Document:

Exhibit
10.1

*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

GOLDEN GRAIN
ENERGY, LLC (“OWNER”)

AND

FAGEN, INC. (“DESIGN-BUILDER”)

June 9, 2006

 

 

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 1 Definitions; Rules of Interpretation

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Rules of Construction

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Defined Terms

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 2 The Expansion Project

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Services to be Performed

  	
   

  	
  6

  
	
  2.2

  	
   

  	
  Extent of Agreement

  	
   

  	
  6

  
	
  2.3

  	
   

  	
  Conflicting Provisions

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 3 Design-Builder Responsibilities

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Design-Builder’s Services in General

  	
   

  	
  7

  
	
  3.2

  	
   

  	
  Design Development and Services

  	
   

  	
  8

  
	
  3.3

  	
   

  	
  Standard of Care

  	
   

  	
  8

  
	
  3.4

  	
   

  	
  Government Approvals and Permits

  	
   

  	
  9

  
	
  3.5

  	
   

  	
  Subcontractors

  	
   

  	
  9

  
	
  3.6

  	
   

  	
  Maintenance of Site

  	
   

  	
  9

  
	
  3.7

  	
   

  	
  Project Safety

  	
   

  	
  9

  
	
  3.8

  	
   

  	
  Submission of Reports

  	
   

  	
  10

  
	
  3.9

  	
   

  	
  Training

  	
   

  	
  10

  
	
  3.10

  	
   

  	
  Integration of Expansion Plant into GGE Plant

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 4 Owner’s Responsibilities

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Duty to Cooperate

  	
   

  	
  11

  
	
  4.2

  	
   

  	
  Furnishing of Services and Information

  	
   

  	
  11

  
	
  4.3

  	
   

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

  	
   

  	
  12

  
	
  4.4

  	
   

  	
  Owner’s Representative

  	
   

  	
  13

  
	
  4.5

  	
   

  	
  Government Approvals and Permits

  	
   

  	
  13

  
	
  4.6

  	
   

  	
  Owner’s Separate Contractors

  	
   

  	
  13

  
	
  4.7

  	
   

  	
  Security

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 5 Ownership of Work Product; Risk of
  Loss

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Work Product

  	
   

  	
  13

  
	
  5.2

  	
   

  	
  Owner’s Limited License Upon Payment in Full

  	
   

  	
  14

  
	
  5.3

  	
   

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

  	
   

  	
  14

  
	
  5.4

  	
   

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

  	
   

  	
  15

  
	
  5.5

  	
   

  	
  Owner’s Indemnification for Use of Work Product

  	
   

  	
  15

  
	
  5.6

  	
   

  	
  Risk of Loss

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 6 Commencement and Completion of the
  Expansion Project

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Pre-Engineering Agreement

  	
   

  	
  16

  
	
  6.2

  	
   

  	
  Notice to Proceed; Commencement

  	
   

  	
  16

  

 

 ii
 

 

 

	
  6.3

  	
   

  	
  Expansion Project Start-Up and Testing

  	
   

  	
  17

  
	
  6.4

  	
   

  	
  Substantial Completion

  	
   

  	
  17

  
	
  6.5

  	
   

  	
  Final Completion

  	
   

  	
  19

  
	
  6.6

  	
   

  	
  Post Completion Support

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 7 Performance Testing and Liquidated
  Damages

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Performance Guarantee

  	
   

  	
  20

  
	
  7.2

  	
   

  	
  Performance Testing

  	
   

  	
  20

  
	
  7.3

  	
   

  	
  Liquidated Damages

  	
   

  	
  21

  
	
  7.4

  	
   

  	
  Bonds and Other Performance Security

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 8 Warranties

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Design-Builder Warranty

  	
   

  	
  23

  
	
  8.2

  	
   

  	
  Correction of Defective Work

  	
   

  	
  24

  
	
  8.3

  	
   

  	
  Warranty Period Not Limitation to Owner’s Rights

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 9 Contract Price

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Contract Price

  	
   

  	
  25

  
	
  9.2

  	
   

  	
  Effect of Construction Cost Index Increase on Contract
  Price

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 10 Payment Procedures

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Payment at Financial Closing

  	
   

  	
  26

  
	
  10.2

  	
   

  	
  Progress Payments

  	
   

  	
  26

  
	
  10.3

  	
   

  	
  Final Payment

  	
   

  	
  27

  
	
  10.4

  	
   

  	
  Failure to Pay Amounts Due

  	
   

  	
  27

  
	
  10.5

  	
   

  	
  Design-Builder’s Payment Obligations

  	
   

  	
  28

  
	
  10.6

  	
   

  	
  Record Keeping and Finance Controls

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 11 Hazardous Conditions and Differing
  Site Conditions

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Hazardous Conditions

  	
   

  	
  28

  
	
  11.2

  	
   

  	
  Differing Site Conditions; Inspection

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 12 Force Majeure; Change in Legal
  Requirements

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Force Majeure Event

  	
   

  	
  30

  
	
  12.2

  	
   

  	
  Effect of Force Majeure Event

  	
   

  	
  30

  
	
  12.3

  	
   

  	
  Change in Legal Requirements

  	
   

  	
  31

  
	
  12.4

  	
   

  	
  Time Impact And Availability

  	
   

  	
  31

  
	
  12.5

  	
   

  	
  Effect of Industry-Wide Disruption on Contract Price

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 13 Changes to the Contract Price and
  Scheduled Completion Dates

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Change Orders

  	
   

  	
  31

  
	
  13.2

  	
   

  	
  Contract Price Adjustments

  	
   

  	
  32

  
	
  13.3

  	
   

  	
  Emergencies

  	
   

  	
  32

  
	
  13.4

  	
   

  	
  Contract Time Adjustment

  	
   

  	
  33

  
	
  13.5

  	
   

  	
  Failure to Complete Owner’s Milestones

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 14 Indemnity

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Tax Claim Indemnification

  	
   

  	
  33

  

 

 iii
 

 

 

	
  14.2

  	
   

  	
  Payment Claim Indemnification

  	
   

  	
  33

  
	
  14.3

  	
   

  	
  Design-Builder’s General Indemnification

  	
   

  	
  33

  
	
  14.4

  	
   

  	
  Owner’s General Indemnification

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 15 Stop Work; Termination for Cause

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
   

  	
  Owner’s Right to Stop Work

  	
   

  	
  35

  
	
  15.2

  	
   

  	
  Owner’s Right to Perform and Terminate for Cause

  	
   

  	
  35

  
	
  15.3

  	
   

  	
  Owner’s Right to Terminate for Convenience

  	
   

  	
  36

  
	
  15.4

  	
   

  	
  Design-Builder’s Right to Stop Work

  	
   

  	
  36

  
	
  15.5

  	
   

  	
  Design-Builder’s Right to Terminate for Cause

  	
   

  	
  37

  
	
  15.6

  	
   

  	
  Bankruptcy of Owner or Design-Builder

  	
   

  	
  38

  
	
  15.7

  	
   

  	
  Lenders’ Right to Cure

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 16 Representatives of the Parties

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.1

  	
   

  	
  Designation of Owner’s Representatives

  	
   

  	
  39

  
	
  16.2

  	
   

  	
  Designation of Design-Builder’s Representatives

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 17 Insurance

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.1

  	
   

  	
  Insurance

  	
   

  	
  40

  
	
  17.2

  	
   

  	
  Design-Builder’s Insurance Requirements

  	
   

  	
  40

  
	
  17.3

  	
   

  	
  Owner’s Liability Insurance

  	
   

  	
  41

  
	
  17.4

  	
   

  	
  Owner’s Property Insurance

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 18 Representations and Warranties

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.1

  	
   

  	
  Design-Builder and Owner Representations and
  Warranties

  	
   

  	
  43

  
	
  18.2

  	
   

  	
  Design-Builder Representations and Warranties

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 19 Dispute Resolution

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.1

  	
   

  	
  Dispute Avoidance and Mediation

  	
   

  	
  44

  
	
  19.2

  	
   

  	
  Arbitration

  	
   

  	
  44

  
	
  19.3

  	
   

  	
  Duty to Continue Performance

  	
   

  	
  45

  
	
  19.4

  	
   

  	
  No Consequential Damages

  	
   

  	
  45

  
	
  19.5

  	
   

  	
  Limitation of Liability

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 20 Confidentiality of Shared Information

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.1

  	
   

  	
  Non-Disclosure Obligation

  	
   

  	
  46

  
	
  20.2

  	
   

  	
  Publicity and Advertising

  	
   

  	
  47

  
	
  20.3

  	
   

  	
  Term of Obligation

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 21 Miscellaneous

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.1

  	
   

  	
  Assignment

  	
   

  	
  47

  
	
  21.2

  	
   

  	
  Successors

  	
   

  	
  48

  
	
  21.3

  	
   

  	
  Governing Law

  	
   

  	
  48

  
	
  21.4

  	
   

  	
  Severability

  	
   

  	
  48

  
	
  21.5

  	
   

  	
  No Waiver

  	
   

  	
  48

  
	
  21.6

  	
   

  	
  Headings

  	
   

  	
  48

  
	
  21.7

  	
   

  	
  Notice

  	
   

  	
  48

  

 

 iv
 

 

 

	
  21.8

  	
   

  	
  No Privity with Design Consultant/Subcontractors

  	
   

  	
  49

  
	
  21.9

  	
   

  	
  Amendments

  	
   

  	
  49

  
	
  21.10

  	
   

  	
  Entire Agreement

  	
   

  	
  49

  
	
  21.11

  	
   

  	
  Third-Party Beneficiaries

  	
   

  	
  50

  
	
  21.12

  	
   

  	
  Counterparts

  	
   

  	
  50

  
	
  21.13

  	
   

  	
  Survival

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A Performance Guarantee Criteria

  	
   

  	
  A-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT B Project Scope

  	
   

  	
  B-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT C Owner’s Responsibilities

  	
   

  	
  C-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT D ICM License Agreement

  	
   

  	
  D-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT E Schedule of Values

  	
   

  	
  E-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT F Form of Informational Report

  	
   

  	
  F-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT G Required Permits

  	
   

  	
  G-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT H Form of Performance Bond

  	
   

  	
  H-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT I Form of Payment Bond

  	
   

  	
  I-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT J Draw (Payment) Schedule

  	
   

  	
  J-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT K Air Emissions Application or Permit

  	
   

  	
  K-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT L Pre-Engineering Agreement

  	
   

  	
  L-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT M Form of Application for Payment

  	
   

  	
  M-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT N Form of Lien Waiver

  	
   

  	
  N-1

  

 

 v

LUMP SUM
DESIGN-BUILD CONTRACT

This
LUMP SUM DESIGN-BUILD CONTRACT (the “Agreement”) is made as of June 9,
2006, (the “Effective Date”) by and between Golden Grain Energy, LLC, an
Iowa limited liability company (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 forty (40) million gallons per year (“MGY”)
dry grind ethanol production facility near Mason City, Iowa (the “GGE Plant”),
under a Design-Build Agreement dated October 24, 2003;

B.                                     The
Owner desires to develop, construct, own and operate a 40 MGY expansion (the “Expansion
Plant”) of the GGE Plant, which would bring the total nameplate capacity of
the GGE Plant to 80 million gallons per year; 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.

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.

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 6.4.3

Confidential Information is
defined in Section 20.1.

 2
 

 

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.

Fagen Engineering
is defined in Section 6.1.

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.

 3
 

 

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

Financing Documents
means the final loan documents with the Lender or Lenders providing financing
for the construction or term financing of the 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.

GGE 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.

 4
 

 

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

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

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

Pre-Engineering Agreement is
defined in Section 6.1.

 5
 

 

Punch List is
defined in Section 6.4.3.

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

Safety Representative
is defined in Section 3.7.1.

Schedule of Values
is defined in Section 10.2.5.

Scheduled Substantial Completion
Date is defined in Section 6.4.1.

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:

 6
 

 

List of Exhibits

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                                     Pre-Engineering
Agreement

Exhibit M                                Form
of Application for Payment

Exhibit N                                   Form
of Lien Waiver

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 (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

 7
 

 

any way the general undertakings of the Design-Builder as set forth
herein.  Design-Builder’s Representative
shall be reasonably available to Owner and shall have the necessary expertise
and experience required to supervise the Work. 
Design-Builder’s Representative shall communicate regularly with Owner
and shall be vested with the authority to act on behalf of Design-Builder.

3.2                               Design
Development and Services.

3.2.1                     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

 8
 

 

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 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.

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.

 9
 

 

3.7                               Project
Safety.

3.7.1                     Design-Builder
recognizes the importance of performing the Work in a safe manner so as to
prevent damage, injury or loss to (i) any individuals at the Site, whether
working or visiting, (ii) the Work, including materials and equipment
incorporated into the Work or stored on-Site or off-Site, and (iii) any other
property at the Site or adjacent thereto. 
Design-Builder assumes responsibility for implementing and monitoring
all safety precautions and programs related to the performance of the
Work.  Design-Builder shall, prior to
commencing construction, designate a representative (the “Safety
Representative”) with the necessary qualifications and experience to
supervise the implementation and monitoring of all safety precautions and programs
related to the Work. Unless otherwise required by the Contract Documents,
Design-Builder’s Safety Representative shall be an individual stationed at the
Site who may have responsibilities on the 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 GGE 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 off-Site training by separate arrangement between Owner and Design-Builder
and as time is available.  All training
personnel and costs associated with such training personnel, including labor
and all training materials will be provided to Owner within the Contract Price
at no additional cost. Owner will 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

 10
 

 

training manuals and operating manuals and other documents reasonably
necessary for the start-up process.

3.10                        Integration
of Expansion Plant into GGE Plant.  Design-Builder
shall coordinate with Owner the timely and full integration of installation and
start-up of the Expansion Plant into the GGE Plant so as to coincide as much as
possible with the periods of non-operation (whether scheduled or otherwise) of
the GGE Plant.  Design-Builder shall
perform all services reasonably necessary to fully integrate the Expansion
Plant into the GGE 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. 
Design-Builder will cooperate with Owner to perform hot taps where
feasible.  Owner shall bear all costs
related to such hot taps and shall be responsible for any and all increased
costs to Design-Builder which result from Design-Builder’s cooperation with
Owner in the performance of hot taps.

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;

 11

 

(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;

(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 GGE
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

 12
 

 

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 prior to issuing the Notice to Proceed.

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

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

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

Article 5

Ownership of Work Product; Risk of Loss

5.1                               Work
Product.  All drawings,
specifications, calculations, data, notes and other materials and documents,
including electronic data furnished by Design-Builder to Owner under

 13
 

 

this Agreement (“Work Product”) shall be instruments of service
and Design-Builder shall retain the ownership and property interests therein,
including the copyrights thereto.

5.2                               Owner’s
Limited License Upon Payment in Full.  Upon
Owner’s payment in full for all Work performed under the Contract Documents,
Design-Builder shall grant Owner a limited license to use the Work Product in
connection with Owner’s occupancy and repair of the 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 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 and repair the Expansion Plant, subject to the following:

 14
 

 

(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 [*] 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.

5.4                               Owner’s
Limited License Upon Design-Builder’s Default. 
If this Agreement is terminated due to Design-Builder’s default
pursuant to Section 15.2 and (i) it is adjudged that Design-Builder was in
default, and (ii) Owner has fully satisfied all of its obligations under the
Contract Documents through the time of Design-Builder’s default, then
Design-Builder shall grant Owner a limited license to use the Work Product in
connection with Owner’s completion and occupancy and repair of the 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 gross 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 gross 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.

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

 15
 

 

Article 6

Commencement and Completion of the Expansion Project

6.1                               Pre-Engineering
Agreement.  Owner shall have entered
into that certain Pre-Engineering Agreement between Owner and Fagen
Engineering, LLC (“Fagen Engineering”) dated May 25, 2006 and attached
hereto as Exhibit L (“Pre-Engineering Agreement”). The Pre-Engineering
Agreement provides for Fagen Engineering to commence work on the preliminary
engineering for the Expansion Project as set forth therein. Owner has agreed to
pay [*] for such engineering services pursuant to the terms of that agreement,
the full amount of which shall be included in and credited to the Contract
Price. Notwithstanding the foregoing sentence, if a Notice to Proceed is not
issued pursuant to Section 6.2, or Financial Closing is not obtained pursuant
to Section 4.3, then no amount paid under the Pre-Engineering Agreement shall
be refunded to Owner.

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 preliminary Site work required of Owner, as
described in Exhibit C is completed along with redline drawings and such
preliminary Site work and redline drawings have been reviewed and deemed
adequate by Design-Builder; (3) the air permit(s) and/or other applicable
local, state or federal permits necessary so that construction can begin, as
listed on Exhibit G, have been obtained; (4) Owner has obtained Financial
Closing pursuant to Section 4.3; (5) if applicable, Owner has executed a sales
tax exemption certificate and 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.

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

 16
 

 

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. O. Box 159

Granite Falls, MN  56241

Attention: Becky Dahl

Fax:  (320)
564-3278

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.

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

 17
 

 

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
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 Four Hundred Eighty-Five (485) Days after the
date of the Notice to Proceed, Owner shall pay Design-Builder at the time of
Final Payment under Section 10.3 hereof an early completion bonus (“Early
Completion Bonus”) pursuant to the following schedule:

(i)                                     [*] per Day for
each Day that Substantial Completion occurred in advance of Four Hundred
Eighty-Five (485) Days but after Four Hundred Fifty-Five (455) Days;

(ii)                                  [*] per Day for
each Day that Substantial Completion occurred in advance of Four Hundred
Fifty-Five (455) Days but after Three Hundred Ninety-Five (395) Days;

(iii)                               [*] per Day for
each Day that Substantial Completion occurred in advance of Three Hundred Ninety-Five
(395) Days.

The Early Completion Bonus, if any, under
this Section 6.4.4 shall be capped at and shall not exceed [*].

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%).
On each anniversary of the note, any unpaid accrued interest shall be converted
to principal and shall accrue interest as principal thereafter. Owner shall pay
said promissory note as soon as allowed by senior lender; in any event, the note,
plus accrued interest, shall be paid in full before Owner pays or makes any
distributions to or for the benefit of its owners (shareholders, members,
partners, etc.). All payments shall be applied first to accrued interest and
then to principal.

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

 18
 

 

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;

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

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

(f)                                    the
information in Section 6.5.4 has been provided to Owner;

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

(h)                                 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

(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.

 19
 

 

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 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; provided, however, that
Design-Builder makes no guarantees and provides no warranties, whether express
or implied, with respect to the air emissions criteria of the Expansion Plant
or the results of any air emissions testing. 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 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

 20
 

 

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 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.

7.3.1                     Design-Builder
understands that if Final Completion is not attained by the Final Completion
Date, Owner will suffer damages which are difficult to determine and accurately
specify. Design-Builder agrees that if Final Completion is not attained by the
end of the Final Completion Date, Design-Builder shall pay Owner as liquidated
damages, and not as a penalty, for each Day that Final Completion extends
beyond the Final Completion Date the following amounts:

 21

 

(i)                                [*]
per Day for each Day that Final Completion occurs after the Final Completion
Date but prior to thirty (30) Days after the Final Completion Date;

(ii)                             [*]
per Day for each Day that Final Completion occurs after the date that is thirty
(30) Days after the Final Completion Date but prior to ninety (90) Days after
the Final Completion Date;

(iii)                          [*] per
Day for each Day that Final Completion occurs after the date that is ninety
(90) Days after the Final Completion Date.

Owner, at its discretion, may elect to offset any such liquidated
damages from any retainage.  Liquidated
damages shall be paid by Design-Builder by the 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.  

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

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

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.

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

 22
 

 

(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 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

 23
 

 

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 appearance of such failure or non-conformance 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 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.

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.

 24
 

 

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 [*] (“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.

9.2.1                     The
Baseline Index for this Agreement shall be 7695.40 (April 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 thereto.

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

 25
 

 

Article 10

Payment Procedures

10.1                        Payment
at Financial Closing.  As part of the
Contract Price, Owner shall pay Design-Builder [*], 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 [*] 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. On or before the
twenty-fifth (25th) Day of each month beginning with the first (1st) month
following the Notice to Proceed, Design-Builder shall submit to Owner its
request for payment for all Work performed and not paid for during the previous
Pay Period (the “Application for Payment”). 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, received from
Subcontractors and suppliers for the Work included in the Application for
Payment submitted for the immediately preceding Pay Period and for which
payment has been received.

10.2.2              The Application
for Payment shall constitute Design-Builder’s representation that the Work has
been performed consistent with the Contract Documents and has progressed to the
point indicated in the Application for Payment. The Parties agree that the work
completed at the Site, 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.

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

 26
 

 

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 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. 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 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.

 27
 

 

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

10.4.3              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

 28
 

 

encountered, and, if they have been encountered, (ii) prescribe the
remedial measures that Owner is required under applicable Legal Requirements to
take with respect to such Hazardous Conditions in order for the Work to proceed.
Owner’s choice of such Qualified Independent Experts shall be subject to the
prior approval of Design-Builder, which approval shall not be unreasonably
withheld or delayed.

11.1.3              Design-Builder
shall be obligated to resume Work at the affected area of the 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

 29
 

 

the extent reasonably possible, provide such notice before the
Differing Site Condition has been substantially disturbed or altered.

Article 12

Force Majeure; Change in Legal Requirements

12.1                        Force
Majeure Event.  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;

 30
 

 

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

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

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

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

12.4                        Time
Impact And Availability.  If the
Design-Builder is delayed at any time in the commencement or progress of the
Work due to a delay in the delivery of, or unavailability of, essential
materials 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

 31
 

 

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

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

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

13.2                        Contract
Price Adjustments.

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

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

 32
 

 

Price and/or the Contract Time(s) on account of emergency work shall be
determined as provided in this Article 13.

13.4                        Contract
Time Adjustment.  Design-Builder
shall be entitled to an extension of the Contract Time(s) to the extent the GGE
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

 33
 

 

the extent resulting from the negligent or intentionally wrongful acts
or from omissions of Design-Builder, Design Consultants, Subcontractors, anyone
employed directly or indirectly by any of them or anyone for whose acts any of
them may be liable.

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

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

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

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

 34

 

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.

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, or (iv) any representation or warranty made by
Design-Builder under Section 18.1 hereof was false or materially misleading
when made, then Owner may terminate this Agreement upon written notice to
Design-Builder.

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

 35
 

 

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

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

15.3                        Owner’s
Right to Terminate for Convenience.

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

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

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

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

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

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

15.3.2              If Owner
terminates this Agreement pursuant to this Section 15.3 and proceeds to design
and construct the 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.

 36
 

 

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.

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

 37
 

 

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
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.

 38
 

 

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:

Walter Wendland

President and CEO

1822 43rd St SW

Mason City, IA 50401

Telephone: (641) 423-8525

Facsimile:
(641) 421-8457

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:

Walter Wendland

President and CEO

1822 43rd St SW

Mason City, IA 50401

Telephone: (641) 423-8525

Facsimile:
(641) 421-8457

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

Roland “Ron” Fagen

CEO and President

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Telephone:  (320) 564-3324

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

Aaron Fagen

Chief Operating Officer

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Telephone:  (320) 564-3324

 39
 

 

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

  	
   

  
					

 

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:

 40
 

 

(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.

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

 41
 

 

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, Design
Consultants, Subcontractors, the Lenders and Lenders’ Agent as additional
insureds, without application of deductible, retention or retrospective
premiums as to the additional insureds.

17.4                        Owner’s
Property Insurance.

17.4.1              Unless otherwise
provided in the Contract Documents, Owner shall procure from insurance
companies authorized to do business in the state in which the 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, Design Consultants, Subcontractors, the
Lenders and Lenders’ Agent and shall insure against the perils of fire and
extended coverage, theft, vandalism, malicious mischief, collapse, flood,
earthquake, debris removal and other perils or causes of loss as called for in
the Contract Documents and without application of any deductible, retention or
retrospective premium. Owner shall maintain coverage equal to or in excess of
the value of each of Design-Builder’s, Design Consultants’, and Subcontractors’
property on the Site. The property insurance shall include physical loss or
damage to the Work, including materials and equipment in transit, at the Site
or at another location as may be indicated in Design-Builder’s Application for
Payment and approved by Owner.

17.4.2              Unless the
Contract Documents provide otherwise, Owner shall procure and maintain boiler
and machinery insurance that will include as additional insureds the Owner,
Design-Builder, Design Consultants, and Subcontractors, in an amount not less
than 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. 107-297, 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

 42
 

 

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.

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;

 43
 

 

(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 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

 44
 

 

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 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

 45
 

 

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
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;

 46

 

(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 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

 47
 

 

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, 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 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

 48
 

 

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

If to Owner, to:

Golden Grain Energy, LLC

1822 43rd St SW

Mason City, IA 50401

Attention:  Walter Wendland

Fax:  (641)
421-8457

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.

 49
 

 

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.]

 50

 

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:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Golden Grain
  Energy, LLC

  	
   

  	
  Fagen, Inc.

  	
   

  
	
  (Name
  of Owner)

  	
   

  	
  (Name of Design-Builder)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
     /s/
  Walter Wendland

  	
   

  	
     /s/ Roland Fagen

  	
   

  
	
  (Signature)

  	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
     Walter
  Wendland

  	
   

  	
     Roland “Ron” Fagen

  	
   

  
	
  (Printed
  Name)

  	
   

  	
  (Printed Name)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
     President
  and CEO

  	
   

  	
     CEO and President

  	
   

  
	
  (Title)

  	
   

  	
  (Title)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
     6/15/06

  	
   

  	
  Date:

  	
     6/19/06

  	
   

  
						

 

 

EXHIBIT A

Performance Guarantee Criteria

 

 A-1

 

EXHIBIT B

Project Scope

 B-1

 

EXHIBIT C

Owner’s Responsibilities

 

The Owner shall operate the GGE Plant in accordance with good fuel
ethanol production industry practices and shall provide Design-Builder access
to the GGE 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, “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. 
Owner shall prepare site according to Design-Builder’s engineering plans
provided for the site work under the Pre-Engineering Agreement.

 C-1
 

 

 

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 150
horsepower and where demanded by process requirements.  Owner is encouraged to discuss with its
electrical service supplier whether additional soft start motor controllers

 C-2
 

 

 

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

 C-3
 

 

 

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

  	
   

  
	
  Liquifaction
  Tank

  	
   

  	
  3,500

  	
   

  
	
  Fermentation
  Tank

  	
   

  	
  5,000

  	
   

  
	
  All Other Areas

  	
   

  	
  3,000

  	
   

  

 

 C-4
 

 

 

Table
2   Owner’s Milestones

 

	
  Owner’s Responsibilities

  	
   

  	
  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

 D-1

 

EXHIBIT E

Schedule of Values

 

 E-1

 

EXHIBIT F

Form of Informational Report

	
  

  	
   

  
	
  PROJECT MEETING: Two-Week Look Ahead(s)

  
	
   

  

 

	
  JOBSITE:

  	
  MEETING

  DATE:

  	
   

  

 

	
  q MANPOWER

  	
   

  	
  TOTALS q 

  	
   

  
	
  Fagen, Inc.

  	
   

  	
  0

  	
   

  
	
  (sub)

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  0

  	
   

  
	
  JOBSITE TOTAL

  	
   

  	
  0

  	
   

  

 

q  SAFETY ISSUES

1.     text

2.     text

 

q  WAREHOUSE ISSUES

1.     text

2.     text

 

q  PROCUREMENT ISSUES

1.     text

2.     text

 

q  OPERATIONS ISSUES

1.     text

2.     text

 

q  CIVIL

Area

1.     text

2.     text

 F-1
 

 

 

q  STRUCTURAL

Area

1.     text

2.     text

 

q  SIDING / INSULATION

Area

1.     text

2.     

 

q  MILLWRIGHT

Area

1.     text

2.     

 

q  PIPE

Area

1.     text

2.

 

q  ELECTRICAL

Area

1.     text

2.

 

q  DELIVERIES

Area

1.     text

 

q  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

  	
   

  	
  Design-Builder

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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:

  	
  o   None

  	
  o    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.

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

 H-2
 

 

 

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.

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.

 H-3
 

 

 

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:

  	
  o

  	
  None

  	
  o

  	
  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.

 I-2
 

 

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

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

6.2           Pay
or arrange for payment of any undisputed amounts.

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

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

 J-1

 

EXHIBIT K

Air Emissions Application or Permit

 K-1

 

 

EXHIBIT L

Pre-Engineering Agreement

 L-1

 

 

EXHIBIT M

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-2Exhibit
10.1

ADDENDUM
NO. 1 TO AMENDED CHANGE IN CONTROL AND

TERM
EMPLOYMENT AGREEMENT

This Addendum No.
1 dated as of the 7th day of September, 2006, is entered into between AmeriVest
Properties Inc., a Maryland corporation (the “Company”) and Kathryn L. Hale (“Executive”,
and collectively with the Company, the “Parties”).

WHEREAS, the
Parties have entered into an Amended Change in Control and Term Employment
Agreement (“Agreement”) dated as of December 16, 2005, pursuant to which
Company agreed to employ Executive and Executive agreed to be employed by
Company as the Company’s Chief Financial Officer through May 31, 2006 (“Employment
Period”).

WHEREAS, Section
4(e)(i) of the Agreement provides that upon the expiration of Executive’s
Employment Period, among other requirements as specifically set forth in the
Agreement, and as a requisite to payment of Severance by Company to Executive,
as defined in the Agreement, Executive shall on the date of her termination of
employment enter into and execute this Addendum No. 1 to Agreement wherein
Executive ratifies all the provisions of the Agreement and agrees that she
shall be legally bound by all releases and all other terms set forth in the
Agreement as of the date of Executive’s termination of employment.

WHEREAS, Executive
desires to fulfill her obligation under the Agreement to enter into and execute
this Addendum No. 1 to Agreement.

NOW THEREFORE, the
Parties hereto, intending to be legally bound, hereby agree as follows:

1.                                       In
exchange for the benefits payable to Executive as set forth in Section 4(e) of
the Agreement, Executive does hereby voluntarily and knowingly release and
discharge the Company and its successors, subrogees, assigns, principals,
agents, partners, heirs, employees, shareholders, officers, directors,
subsidiaries, affiliates, divisions, associates and attorneys (collectively the
“Released Parties”) from any and all claims, action, causes of action,
liabilities, demands, rights, damages, costs, attorneys’ fees, expenses and
controversies of every kind and description through the date of this
Agreement.  These releases shall include,
by way of example and not limitation, all claims which arise out of, relate to,
or are based on (i) Executive’s employment and/or association with the Released
Parties and the termination thereof, (ii) any and all contracts, binding
promises and statements to, from or between the Parties, (iii) the common laws
of any state, (iv) Title VII of the Civil Rights Act of 1964, as amended, (v)
claims under the Civil Rights Act of 1991, (vi) claims under 42 U.S.C. § 1981,
§ 1981a, § 1983, § 1985, or § 1988, (vii) the Age Discrimination in Employment
Act of 1967, as amended, (viii) the Employee’s Income Retirement Security Act
of 1974, as amended, (ix) claims under the Older Workers Benefit Protection Act
of 1990, and (x) claims under all other local, state and federal statutes, any
of which could be raised, filed and/or brought in any court of competent
jurisdiction an/or in any local, state and federal administration agency or
administration.  However, Executive does
not release any claims she may have under any stock option or warrant
agreements.

 

(i)                                     Nothing contained herein shall be construed
as a release of any claim the Executive may have to unemployment benefits.  Executive may make a claim for such benefits,
and the Released Parties will provide truthful information in response to
questions from the responsible State agency.

(ii)                                  Notwithstanding the recitation of the claims
set forth in Section 4(f) of the Agreement or Section 1 of this Addendum No. 1
to Agreement, or whether quoted therein or herein or not, and for the purpose
of effectuating a full and final release between the Parties, Executive
expressly acknowledges that all releases agreed to by Executive in Section 4(f)
of the Agreement and Section 1 of this Addendum No. 1 are intended to include
and contemplate the extinguishment, without limitation, of all claims which she
now has or does not know or suspect to exist in her favor at the time of the
execution hereof.

2.                                       Executive warrants and represents as follows:

(i)                                   Executive has full and complete legal
capacity to enter into this Addendum No. 1 to Agreement, has read this Addendum
No. 1 to Agreement, has had a reasonable time to consider its terms, and agrees
to the conditions and obligations set forth in it.

(ii)                                  Executive has had twenty-one (21) days to
consider this Addendum No. 1 to Agreement, and, if Executive executes this
Addendum No. 1 to Agreement within less than twenty-one (21) days from the date
of receipt, it is with the express understanding that Executive had the full
twenty-one (21) days available if so desired. 
Further, Executive waives all rights to a twenty-one (21) day period to
consider the terms of Employee’s release of claims under the Age Discrimination
in Employment Act (“ADEA”) if Executive signs this Addendum No. 1 to Agreement
prior to the expiration of the twenty-one (21) day period.

(iii)                               Executive has not relied on any statement
made by the Company, its agents or representatives, either express or implied,
or by statement or omission, in making his decision to enter into this Addendum
No. 1 to Agreement.  Executive
voluntarily executes this Addendum No. 1 to Agreement after having been advised
by the Company to seek legal counsel, and has had full opportunity to consult
with legal counsel, and without being pressured or influenced by any person, or
by any statement or representation of any person acting on behalf of another
Party, including the officers, agents and attorneys for any other Party.

(iv)                              Executive has been informed and understands
that (i) to the extent that this Addendum No. 1 to Agreement waives or releases
any claims Executive might have under the ADEA, Executive may rescind such
waiver and release within seven (7) calendar days of the execution of this
Addendum No. 1 to Agreement, and (ii) any such rescission must be in writing
and hand delivered to the Company, or, if sent by mail, postmarked within the
seven (7) day period, sent only by certified mail, return receipt requested,
and addressed to the Company.

 2
 

 

(v)                                 This Addendum No. 1 to Agreement is subject
to the terms of the Older Workers Benefit Protection Act of 1990 (“OWBPA”).  Executive acknowledges and agrees that she
is, voluntarily and with full knowledge of the consequences of such release,
releasing all claims, including any claims Executive has or could have brought
under the OWBPA and any claim(s) under the ADEA.

(vi)                              Executive acknowledges and agrees that this
Addendum No. 1 to Agreement is written in a manner intended to be understood,
and that Executive understands this Addendum No. 1 to Agreement.

(vii)                           Executive has had a full and fair opportunity
to investigate the facts underlying any claims that Executive believes she may
have against the Company.  Executive
enters into this Addendum No. 1 to Agreement acknowledging that there may be
facts of which she is not aware; but nonetheless enters into this Addendum No.
1 to Agreement with the intent of providing the Company, and its affiliates,
with a full and final release of all known and unknown, suspected or
unsuspected, foreseen or unforeseen, matured or unmatured, liquidated or
unliquidated, claims, based on all known and unknown facts.

3.                                       By
execution of this Addendum No. 1 to Agreement, Executive ratifies all of the
provisions of the Agreement and all of the provisions of the Amendment to
Agreement, and agrees that she shall be legally bound by all releases and all
other terms set forth in the Agreement, the Amendment to Agreement, and this
Addendum No. 1 to Agreement as of the date of Executive’s termination of
employment.

4.                                       Except
to the extent supplemented hereby, the Agreement shall remain unchanged and in
full force and effect and is hereby ratified and confirmed in all respects as
supplemented hereby.

IN WITNESS
WHEREOF, the undersigned have executed this Addendum No. 1 to Agreement as of
the date and year above written.

	
   

  	
  AMERIVEST PROPERTIES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/
  Charles K. Knight

  	
   

  
	
   

  	
  Charles K.
  Knight, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
    /s/ Kathryn L. Hale

  	
   

  
	
   

  	
  Kathryn L. Hale

  

 

 3

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