Document:

Exhibit
10.7.1

	
  

  	
   

  	
   

  
	
  MULTIPURPOSE NOTE AND SECURITY AGREEMENT

  	
  Officer No.

  	
  073    C

  
	
  Borrower: “I”, “Me” and “My” Means Each Borrower
  Below Jointly and Severally

  	
   

  	
  Lender: “You” and “Your” Means The Lender, Its Successors
  and Assigns

  	
  Customer No.

  	
   

  
	
  Ethanol Grain Processors LLC

  	
   

  	
  First Citizens National Bank

  	
  Loan No.

  	
  95200

  
	
   

  	
   

  	
   

  	
  Renewal of

  	
  95200

  
	
  1918 McDonald Rd

  	
   

  	
  100 W. Washington Avenue

  	
  Date

  	
  September 07, 2006

  
	
  Rives, TN 38253

  	
   

  	
  Union City, TN 38621

  	
  Loan Amount

  	
  $1,000,000.00

  
	
   

  	
   

  	
  (731)-885-2300

  	
  Maturity Date

  	
  August 30, 2007

  
	
  NOTE: I promise to pay to you,
  or your order, at your address above, the principal sum of:   One Million and 00/100  Dollars
  ($$1,000,000.00)

  	
   

  	
   

  
	
  together with interest at the rate of interest
  provided for hereinafter.

  
	
  o    Single Advance:   I
  have received all of this principal sum. No additional advances will be made
  under this note.

  
	
  x    Multiple Advance: 
  The principal sum shown above is the maximum amount of principal I can
  borrow under this note.  As of this
  date I have received the amount of
                                  and
  future principal advances are comtemplated.

  
	
  x    Conditions:  The
  conditions for future advances are 2,500.00 MINIMUM DRAWS

  
	
  x    Open-End Credit:  You and I agree that I can borrow up to the
  maximum amount of principal more than one time. This option is subject to all
  other conditions and expires no later than August 30, 2007

  
	
  o    Closed-End Credit: You and I agree that I may borrow up to
  the maximum only one time (and subject to all other conditions).

  
	
  THE PURPOSE OF THE LOAN IS: RENEWAL / Working
  Capital

  
	
  INTEREST:  Interest accrues on a Actual/360
  Day basis.

  
	
  I agree to pay interest on the principal balance
  owing from time to time as stated below.

  
	
  o    Fixed Rate: I agree to pay interest at the fixed, simple
  rate of               % per year,
  from           until paid in full.

  
	
  x    Variable Rate:  I
  agree to pay interest from 08/30/2006 at
  the initial simple rate of 7.600% per
  year. This rate may change as stated below.

  
	
  THE FUTURE RATE WILL BE .650% BELOW Wall Street Journal
  Prime Rate (“the index”) as published in the The Money Tables of the Wall
  Street Journal.

  
	
  THE INTEREST RATE ON THE NOTE MAY CHANGE AS OFTEN
  AS daily (ASSUMING THERE IS A CHANGE IN THE INDEX).

  
	
  A CHANGE IN THE INTEREST RATE WILL TAKE EFFECT
  1st business day after change date.

  
	
  AN INCREASE IN THE INTEREST RATE WILL CAUSE AN
  INCREASE IN THE PAYMENT AMOUNT.

  
	
   

  
	
   

  
	
  Post-Maturity Interest  Interest will accrue after maturity on the
  unpaid balance of this note on the same basis as interest accrues prior to
  maturity, unless a specific post-maturity interest rate is agreed to in the
  next sentence.

  
	
  o  If checked, interest will accrue at the
  rate of        % per year on the
  balance of this note not paid at maturity, including maturity by
  acceleration.

  
	
  o  If checked, I agree to pay a minimum FINANCE CHARGE of $             if I pay this loan before you
  have earned that much in FINANCE CHARGES.

  
	
  Delinquency and Default: I
  agree to pay the costs you incur to collect this note in the event of my
  default, including your attorney fees.

  
	
  IF MY PAYMENT IS MORE THAN 15 DAYS LATE, I WILL
  PAY A LATE CHARGE EQUAL TO 5.000% OF THE PAYMENT AMOUNT UP TO $250.00.

  
	
  o  Additional Charges:  In addition to interest, I o
  have paid  o
  agree to pay the following additional
  charges.          

  
	
   

  

Payments: I agree to pay this note as follows:

THIS NOTE IS DUE ON DEMAND, IF NO DEMAND THEN:

Principal and interest are due
and payable in 365 days on August 30, 2007.

Additional Terms:

o    If
checked this is a purchase money loan. You may include the name of the seller
on the check or draft for this loan.

Security: I give you a security
interest in the following:

(1)               any property of
mine, whether I own it now or in the future, which is in your possession (This
includes, but is not limited to, property I give you for safekeeping,
collection or exchange, and all dividends and distributions from property.);

(2)               the property
described below, together with all parts, accessories, repairs, improvements
and accessions to the property, and all proceeds and products from the
property.

x   If checked, this note is secured by a
separate GUARANITES DATED 08-23-05

Description of real estate if the above property is crops, timber,
minerals (including oil or gas) or fixtures:

	
  Name of record owner, if not
  me:

  	
   

  	
   

  	
  Any person who signs within this box does so to give
  you a security interest in the property described above. This person does not
  promise to pay the note.

  
	
  o
  If checked, this security agreement should be filed in the real estate
  records.

  	
   

  	
   

  	
  Date

  
	
  BORROWER-I ACKNOWLEDGE RECEIPT OF A COPY OF THIS
  NOTE AND AGREE TO THE TERMS AND CONDITIONS CONTAINED ON THIS PAGE AND ON PAGE
  2 OF THIS NOTE.

  
	
  CO-SIGNER-I UNDERSTAND THAT I HAVE FULL
  LIABILITY AND RESPONSIBILITY TO PAY THIS CONTRACT. YOU DON’T HAVE TO MAKE ANY
  DEMANDS ON ANY OTHER PERSON SIGNING THIS CONTRACT OR TAKE STEPS TO REPOSSESS
  ANY COLLATERAL BEFORE YOU ASK ME TO REPAY. I HAVE READ AND UNDERSTAND THIS
  ENTIRE CONTRACT.

  

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BORROWER Ethanol Grain Processors
  LLC

  	
   

  	
  DATE

  	
   

  	
  BORROWER

  	
   

  	
  DATE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ JAMES K PATTERSON

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BY: 

  	
  JAMES K PATTERSON, Chief Executive

  	
   

  	
  09-07-06

  	
   

  	
   

  	
   

  	
   

  
	
  BORROWER Ethanol Grain Processors
  LLC

  	
   

  	
  DATE

  	
   

  	
  BORROWER

  	
   

  	
  DATE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BY: 

  	
  MIKE MILLER, Treasurer

  	
   

  	
  09-07-06

  	
   

  	
   

  	
   

  	
   

  
	
  CO-SIGNER

  	
   

  	
   

  	
   

  	
  DATE

  	
   

  	
  CO-SIGNER

  	
   

  	
  DATE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  FC09072006033645P

  	
   

  	
  TNMPN  Rev.  (4/20/04)
   GP  -  TN

  
														

 

 1Exhibit 10.18

LUMP SUM
DESIGN-BUILD CONTRACT

This LUMP SUM DESIGN-BUILD CONTRACT (the “Agreement”)
is made as of August 25, 2006, (the “Effective Date”) by and between
Ethanol Grain Processors, LLC, a Tennessee limited liability company (the “Owner”)
and Fagen, Inc., a Minnesota corporation (the “Design-Builder”) (each a “Party”
and collectively, the “Parties”).

RECITALS

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

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

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

AGREEMENT

Article 1

Definitions; Rules of Interpretation

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

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

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

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

 

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

AAA is
defined in Section 19.1.

Agreement is defined in the Preamble.

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

Applicable
Law means

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

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

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

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

Application
for Payment is defined in Section 10.2.1.

As Built
Plans is defined in
Section 5.2.

Bankrupt
Party is defined in Section 15.6.1. 

Baseline
Index is defined in Section 9.2.1.

Change
Order is defined in Section 13.1.1.

CCI
is defined in Section 9.2.

Certificate
of Substantial Completion is defined in Section 6.4.3.

Confidential
Information is
defined in Section 20.1.

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.

 2
 

 

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.

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.

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

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

Force
Majeure Event is defined in Section 12.1. 

 3
 

 

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

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

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 Project or Site, the practices involved in
the Project or Site, or any Work, including any consensus standards for
materials, products, systems, and services established by ASTM International,
any successor organization thereto, or any Governmental Authority.

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

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

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

MGY is defined in the Recitals.

Notice
to Proceed is defined in Section 6.2.

 4
 

 

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 13.4.

Owner’s
Operator means an
entity selected by Owner as operator of the Project or any other entity that
Owner chooses to replace such entity.

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. 

Phase
I is defined in Exhibit L.

Phase
I and Phase II Engineering Services Agreement is defined in Section 6.1.

Phase
II is defined in Exhibit L.

Plant
is defined in the Recitals.

Project is
defined in Section 2.1.

 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 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
Project

2.1          Services
to be Performed.

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

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

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

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

 6
 

 

 

	
  List of Exhibits

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Performance Guarantee Criteria

  
	
  Exhibit B

  	
   

  	
  General Project Scope

  
	
  Exhibit C

  	
   

  	
  Owner’s Responsibilities

  
	
  Exhibit D

  	
   

  	
  ICM License Agreement

  
	
  Exhibit E

  	
   

  	
  Schedule of Values

  
	
  Exhibit F

  	
   

  	
  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

  	
   

  	
  Phase I and Phase II Engineering Services Agreement

  
	
  Exhibit M

  	
   

  	
  Form of Application for Payment

  
	
  Exhibit N

  	
   

  	
  Form of Lien Waiver

  
	
  Exhibit O

  	
   

  	
  Form of Consent to Assignment

  

 

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

2.3          Conflicting Provisions. 
In the event of any conflict or inconsistency between the body of this
Agreement and any Exhibit or Schedule hereto, the terms and provisions of this
Agreement, as amended from time to time, shall prevail and be given
priority.  Subject to the foregoing, the
several documents and instruments forming part of this Agreement are to be
taken as mutually explanatory of one another and in the case of ambiguities or
discrepancies within or between such parts the same shall be explained and
interpreted, if possible, in a manner which gives effect to each part and which
avoids or minimizes conflicts among such parts. 
No oral representations or other agreements have been made by the
Parties except as specifically stated in the Contract Documents.

Article 3

Design-Builder
Responsibilities

3.1          Design-Builder’s Services in General.  Except for services and information to be
provided by Owner and specifically set forth in Article 4 and Exhibit C,
Design-Builder shall perform or cause to be performed all design, engineering,
procurement, construction services, supervision, labor, inspection, testing,
start-up, material, equipment, machinery, temporary utilities and other
temporary facilities to complete construction of the Project in a timely manner
consistent with the Contract Documents (the “Work”).  Design-Builder acknowledges that the Plant’s
location requires seismic design category D as defined by the International
Building Code and that the Work, as defined hereunder, includes the services
necessary for the complete construction of the Project at the Site.  All design and engineering and construction
services and other Work of the Design-Builder shall be performed in accordance
with (i) the general project scope guidelines 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 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

 7
 

 

personnel as required by Law. 
The enumeration of specific duties and obligations to be performed by
the Design-Builder under the Contract Documents shall not be construed to limit
in any way the general undertakings of the Design-Builder as set forth
herein.  Design-Builder’s Representative
shall be reasonably available to Owner and shall have the necessary expertise
and experience required to supervise the Work. 
Design-Builder’s Representative shall communicate regularly with Owner
and shall be vested with the authority to act on behalf of Design-Builder.

3.2          Design Development and Services.

3.2.1       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 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 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 Project.
Design-Builder shall provide reasonable assistance to Owner in obtaining those
permits, approvals and licenses that are Owner’s responsibility.

3.5          Subcontractors.

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

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

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

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

3.6          Maintenance of Site. 
Design-Builder shall keep the Site reasonably free from debris, trash
and construction wastes to permit Design-Builder to perform its construction
services efficiently, safely and without interfering with the use of adjacent
land areas.  Upon Substantial Completion
of the Work Design-Builder shall remove all debris, trash, construction wastes,
materials, equipment, machinery and tools arising from the Work to permit Owner
to occupy the 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 Project in addition to
safety.  The Safety Representative shall
make routine daily inspections of the Site and shall hold weekly safety
meetings with Design-Builder’s personnel, Subcontractors and others as
applicable.

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

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

3.8          Submission of Reports.  Design-Builder shall provide Owner with 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 up to two
(2) weeks of training at a facility designated by ICM for all of Owner’s
employees and Owner Operator’s employees required for the operation and
maintenance of the Plant in accordance with all design specifications therefor
contained in the Contract Documents and necessary in order to maintain the
Performance Guarantee Criteria, including operators, laboratory personnel,
general, plant and maintenance managers. Other personnel of Owner and Owner
Operator may receive such 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
and Owner Operator within the Contract Price at no additional cost. Owner and
Owner Operator will be responsible for all travel and expenses of their
employees and the Owner and Owner Operator 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

 10

 

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

Article 4

Owner’s
Responsibilities

4.1          Duty
to Cooperate.

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

4.1.2       Owner
shall pay all reasonable costs incurred by Design-Builder for frost removal so
that winter construction can proceed. 
Such costs may include, but are not limited to, equipment costs,
equipment rental costs, sheltering costs, special material costs, fuel costs
and associated labor costs.  Owner
acknowledges and agrees that such costs are in addition to, and not included
in, the Contract Price, and that the payment of such costs, which shall be
billed on a weekly basis, shall not require the issuance of a Change Order or
the obtaining of any Owner approval prior to the issuance of invoices for such
costs.

4.2          Furnishing
of Services and Information.

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

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

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

(c)                                  temporary
and permanent easements, zoning and other requirements and encumbrances
affecting land use, or necessary to permit the proper design and construction
of the 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; 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.

 11
 

 

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

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

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

 12
 

 

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 Project or at the Site by
separate contractors under Owner’s control. 
Owner shall contractually require its separate contractors to cooperate
with, and coordinate their activities so as not to interfere with,
Design-Builder in order to enable Design-Builder to timely complete the Work
consistent with the Contract Documents.

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

Article 5

Ownership
of Work Product; Risk of Loss

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

5.2          Owner’s Limited License Upon Payment in Full.  Upon
Owner’s payment in full for all Work performed under the Contract Documents,
Design-Builder shall grant Owner a limited license to use the Work Product in
connection with Owner’s occupancy and repair of the Plant.  Design-Builder acknowledges and agrees that
the limited license to use the Work Product granted hereby shall provide Owner
sufficient rights in and to the Work Product as shall be necessary for Owner to
operate and maintain the Plant and shall include any Pass Through Warranties in
connection therewith.  Design-Builder
shall provide Owner with a copy of the plans of the Plant, as built, (the “As
Built Plans”) conditioned on Owner’s express understanding that its use of
the Work Product and its acceptance of the As Built Plans is at Owner’s sole
risk and without liability or legal exposure to Design-Builder or anyone
working by or through Design-Builder, including Design Consultants of any tier
(collectively the “Indemnified Parties”); provided, however, that any
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 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 Plant,
but shall not be entitled to use the Work Product for any other purposes
whatsoever, including without limitation, expansion of the Plant.  Notwithstanding the

 13
 

 

foregoing
sentence, Owner shall be entitled to use the Work Product for the operation,
maintenance and repair of the plant including the interconnection of, but not
the design of, any future expansions to the Plant.  The limited license granted to Owner under
Sections 5.2, 5.3 or 5.4 to use the Work Product shall be limited by and
construed according to the same terms contained in the ICM License Agreement,
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 Project for its
convenience as set forth in Section 15.3 hereof, or if Design-Builder
elects to terminate this Agreement in accordance with Section 15.5,
Design-Builder shall, upon Owner’s payment in full of the amounts due
Design-Builder under this Agreement, grant Owner a limited license to use the
Work Product to complete the Plant and subsequently occupy and repair the
Plant, subject to the following:

(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 Two Million Five Hundred Thousand Dollars
($2,500,000.00) as compensation for the limited right to use the Work Product
completed “as is” on the date of termination in accordance with this Article 5.

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

5.5          Owner’s Indemnification for Use of Work Product.  If Owner uses the Work Product or Plant under any
of the circumstances identified in this Article 5, to the fullest extent

 14
 

 

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

5.6          Risk of Loss.  Design-Builder shall have no liability
for a physical loss of or damage to the Work unless such loss or damage is
caused by 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.

Article 6

Commencement
and Completion of the Project

6.1          Phase I and Phase II Engineering.  Owner shall have entered into that certain
Phase I and Phase II Engineering Services Agreement dated May 25, 2006 between
Owner and Fagen Engineering, LLC (“Fagen Engineering”) and attached
hereto as Exhibit L (“Phase I and Phase II Engineering Services Agreement”).
The Phase I and Phase II Engineering Services Agreement provides for Fagen
Engineering to commence work on the Phase I and Phase II engineering for the
Project as set forth therein.  Owner has
agreed to pay Fagen Engineering Ninety-two Thousand Five Hundred Dollars
($92,500.00) for such engineering services pursuant to the terms of that
agreement, the full amount of which shall be included in and credited to the
Contract Price.  Notwithstanding the
foregoing sentence, if a Notice to Proceed is not issued pursuant to Section
6.2, or Financial Closing is not obtained pursuant to Section 4.3, then no
amount paid under the Phase I and Phase II Engineering Services 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 Project will be constructed; (2) the Phase I and Phase II Site work
required of Owner, as described in Exhibit L is completed along with redline
drawings and such Phase I and Phase II 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

 15
 

 

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. Provided that
Owner has fulfilled all of the requirements listed in (1) through (7) above to
Design-Builder’s satisfaction, Design-Builder shall accept Notice to Proceed no
later than January 31, 2007. 
Notwithstanding the foregoing, Design-Builder shall not be required to
accept Notice to Proceed prior to January 29, 2007. 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 no later
than April 30, 2007; otherwise, this Agreement may be terminated, at
Design-Builder’s sole option.  If
Design-Builder chooses to terminate this Agreement pursuant to its right under
the immediately preceding sentence, then Design-Builder shall have no further
obligations hereunder.

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

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN  56241

Attention: Becky Dahl

Fax:  (320)
564-5190

Within ten (10)
Days of receipt by Design-Builder of the Notice to Proceed, notice of either
acceptance or denial of the Notice to Proceed shall be delivered by
Design-Builder to Owner pursuant to the notice requirements set forth in
Section 21.7 hereof.

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

6.4          Substantial Completion.

6.4.1       Substantial
Completion of the entire Work shall be achieved no later than Five Hundred
Forty-five (545) Days after the date of the Notice to Proceed, subject to
adjustment

 16
 

 

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 Plant for its
intended purposes.  Substantial
Completion shall be attained at the point in time when the Plant is ready to
grind the first batch of corn and begin operation for its intended use.  No production is guaranteed on the date of
Substantial Completion.

6.4.3       Procedures.  Design-Builder shall notify Owner in writing
when it believes Substantial Completion has been achieved with respect to the
Work.  Within five (5) Days of Owner’s
receipt of Design-Builder’s notice, Owner and Design-Builder will jointly
inspect such Work to verify that it is substantially complete in accordance
with the requirements of the Contract Documents.  If such Work is deemed substantially
complete, Design-Builder shall  prepare
and issue a “Certificate of Substantial Completion” for the Work that
will set forth (i) the date of Substantial Completion, (ii) the remaining items of Work that have to be
completed before Final Payment (“Punch List”), (iii) provisions
(to the extent not already provided in this Agreement) establishing Owner’s and
Design-Builder’s responsibility for the 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
Five Hundred Forty-five (545) Days after the date of the Notice to Proceed,
Owner shall pay Design-Builder at the time of Final Payment under Section 10.3
hereof an early completion bonus (“Early Completion  Bonus”) of
Twenty Thousand Dollars ($20,000.00)
per Day for each Day that Substantial Completion occurred in advance of said
Five Hundred Forty-five Days (545).

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.

 17
 

 

6.5          Final Completion.

6.5.1       Final Completion
of the Work shall be achieved within ninety (90) Days after the earlier of the
actual date of Substantial Completion or the Scheduled Substantial Completion
Date (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 in accordance with Section
7.2.

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.

 18
 

 

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

Article 7

Performance Testing and Liquidated Damages

7.1          Performance Guarantee.  The Design-Builder
guarantees that the Plant will meet the performance criteria listed in Exhibit
A (the “Performance Guarantee Criteria”) during a performance test
conducted and concluded pursuant to the terms hereof not later than Ninety (90)
Days after the date of Substantial Completion. 
If there is a performance shortfall, Design-Builder will pay all design
and construction costs associated with making the necessary corrections, and
will diligently pursue and complete 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 Plant using Design-Builder’s supervisory personnel and the Air
Emissions Tester shall conduct the air emissions test, in each case, in
accordance with the testing procedures set forth in Exhibit A (the “Performance
Tests”), to demonstrate, at a minimum, compliance with the Performance
Guarantee Criteria.  Owner is responsible
for obtaining Air Emissions Tester and for ensuring Air Emissions Tester’s
timely performance.  Design-Builder shall
cooperate with the Air Emissions Tester to facilitate performance of all air
emissions tests.  Design-Builder shall
not be held responsible for the actions of Owner’s employees and third parties
involved in the Performance Testing, including but not limited to Air Emissions
Tester.

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

 19
 

 

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, Independent
Engineer 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 or
Independent Engineer 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 and
Independent Engineer verifies that the Performance Guarantee Criteria have been
met.

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

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 Twenty Thousand Dollars ($20,000.00) as liquidated damages, and
not as a penalty, for each Day that Final Completion extends beyond the Final
Completion Date.  Owner, at its
discretion, may elect to offset any such liquidated damages from any
retainage.  Liquidated damages shall be
paid by 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.

 20
 

 

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 One Million Dollars ($1,000,000).

7.3.3       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 arise solely due to a delay in achieving Final Completion by the
Final Completion Date; provided that such liquidated damages shall not in any
way detract from or limit Owner’s remedies or Design-Builder’s liabilities
otherwise provided for in the Contract Documents.

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

7.4          Bonds and Other Performance Security.

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

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

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

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

 21
 

 

(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 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

 22
 

 

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.

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 One Hundred Fourteen Million Three
Hundred Forty-four Thousand Eight Hundred Eighty-two Dollars ($114,344,882.00)
(“Contract Price”), subject to adjustments made in accordance with
Article 13.  The Contract Price does not
include the water pre-treatment system and the fire protection system which
shall be provided by Design-Builder pursuant to a separate side-letter
agreement executed by Owner and Design-Builder at Design-Builder’s standard
time plus material rates during the relevant time period and at the relevant
locale.  Owner acknowledges that it has
taken no action which would impose a union labor or prevailing wage requirement
on Design-Builder, Owner or the Project. 
The Parties acknowledge and agree that if after the date hereof, an
Owner’s action, a change in Applicable Law, or a Governmental Authority acting
pursuant to a change in Applicable Law shall require Design-Builder to employ
union labor or compensate labor at prevailing wages, the Contract Price shall
be adjusted upwards to include any increased costs associated with such labor
or wages.  Such adjustment shall include,
but not be limited to, increased labor, subcontractor, and material and
equipment costs resulting from any union or prevailing wage requirement;
provided, however, that if an option is made available to either employ union
labor, or to compensate labor at prevailing wages, such option shall be at
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.

 23

 

9.2.1               The
Baseline Index for this Agreement shall be 7540.38 (September 2005) (“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.

Article
10

Payment
Procedures

10.1        Payment at Financial Closing.  As part of the Contract
Price, Owner shall pay Design-Builder Eight Million Dollars ($8,000,000.00), as
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 of
Financial Closing or the acceptance of a Notice to Proceed. The Eight Million
Dollar ($8,000,000.00) mobilization fee payment shall be subject to retainage
as provided by Section 10.2.7.

10.2        Progress
Payments.

10.2.1     Application for Payment.  Following
the issuance of Notice to Proceed pursuant to Section 6.2, Design-Builder shall
submit to Owner, on or before the twenty-fifth (25th) Day of each month, its request for
payment for all Work performed and not paid for during the previous Pay Period
(the “Application for Payment”). 
The Application for Payment shall be substantially in the form attached
hereto as Exhibit M.  Design-Builder
shall submit to Owner, along with each Application for Payment, signed lien
waivers, substantially in the form attached hereto as Exhibit N, 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 or Independent Engineer 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
ten (10) Days after Owner’s receipt of each Application for Payment, Owner
shall pay Design-Builder all amounts properly due, but in each case less the
total of payments previously made, and less amounts properly withheld under
this Agreement.

10.2.4     The
Application for Payment may request payment for equipment and materials not yet
incorporated into the Project; provided that (i) Owner is satisfied that the
equipment and materials are suitably stored at either the Site or another
acceptable location, (ii)

 24
 

 

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 five (5) Days prior to the date payment is due.  The notice shall indicate the specific
amounts Owner intends to withhold, the reasons and contractual basis for the withholding,
and the specific measures Design-Builder must take to rectify Owner’s
concerns.  Design-Builder and Owner will
attempt to resolve Owner’s concerns prior to the date payment is due.  If the Parties cannot resolve such concerns,
Design-Builder may pursue its rights under the Contract Documents, including
those under Article 19. 
Notwithstanding anything to the
contrary in the Contract Documents, Owner shall pay Design-Builder all
undisputed amounts in an Application for Payment within the times required by
the Agreement.

10.2.7     Retainage on Progress Payments.  Owner
will retain ten percent (10%) of each payment up to a maximum of Five Million
Seven Hundred Seventeen Thousand Two Hundred Forty-four Dollars
($5,717,244.00). Once Five Million Seven Hundred Seventeen Thousand Two Hundred
Forty-four Dollars ($5,717,244.00) has been retained, in total, Owner will not
retain any additional amounts from any subsequent payments. Owner will also
reasonably consider reducing retainage for Subcontractors completing their work
early in the Project.  Upon Substantial
Completion of the Work Owner shall release to Design-Builder all retained
amounts less an amount equal to one hundred and fifty percent (150%) of the
reasonable value of all remaining or incomplete items of Work and less an
amount equal to the value of any Subcontractor lien waivers not yet obtained,
as noted in the Certificate of Substantial Completion, provided that such
payment shall only be made if Design-Builder has met the Performance Guarantee Criteria
listed in Exhibit A.

10.3        Final Payment.  Design-Builder shall deliver to Owner
a request for final payment (the “Final Application for Payment”) when
Final Completion has been achieved in accordance with Section 6.5. Owner shall
make final payment within thirty (30) Days after Owner’s receipt of the Final
Application for Payment (“Final Payment”).

10.4        Failure
to Pay Amounts Due.

10.4.1     Interest.  Payments
which are due and unpaid by Owner to Design-Builder, whether progress payments
or Final Payment, shall bear interest commencing five (5) Days after payment is
due at the rate of eighteen percent (18%) per annum, or  the maximum rate allowed by Law, whichever is
lower.

 25
 

 

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 Project or Site.  Design-Builder shall not remove, remediate or
handle in any way (except in case of emergency) any Hazardous Conditions
encountered at the Site without prior written approval of Owner.

11.1.2     Upon
receiving notice of the presence of suspected Hazardous Conditions, Owner shall
take the necessary measures required to ensure that the Hazardous Conditions
are remediated or rendered harmless. 
Such necessary measures shall include Owner retaining Qualified
Independent Experts to (i) ascertain whether Hazardous Conditions have actually
been encountered, and, if they have been encountered, (ii) prescribe the
remedial measures that Owner

 26
 

 

is required
under applicable Legal Requirements to take with respect to such Hazardous
Conditions in order for the Work to proceed. 
Owner’s choice of such Qualified Independent Experts shall be subject to
the prior approval of Design-Builder, which approval shall not be unreasonably
withheld or delayed.

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

11.1.4     Design-Builder
will be entitled, in accordance with this Article 11, to an adjustment in its
Contract Price and/or Contract Time(s) to the extent Design-Builder’s cost
and/or time of performance have been adversely impacted by the presence of
Hazardous Conditions, provided that such Hazardous Materials or Hazardous
Conditions 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 or Hazardous Materials at the Site.

11.1.6     Notwithstanding
the preceding provisions of this Section 11.1, Owner is not responsible
for Hazardous Conditions or Hazardous Materials 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 or Hazardous Materials 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

 27
 

 

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

11.2.3     Notwithstanding
the foregoing, Design-Builder acknowledges that the Work will be performed in a
category D seismic zone as defined by the International Building Code and
agrees that such seismic zone classification shall not constitute a Differing
Site Condition hereunder.

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;

 28
 

 

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

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

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

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

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

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

12.5        Effect
of Industry-Wide Disruption on Contract Price.  In the event of an Industry-Wide Disruption,
the Contract Price shall be adjusted to allocate the risk of such market
conditions equally between the Owner and Design-Builder through the following
commercially reasonable and equitable escalation in the Contract Price:

12.5.1     If during the
course of the Project the 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 pursuant to Section 12.5.2.

 29
 

 

12.5.2     In the event that
the CCI increases over the Baseline Index, the Contract Price shall be adjusted
to reflect one-half of such increase, but only with respect to those
Applications for Payment submitted after the date on which written notice of
the adjustment in Contract Price is given, and only with respect to CCI
increases over the Baseline Index for which the Contract Price has not been
adjusted pursuant to Section 9.2.

12.5.3     Payment for any
adjustment in the Contract Price as a result of this Article 12 shall be made
in accordance with the terms of this Agreement.

Article 13

Changes to the Contract Price and Scheduled
Completion Dates

13.1        Change Orders.

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

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

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

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

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

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

13.2        Contract Price Adjustments.

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

13.2.2     If Owner and
Design-Builder disagree upon whether Design-Builder is entitled to be paid for
any services required by Owner, or if there are any other disagreements over
the scope of Work or proposed changes to the Work, Owner and Design-Builder
shall resolve the disagreement pursuant to Article 19 hereof.  As part of the negotiation process,

 30
 

 

Design-Builder shall furnish Owner with a good
faith estimate of the costs to perform the disputed services in accordance with
Owner’s interpretations.  If the Parties
are unable to agree and Owner expects Design-Builder to perform the services in
accordance with Owner’s interpretations, Design-Builder shall proceed to
perform the disputed services, conditioned upon Owner issuing a written order
to Design-Builder (i) directing Design-Builder to proceed, and (ii) specifying
Owner’s interpretation of the services that are to be performed.  If this occurs, Design-Builder shall be
entitled to submit in its Applications for Payment an amount equal to fifty
percent (50%) of its reasonable estimated direct cost to perform the services,
and Owner agrees to pay such amounts, with the express understanding that
(x) such payment by Owner does not prejudice Owner’s right to argue that
it has no responsibility to pay for such services, and (y) receipt of such
payment by Design-Builder does not prejudice Design-Builder’s right to seek
full payment of the disputed services if Owner’s order is deemed to be a change
to the Work.

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

13.4        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 3 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) 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 Project as a result of the
failure of Design-Builder, or those for whose acts

 31
 

 

it is responsible,
to pay for any services, materials, labor, equipment, taxes or other items or
obligations furnished or incurred for or in connection with the Work.  Within three (3) business days of receiving
written notice from Owner that such a claim or mechanic’s lien has been filed,
Design-Builder shall commence to take the steps necessary to discharge such
claim or lien.

14.3        Design-Builder’s General Indemnification.

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

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

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

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

14.4        Owner’s
General Indemnification. 
Owner, to the fullest extent permitted by Law, shall indemnify, hold
harmless and defend Design-Builder and any of Design-Builder’s officers,
directors, employees, or agents from and against claims, losses, damages,
liabilities, including attorneys’ fees and expenses, for bodily injury,
sickness or death, and property damage or destruction (other than to the Work
itself) to the extent resulting from the negligent acts, willful misconduct, or
from omissions of Owner, its officers, directors, employees, agents, or anyone
for whose acts any of them may be liable.

14.4.1     Without limiting
the generality of Section 14.4 hereof, Owner shall fully indemnify, save
harmless and defend the Design-Builder and any of Design-Builder’s officers,

 32
 

 

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.

Article 15

Stop Work; Termination for Cause

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

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

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

15.2.2     Upon the
occurrence of an event set forth in Section 15.2.1 above, Owner may
provide written notice to Design-Builder that it intends to terminate the
Agreement unless the problem cited is cured, or commenced to be cured within
seven (7) Days of Design-Builder’s receipt of such notice.  If Design-Builder fails to cure, or
reasonably commence to cure such problem and thereafter diligently pursue such
cure to completion, then Owner may give a second written notice to
Design-Builder of its intent to terminate following an additional seven (7) Day
period.  If Design-Builder, within such
second seven (7) Day period, fails to cure, or reasonably commence to cure such
problem and thereafter diligently pursue such cure to completion, then Owner
may declare the Agreement terminated for default by providing written notice to
Design-Builder of such declaration.  If (i) the insurance coverage required by
Design-Builder pursuant Article 17 hereof is suspended or cancelled without
Design-Builder providing immediate replacement coverage (and, in any case,
within fourteen (14) Days of the occurrence thereof) meeting the requirements
specified in 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

 33
 

 

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 the Work,
of all materials, equipment, scaffolds, tools, appliances and other items
thereon, which have been purchased for the performance of the Work, all of
which Design-Builder hereby transfers, assigns and sets over to Owner for such
purpose, and to employ any person or persons to complete the Work and provide
all of the required labor, services, materials, equipment and other items.  In the event of such termination,
Design-Builder shall not be entitled to receive any further payments under the
Contract Documents until the Work shall be finally completed in accordance with
the Contract Documents.  At such time, if
the unpaid balance of the Contract Price exceeds the cost and expense incurred
by Owner in completing the Work, Design-Builder will be paid promptly by Owner
for Work performed prior to its default. 
If Owner’s cost and expense of completing the Work exceeds the unpaid
balance of the Contract Price, then Design-Builder shall be obligated to
promptly pay the difference to Owner. 
Such costs and expense shall include not only the cost of completing the
Work, but also losses, damages, costs and expenses, including attorneys’ fees
and expenses, incurred by Owner in connection with the re-procurement and
defense of claims arising from Design-Builder’s default, subject to the waiver
of consequential damages set forth in Section 19.4 and the limitation of
liability set forth in Section 19.5 hereof.

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

 34
 

 

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

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

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

15.4        Design-Builder’s Right to Stop Work.

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

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

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

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

(a)                                  The
Work has been stopped for sixty (60) consecutive Days, or more than ninety (90)
Days during the duration of the Project, because of court order, any
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 Project, even though Owner has not ordered
Design-Builder in writing to stop and suspend the Work pursuant to
Section 15.1 hereof.

 35
 

 

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

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

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

 36

 

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

Article
16

Representatives
of the Parties

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

James K. Patterson

Chief Executive Officer

308 Windemere Woods Dr.

Nashville, TN 37215

Telephone: (615) 298-4438

Facsimile:  (615) 298-4121

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:

Mike Miller

General Manager

Obion Grain Company

6th at Palestine, PO Box 119

Obion, TN 38240

Telephone: (731) 536-6251

Facsimile:

Owner may
replace the individuals designated above upon ten (10) Days written notice to
Design-Builder.

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

Roland “Ron” Fagen

CEO and President

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Telephone:  (320) 564-3324

Facsimile: (320) 564-3278

 37
 

 

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

Aaron Fagen

Chief Operating Officer

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Telephone:  (320) 564-3324 

Facsimile: (320) 564-3278

Article
17

Insurance

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

	
  Commercial General
  Liability:

  	
   

  	
   

  	
   

  
	
  General
  Aggregate

  	
   

  	
   

  	
   

  
	
  Products-Comp/Op
  AGG

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Personal &
  Adv Injury

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Each Occurrence

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Fire Damage (Any
  one fire)

  	
   

  	
  $

  	
  50,000

  	
   

  
	
  Med Exp (Any one
  person)

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Automobile Liability:

  	
   

  	
   

  	
   

  
	
  Combined Single
  Limit

  	
   

  	
   

  	
   

  
	
  Each Occurrence

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  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

  	
   

  

 

 38
 

 

17.2        Design-Builder’s Insurance Requirements.

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

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

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

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

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

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

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

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

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

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

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

 39
 

 

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

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

17.4        Owner’s Property Insurance.

17.4.1     Unless otherwise
provided in the Contract Documents, Owner shall procure from insurance
companies authorized to do business in the state in which the Project is
located, and maintain through Final Completion, property insurance upon the
entire Project in a minimum amount equal to the full insurable value of the
Project, including professional fees, overtime premiums and all other expenses
incurred to replace or repair the insured property.  The property insurance obtained by Owner
shall include as additional insureds the interests of Owner, Design-Builder,
Design Consultants, Subcontractors, the Lenders and Lenders’ Agent and shall
insure against the perils of fire and extended coverage, theft, vandalism,
malicious mischief, collapse, flood, earthquake, debris removal and other
perils or causes of loss as called for in the Contract Documents and without application
of any deductible, retention or retrospective premium.  Owner shall maintain coverage equal to or in
excess of the value of each of Design-Builder’s, Design Consultants’, and
Subcontractors’ property on the Site. 
The property insurance shall include physical loss or damage to the
Work, including materials and equipment in transit, at the Site or at another
location as may be indicated in Design-Builder’s Application for Payment and
approved by Owner.

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

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

 40
 

 

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
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;

 41
 

 

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

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

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

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

Article 19

Dispute Resolution

19.1        Dispute
Avoidance and Mediation. 
The Parties are fully committed to working with each other throughout
the 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

 42
 

 

Construction
Industry Arbitration Rules and Mediation Procedures.  The mediation will be governed by and
conducted pursuant to a mediation agreement negotiated by the Parties or, if
the Parties cannot so agree, by procedures established by the mediator.

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

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

Design-Builder
and Owner expressly agree that any arbitration pursuant to this
Section 19.2 may be joined or consolidated with any arbitration involving
any other person or entity (i) necessary to resolve the claim, dispute or
controversy, or (ii) substantially involved in or affected by such claim,
dispute or controversy.  Both
Design-Builder and Owner will include appropriate provisions in all contracts
they execute with other parties in connection with the 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

 43
 

 

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

Article 20

Confidentiality of Shared Information

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

 44
 

 

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

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

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

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

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

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

 45
 

 

Design-Builder nor
Owner shall, without the written consent of the other, assign or transfer this
Agreement or any of the Contract Documents. 
Design-Builder’s subcontracting portions of the Work in accordance with
this Agreement shall not be deemed to be an assignment of this Agreement.  Owner may assign all of its rights and
obligations under the Contract Documents to its Lenders or Lenders’ Agent as
collateral security in connection with Owner obtaining or arranging any
financing for the Project; provided, however, Owner shall deliver, at least ten
(10) Days prior to any such assignment, to Design-Builder (i) written notice of
such assignment and (ii) a copy of the instrument of assignment in form and
substance reasonably acceptable to Design-Builder, whose approval shall not be
unreasonably withheld.  The Lenders or
Lenders’ Agent may assign the Contract Documents or their rights under the
Contract Documents, including without limitation in connection with any
foreclosure or other enforcement of their security interest.  Design-Builder shall execute, if requested, a
consent to assignment for the benefit of the Lenders and/or the Lenders’ Agent
in form and substance reasonably acceptable to Design-Builder, a form of which
is attached hereto as Exhibit O, 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.   Additionally, Owner may assign all of its
rights and obligations under the Contract Documents to any person or entity who
is a survivor to a merger of, or a sale of, all or substantially all of the
assets of Owner; provided, however that Owner may not so assign its rights and
obligations without: (x) the prior written consent of Design-Builder, which
will not be unreasonably withheld or delayed; (y) demonstrating to
Design-Builder’s satisfaction that the assignee has the capability to fulfill
Owner’s obligations under this Agreement; and (z) consent of ICM to the
assignment of the ICM License Agreement pursuant to the terms thereof.

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.

 46
 

 

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

If to
Design-Builder, to:

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN  56241

Attention: Aaron Fagen

Fax:  (320) 564-3278

with a
copy to:

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN  56241

Attention: Jennifer Johnson

Fax:  (320) 564-3278

and
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:

Ethanol
Grain Processors, LLC

308
Windemere Woods Dr.

Nashville,
TN 37215

Attention:  James K. Patterson

Fax (615) 298-4121

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.

 47
 

 

Each of the Parties may revise the notice information provided above
upon ten (10) Days written notice to the other Party.

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

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

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

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

21.12      Counterparts.  This Agreement may be executed in one (1) or
more counterparts, each of which shall be deemed an original and all of which
together shall be deemed one and the same Agreement, and may be executed and
delivered by facsimile signature, which shall be considered an original.

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

[The next page is the signature page.]

 48

 

IN
WITNESS WHEREOF, the Parties hereto have caused their names
to be hereunto subscribed by their officers thereunto duly authorized,
intending thereby that this Agreement shall be effective as of this August 25,
2006.

	
  OWNER:

  	
   

  	
  DESIGN-BUILDER:

  
	
   

  	
   

  	
   

  
	
  Ethanol Grain
  Processors, LLC

  	
   

  	
  Fagen, Inc.

  
	
  (Name
  of Owner)

  	
   

  	
  (Name of Design-Builder)

  
	
   

  	
   

  	
   

  
	
  /s/ James K.
  Patterson

  	
   

  	
  /s/ Roland “Ron” Fagen

  
	
  (Signature)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
  JAMES K.
  PATTERSON

  	
   

  	
  Roland “Ron” Fagen

  
	
  (Printed
  Name)

  	
   

  	
  (Printed Name)

  
	
   

  	
   

  	
   

  
	
  CHIEF EXECUTIVE
  OFFICER

  	
   

  	
  CEO and President

  
	
  (Title)

  	
   

  	
  (Title)

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  AUGUST 26, 2006

  	
   

  	
  Date:

  	
  9/11/06

  
					

 

 49

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