to use the Work Product for any other purposes whatsoever, including
without limitation, expansion of the Expansion Plant. Notwithstanding the
foregoing sentence, Owner shall be entitled to use the Work Product for the
operation, maintenance and repair of the Expansion Plant including the
interconnection of, but not the design of, any future expansions to the
Expansion 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 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. This paragraph also applies to Sections 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 Expansion 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 Expansion Plant and subsequently occupy, operate,
maintain and repair the Expansion Plant, subject to the following:

(a)                             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

(b)                            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 One Million Two Hundred Fifty Thousand
Dollars ($1,250,000.00) 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.

 18

 

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, operation, maintenance, occupancy and
repair of the Expansion 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 Expansion Plant at Owner’s discretion.

5.5          Owner’s
Indemnification for Use of Work Product. If Owner uses the Work Product or Expansion
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 Expansion 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 the willful misconduct or the
negligence of 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 the negligence
of Owner’s employees or third parties who are not Subcontractors.
Design-Builder shall have no liability for a physical loss of or damage to the
Work occurring after Final Completion. Design-Builder shall have no liability
for losses or damages for which insurance coverage under this Agreement is
available to Owner; in such circumstances, any 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 without the application of any
reductions from such coverages due to deductible, retention or retrospective
premiums.

Article 6

Commencement and Completion of the Expansion Project

6.1          [Reserved].

6.2          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 Expansion Project will be
constructed; (2) the Phase I Site work required of Owner and a sufficient
portion of the Phase II Site work required of Owner, each as described in
Exhibits C and L, have been completed, at Design-Builder’s reasonable
determination, so as to permit 

 19
 

 

Design-Builder to commence construction, and all
relevant redline drawings for such completed Phase I and Phase II Site work
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 demonstrates it has the financial resources to construct the project and
it appears reasonable that Financial Closing and the issuance of an officer’s
certificate pursuant to Section 4.3 will occur within sixty (60) days of the
issuance of Notice to Proceed; (5) if applicable, Owner has executed a sales
tax exemption certificate and provided the 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.

6.2.1 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. 0. Box 159

Granite Falls, MN 56241 

Attention: Becky Dahl 

Fax: (320) 564-5190

Within five (5) Days of receipt by Design-Builder of
the Notice to Proceed, Design-Builder shall deliver to Owner notice of either
acceptance or denial of the Notice to Proceed including the reasons for
rejection, if applicable.

6.3          Expansion 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 of the Expansion 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 Expansion 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 Expansion 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

 20
 

 

6.4          Substantial Completion.

6.4.1 Substantial Completion of the entire Work
shall be achieved no later than Five Hundred and Forty-five (545) Days after
the date of the Notice to Proceed, subject to adjustment in accordance with the
Contract Documents hereof (the “Scheduled Substantial Completion Date”).

6.4.2 “Substantial Completion” shall be
deemed to occur on the date on which the Work is sufficiently complete so that
Owner can occupy and use the Expansion Plant for its intended purposes.
Substantial Completion shall be attained at the point in time when the
Expansion Plant is ready to grind the first batch of corn and begin operation
for its intended use. No production is guaranteed on the date of Substantial
Completion.

6.4.3 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 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 Expansion 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 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.

6.4.4 Early Completion Bonus. If Substantial Completion is attained
within Five Hundred Forty-five (545) 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 Eight Thousand Dollars ($8,000.00) per Day for each Day that Substantial
Completion occurred in advance of said Five Hundred Forty-five (545) Days.

6.4.5 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%) per annum. 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 

 21
 

 

the benefit of its owners (shareholders, members,
partners, etc.). All payments shall be applied first to accrued interest and
then to principal.

6.5          Final
Completion.

6.5.1 Final Completion of the Work shall be
achieved within Ninety (90) Days after the date of Substantial Completion (the “Final
Completion Date”).

6.5.2 “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; clean-up of the Site has been completed;

(d)                                 all permits required to have been obtained by
Design-Builder have been obtained; the information in Section 6.5.4 has been
provided to Owner;

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

(f)                                    the Performance Tests have been successfully
completed.

6.5.3 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.

6.5.4 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

 22
 

 

(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.

6.5.5 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 (1) year after Substantial Completion, and (iii) the terms
of any warranties required by the Contract Documents.

6.6       Post
Completion Support. Adequate
personnel to complete all Work within the Contract Time(s) 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 (1) month of
on-Site 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
Expansion 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.

7.2          Performance
Testing.

7.2.1 The Design-Builder shall direct and
supervise the tests and, if necessary, the retests of the Expansion 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.
Owner is responsible for obtaining Air Emissions Tester and for ensuring Air
Emissions Tester’s timely performance. 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, including but
not limited to Air Emissions Tester.

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 

 23
 

 

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 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.

7.2.4 If Owner, for whatever reason, including
without limitation, Owner’s failure to perform maintenance or provide supplies
necessary for start-up, testing, and demonstration of the Performance Guarantee
Criteria for the Expansion Plant, prevents Design-Builder from demonstrating
the Performance Guarantee Criteria within thirty (30) Days of Design-Builder’s
notice that the Expansion 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 Little Sioux Corn Processors, LP 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
Expansion 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 ninety (90) days beyond
Substantial Completion.

7.3          Liquidated Damages. 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 Eight Thousand Dollars
($8,000.00) 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 

 24
 

 

Design-Builder by the fifteenth (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.

7.3.1 Maximum Liquidated Damages. Design-Builder’s liability for liquidated
damages under Section 7.3.1 shall be capped at and shall not exceed One Million
Dollars ($1,000,000.00).

7.3.2 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.

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 seven and one half percent (7.5%) for obtaining such
bond, such fee to be calculated by multiplying seven and one half percent
(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
seven and one half percent (7.5%) for obtaining such bonds or security, such
fee to be calculated by multiplying seven and one half percent (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 seven and one half percent (7.5%) for obtaining such bond, such fee to
be calculated by multiplying seven and one half percent (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 

 25
 

 

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 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 Expansion 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 (1) year
from the date of Substantial Completion of the Work; provided that Owner must
report such non-conformance within seven (7) days of the date that Owner
becomes aware of such failure or non-conformance or the date Owner should have
become aware of such failure or non-conformance, whichever is earlier, and that
such one (1)-year period shall be extended one (1) 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 

 26
 

 

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 non-conforming Work.

8.3          Warranty Period Not Limitation to
Owner’s Rights. The
one (1)-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.

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 Forty-seven Million Eight Hundred Sixty Thousand Dollars
($47,860,000.00) (“Contract Price”), subject to adjustments made in
accordance with Articles 12.4 and 13. The Contract Price does not include the
water-pretreatment system and the fire protection system which shall be
provided by Fagen 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 Expansion Project. The Parties
acknowledge and agree that if after the date hereof, action by Owner, 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. Such
adjustments shall include, but not be limited to, increased labor,
subcontractor, and material and equipment costs resulting from any union or
prevailing wage requirement; provided, however, that if an option is made
available to either employ union labor, or to compensate labor at prevailing
wages, such option shall be at Design-Builder’s sole discretion and that if
such option is executed by Owner without Design-Builder’s agreement,
Design-Builder shall have the right to terminate this agreement and shall be
entitled to compensation pursuant to Section 15.3.1 hereof.

9.2          Effect of Construction Cost Index
Increase on Contract Price. If between the Effective Date and the date on which a Notice to
Proceed is given to Design-Builder the Construction Cost Index published by
Engineering News-Record Magazine (“CCI”) increases over the Baseline
Index established in Section 9.2.1, Design-Builder shall notify Owner in
writing that it is adjusting the Contract Price.

 27
 

 

9.2.1       The
Baseline Index for this Agreement shall be 7722.66 (August 2006)

(“Baseline Index”).

9.2.2 In the event that 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 to the
percentage increase in CCI.

Article 10

Payment Procedures

10.1        Payment at Financial Closing. As part of the Contract Price, Owner shall
pay Design-Builder Two Million Five Hundred Thousand Dollars ($2,500,000.00),
as a mobilization fee, as soon as allowed by its organizational documents and
any other agreements or Laws and at the latest, at the earlier to occur
Financial Closing or the issuance of a Notice to Proceed. Said Two Million Five
Hundred Thousand Dollars ($2,500,000.00) mobilization fee payment shall be
subject to retainage as provided by Section 10.2.7.

10.2        Progress Payments.

10.2.1 Application for Payment. Following the issuance of Notice to Proceed
pursuant to Section 6.2, Design Builder shall submit to Owner, on or before the
twenty-fifth (25th) Day of each month, its request for payment for all Work
performed and not paid for during the previous Pay Period (the “Application
for Payment”). The Application for Payment shall be substantially in the
form attached hereto as Exhibit M. Design-Builder shall submit to Owner, along
with each Application for Payment, signed lien waivers, substantially in the
form attached hereto as Exhibit N, from Design-Builder, 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,
the comparison of the Application for Payment against the work schedule, and
the Schedule of Values shall provide sufficient substantiation of the accuracy
of the Application for Payment and that no additional documentation will be
provided to Owner in support of an Application for Payment. Title to the Work,
including Work reflected in an Application for Payment which is in process, is
in transit, is in storage, or has been incorporated into the Site, 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 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 Expansion
Project; provided that (i) Owner is satisfied that the equipment and materials
are suitably stored at either the Site or another acceptable 

 28
 

 

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. The schedule of values attached hereto as
Exhibit E (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 ten (10) 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.

10.2.7 Retainage on Progress
Payments. Owner will
retain five percent (5%) of each payment. Notwithstanding the foregoing, the
maximum retainage set forth herein shall increase if the Contract Price is
increased pursuant to Section 9.2 of this Agreement such that the maximum
retainage will equal five percent (5%) of the Contract Price as adjusted. Owner
will also reasonably consider reducing retainage for Subcontractors completing
their work early in the Expansion Project. Upon Substantial Completion of the
Work pursuant to Section 6.4, Owner shall release to Design-Builder all
retained amounts less an amount equal to one hundred and fifty percent (150%)
of 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 6.5. 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 commencing on the date payment is due 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 

 29
 

 

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.

10.4.3 Failure to Make Final
Payment. Owner’s
failure to make Final Payment pursuant to section 10.3 hereof shall void any
and all warranties, whether express or implied, provided by Design-Builder
pursuant to this Agreement.

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.

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 Governmental
Authorities having jurisdiction over the Expansion 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 

 30
 

 

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 Expansion 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 Expansion 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 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.

 31
 

 

Article 12

Force Majeure; Change in Legal Requirements

12.1        Force Majeure Event. A 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:

(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 

 32
 

 

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 or labor to the Project as a
result of a significant industry-wide economic fluctuation or disruption beyond
the control of and without the fault of the Design-Builder or its
Subcontractors which is experienced or expected to be experienced by certain
markets providing essential materials and equipment to the Project during the
performance of the Work and such economic fluctuation or disruption adversely
impacts the price, availability, and delivery timeframes of essential
materials, equipment, or labor (such event an “Industry-Wide  Disruption”), the Design-Builder shall be
entitled to an equitable extension of the Contract Time(s) 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 or labor to the Project as a result of an
Industry-Wide Disruption.

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).

 

 33

 

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 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.

 34
 

 

13.4        Contract Time Adjustment. Design-Builder shall be entitled to an
extension of the Contract Time(s) to the extent the LSCP Plant is unable to
operate as expected not due to any act or omission of the Design-Builder.

13.5        Failure to Complete Owner’s Milestones. The dates when Owner’s obligations are
required to be completed to enable Design-Builder to achieve the contract
time(s) are identified in Table 2 in Exhibit C (“Owner’s Milestones”).
The Contract Time(s) shall be revised to provide a Day-for-Day extension of the
Contract Time(s) for completion of the Work for each full Day during which
Owner fails to timely complete its obligations pursuant to the Owner’s
Milestones. In the event of Owner’s failure to timely complete its obligations
pursuant to Owner’s Milestones results in the extension of the Contract
Time(s), the Contract Price shall be adjusted to compensate Design-Builder for
the effects, if any, of such change.

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 (and its officers,
directors, agents, successors and assigns) from and against any and all damages
claims, costs, losses liabilities, and expenses (including penalties, interest,
fines, taxes of any kind, attorneys’ fees, accountants and other professional
fees and associated expenses or costs incurred by Design-Builder in connection
with or as a result of any action taken by Design-Builder in accordance with
Owner’s directive.

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 Expansion 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.

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 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, 

 35
 

 

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, 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,
willful misconduct, 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 Owner 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 

 36
 

 

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 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 Expansion 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.

 37
 

 

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 Article 17 hereof; (ii) if applicable, 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; (iv)
Design-Builder fails to achieve Final Completion within seven hundred and
twenty-five (725) Days after the date of Notice to Proceed; or (v) 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.

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 and the limitation of liability set forth in
Section 19.5 hereof.

15.2.4 If Owner improperly terminates the Agreement
for cause, the termination 

 38
 

 

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 Expansion 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.

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.

 39
 

 

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
Expansion Project, because of court order, any Governmental 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
Expansion 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
Expansion 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 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 

 40
 

 

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, but within the timeframes
set forth therein, 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:

Steve Roe

General
Manager

4808 F
Avenue

Marcus, IA
51035

Telephone:
(712) 376-2800

Facsimile: (712) 376-2815

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:

Steve Roe

General
Manager

4808 F
Avenue

Marcus, IA
51035

Telephone:
(712) 376-2800

Facsimile: (712) 376-2815

 41
 

 

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 

Facsimile: (320) 564-3278

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 

Facsimile (320) 564-3278

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:

	
  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

  	
   

  

 

 42
 

 

 

	
  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 Expansion Project is located, 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;

(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.

 43
 

 

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 Expansion 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
Expansion 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
Expansion 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 Expansion
Project. The general and professional liability insurance obtained by Owner
shall name Design-Builder, the Lenders and Lenders’ Agent as additional
insureds, and shall include the interests of such parties and of Design
Consultants and Subcontractors without application of deductible, retention or
retrospective premiums as to the additional insureds, Design Consultants, and
Subcontractors.

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 Expansion Project is located, and maintain
through Final Completion, property insurance upon the entire Expansion Project
in a minimum amount equal to the full insurable value of the Expansion Project,
including professional fees, 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, the Lenders and Lenders’ Agent, shall include the interests of
such additional insureds and Design Consultants and Subcontractors, 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 with respect
to such additional insureds, Design Consultants, and Subcontractors. Owner
shall maintain coverage equal to or in excess of the value of each of
Design-Builder’s, Design Consultants’, and 

 44
 

 

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 the 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. 107­297, 116 Stat. 2322
(2002), as extended by the Terrorism Risk Insurance Extension Act of 2005, Pub.
L. No. 109-144 (2005), 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 during the term of this
Agreement. Promptly after Owner’s receipt thereof, Owner shall be required to
provide Design-Builder with copies of all insurance policies 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.

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.

 

 45

 

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.

Article 18

Representations and Warranties

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

(a)                                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;

(b)               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;

(c)                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

(d)
                              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.

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 Expansion Project and agree to communicate regularly with each other at all
times so as to avoid or minimize disputes or disagreements. If disputes or 

 46
 

 

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 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 Expansion 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 

 47
 

 

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        No 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.

19.5        Limitation of Liability. Notwithstanding anything else in this
Agreement to the contrary, the aggregate liability of Design-Builder, its
Subcontractors, vendors, suppliers, agents and employees, to Owner (or any
successor thereto or assignee thereof) for any and all claims and/or
liabilities arising out of or relating in any manner to the Work or to
Design-Builder’s performance or non-performance of its obligations hereunder,
whether based in contract, tort (including negligence), strict liability, or
otherwise, shall not exceed, in the aggregate, the Contract Price and shall be
reduced, upon the issuance of each Application for Payment, by the total value
of such Application for Payment; provided, however, that upon the earlier of
Substantial Completion or such point in time requests for payment pursuant to
Article 10 have been made for ninety percent (90%) of the Contract Price,
Design-Builder’s aggregate liability shall be limited to the greater of (1) Ten
Percent (10%) of the Contract Price or (2) the amount of insurance coverage
available to respond to the claim or liability under any policy of insurance
provided by Design-Builder under this Agreement. The aggregate liability of
Design-Builder shall not include increased costs of purchasing equipment,
materials, supplies, or services, except to the extent Owner has terminated the
Agreement pursuant to Section 15.2 and such equipment, materials, supplies, and
services are required to complete the Work or to the extent that any of such
equipment, materials, supplies, and services may be included in the payment of
liquidated damages pursuant to Section 7.3 hereof. Notwithstanding the
foregoing, the maximum aggregate liability of Design-Builder for failure to
achieve the Contract Time(s) shall be as set forth in Section 7.3.

Article 20

Confidentiality of Shared Information

20.1        Non-Disclosure Obligation. Except as required by court order, subpoena,
or Applicable Law, the Parties will hold in confidence, and will use only for
the purposes of completing the Project, any and all Confidential Information
disclosed to each other. Neither Party shall disclose to third parties any
Confidential Information without the express written 

 48
 

 

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 Confidential Information and information regarding the
terms and conditions of this Agreement confidential. However, the Parties may
disclose Confidential Information to their respective lenders, lenders’ agents,
advisors and/or consultants only as reasonably necessary in connection with the
financing of the Plant or to enable them to advise the Parties with regard to
the Contract Documents and the Project, provided that prior to such disclosure
any party to whom Confidential Information is disclosed is informed by the
disclosing Party of the existence of this confidentiality obligation and agrees
to be obligated to maintain the confidentiality of any information received.
The term “Confidential Information” will mean (i) 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, (ii) any and all information concerning the Contract
Documents, the Agreement, or the terms thereof, and (iii) all information which
one Party, directly or indirectly, may acquire from another Party; however,
Confidential Information will not include information falling into any of the following
categories:

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

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

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

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

(e)                                  information that is available through
discovery by independent research without use of or access to the Confidential
Information acquired from the other Party; and

(f)                                    photographs and descriptive information
regarding the Project, including Plant capacity, Owner’s name, and Project
location, as used by Fagen for purposes of marketing and promotion.

Each Party’s obligation to maintain Confidential
Information in confidence will be deemed performed if such Party observes with
respect thereto the same safeguards and precautions which such Party observes
with respect to its own Confidential Information of the same or similar kind.
It will not be deemed to be a breach of the obligation to maintain Confidential
Information in confidence if Confidential Information is disclosed upon the
order of a court or other authorized Governmental Authority, or pursuant to
other Legal Requirements. However, if Owner is required to file the Contract
Documents or a portion thereof with a Governmental Authority, it agrees that it
will not do so without first informing Design-Builder of the requirement and
seeking confidential treatment of the Contract Documents prior to filing the 

 49
 

 

documents or a portion thereof.

20.2        Publicity and Advertising. Owner shall not make or permit any of its
subcontractors, agents, or vendors to make any external announcement or
publication, release any photographs or information concerning the Expansion
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
Fagen unless prior written consent is obtained from Fagen, 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 five (5) 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 Expansion
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 in form and substance
reasonably acceptable to Design-Builder, whose approval shall not be
unreasonably withheld. 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 in form and
substance reasonably acceptable to Design-Builder, which form is attached
hereto as Exhibit 0, 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 parts of
the provision of the Contract Documents, which shall remain in full force and
effect as if 

 50
 

 

the unenforceable provision or part were deleted.

21.5        No Waiver. The failure of either Design-Builder or Owner
to insist, in any one (1) 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) 564-5190

 51
 

 

If to Owner, to:

Little
Sioux Corn Processors, LP

4808
F Avenue

Marcus, IA 51035 

Attention: Steve Roe 

Fax: (712) 376-2815

and

Lender’s Agent at the address provided for
Lender’s Agent to Design-Builder by Owner by notice within five (5) 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 (1) 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 and effect) 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.]

 52
 

 

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 the Effective Date.

	
  OWNER:

  	
   

  	
  DESIGN-BUILDER:

  
	
   

  	
   

  	
   

  
	
  Little Sioux
  Corn Processors, LP

  	
   

  	
   

  
	
  By it general
  partner

  	
   

  	
   

  
	
  Little Sioux
  Corn Processors, LLC

  	
   

  	
  Fagen, Inc.

  
	
  (Name of Owner)

  	
   

  	
  (Name of Design-Builder)

  
	
   

  	
   

  	
   

  
	
  /s/ Stephen Roe

  	
   

  	
  /s/ Ron Fagen

  
	
  (Signature)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
  Stephen Roe

  	
   

  	
  Roland “Ron” Fagen

  
	
  (Printed Name)

  	
   

  	
  (Printed Name)

  
	
   

  	
   

  	
   

  
	
  CEO/President

  	
   

  	
  CEO and President

  
	
  (Title)

  	
   

  	
  (Title)

  
	
   

  	
   

  	
   

  
	
  Date: 

  	
  9/26/06

  	
   

  	
  Date: 

  	
  9/26/06

  
					

 

 53

 

EXHIBIT A

Performance Guarantee Criteria

 

	
  Criteria

  	
   

  	
  Specification

  	
   

  	
  Testing Statement

  	
   

  	
  Documentation

  
	
  Expansion Plant Capacity — fuel grade ethanol

  	
   

  	
  Operate at a rate of 92 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 contiguous day performance test

  	
   

  	
  Production records and written report by
  Design-Builder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Corn to Ethanol Conversion ratio; Corn must be #2 [*]

  	
   

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

  	
   

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

  	
   

  	
  Production records and written analysis by
  Design-Builder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Electrical Energy

  	
   

  	
  0.75 kWh per denatured gallon of fuel grade ethanol
  [*]

  	
   

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

  	
   

  	
  Production records and written analysis by
  Design-Builder.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Natural Gas

  	
   

  	
  Shall not exceed 34,000 Btu per denatured gallon of
  fuel grade ethanol. (This Performance Criteria relates to production of
  ethanol and excludes any natural gas usage that may occur for drying corn.)

  	
   

  	
  As determined by meter readings during a seven
  contiguous 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
Securities and Exchange Commission.

 A-1
 

 

 

	
  Process Water Discharge (not including cooling
  tower and boiler blowdown and water pre-treatment (RO) 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 Indiana Department of Environmental Management, Office
  of Air Quality.

  	
   

  	
  Must meet the requirements as prescribed in the Air
  Permit Application attached as Exhibit K.

  	
   

  	
  Written report by Owner’s Air Emission Tester.

  

 

As part of the Performance
Guarantee Criteria the Expansion Plant shall operate in accordance with all
Legal Requirements.

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 Expansion Plant requires resources and cooperation of the Owner,
vendors and other suppliers to the Expansion 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

Project Scope

 

 B-1

 

EXHIBIT C

Owner’s Responsibilities

The Owner shall operate the LSCP Plant in
accordance with good fuel ethanol production industry practices and shall
provide Design-Builder access to the LSCP Plant to the extent necessary to complete the Work in accordance
with the Agreement.

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

1)
                              Land and Grading — 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: 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, spill
containment and drainage systems from
both rail and truck loading spots into the tank farm or other location, “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 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 $800,000. The
requirements of each state and the decisions of each Owner will increase or
decrease the actual cost. Additionally, the
cost of the required soil stabilization in Table 1 can be in the range
of, or may exceed, $2.5MM which cost is not included in the Contract Price. The
specific soil stabilization requirements for the grain and DDGS areas will be 

 C-1
 

 

developed
in coordination with the gain/DDGS area subcontractor. Owner shall prepare site according to Design-Builder’s
engineering plans provided for the site work.

2)                                Permits — Owner shall obtain all Operating Permits
including, but not limited to, air quality permits, in a timely manner to allow
construction and start-up of the plant as designed by Design-Builder. Owner
shall obtain all testing, including air emissions tests, and site inspections
required to secure the necessary operating permits.

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

4)                                Iowa
Pollutant Elimination Discharge Permit — Owner shall obtain a permit to discharge cooling tower water and
reverse osmosis (“R.O.”) reject water and any other waste water directly to a
designated waterway or other location. Owner shall supply the discharge piping
to transport to the designated waterway or other location.

5)                                Natural Gas Supply and
Service Agreement — Owner
shall procure and supply a continuous supply of natural gas to supply the
incremental increase in gas requirements related to the expanded operations.
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) The 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 supply the requirements of the
expanded operations. (2) The Owner is responsible for procurement, installation
and maintenance of the site distribution system, including, but not limited to,
the required substation and all associated distribution lines, switchgear,
sectional cabinets, distribution transformers, transformer pads, etc. An
on-site primary digital meter is also to be supplied for monitoring of
electrical usage and demand. This meter must have the capability to be monitored
via a telephone line or other electrical signal. (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. (4)
Modifications to the existing site distribution system, 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 

 C-2
 

 

150 horsepower and where
demanded by process requirements. Owner is encouraged to discuss with its
electrical service 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.

8)                                Water
Supply, Service Agreement, and Pre-Treatment System — Owner shall supply on-site process wells or
other water source capable of providing the incremental quantity of water,
which includes process water, R.O. feed water, cooling tower make-up water and
boiler feed water, of a quality which will allow discharges to comply with
NPDES limits and stable operation of the plant. Owner should consider providing
a redundant supply source.

Owner shall pay for a water
pre-treatment system to be designed and constructed by Design-Builder and to be
integrated into the Expansion Plant. Owner shall provide an updated water
sample of current process water for analysis to aid in design of the water
pre-treatment system. The pre-treatment system will be designed to provide the
Expansion Plant with the quantity and quality of raw and treated water needed
to supply the Expansion 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 Expansion 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 shall provide for any additions or improvements to the
discharge piping, septic tank and drainfield system or connections to municipal
system as required for the sanitary sewer requirements of the Expansion 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 any additions required to the ditches and permanent roads,
including the gravel, pavement or concrete, with the roads passing standard
compaction tests. Design-Builder shall repair any damage directly caused by
Design-Builder activities, specifically excluding any damages causes by normal
wear and tear.

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)           Maintenance
and Power Equipment — The
maintenance, spare parts, and power equipment as required by the Expansion
Plant or desired by Owner shall be the sole and 

 C-3
 

 

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

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

13)           Drawings
— Owner shall supply
drawings to Design-Builder detailing any changes made

to the plant since completion of the initial plant.

14)                      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 Expansion 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.

Table 1 Minimum Soil Bearing Pressure — Responsibility of
Owner

 

	
  Description

  	
   

  	
  Required Allowable Soil Bearing

  Pressure (pounds per square foot)

  	
   

  
	
  Slurry Tank

  	
   

  	
  4,000

  	
   

  
	
  Liquefaction
  Tank

  	
   

  	
  3,500

  	
   

  
	
  Fermentation
  Tank

  	
   

  	
  4,500

  	
   

  
	
  All Other Areas

  	
   

  	
  3,000

  	
   

  

 

 C-4
 

 

Table 2 Owner’s Milestones

 

	
  Owner’s Responsibilities

  Notice to Proceed

  	
   

  	
  Number Of Days To Be 

  Completed After Notice To

  Proceed

  	
   

  
	
  Notice to
  Proceed

  	
   

  	
    0

  	
   

  
	
  Storm Water
  Permits Complete

  	
   

  	
  60

  	
   

  
	
  Natural
  Gas/Propane Supply Agreements Complete

  	
   

  	
  90

  	
   

  
	
  Water Supply and
  Service Agreements Complete

  	
   

  	
  90

  	
   

  
	
  Risk Insurance
  Provider Selected/Fire Protection Requirements Known

  	
   

  	
  90

  	
   

  
	
  NPDES Discharge
  Point Selected

  	
   

  	
  90

  	
   

  
	
  Electrical
  Service

  	
   

  	
  90

  	
   

  
	
  Water
  Pre-Treatment System Design Complete

  	
   

  	
  170

  	
   

  
	
  Wastewater
  Discharge System Complete

  	
   

  	
  180

  	
   

  
	
  Operating
  Permits Complete

  	
   

  	
  200

  	
   

  
	
  Discharge
  Permits Complete

  	
   

  	
  200

  	
   

  
	
  Pumphouse/Water
  Pre-treatment System Complete

  	
   

  	
  305

  	
   

  
	
  Fire Protection
  System Complete

  	
   

  	
  305

  	
   

  
	
  Administrative
  Building Complete

  	
   

  	
  90
  days prior to SC

  	
   

  
	
  Paving
  (Expansion Plant Roads) Complete

  	
   

  	
  90
  days prior to SC

  	
   

  
	
  Rail Spur
  Complete

  	
   

  	
  90
  days prior to SC

  	
   

  
	
  Employees Hired
  and Ready for Training

  	
   

  	
  60
  days prior to SC

  	
   

  
	
  Natural Gas Pipeline
  Complete

  	
   

  	
  60 days prior to SC

  	
   

  

 

 

 C-5

 

 

EXHIBIT D

ICM License Agreement

THIS LICENSE AGREEMENT (this “License Agreement”) is entered into and
made effective as of September 20, 2006 (“Effective Date”) by and between
Little Sioux Corn Processors, LP, an Iowa limited partnership (“OWNER”), and ICM,
Inc., a Kansas corporation (“ICM”).

WHEREAS, OWNER has entered into that certain
Design-Build Lump Sum Contract dated September 20, 2006 (the “Contract”) with
Fagen, Inc., a Minnesota corporation (“Fagen”), under which Fagen is to design
and construct a forty (40) million gallon per year expansion ethanol plant for
OWNER, which would bring the total nameplate capacity to ninety-two (92)
million gallons per year, to be located in or near Marcus, Iowa (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 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 

 D-1
 

 

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 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 made 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.

 D-2
 

 

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 limited license granted herein is certain
payments by Fagen to ICM, which is funded by and included in the amounts
payable by OWNER to Fagen for the construction of the Plant under the Contract.

8.           OWNER may not assign the 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 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 

 D-3
 

 

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 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. In the event the Plant is
located in, or OWNER is organized under the laws of, a country other than the
US, OWNER hereby specifically agrees that any injunctive or other equitable
relief granted by a court 

 D-4
 

 

located in the State of
Kansas, US, or any award by a court located in the State of Kansas, shall be
specifically enforceable as a foreign judgment in the country in which the
Plant is located, OWNER is organized or both, as the case may be, and agrees
not to contest the validity of such relief or award in such foreign
jurisdiction, regardless of whether the laws of such foreign jurisdiction would
otherwise authorize such injunctive or other equitable relief, or award.

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 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.

 D-5
 

 

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:

  
	
   

  Little Sioux Corn
  Processors, LP

   

  By its general partner

  Little Sioux Corn
  Processors, LLC

  	
   

  ICM,
  Inc.

  
	
   

  By:  /s/ Stephen Roe

  	
   

  By:  /s/ David
  Vander Griend

  
	
   

  Title: 
  CEO/President

  	
   

  Title: 
  CEO/President

  
	
   

  Date Signed: 9/21/06

  	
   

  Date Signed: 9/27/06

  
	
   

  Address for giving notices:

  	
   

  Address for giving notices:

  
	
   

  4808
  F Avenue

  Marcus,
  IA 51035

   

  	
   

  301
  N First Street

  Colwich,
  KS  67030

  

 

 

 D-6

 

EXHIBIT E

Schedule of Values

	
  LITTLE SIOUX CORN PROCESSORS
  ETHANOL PLANT

  EXPANSION

  MARCUS, IOWA

   

  
	
  PAY REQUEST BREAKDOWN

  
	
   

  	
  DESCRIPTION

  	
   

  
	
   

  	
   

  	
   

  
	
    1

  	
  MOBILIZATION

  	
   $   2,500,000 

  
	
    2

  	
  ENGINEERING

  	
  *

  
	
    3

  	
  GENERAL CONDITIONS (16 MONTHS)

  	
  *

  
	
    4

  	
  SITEWORK

  	
  *

  
	
    5

  	
  CONCRETE

  	
  *

  
	
    6

  	
  MASONRY

  	
  *

  
	
    7

  	
  STRUCTURAL STEEL & MISC. METALS

  	
  *

  
	
    8

  	
  LUMBER, CARPENTRY & FINISHES

  	
  *

  
	
    9

  	
  GIRTS, SIDING & ROOF DECK

  	
  *

  
	
  10

  	
  DOORS & WINDOWS

  	
  *

  
	
  11

  	
  PAINT

  	
  *

  
	
  12

  	
  DRYER SYSTEM

  	
  *

  
	
  13

  	
  FIELD ERECTED TANKS

  	
  *

  
	
  14

  	
  PROCESS TANKS & VESSELS

  	
  *

  
	
  15

  	
  THERMAL OXIDIZER

  	
  *

  
	
  16

  	
  MIXERS

  	
  *

  
	
  17

  	
  PUMPS

  	
  *

  
	
  18

  	
  HEAT EXCHANGERS

  	
  *

  
	
  19

  	
  SIEVE BOTTLES & BEADS

  	
  *

  
	
  20

  	
  CHILLER

  	
  *

  
	
  21

  	
  CENTRIFUGES

  	
  *

  
	
  22

  	
  AIR COMPRESSORS

  	
  *

  
	
  23

  	
  METHANATOR

  	
  *

  
	
  24

  	
  COOLING TOWER

  	
  *

  
	
  25

  	
  ETHANOL LOADOUT

  	
  *

  
	
  26

  	
  VAPOR FLARE SYSTEM

  	
  *

  
	
  27

  	
  PROCESS PIPING & VALVES

  	
  *

  
	
  28

  	
  INSULATION

  	
  *

  
	
  29

  	
  PLUMBING & HVAC

  	
  *

  
	
  30

  	
  ELECTRICAL 

  	
  *

  
	
  31

  	
  START-UP

  	
  *

  
	
  32

  	
  DEMOBILIZATION

  	
  *

  
	
   

  	
   

  	
   

  
	
   

  	
  CONTRACT AMOUNT

  	
   $ 47,860,000 

  

 

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

 

 E-1

 

EXHIBIT F

Form of
Informational Report

	
  

  	
  PROJECT
  MEETING:Two-Week
  Look Ahead(s)

  

 

	
  JOBSITE:

  	
   

  	
  MEETING
  DATE:

  	
   

  

 

	
  ▼ MANPOWER

  	
   

  	
  TOTALS ▼

  
	
  Fagen, Inc.

  	
   

  	
  0

  
	
  (sub)

  	
   

  	
  0

  
	
   

  	
   

  	
  0

  
	
   

  	
   

  	
  0

  
	
   

  	
   

  	
  0

  
	
   

  	
   

  	
  0

  
	
   

  	
   

  	
  0

  
	
   

  	
   

  	
  0

  
	
   

  	
   

  	
  0

  
	
   

  	
   

  	
  0

  
	
  JOBSITE TOTAL

  	
   

  	
  0

  

 

	
  ▼ SAFETY ISSUES

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  
	
  2.  text

  	
   

  	
   

  

 

	
  ▼ WAREHOUSE ISSUES

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  
	
  2.  text

  	
   

  	
   

  

 

	
  ▼ PROCUREMENT ISSUES

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  
	
  2.  text

  	
   

  	
   

  

 

	
  ▼ OPERATIONS ISSUES

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  
	
  2.  text

  	
   

  	
   

  

 

	
  ▼ CIVIL

  	
   

  	
   

  
	
  Area

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  
	
  2.  text

  	
   

  	
   

  

 

 F-1
 

 

 

	
  ▼ STRUCTURAL

  	
   

  	
   

  
	
  Area

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  
	
  2.  text

  	
   

  	
   

  

 

 

	
  ▼ SIDING / INSULATION

  	
   

  	
   

  
	
  Area

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  

 

	
  ▼ MILLWRIGHT

  	
   

  	
   

  
	
  Area

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  

 

	
  ▼ PIPE

  	
   

  	
   

  
	
  Area

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  

 

	
  ▼ ELECTRICAL

  	
   

  	
   

  
	
  Area

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  

 

	
  ▼ DELIVERIES

  	
   

  	
   

  
	
  Area

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  

 

	
  ▼ SUBCONTRACTOR

  	
   

  	
   

  
	
  Subcontractor
  Name

  	
   

  	
   

  
	
  1.  text

  	
   

  	
   

  

 

 

 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

  	
   

  	
  Owner

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  TTB

  	
   

  	
  Owner

  	
   

  	
   

  	
   

  	
   

  

 

 

 G-1

 

EXHIBIT H

Form of
Performance Bond

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):

  	
   

  	
  Amount: [Amount]

  
	
  Fagen, Inc.

  	
   

  	
  Description (Name and Location):

  
	
  P. O. Box 159

  	
   

  	
  [Expansion Project Name and Location]

  
	
  Granite Falls, MN 56241

  	
   

  	
  OWNER (Name and Address):

  
	
  CONSTRUCTION CONTRACT

  	
   

  	
  [Owner Name/Address]

  
	
  Date:

  	
   

  	
  SURETY (Name and Principal Place of

  
	
   

  	
   

  	
  Business): [Name/Place of Business]

  

 

BOND#

Date (Not earlier than Construction Contract
Date):

Amount:

Modifications
to this Bond:               q   None               q    See Page 2

CONTRACTOR
AS PRINCIPAL                                                               SURETY

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

Fagen,
Inc.

	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  
	
  Name and Title:

  	
   

  	
   

  	
  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 for the performance of the Construction
Contract, which is incorporated herein by reference.

 H-1
 

 

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.

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.

 H-2
 

 

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 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.

 H-3
 

 

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

  	
   

  	
  SURETY

  	
   

  	
   

  	
   

  	
   

  
	
  (Corporate Seal)

  	
   

  	
  (Corporate Seal)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Company:

  	
   

  	
   

  	
  Company:

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Address:

  	
   

  
	
  Name and Title:

  	
   

  	
   

  	
  Name and Title:

  	
   

  
	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

 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

Form of Payment Bond

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):                                                     SURETY
(Name and Principal Place

Fagen, Inc.                                                                                                    Place
of Business):

P. O. Box 159

Granite Falls, MN  56241

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:                               q   None                               q    See
Page 2

CONTRACTOR
AS PRINCIPAL                                                               SURETY

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

Fagen,
Inc.

	
  Signature:

  	
   

  	
   

  	
  Signature:

  	
   

  
	
  Name and Title:

  	
   

  	
   

  	
  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:

 I-1
 

 

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 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 

 I-2
 

 

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 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.

 I-3
 

 

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 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

Draw (Payment) Schedule

Little Sioux Corn Processors, LP

Marcus, IA

Monthly
Draw Schedule - 18 Month Expansion Project

 

	
  MONTH

  	
   

  	
  BILLING

  	
   

  	
  TOTAL BILLING

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  2

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  3

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  4

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  5

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  6

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  7

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  8

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  9

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  10

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  11

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  12

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  13

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  14

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
  15

  	
   

  	
  *

  	
   

  	
  *

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
  $

  	
  47,860,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

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

 

 J-1

                                                                      

EXHIBIT K

Air Emissions
Application or Permit

See Draft Air Permit Attached

 

 K-1

                                                                      

EXHIBIT L

[Reserved]

 

 L-1

                                                                      

EXHIBIT M

Form of
Application for Payment

See attached Form of Application for Payment

 

 M-1

                                                                      

EXHIBIT N

Form of Lien Waiver

GENERAL CONTRACTOR’S PARTIAL WAIVER OF MECHANIC’S LIEN

RIGHTS AND AFFIDAVIT OF DEBTS AND CLAIMS

CONDITIONAL LIEN WAIVER

STATE:  (  
INSERT STATE   )                                                                                          FAGEN,
INC.

COUNTY:  (  
INSERT COUNTY   )

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

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

TRACT
1:  (  
INSERT LEGAL DESCRIPTION   )

TRACT
2:  (  
INSERT LEGAL DESCRIPTION   )

 N-1
 

                                                                      

 

The
undersigned further certifies that all obligations of General Contractor
entered into between suppliers/subcontractors and General Contractor regarding
this Facility are current as of this date, including all obligations of General
Contractor for all work, labor and services performed; materials and equipment
furnished; and all known indebtedness and claims against General Contractor for
damages arising in any manner in connection with General Contractor’s
performance of the contract mentioned above for which General Contractor or
property of General Contractor might in any way be held responsible.

Dated
this ______ day of ___________________, 200__

	
  

  	
  GENERAL CONTRACTOR:

  
	
   

  	
  FAGEN, INC.

  
	
   

  	
  By (Print):

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  (Signature):

  	
   

  
	
   

  	
  Witness (Print):

  	
   

  
	
   

  	
  (Signature):

  	
   

  

 

	
  In the alternative (or if requested):

  	
   

  	
   

  	
   

  
	
  Subscribed and sworn to before me this

  	
   

  	
   

  	
   

  
	
   

  	
  day of

  	
   

  	
  , 200__.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public

  	
   

  	
   

  	
   

  	
   

  
	
  My Commission Expires:

  	
   

  	
   

  	
   

  

 

 N-2

                                                                      

EXHIBIT O

Form of Consent to
Assignment

FAGEN CONSENT TO ASSIGNMENT

THIS CONSENT TO ASSIGNMENT (this “Consent”), dated as of                                  ,
2006,
is made among FAGEN, INC., a Minnesota corporation (the “Obligor”), Little
Sioux Corn Processors,
LP, an Iowa limited partnership (“Assignor”), and the financial
institution party to this Agreement, not in its individual capacity, but acting
solely in the capacity of collateral agent on behalf of the below defined Lenders (such
financial institution in such capacity, or such other financial institution acting in such
capacity, the “Collateral Agent”).

The Assignor seeks to
construct and operate a forty (40) million gallon per year expansion to a fifty-two (52) million gallons per year dry grind ethanol
production facility near Marcus, Iowa (the
“Project”). The Obligor and the Assignor have entered into the Lump-Sum
Design-Build Agreement dated as of
September 20, 2006 (as amended, modified, supplemented and in effect from time to time, the “Assigned Agreement”). The
Assignor and certain other financial institutions
(the “Lenders”) intend to finance certain costs of the Assignor for the
development, construction and
operation of the Project pursuant to various financing arrangements (the “Financing
Arrangements”). The Assignor and the Collateral Agent (on behalf of the
Lenders) intend to enter into certain
security arrangements (the “Security Documents”), pursuant to which the
Assignor will pledge and assign to the Collateral Agent a lien on and a security
interest in all of the Assignor’s right, title and interest in, among
other things, the Assigned Agreement.

SECTION 1. CONSENT TO
ASSIGNMENTS; LIABILITY; CURE RIGHTS; ETC.

1.1   Acknowledgments
and Consents.   The Obligor (i) acknowledges that the Assigned
Agreement is in full force and effect and that there are no other amendments,
modifications or supplements thereto, either oral or written; (ii) represents
and warrants that it has not assigned, transferred
or pledged the Assigned Agreement to any third party; (iii) represents and
warrants that it has no knowledge of
any existing default by the Assignor in the performance of any provision of the Assigned Agreement; (iv)
acknowledges and consents to the Assignor’s pledge and assignment of the Assigned Agreement to the
Collateral Agent; (v) acknowledges the right of the Collateral Agent in the exercise of its rights and remedies under
the Security Documents to take all
actions and exercise all rights of the Assignor under the Assigned Agreement as
if it were the Assignor; (vi) acknowledges and agrees that this Consent
satisfies Section 21.1 of the Assigned Agreement; and (vii) acknowledges and
agrees that the Collateral Agent is entitled to notices under the Assigned
Agreement pursuant to Section 21.7 thereof.

1.2   Limitation on
Assumption of Obligations.   The
Collateral Agent shall not be liable
for the performance or observance of any of the obligations or duties of the
Assignor under the Assigned
Agreement, nor shall the Security Documents give rise to any duties or
obligations whatsoever, except that,
insofar as the Collateral Agent exercises any of Assignor’s rights under the Assigned Agreement and/or makes any claims with
respect to any payments, deliveries or other
obligations under the Assigned Agreement, the satisfaction of the terms

 O-3
 

                                                                      

and conditions of the
Assigned Agreement applicable to such exercise of rights or such claims shall
be a condition precedent to the Obligor’s obligations with respect
thereto. Upon any transfer to a third party of the rights of the Collateral Agent under the Assigned Agreement pursuant
to its exercise of its remedies under the Security Documents as
described in Section 1.4 below which transfer
of the Assigned Agreement shall be subject in all respects to the terms and
conditions of the Assigned Agreement,
including Section 21.1 thereof (i) the transferee shall succeed to all right,
title and interest of the Assignor and
the Collateral Agent and (ii) the Collateral Agent shall have no further
liabilities, duties or obligations to the Assignor under the Assigned
Agreement.

1.3   Cure Periods.   The Obligor hereby confirms that it will
provide to the Collateral Agent the
same notices as are to be provided to the Assignor pursuant to Sections 15.4.2,
15.5.1(d), and 15.5.2 of the Assigned Agreement.

 1.4   Substitute Owner.   The
Obligor acknowledges that upon an event of default by the Assignor under the Financing Arrangements and an
exercise of remedies by the Collateral Agent under the Security Documents, the Collateral Agent may (but shall not be
obligated to) assume, or cause any purchaser at any foreclosure sale or
any assignee or transferee under any instrument of assignment or transfer in lieu of foreclosure to assume, all of the
interests, rights and obligations of
the Assignor thereafter arising under the Assigned Agreement. Each assuming party shall agree in writing to be bound by, and to
assume the terms and conditions of, the Assigned Agreement pursuant to
an assignment agreement in form and substance satisfactory to the Obligor pursuant to Section 21.1 of the
Assigned Agreement, and the Obligor shall continue to perform its obligations under the Assigned
Agreement in favor of the assuming party as if such party had been an
original party to the Assigned Agreement; provided, that the assuming
party shall cure any defaults, whether monetary or otherwise, then existing
under the Assigned Agreement in such assuming party’s capacity as “Owner” under
the Assigned Agreement (as defined in such
agreement) after giving effect to assignment of Assignor’s rights and
obligations to such assuming party; but provided, further, that
the liability of the Collateral Agent (or any entity
acting on behalf of the Collateral Agent or any of the other Secured Parties)
shall not exceed all of its right, title and interest in and to the
Project.

1.5   No Amendments.   The Obligor acknowledges that under the
terms of the Financing Arrangements,
the Assignor is required to obtain the consent of the Lenders for certain amendments
to the Assigned Agreement.

SECTION 2.            NOTICES.   The
first paragraph of Section 21.7 of the Assigned Agreement is hereby incorporated in this Consent, as if set
forth herein in its entirety. For purposes of Section 21.7 of the Assigned Agreement, the initial address for notice to
the Collateral Agent shall be as follows:

	
  

  	
   

  	
  [BANK]

  
	
   

  	
   

  	
  [ADDRESS]

  
	
   

  	
   

  	
  Attn:   [NAME/TITLE]

  
	
   

  	
   

  	
  Fax:   [FAX NUMBER]

  

 O-4
 

                                                                      

The Obligor acknowledges and agrees that the delivery of
the Collateral Agent’s notice information in this Section 2 shall be deemed to
satisfy the requirement of the Owner in Section 21.7 of the Assigned Agreement to deliver such information to the
Obligor.

SECTION
3.   MISCELLANEOUS.

THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK AND SHALL BE BINDING UPON THE PARTIES
HERETO AND THEIR PERMITTED SUCCESSORS AND ASSIGNS AND SHALL INURE TO THE BENEFIT OF THE PARTIES HERETO AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS. THE PARTIES HERETO HEREBY AGREE TO EXECUTE AND DELIVER ALL SUCH INSTRUMENTS
AND TAKE ALL SUCH ACTION AS MAY BE REASONABLY NECESSARY TO EFFECTUATE FULLY THE
PURPOSES OF THIS CONSENT.

[THE NEXT PAGE IS THE SIGNATURE PAGE]

 O-5
 

                                                                      

IN WITNESS WHEREOF, the parties hereto have caused this
Consent to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.

	
  

  	
   

  	
  Consented and Agreed to:

  
	
   

  	
   

  	
   

  
	
  FAGEN, INC., 

  	
   

  	
  LITTLE
  SIOUX CORN PROCESSORS, LP 

  
	
  as Obligor

  	
   

  	
  By its general partner

  
	
   

  	
   

  	
  Little Sioux Corn
  Processors, LLC

  
	
  By: 

  	
   

  	
   

  	
   

  	
  as Assignor

  
	
  Name: 

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
  Address for Notices:

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  Fagen, Inc.

  	
   

  	
   

  
	
   

  	
  501 W. Highway 212 

  	
   

  	
   

  
	
   

  	
  P.O. Box 159

  	
   

  	
   

  	
  Little
  Sioux Corn Processors, LP

  
	
   

  	
  Granite Falls, MN 56241 

  	
   

  	
   

  	
  4808 F Avenue

  
	
   

  	
  Attn: Aaron Fagen

  	
   

  	
   

  	
  Marcus, IA 51035

  
	
   

  	
  Fax: (320) 564-3278

  	
   

  	
   

  	
  Attention: Steve Roe

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (712) 376-2815

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  With a copy to

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fagen, Inc.

  	
   

  	
   

  	
   

  
	
   

  	
  501 W. Highway 212

  	
   

  	
   

  	
   

  
	
   

  	
  P.O. Box 159

  	
   

  	
   

  	
   

  
	
   

  	
  Granite Falls, MN 56241 

  	
   

  	
   

  	
   

  
	
   

  	
  Attn: Bruce Langseth 

  	
   

  	
   

  	
   

  
	
   

  	
  Fax: (320) 564-3278

  	
   

  	
   

  	
   

  
	
  :

  	
   

  	
   

  	
   

  
	
  [BANK NAME]

  	
   

  	
   

  
	
  not in its individual capacity,

  	
   

  	
   

  
	
  but solely as Collateral Agent

  	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [BANK]

  	
   

  	
   

  
	
  [ADDRESS]

  	
   

  	
   

  
	
  Attn:

  	
  [NAME/TITLE]

  	
   

  	
   

  
	
  Fax:

  	
  [FAX NUMBER]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
								

 

 O-6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]