Document:

EXHIBIT 10.5 TO SOY ENERGY, LLC FORM 10-Q FOR THE QUARTER ENDED JULY 31, 2010

Exhibit 10.5

CONSTRUCTION AND DESIGN AGREEMENT 

BETWEEN OWNER & PROJECT MANAGER

THIS CONSTRUCTION AND DESIGN AGREEMENT BETWEEN OWNER & PROJECT
MANAGER (together with its Exhibits, this “Agreement”) is made effective on
August 11, 2010 (the “Effective Date”) between: 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Owner:

 	
  

 	
 Soy Energy,
 LLC

 
	
  

 	
  

 	
  

 	
 PO Box 663

 
	
  

 	
  

 	
  

 	
 Marcus, IA
 51035

 
	
  

 	
  

 	
  

 	
 Designated
 Representative: RICK DAVIS

 
	
  

 	
  

 	
  

 	
 E-Mail: rdavis@midlands.net

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 and Project
 Manager:

 	
  

 	
 Ball
 Industrial Services, LLC

 
	
  

 	
  

 	
  

 	
 590 Market
 Street

 
	
  

 	
  

 	
  

 	
 West Des
 Moines, IA 50266

 
	
  

 	
  

 	
  

 	
 Designated
 Representative: JIM HAGBERG

 
	
  

 	
  

 	
  

 	
 E-Mail: jhagberg@ball-construction.com

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Ball
 Construction Services, LLC

 
	
  

 	
  

 	
  

 	
 590 Market
 Street

 
	
  

 	
  

 	
  

 	
 West Des
 Moines, IA 50266

 
	
  

 	
  

 	
  

 	
 Designated
 Representative: BOB SODDERS

 
	
  

 	
  

 	
  

 	
 E-Mail:
 bsodders@ball-construction.com

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 for the
 following Project:

 	
  

 	
 Biodiesel
 Plant Modifications

 
	
  

 	
  

 	
  

 	
 4172 19th St
 SW

 
	
  

 	
  

 	
  

 	
 Mason City,
 IA 50402.

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 TABLE OF ARTICLES

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 1

 	
  

 	
 GENERAL
 PROVISIONS

 	
  

 	
 3

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 2

 	
  

 	
 PROJECT
 MANAGER’S RESPONSIBILITIES

 	
  

 	
 6

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 3

 	
  

 	
 OWNER’S
 RESPONSIBILITIES

 	
  

 	
 17

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 4

 	
  

 	
 HAZARDOUS
 MATERIALS AND EMERGENCIES

 	
  

 	
 18

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 5

 	
  

 	
 COMPENSATION

 	
  

 	
 19

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 6

 	
  

 	
 COST OF THE
 WORK

 	
  

 	
 20

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 7

 	
  

 	
 PAYMENTS

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 8

 	
  

 	
 INSURANCE
 AND BONDS

 	
  

 	
 26

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 9

 	
  

 	
 DISPUTE
 RESOLUTION

 	
  

 	
 27

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 10

 	
  

 	
 TERMINATION
 OR SUSPENSION

 	
  

 	
 28

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 11

 	
  

 	
 MISCELLANEOUS
 PROVISIONS

 	
  

 	
 30

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 EXHIBITS

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 A

 	
  

 	
 Initial CSO,
 Feedstock Biodiesel Specifications

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 B

 	
  

 	
 Preliminary
 Arrangements

 	
  

 	
  

 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 C

 	
  

 	
 Guaranteed
 Maximum Price Amendment

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 D

 	
  

 	
 Soy Energy –
 Biodiesel Plant Modification Budget

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 E

 	
  

 	
 Ball
 Industrial Rate Sheet

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 F

 	
  

 	
 Initial
 Project Timeline

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 G

 	
  

 	
 Key
 Consultants and Subcontractors

 	
  

 	
  

 

Page 2 of 34

RECITALS

Owner desires to retain Project Manager to provide, and Project Manager
wishes to provide, Owner certain design, engineering, procurement, testing,
training, and construction services, labor, materials and supplies and
equipment for modifications to Owner’s existing biodiesel plant located at 4172
19th St SW, Mason City, Iowa (the “Plant”), as required to provide Owner the
ability to operate the Plant with multiple feedstocks for production at an
annualized production rate of 30,000,000 gallons of 100% biodiesel satisfying
ASTM D6571 specifications per year based upon a 345-day year, all as more specifically
provided in this Agreement. 

AGREEMENT

Owner and Project Manager agree as follows: 

ARTICLE 1  GENERAL PROVISIONS

	
  

 	
  

 	
  

 
	
 § 1.1 

 	
 DEFINITIONS

 
	
  

 	
 Capitalized
 terms used in the Contract Documents have the meanings set forth in the
 preamble, this section and elsewhere in this Agreement. Unless otherwise
 defined, words that have well-known technical or construction industry
 meanings are used in accordance with such meanings. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.1

 	
 APPLICATION FOR PAYMENT 

 
	
  

 	
  

 	
 Application
 for Payment is defined in Section 7.2.1. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.2

 	
 CHANGE ORDER 

 
	
  

 	
  

 	
 Change Order
 is defined in Section 2.7. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.3

 	
 CONSTRUCTION DOCUMENTS 

 
	
  

 	
  

 	
 Construction
 Documents is defined in Section 2.3.3. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.4

 	
 CONSTRUCTION PHASE 

 
	
  

 	
  

 	
 The
 Construction Phase is the period commencing at the end of the second month of
 Detailed Engineering and ending at Final Completion. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.5

 	
 CONTINGENCY FUND 

 
	
  

 	
  

 	
 Contingency
 Fund is defined in Section 5.3. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.6

 	
 CONTRACT DOCUMENTS 

 
	
  

 	
  

 	
 Contract
 Documents include only the following: this Agreement (including its
 exhibits); written modifications, amendments and Change Orders to this
 Agreement executed by Owner and Project Manager after the Effective Date,
 and, upon completion by Project Manager and acceptance by Owner, the Preliminary
 Construction Documents and Construction Documents. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.7

 	
 CONTRACT TIME 

 
	
  

 	
  

 	
 Contract
 Time is the period of time, including any adjustments authorized by Owner,
 allotted in the Contract Documents for Substantial Completion of the Work. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.8

 	
 COST OF THE WORK 

 
	
  

 	
  

 	
 Cost of the
 Work is defined in Section 6.1. 

 

Page
3 of 34

	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.9

 	
 DESIGN ENGINEER 

 
	
  

 	
  

 	
 Design
 Engineer shall mean CJS Group Inc., the firm retained and paid by Project
 Manager (subject to reimbursement by Owner as Cost of the Work) to provide
 all professional engineering and other professional design services for the
 Project, directly or through subconsultants approved by Owner, including the
 key consultants listed in attached Exhibit G. Project Manager shall not replace
 the Design Engineer or any of its key consultants without the approval of
 Owner. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.10

 	
 DETAILED ENGINEERING 

 
	
  

 	
  

 	
 Detailed
 Engineering begins when the Project Manager receives an unrestricted Notice
 to Proceed. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.11

 	
 DRAWINGS 

 
	
  

 	
  

 	
 Drawings are
 the graphic and pictorial portions of the Contract Documents showing the
 design, location and dimensions of the Work, generally including plans,
 elevations, sections, details, schedules and diagrams. Exhibit B provides
 Preliminary Arrangements of the new equipment, additions and modifications,
 which are the basis of the Guaranteed Maximum Price and shall be the basis of
 the final Construction Documents. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.12

 	
 FINAL COMPLETION 

 
	
  

 	
  

 	
 Final
 Completion is defined in Section 2.4.3. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.13

 	
 GUARANTEED MAXIMUM PRICE 

 
	
  

 	
  

 	
 Guaranteed
 Maximum Price is defined in Section 5.2. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.14

 	
 INDEPENDENT ENGINEER 

 
	
  

 	
  

 	
 Independent
 Engineer is defined in Section 3.7. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.15

 	
 NOTICE TO PROCEED 

 
	
  

 	
  

 	
 Project
 Manager will begin Detailed Engineering when it receives an unrestricted
 Notice To Proceed from the Owner. Notice To Proceed will be the point in time
 when this Agreement has been executed, the acquisition of the Plant by Owner
 has been consummated and Owner has closed on financing necessary to fund the
 Project. Owner can begin Project activities sooner with a restricted Notice
 to Proceed by funding activities shown in Exhibit F. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.16

 	
 OWNER 

 
	
  

 	
  

 	
 Owner is Soy
 Energy, LLC and where action is required by “Owner” such action may be taken
 by its Designated Representative as defined in Section 3.5. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.17

 	
 OWNER INDEMNIFIED PARTIES 

 
	
  

 	
  

 	
 Owner
 Indemnified Parties is defined in Section 2.15.1. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.18

 	
 OWNER’S LENDER 

 
	
  

 	
  

 	
 Owner’s
 Lender is OSM-REO FF, LLC, a Minnesota limited liability company. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.19

 	
 PERFORMANCE GUARANTEE CRITERIA 

 
	
  

 	
  

 	
 Performance
 Guarantee Criteria is defined in Section 2.13 and consist of all the
 guarantees listed in Exhibit A. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.20

 	
 PERFORMANCE TEST 

 
	
  

 	
  

 	
 Performance
 Test is defined in Section 2.14 and includes the Performance Tests described
 in Exhibit A. 

 

Page
4 of 34

	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.21

 	
 PRELIMINARY ARRANGEMENT 

 
	
  

 	
  

 	
 Preliminary
 Arrangement means the schematic diagram of the Project prepared by Project
 Manager and accepted by Owner before the Effective Date, attached to this
 Agreement as Exhibit B. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.22

 	
 PRELIMINARY CONSTRUCTION DOCUMENTS 

 
	
  

 	
  

 	
 Preliminary
 Construction Documents is defined in Section 2.3.2. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.23

 	
 PROJECT 

 
	
  

 	
  

 	
 The Project
 is the design and construction of modifications of Owner’s biodiesel plant
 required to operate the biodiesel plant with the capability to use multiple
 feedstocks for production (including, without limitation, the ability to use
 100% Corn Stillage Oil (CSO) for all of its production needs alone or in combination
 with suitable quality and quantity of animal fats, other free fatty acids (up
 to 15% FFA), or crude or refined soybean oil) at an annualized production
 rate of 30,000,000 gallons of 100% biodiesel satisfying ASTM D6571
 specifications, per year based upon a 345-day year. The modifications shall
 be in accordance with the requirements of the Contract Documents as more
 specifically provided in Exhibit A. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.24

 	
 PROJECT MANAGER

 
	
  

 	
  

 	
 Project
 Manager collectively refers to Ball Industrial Services, LLC and Ball
 Construction Services, LLC. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.25

 	
 SCHEDULE OF VALUES 

 
	
  

 	
  

 	
 Schedule of
 Values is attached as Exhibit D. The Schedule of Values is an estimate based
 on budgeted costs and may be modified to reflect costs set forth in final
 subcontracts and supply contracts. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.26

 	
 SPECIFICATIONS 

 
	
  

 	
  

 	
 Specifications
 are the written requirements for materials, equipment, systems, standards and
 workmanship for the Work, and performance of related services to be prepared
 by Project Manager and approved by Owner. Owner shall promptly review and
 respond to any requests for approval of specifications in order to keep the
 Project on the timeline for Scheduled Substantial Completion. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.27

 	
 SUBCONTRACTOR 

 
	
  

 	
  

 	
 Subcontractor
 means any person or entity retained by Project Manager to perform a portion
 of the Work pursuant to Section 2.5, including without limitation, the Design
 Engineer, any other consultant, trade contractors, and suppliers of materials
 and equipment for the Project. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.28

 	
 SCHEDULED SUBSTANTIAL COMPLETION DATE 

 
	
  

 	
  

 	
 Scheduled
 Substantial Completion Date is defined in Section 2.4.2. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.29

 	
 SUBSTANTIAL COMPLETION 

 
	
  

 	
  

 	
 Substantial
 Completion is defined in Section 2.4.2. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 1.1.30

 	
 WORK 

 
	
  

 	
  

 	
 Work means
 all engineering, design, procurement, construction management, construction,
 testing, training on the plant modifications, inspection, labor and other
 services, and all materials, tools, equipment, and machinery, which are
 required to complete the design, construction and equipping of the Project
 and that are related to, associated with, or incidental to Project Manager’s
 obligations under the Contract Documents, including those not shown in 

 

Page
5 of 34

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 the Drawings
 and Specifications that are otherwise necessary or advisable to complete the
 Project in accordance with the standard of care provided in Contract
 Documents. 

 
	
  

 	
  

 	
  

 
	
 § 1.2

 	
 PRE-CONSTRUCTION PHASE MATTERS 

 
	
  

 	
 Project
 Manager’s Pre-Construction Phase responsibilities, compensation and payments
 are set forth in a separate Agreement entitled “Phase 1 Engineering Services
 – Scope Definition.” 

 
	
  

 	
  

 	
  

 
	
 § 1.3

 	
 CONFLICTING PROVISIONS 

 
	
  

 	
 The body of
 this Agreement and the Exhibits are intended to be complementary and
 interpreted to avoid conflict, with words and phrases interpreted in a manner
 consistent with construction and design industry standards, and shall be
 interpreted, if possible, to give effect to each part and to avoid or
 minimize conflicts. If there is nevertheless any conflict or inconsistency
 between the body of this Agreement and any Exhibit, (1) such conflict or
 inconsistency shall be resolved in a manner that is consistent with the
 Performance Guarantee Criteria and reasonably acceptable to Owner and (2) the
 terms of this Agreement shall prevail for purposes of determining whether
 Project Manager is entitled to an adjustment in the Guaranteed Maximum Price
 or the Scheduled Substantial Completion Date as a result of any changes in
 the Work required to resolve any conflict or inconsistency. Project Manager shall
 prepare Construction Documents that are consistent with this Agreement. If
 there is a conflict or inconsistency between this Agreement (including the
 Exhibits) and the Construction Documents that Owner has not authorized or
 approved in writing, Project Manager shall at Project Manager’s expense (1)
 revise the Construction Documents to reconcile the conflict or inconsistency
 in a manner that is consistent with the Performance Guarantee Criteria and
 reasonably acceptable to Owner and (2) correct Work, if any, Project Manager
 has performed that does not conform with the revised Construction Documents. 

 
	
  

 	
  

 	
  

 
	
 ARTICLE 2  PROJECT MANAGER’S
 RESPONSIBILITIES

 
	
  

 	
  

 	
  

 
	
 § 2.1

 	
 GENERAL 

 
	
  

 	
 Project
 Manager accepts the relationship of trust and confidence established by this
 Agreement and covenants with Owner to exercise Project Manager’s skill and
 judgment in furthering the interests of Owner; to furnish through duly
 licensed professionals all civil, structural, mechanical, electrical and
 other engineering services, surveying services, and, to the extent necessary
 to complete the Project, architecture and other professional design services;
 to furnish efficient construction administration, management services and
 supervision; to furnish at all times an adequate supply of workers and
 materials; and to perform the Work in an expeditious and economical manner
 consistent with Owner’s interests. Project Manager shall perform, directly or
 through Subcontractors, all Work and provide all services, labor, materials,
 supplies, tools and equipment, necessary to complete the Project in
 accordance with applicable law, the Performance Guarantee Criteria and the
 Contract Documents. The enumeration of specific duties and obligations to be
 performed by Project Manager in this Agreement and in the Contract Documents
 shall not limit the general undertakings of Project Manager. 

 
	
  

 	
  

 	
  

 
	
 § 2.2

 	
 STANDARD OF CARE 

 
	
  

 	
 Project
 Manager (including its consultants and Subcontractors) shall perform all
 professional engineering, construction and related services under this
 Agreement with the care, skill, competence, expertise and efficiency
 ordinarily used and accepted in the industry by those practicing under
 similar circumstances for similar projects in the Midwest. 

 
	
  

 	
  

 	
  

 
	
 § 2.3

 	
 PROFESSIONAL SERVICES

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.3.1

 	
 General

 
	
  

 	
  

 	
 Project
 Manager shall provide all engineering, testing, consulting and other
 professional services required to complete the Work through the Design
 Engineer, who shall cause such

 

Page 6 of 34

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 services to
 be provided by properly licensed design professionals, whose signature and
 seal shall appear on all Drawings, Specifications, calculations,
 certifications, shop drawings and other submittals prepared by such
 professionals. Shop drawings and other submittals related to the Work designed
 or certified by such professional, if prepared by others, shall bear such
 professional’s written approval when submitted to Owner. Owner shall be
 entitled to rely upon the adequacy, accuracy and completeness of the
 services, certifications and approvals performed or provided by Project
 Manager through the Design Engineer. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 2.3.2

 	
 Preliminary Construction Documents 

 
	
  

 	
  

 	
 Within Five
 (5) business days after the Effective Date, Project Manager shall provide the
 current revision of the following documents to Owner (together with any other
 documents Project Manager and Owner reasonably agree are necessary to
 document the preliminary design of the Project, the “Preliminary Construction
 Documents”), which shall be prepared by the Design Engineer and be consistent
 with the Preliminary Arrangements and, upon approval by Owner, shall be part
 of the Contract Documents: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 major
 equipment lists, with sizes; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 process flow
 diagram; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 process
 design criteria and/or process description; and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 site layout.
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Owner shall
 within Ten (10) business days after receipt of the Preliminary Construction
 Documents review and approve such documents. The Preliminary Construction
 Documents shall establish performance standards for the completed Project and
 identify components required to meet those performance standards. Project
 Manager shall have the right to revise the layout of the equipment and
 substitute specific pieces of equipment, provided the completed Project shall
 conform to or exceed the performance standards established by the Contract
 Documents. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 2.3.3

 	
 Construction Documents 

 
	
  

 	
  

 	
 Project
 Manager shall provide through qualified, licensed design professionals
 employed by Project Manager, 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
 otherwise facilitate construction of the Work in accordance with this
 Agreement, the Performance Guarantee Criteria and the Preliminary
 Construction Documents (such Drawings, Specifications and design submittals
 collectively and together with the Preliminary Construction Documents, are
 the “Construction Documents”). 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 2.3.4

 	
 Construction Administration 

 
	
  

 	
  

 	
 Project
 Manager shall cause the Design Engineer to provide construction
 administration services to ensure that the construction of the Work conforms
 with the Construction Documents, which services shall include, without
 limitation: observation of the construction of the Work as it progresses;
 review of test and inspection reports; certification of Applications For
 Payment, Project Manager’s notices of Substantial Completion and Final
 Completion; and review and approval of shop drawings and other submittals. 

 

Page 7 of 34

	
  

 	
  

 	
  

 
	
 § 2.4

 	
 CONTRACT TIME 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.4.1

 	
 General 

 
	
  

 	
  

 	
 Time is of
 the essence with respect to the dates and times set forth in the Contract
 Documents, including Exhibit F hereto. Project Manager shall commence the
 Work when it receives the Notice to Proceed unless the parties mutually agree
 otherwise in writing. Project Manager, directly and through its
 Subcontractors, shall maintain adequate personnel, equipment, and materials
 to complete all Work within the Contract Time until Final Completion has been
 achieved. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.4.2

 	
 Substantial Completion; Re-commissioning of the Plant 

 
	
  

 	
  

 	
 Substantial
 Completion of the Work shall be achieved no later than two hundred seventy
 (270) days after the date the Notice to Proceed has been delivered to Project
 Manager (the “Scheduled Substantial Completion Date”). Substantial Completion
 shall be deemed to occur on the date on which the Work satisfies the
 Performance Guarantee Criteria and is sufficiently complete so that Owner can
 occupy and use the Project for its intended purposes. The actual Substantial
 Completion shall be determined, and the Scheduled Substantial Completion Date
 may be adjusted, in accordance with this Section 2.4.2. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 No later
 than sixty (60) days before the date that Project Manager expects to achieve
 Substantial Completion, Project Manager will notify Owner of the estimated
 date of Substantial Completion. Owner, with the cooperation and assistance of
 Project Manager, will re-commission the existing Plant and bring it up to
 full capacity converting crude soybean oil to ASTM-quality biodiesel at an
 annualized rate of 30,000,000 gallons within sixty (60) days after notice
 from Project Manager. If Project Manager does not achieve Substantial
 Completion on or before the Scheduled Substantial Completion Date solely due
 to Owner’s failure to successfully re-commission the Plant, there will be a
 one-day extension of the Scheduled Substantial Completion Date for each day
 of such Owner-caused delay. However, no extension to the Scheduled
 Substantial Completion Date will be made if Owner was delayed or prevented
 from re-commissioning the Plant by acts or omissions of Project Manager. 

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 2.4.3

 	
 Final Completion 

 
	
  

 	
  

 	
 Final
 Completion of the entire Work shall be achieved on the date Owner reasonably
 determines that: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Substantial
 Completion has been achieved; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 all
 outstanding items of Work have been completed by Project Manager; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 clean-up of
 the Plant has been completed; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 release and
 waiver of all claims and liens from Project Manager and Subcontractors have
 been provided. 

 

	
  

 	
  

 	
  

 
	
  

 	
 § 2.4.4

 	
 Substantial Completion Notice and Procedures 

 
	
  

 	
  

 	
 Project
 Manager shall notify Owner in writing when it believes Substantial Completion
 has been achieved with respect to the Work, which notice shall include a
 certification by the Design Engineer that the Work is complete in accordance
 with the Contract Documents, Performance Testing pursuant to Section 2.14 has
 been completed, and the Work satisfies the Performance Guarantee Criteria.
 Within five (5) Days of Owner’s receipt of Project Manager’s notice, Owner,
 Independent Engineer and Project Manager will jointly inspect such Work to
 verify that the Work satisfies the Performance Guarantee Criteria and is
 sufficiently complete so that 

 

Page
8 of 34

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Owner can
 occupy and use the Project for its intended purposes. If Owner, Independent
 Engineer and Project Manager agree such Work is deemed Substantially
 Complete, Project Manager shall prepare and issue a “Certificate of
 Substantial Completion” for the Work that will set forth (i) the date of
 Substantial Completion, which will be the date that Owner has accepted the
 Work, (ii) certification by Project Manager and Design Engineer that the Work
 satisfies the Performance Guarantee Criteria and (iii) an acknowledgment by
 Owner that warranties with respect to the Work commence on the date of
 Substantial Completion. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.4.5

 	
 Final Completion Notice and Procedures 

 
	
  

 	
  

 	
 Project
 Manager shall notify Owner in writing when it believes Final Completion has
 been achieved with respect to the Work. Within five (5) Days of Owner’s
 receipt of Project Manager’s notice, Owner and Project Manager will jointly
 inspect such Work to verify that it is finally complete in accordance with
 the requirements of the Contract Documents. If Owner, Independent Engineer
 and Project Manager agree the Work is finally complete, Project Manager shall
 prepare and issue a “Certificate of Final Completion” for the Work. 

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 2.4.6

 	
 Items Provided by Project Manager 

 
	
  

 	
  

 	
 At the time
 of submission of its Final Application for Payment, Project Manager shall
 provide: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (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; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 a general
 release executed by Project Manager waiving, upon receipt of final payment by
 Project Manager, 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; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 consent of
 Project Manager’s surety, if any, to Final Payment; and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 a hard copy
 of all Drawings, Specifications and any other Contract Documents developed
 after the Effective Date. 

 

	
  

 	
  

 	
  

 
	
  

 	
 §2.4.7

 	
 Liquidated Damages 

 
	
  

 	
  

 	
 If
 Substantial Completion is not attained within forty-five (45) days of the
 Scheduled Substantial Completion Date, Owner will suffer damages which are
 difficult to determine and accurately specify. Project Manager shall pay
 Owner five thousand five hundred dollars ($5,500) as liquidated damages, and
 not as a penalty, for each day that Substantial Completion extends beyond
 forty-five (45) days after the Scheduled Substantial Completion Date;
 provided, however, that liquidated damages under this section shall not
 exceed an aggregate of $350,000. Owner, at its discretion, may elect to
 offset any such liquidated damages from the Project Manager’s Fee. Project
 Manager shall not be obligated to pay any liquidated damages if the cause for
 the delay is due to actions or omissions of Owner. The liquidated damages
 provided herein shall be in lieu of all liability occasioned solely by any
 delay in achieving Substantial Completion; however, liquidated damages shall
 not limit any of Owner’s remedies or Project Manager’s liabilities in
 connection with any other claims, including, without limitation, any claims
 arising in connection with satisfaction of the Performance Guarantee
 Criteria. 

 
	
  

 	
  

 	
  

 
	
 § 2.5

 	
 SUBCONTRACTORS 

 
	
  

 	
 Project
 Manager shall employ only Subcontractors that are duly licensed and qualified.
 

 

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 § 2.5.1

 	
 Generally; Responsibility 

 
	
  

 	
  

 	
 Those
 portions of the Work that Project Manager does not customarily perform with
 Project Manager’s own personnel shall be performed by Subcontractors under
 written subcontracts, purchase orders, subconsultant agreements, or other
 appropriate written agreements with Project Manager (“Subcontracts”). Project
 Manager shall coordinate the activities of all of Project Manager’s
 Subcontractors. Project Manager assumes responsibility 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, provided Owner shall be a third-party beneficiary of Project
 Manager’s rights under any Subcontract. Organization of the Specifications
 into divisions, sections and articles and the arrangement of Drawings shall
 not control Project Manager in dividing the Work among Subcontractors or in
 establishing the extent of Work to be performed by any trade. 

 
	
  

 	
  

 	
  

 
	
  

 	
 §2.5.2

 	
 Bids; Selection 

 
	
  

 	
  

 	
 Project
 Manager shall obtain bids from Subcontractors and from suppliers of materials
 or equipment fabricated especially for the Work and shall review such bids
 with Owner. Project Manager shall select and accept bids with Owner’s prior
 approval, which shall not be unreasonably withheld. Project Manager
 represents that it has identified and provided information to Owner regarding
 all key Subcontractors and suppliers, and Owner has had an opportunity to
 review such information and make any objections known prior to execution of
 this Agreement, and a list of all such key Subcontractors and suppliers is
 attached to the Agreement as Exhibit G. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.5.3

 	
 Subcontract Provisions 

 
	
  

 	
  

 	
 Subcontracts
 or other agreements shall require the Subcontractor to perform its portion of
 the Work in accordance with the Contract Documents, to be bound to Project
 Manager by the Contract Documents to the same extent Project Manager is bound
 to Owner, and to conform to the applicable compensation and payment
 provisions of this Agreement. The Subcontract will provide Owner with the
 same audit rights with regard to the Subcontractor as Owner receives with
 regard to Project Manager under this Agreement. Each Subcontract shall
 require the Subcontractor to indemnify, defend and hold harmless Owner, name
 Owner an additional insured on its general liability policies, and to conform
 with the dispute resolution provisions of this Agreement. Project Manager
 shall ensure that each subcontract is assignable to Owner without consent of
 the Subcontractor or any other person or entity if Project Manager defaults
 on its obligations or the Agreement is terminated with cause. Project Manager
 shall provide Owner and Owner’s Lender with copies of each executed
 Subcontract within seven (7) days after execution of the Subcontract. 

 
	
  

 	
  

 	
  

 
	
  

 	
 §2.5.4

 	
 Related Parties 

 
	
  

 	
  

 	
 If Project
 Manager engages a Subcontractor that may be considered a Related Party, then
 Project Manager shall promptly notify Owner in writing of such relationship
 and the specific nature of the contemplated transaction. “Related Party”
 includes a parent, subsidiary, affiliate or other entity having common
 ownership or management with Project Manager; any entity in which any
 stockholder in, or management employee of, Project Manager owns any interest
 in excess of ten percent in the aggregate; any person or entity which has the
 right to control the business or affairs of the Project; or any member of the
 immediate family of any of the foregoing. 

 

Page
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 § 2.6

 	
 ADMINISTRATION AND REPORTS 

 
	
  

 	
  

 
	
  

 	
 § 2.6.1

 	
 Meetings 

 
	
  

 	
  

 	
 Before
 commencement of the Construction Phase services, Project Manager and Owner
 shall hold an initial meeting to review and discuss the Work. After the
 commencement of the Construction Phase services, Project Manager shall
 schedule and conduct meetings with Owner at least every 2 weeks to discuss
 such matters as procedures, progress, coordination, scheduling, and status of
 the Work. Project Manager shall prepare and promptly distribute minutes to
 Owner. In addition to such meetings, Project Manager shall communicate
 regularly with Owner regarding the status and condition of the Work. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.6.2

 	
 Progress Reports 

 
	
  

 	
  

 	
 Project
 Manager shall record the progress of the Project. On at least a monthly
 basis, Project Manager shall submit written progress reports to Owner,
 showing percentages of completion and other reasonable information requests
 made by Owner. Project Manager shall also keep, and make available to Owner,
 a daily log containing a record for each day of weather, portions of the Work
 in progress, number of workers on site, identification of equipment on site,
 problems that might affect progress of the Work, accidents, injuries, and
 other reasonable information requests made by Owner. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.6.3

 	
 Cost Control 

 
	
  

 	
  

 	
 Project
 Manager shall develop a system of cost control for the Work, including
 regular monitoring of actual costs for activities in progress and estimates
 for uncompleted tasks and proposed changes. Project Manager shall identify
 variances between actual and budgeted costs and report the variances to Owner
 and shall provide this information in its monthly reports to Owner. Nothing
 in this section shall affect Project Manager’s obligations with respect to
 the Guaranteed Maximum Price. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.6.4

 	
 Construction Documents 

 
	
  

 	
  

 	
 Project
 Manager shall maintain at the Plant a current, complete set of Construction
 Documents, as issued and approved for the building permit. Owner and
 Independent Engineer shall have the right to review such Construction
 Documents. 

 
	
  

 	
  

 	
  

 
	
 § 2.7

 	
 CHANGES TO THE WORK 

 
	
  

 	
 Owner and
 Project Manager may mutually agree in writing to changes to the Work that are
 within the general scope of this Agreement consisting of additions, deletions
 or other revisions (each written order, a “Change Order”). To be effective,
 any adjustment to the Scheduled Substantial Completion Date or Guaranteed
 Maximum Price because of changes in the Work must be specified in a written
 Change Order signed by Project Manager and Owner, specifying the work to be
 done, and any adjustments in the Guaranteed Maximum Price or the Scheduled
 Substantial Completion Date. A Change Order shall be executed before
 proceeding with the change in the Work except in the event of an emergency
 affecting the safety of persons or property, in which case Project Manager
 shall act at its discretion and shall be paid an amount equal to the
 reasonable Cost of the Work incurred in the event of the emergency plus a fee
 which shall be not more than a percentage that is proportional to the Project
 Manager’s Fee. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.7.1

 	
 Concealed Conditions 

 
	
  

 	
 Project
 Manager represents that Project Manager has visited the existing Plant, is
 generally familiar with the local conditions under which the Work will be
 performed, and has correlated personal observations and information obtained
 from all known sources and accounted for such observations and information in
 the Construction Documents, the Project schedule and the Guaranteed Maximum
 Price. If Project Manager encounters concealed or unknown conditions of an
 unusual nature that affect the performance of the Work and vary from those
 reasonably anticipated by Project Manager below ground or in an 

 

Page
11 of 34

	
  

 	
  

 	
  

 
	
  

 	
 existing
 structure, and those conditions are not ordinarily found to exist or differ
 from those generally recognized as inherent in work of the character provided
 for in this Agreement, the Project Manager shall promptly give notice of the
 conditions to Owner, and, if possible, before the conditions are disturbed,
 and provide Owner with a proposed Change Order for addressing such
 conditions. The Scheduled Substantial Completion Date shall be equitably
 extended (but in no event less than a one-day extension for each day the Work
 is delayed) to the extent of the interference with the Work for the concealed
 or unknown conditions by Change Order upon claim by either party. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.7.2

 	
 Delays 

 
	
  

 	
 If Project
 Manager is delayed at any time in the progress of the Work by any act or
 neglect of Owner; or by any employee of Owner, or by any separate contractor
 employed by Owner, or by changes ordered in the Work, or by labor disputes,
 fire, unusual delay in transportation, fuel, material, or labor shortages or
 unavailability, unavoidable casualties, action or inaction of governmental
 authority, or any other causes beyond Project Manager’s control, the Date of
 Substantial Completion shall be extended by a period equal to such delay. 

 
	
  

 	
  

 	
  

 
	
 § 2.8

 	
 GOVERNMENTAL APPROVALS 

 
	
  

 	
 Project
 Manager shall obtain and pay for all necessary permits, approvals, licenses
 and inspection fees required by any government entity having jurisdiction
 over the Project for prosecution of the Work. Owner shall obtain and pay for
 all necessary permits, approvals, licenses and inspection fees required to
 properly own and operate the Project. Owner shall be responsible for
 obtaining and paying for all air permit issues related to the Plant. Project
 Manager will provide Owner any required information about the character and
 quantities of emissions from construction activities and the completed
 Project. Additionally, Project Manager and Owner shall work with and assist
 each other as they pursue their responsibilities related to this section. 

 
	
  

 	
  

 	
  

 
	
 § 2.9

 	
 WARRANTIES 

 
	
  

 	
  

 	
  

 
	
  

 	
 §2.9.1

 	
 Project Manager Warranty of the Work 

 
	
  

 	
  

 	
 Project
 Manager warrants and guarantees to Owner that all of the Work completed by
 Project Manager, including all materials and equipment furnished as part of
 the construction, shall be new unless otherwise approved by Owner in Writing,
 of good quality, in conformance with the Contract Documents and all legal
 requirements, and free of defects in materials and workmanship. For twelve
 months from the date of Substantial Completion, Owner’s remedies for breach
 of this Warranty will include all labor and materials required to correct any
 deficiencies in the Work, provided that the warranty shall exclude remedies
 for damages caused by Owner’s abuse, Owner’s modifications not executed by
 Project Manager, improper or insufficient maintenance or service by Owner,
 improper operation by Owner, or normal wear and tear due to normal usage.
 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 or to otherwise limit remedies available to Owner. 

 
	
  

 	
  

 	
  

 
	
  

 	
 §2.9.2

 	
 Manufacturer and Subcontractor’s Warranties 

 
	
  

 	
  

 	
 Project
 Manager will provide to Owner all manufacturers’ and Subcontractors’
 warranties upon the earlier of Substantial Completion or termination of this
 Agreement. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.9.3

 	
 Correction of Defective Work 

 
	
  

 	
  

 	
 For a period
 of one (1) year from the date of Substantial Completion of the Work, Project
 Manager will correct any Work that is not in conformance with the Contract
 Documents (such Work being “Defective Work”). Failure of the Plant to perform
 in accordance with the Performance Guarantee Criteria shall be presumed due
 to Defective Work unless due to: (a) the failure of Owner to maintain and
 operate the Plant in accordance with instructions provided by 

 

Page
12 of 34

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Project
 Manager and ordinary industry practices; or (b) a failure or limitation of
 pre-existing Plant equipment not attributable to the Work. If the Plant fails
 to perform in accordance with the Performance Guarantee Criteria due to
 Defective Work, such one (1)-year period shall be extended one (1) day for
 each day that the Plant is not operating in conformance with the Contract
 Documents due to the Defective Work. Project Manager shall, within seven (7)
 days of receipt of written notice of Defective Work from Owner, take
 meaningful steps to commence the correction, repair or replacement of the
 Defective Work and any Work damaged by Defective Work. 

 
	
  

 	
  

 	
  

 
	
  

 	
 §2.9.4

 	
 No Limitation of Remedies 

 
	
  

 	
  

 	
 The warranty
 period applies only to Project Manager’s obligation to correct Defective Work
 and is not intended to constitute a limitation on remedies available to Owner
 against Project Manager for Defective Work, or a period of limitations for
 any rights or remedies Owner may have regarding any of Project Manager’s
 obligations under the Contract Documents. 

 
	
  

 	
  

 	
  

 
	
  

 	
 §2.9.5

 	
 Disputed Warranty Claims 

 
	
  

 	
  

 	
 Project
 Manager shall have the right to dispute any Defective Work claim by Owner
 pursuant to Article 9 of this Agreement. If the claim arises from the failure
 of the Plant to perform in accordance with the Performance Guarantee
 Criteria, Project Manager shall endeavor to discover and correct the cause of
 such failure pending resolution of the dispute. The sole issue for resolution
 in any such dispute resolution process shall be whether such failure was
 caused by Defective Work. If such failure was not caused by Defective Work,
 Project Manager shall be entitled to compensation for its investigative and
 corrective work, including reasonable overhead and profit. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.9.6

 	
 No Consequential Damages 

 
	
  

 	
  

 	
 Project
 Manager shall not be liable to Owner for any special, punitive, incidental,
 indirect or consequential damages (including without limitation, loss of
 production, loss of profits, loss of use or loss of contracts) arising from
 the breach of any warranty contained herein, except to the extent covered by
 insurance. 

 
	
  

 	
  

 	
  

 
	
 § 2.10

 	
 LICENSES 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.10.1

 	
 General 

 
	
  

 	
  

 	
 Project
 Manager hereby grants to Owner a license to use the Work product and
 Construction Documents in connection with Owner’s occupancy, operation,
 maintenance and repair of the Project. Project Manager acknowledges and
 agrees that the license to use the Work product and Construction Documents
 granted hereby shall provide Owner sufficient rights in and to the Work
 product and Construction Documents as shall be necessary for Owner solely to
 operate and maintain the Project and shall not be used for any other purpose.
 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.10.2

 	
 License upon Termination or Default 

 
	
  

 	
  

 	
 If this
 Agreement is terminated prior to completion of the Project, the license
 granted under Section 2.10.1 shall automatically terminate and be replaced by
 a license to use the Work product and Construction Documents to complete the
 Project and subsequently occupy, operate, maintain and repair the Project,
 provided that if Project Manager is not then in default under this Agreement,
 Owner shall pay all amounts then due and payable though the date of
 termination to Project Manager. 

 
	
  

 	
  

 	
  

 
	
 § 2.11

 	
 PROJECT START-UP AND TESTING

 
	
  

 	
 Project
 Manager 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 

 

Page
13 of 34

	
  

 	
  

 	
  

 
	
  

 	
 supervision
 and corrective maintenance of all permanent Project equipment within the
 scope of the Work. Project Manager shall train, supervise and direct Owner’s
 employees and personnel who shall participate in the start-up activities with
 Project Manager’s personnel to become familiar with all aspects of the
 Project. Owner and the Independent Engineer may witness start-up and testing
 activities. 

 
	
  

 	
  

 	
  

 
	
 § 2.12

 	
 POST COMPLETION SUPPORT 

 
	
  

 	
 Project
 Manager will provide (a) two (2) months of on-site operational support for
 Owner’s personnel after successful completion of the Performance Tests; (b)
 one on-site inspection of the Plant to confirm that the Plant is capable of
 operating in accordance with the Performance Guarantee Criteria in each of
 the third, sixth, ninth, and twelfth months following the date of Substantial
 Completion; and (c) for one (1) year from the date of Substantial Completion,
 will provide up to two hundred (200) hours of off-site technical and
 operating procedure support by telephone and other electronic data
 transmission and communication. Any additional support services not otherwise
 required by this Section and not required to correct Defective Work pursuant
 to Section 2.9.3 shall be compensated by Owner at Project Manager’s stated
 rates or as otherwise agreed by the parties. 

 
	
  

 	
  

 	
  

 
	
 § 2.13

 	
 PERFORMANCE GUARANTEE

 
	
  

 	
 Project
 Manager guarantees that the Project 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 prior to the Scheduled
 Substantial Completion Date and for a period of one (1)-year after the date
 of Substantial Completion. If the Project fails to meet the Performance
 Guarantee Criteria prior to the Scheduled Substantial Completion Date,
 Project Manager will make the necessary corrections and re-test until the
 Project meets the Performance Guarantee Criteria, which correction and
 retesting shall be reimbursable as a Cost of the Work, subject to the
 Guaranteed Maximum Price. For a period of one (1)-year after the date of
 Substantial Completion, Project Manager shall be responsible for correction
 and retesting at Project Manager’s expense, pursuant to Section 2.9.3. 

 
	
  

 	
  

 	
  

 
	
 § 2.14

 	
 PERFORMANCE TESTING

 
	
  

 	
 Project
 Manager shall direct tests and, if necessary, any re-tests, of the Project to
 demonstrate, at a minimum, compliance with the Performance Guarantee Criteria
 (the “Performance Tests”). No later than Forty-five (45) Days prior to the
 earlier of the Scheduled Substantial Completion Date or Substantial
 Completion, Project Manager shall provide to Owner for review a detailed
 testing plan for the Performance Tests. Owner and Project Manager shall agree
 upon a testing plan that shall be consistent with the Performance Guarantee
 Criteria and Test Protocols contained in Exhibit A hereto. After such
 agreement has been reached, Project Manager shall notify Owner five (5)
 business days prior to the date Project Manager intends to commence the Performance
 Tests. Project Manager shall provide to Owner a Performance Test report,
 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 Project
 Manager 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 Project
 Manager in writing stating the reasons why Owner determined that the
 Performance Guarantee Criteria have not been met. Project Manager shall,
 within seven (7) days of receipt of such written notice from Owner, undertake
 correction and retesting. Notice and testing procedures shall be repeated as
 necessary until Project Manager, Owner and Independent Engineer verify that
 the Performance Guarantee Criteria have been met. Project Manager shall have
 the right to dispute any determination by Owner or Independent Engineer that
 the Performance Guarantee Criteria have not been met pursuant to Article 9 of
 this Agreement. The sole issue for resolution in any such dispute resolution process
 shall be (1) whether the Performance Guarantee Criteria have or have not been
 met and (2) if the Performance Guarantee Criteria have not been met, whether
 that failure is due to: (a) the failure of Owner to maintain and operate the
 Plant in accordance with the instructions provided by Project Manager, the
 “Crude CSO Specifications” or other standards to which Project 

 

Page
14 of 34

	
  

 	
  

 	
  

 
	
  

 	
 Manager and
 Owner may agree, and ordinary industry practices or (b) due to a failure or
 limitation of pre-existing Plant equipment not attributable to the Work. If
 the Performance Guarantee Criteria have been met, or if the Performance
 Guarantee Criteria have not been met due to the failure of Owner or
 pre-existing Plant equipment, then Project Manager shall be entitled to
 compensation for its re-testing and any unnecessary corrective work,
 including reasonable overhead and profit. 

 
	
  

 	
  

 	
  

 
	
 § 2.15

 	
 INDEMNIFICATION 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.15.1

 	
 Project Manager’s General Indemnification 

 
	
  

 	
  

 	
 Project
 Manager, to the fullest extent permitted by law, shall indemnify, defend and
 hold harmless Owner and their successors, assigns, officers, directors,
 employees and agents (“Owner Indemnified Parties”) from and against losses,
 costs, damages, injuries, liabilities, claims, demands, penalties, interest
 and causes of action, including without limitation, attorney’s fees 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
 wrongful acts or omissions of Project Manager, Subcontractors, anyone
 employed directly or indirectly by any of them or anyone for whose acts any
 of them may be liable. Without limiting the generality of the foregoing,
 Project Manager shall fully indemnify, defend and save harmless Owner
 Indemnified Parties from and against losses, costs, damages, injuries,
 liabilities, claims, demands, penalties interest and causes of action,
 including without limitation attorney’s fees, in favor of any governmental
 authority or other third party to the extent caused by (a) failure of Project
 Manager or any Subcontractor to comply with legal requirements as required by
 this Agreement, or (b) failure of Project Manager or any Subcontractor to
 properly administer and pay any taxes or fees required to be paid by Project
 Manager under this Agreement. 

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 2.15.2

 	
 Payment Claim Indemnification 

 
	
  

 	
  

 	
 (a)

 	
 To the
 extent Project Manager has received payment for the Work, Project Manager
 shall indemnify, defend and hold harmless Owner Indemnified Parties from any
 claims or mechanic’s liens brought against Owner or the Project as a result
 of the failure of Project Manager, or those for whose acts it is responsible,
 to pay for any services, materials, labor, equipment, taxes or other items or
 obligations furnished or incurred for or in connection with the Work. Within
 three (3) business days of receiving written notice from Owner that such a
 claim or mechanic’s lien has been filed, Project Manager shall commence to
 take the steps necessary to discharge such claim or lien. 

 

	
  

 	
  

 	
  

 
	
  

 	
 § 2.15.3

 	
 Owner’s General Indemnification 

 
	
  

 	
  

 	
 Owner, to
 the fullest extent permitted by law, shall indemnify, defend and hold
 harmless Project Manager and their successors, assigns, officers, directors,
 employees and agents (“Project Manager Indemnified Parties”) from and against
 losses, costs, damages, injuries, liabilities, claims, demands, penalties,
 interest and causes of action, including without limitation, attorney’s fees
 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
 wrongful acts or omissions of Owner, anyone employed directly or indirectly
 by Owner or anyone for whose acts Owner may be liable. Without limiting the
 generality of the foregoing, Owner shall fully indemnify, defend and save
 harmless Project Manager Indemnified Parties from and against losses, costs,
 damages, injuries, liabilities, claims, demands, penalties, interest and
 causes of action, including without limitation attorney’s fees, in favor of
 any governmental authority or other third party to the extent caused by (a)
 failure of Owner to comply with legal requirements as required by this
 Agreement, or (b) failure of Owner to properly administer and pay any taxes
 or fees required to be paid by Owner under this Agreement. 

 

Page
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 § 2.16

 	
 PATENT AND COPYRIGHT INFRINGEMENT 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.16.1

 	
 Indemnification 

 
	
  

 	
  

 	
 Project
 Manager shall indemnify, hold harmless and defend 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 for bodily injury, sickness or death, and property
 damage or destruction based on any claim that the Work, or any part thereof,
 or the operation or use of the Work or any part thereof, constitutes
 infringement of any United States or foreign patent, copyright or other
 intellectual property, now or hereafter issued. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 2.16.2

 	
 Other Obligations 

 
	
  

 	
  

 	
 If Project
 Manager has reason to believe that a required design, process or product of
 the Work is an infringement of a copyright or patent, the Project Manager
 shall notify Owner promptly in writing; provided that such notification shall
 not relieve Project Manager of any of its duties under this Agreement,
 including under § 2.16.1 or this § 2.16.2. If Owner is enjoined from the
 operation or use of the Work, the Project, or any part thereof, as the result
 of any patent or copyright suit, claim, or proceeding due to the modification
 of the Plant, Project Manager shall, at its sole expense, take reasonable
 steps to procure the right to operate or use the Work or the Project. If
 Project Manager cannot so procure such right within a reasonable amount of
 time, Project Manager shall promptly, at Project Manager’s option and sole
 expense, (i) modify the Work so as to avoid infringement of any such patent
 or copyright or (ii) replace the Work with Work that does not infringe or
 violate any such patent, copyright, trade secret, proprietary right,
 confidential information or intellectual property right. 

 
	
  

 	
  

 	
  

 
	
 § 2.17

 	
 MAINTENANCE OF PROJECT SITE 

 
	
  

 	
 Project
 Manager shall keep the Project site reasonably free from debris, trash and
 construction wastes to permit Project Manager to perform its construction
 services efficiently, safely and without interfering with the use of adjacent
 land areas. Upon Final Completion of the Work, Project Manager shall remove
 all debris, trash, construction wastes, materials, equipment, machinery and
 tools arising from the Work to permit Owner to operate the Project for its
 intended use. 

 
	
  

 	
  

 	
  

 
	
 § 2.18

 	
 PROJECT SAFETY 

 
	
  

 	
 Project
 Manager 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 Plant,
 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 Plant or adjacent thereto. Project Manager assumes responsibility
 for implementing and monitoring all safety precautions and programs related
 to the performance of the Work. Project Manager 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. As
 promptly as practicable, Project Manager will report in writing any
 safety-related injury, loss, damage or accident arising from the Work to
 Owner’s Designated 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.
 Project Manager’s responsibility for safety under this Section 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. 

 
	
  

 	
  

 
	
 § 2.19

 	
 INTEGRATION OF PROJECT INTO BIODIESEL PLANT 

 
	
  

 	
 Project
 Manager shall perform all services reasonably necessary to fully integrate
 the Project into the existing biodiesel Plant so that the Project operates in
 accordance with the Contract Documents and performs in accordance with the
 Performance Guarantee Criteria.

 

Page
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 ARTICLE 3  OWNER’S RESPONSIBILITIES

 
	
  

 	
  

 	
  

 
	
 § 3.1

 	
 PAYMENTS 

 
	
  

 	
 Owner shall
 pay for Work performed in accordance with this Agreement, up to the
 Guaranteed Maximum Price, pursuant to Articles 5 and 7. 

 
	
  

 	
  

 
	
 § 3.2

 	
 TESTING AND PREPARATION 

 
	
  

 	
 Owner will:
 (a) start and operate the Plant using crude soybean oil before Substantial
 Completion as provided in Section 2.4.2; and (b) with Project Manager’s
 assistance, clean & purge the Plant to make it Methanol-free and suitable
 for normal retrofit construction.

 
	
  

 	
  

 
	
 § 3.3

 	
 INFORMATION AND SERVICES REQUIRED OF OWNER 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 3.3.1

 	
 During the
 Construction Phase, Owner shall furnish information or services required of
 Owner by the Contract Documents with reasonable promptness. Owner shall also
 furnish any other information or services under Owner’s control and relevant
 to Project Manager’s performance of the Work with reasonable promptness after
 receiving Project Manager’s written request for such information or services.
 Project Manager shall be entitled to reasonably rely on the accuracy of
 information and services furnished by Owner, provided Project Manager shall
 review such information in light of Project Manager’s experience,
 observations of the Plant, and information obtained by Project Manager from
 other sources. If Project Manager discovers any apparent discrepancies within
 or among information obtained by Project Manager from any source, Project
 Manager shall exercise its reasonable judgment in reconciling such
 discrepancies before acting in reliance on the information. Project Manager
 shall exercise proper precautions relating to the safe performance of the
 Work. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 3.3.2

 	
 To its
 knowledge, Owner has provided Project Manager any design and “As-Built”
 documentation for the facility that it has in its possession as of the
 Effective Date of this Agreement. Owner shall take commercially reasonable
 steps to request and obtain any and all other documentation for the facility
 requested by the Project Manager. 

 
	
  

 	
  

 	
  

 
	
 § 3.4

 	
 TESTS, SURVEYS AND REPORTS 

 
	
  

 	
 Unless
 otherwise provided in the Contract Documents, Owner shall furnish tests,
 inspections and reports, such as soils, structural, mechanical, and chemical
 tests, tests for air and water pollution, and tests for hazardous materials. 

 
	
  

 	
  

 
	
 § 3.5

 	
 OWNER’S DESIGNATED REPRESENTATIVE 

 
	
  

 	
 Owner shall
 identify a representative authorized to act on behalf of Owner with respect
 to the Project, which Owner may change at any time using the notice
 procedures provided in this Agreement. Owner’s Designated Representative
 shall render decisions promptly and furnish information expeditiously, to
 avoid unreasonable delay in the services or Work of Project Manager. 

 
	
  

 	
  

 
	
 § 3.6

 	
 LEGAL REQUIREMENTS 

 
	
  

 	
 Owner shall
 furnish any legal, insurance and accounting services, including auditing
 services, to meet Owner’s needs and interests and which are not otherwise
 required for the Work or to be provided by Project Manager under this
 Agreement. 

 
	
  

 	
  

 	
  

 
	
 § 3.7

 	
 INDEPENDENT ENGINEER 

 
	
  

 	
 Owner’s
 lender will select an Independent Engineer (the “Independent Engineer”).
 Owner and Independent Engineer each have the right to witness all testing,
 including the Performance Tests and 

 

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 any
 equipment testing, whether at the Plant or at the Subcontractor’s or
 equipment supplier’s premises during the course of this Agreement. Project
 Manager shall cooperate with the Independent Engineer pursuant to any
 reasonable requests by the Independent Engineer or Owner. However, any review
 by Owner or Independent Engineer shall not relieve or release Project Manager
 from any of its duties, obligations or liabilities under the Contract
 Documents. 

 
	
  

 	
  

 
	
 § 3.8

 	
 USE OF FACILITIES 

 
	
  

 	
 At its
 discretion, and subject to any limitations and policies Owner may impose,
 Owner will allow Project Manager and its Subcontractors rent-free use of the
 biodiesel plant’s office space, office machines and equipment,
 equipment/material storage and fabrication facilities to the extent necessary
 or desirable to complete the Work. 

 
	
  

 	
  

 	
  

 
	
 § 3.9

 	
 IDENTIFICATION OF HAZARDOUS MATERIALS OR CONDITIONS 

 
	
  

 	
 Owner will
 provide Phase 1 and any other environmental reports in its possession
 regarding the Plant property to Project Manager. If Owner has knowledge of
 any other hazardous materials on the property that are not reflected in any
 report, Owner will disclose to Project Manager the location of all hazardous
 materials, including contaminated soils or equipment prior to Project Manager
 arriving on-site. If the situation requires removal of the hazardous material
 Owner shall procure those services and the costs shall be outside the
 Guaranteed Maximum Price. 

 
	
  

 	
  

 
	
 ARTICLE 4  HAZARDOUS MATERIALS AND
 EMERGENCIES

 
	
  

 	
  

 	
  

 
	
 § 4.1

 	
 HAZARDOUS MATERIALS 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 4.1.1

 	
 Generally 

 
	
  

 	
  

 	
 Project
Manager shall be responsible for compliance with any requirements of the
Contract Documents or the law regarding hazardous materials to be
incorporated in by Project Manager in the course of performing the Work. If
Project Manager encounters a hazardous material or substance in the existing
Plant not specifically addressed in the Contract Documents and if reasonable
precautions will be inadequate to prevent foreseeable bodily injury or death
to persons resulting from a material or substance encountered on the Plant by
Project Manager, Project Manager shall, upon recognizing the condition,
immediately stop Work in the affected area and report the condition to Owner
in writing. Such work stoppage time shall be added to the Substantial
Completion Date and adjusted by written Change Order. For purposes of this
Agreement, the term “hazardous material or substance” shall not include any
biofuel product or by-product or other material or substance present in the
Plant in connection with ordinary operations in compliance with all
applicable environmental laws.  

 
	
  

 	
  

 	
  

 
	
  

 	
 § 4.1.2

 	
 Procedures 

 
	
  

 	
  

 	
 Upon receipt
 of Project Manager’s written notice, Owner (or Project Manager at Owner’s
 direction) shall obtain the services of a licensed laboratory to verify the
 presence of the material or substance reported by Project Manager. If such
 material or substance is found to be present, Owner (or Project Manager at Owner’s
 direction) shall cause it to be rendered harmless. When the material or
 substance has been rendered harmless, Work in the affected area shall resume
 upon written agreement of Owner and Project Manager. By Change Order, the
 Contract Time shall be extended appropriately and the Guaranteed Maximum
 Price will be increased in the amount of Project Manager’s reasonable
 additional costs of shut-down, delay and start-up. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 4.1.3

 	
 Owner Indemnification 

 
	
  

 	
  

 	
 To the
 extent caused by the negligence or misconduct of Owner or anyone for whom the
 Owner is legally responsible, Owner shall indemnify and hold harmless Project
 Manager and its consultants, agents and employees from and against claims,
 damages, losses and expenses, 

 

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 including but
 not limited to attorneys’ fees, arising out of or resulting from performance
 of the Work in the affected area if in fact the material or substance
 presents the risk of bodily injury or death and has not been rendered
 harmless, provided that such claim, damage, loss or expense is attributable
 to bodily injury, sickness, disease or death, or to injury to or destruction
 of tangible property (other than the Work itself). However, the Owner shall
 have no duty to indemnify a party to the extent that such damage, loss or
 expense is due to the fault or negligence of the party seeking
 indemnification. 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 4.1.4

 	
 No Owner Responsibility 

 
	
  

 	
  

 	
 In no event
 will Owner be responsible in any way for materials or substances Project
 Manager or its Subcontractors bring to the Project site or for claims or
 damages related to such materials. To the extent materials or substances are
 required on the Project site by the Contract Documents, or lawfully present
 in the Plant in connection with ordinary operations, the Project Manager and
 all Subcontractors shall use, handle and dispose of such materials and
 substances in compliance with all applicable environmental laws.

 
	
  

 	
  

 	
  

 
	
  

 	
 § 4.1.5

 	
 Project Manager Indemnification 

 
	
  

 	
  

 	
 To the
 fullest extent allowed by law, Project Manager shall, and shall cause each
 Subcontractor to agree to, indemnify and hold harmless 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 for bodily injury, sickness or
 death, and property damage or destruction arising out of or resulting from:
 (1) Project Manager’s or a Subcontractor’s use, handling or disposal on the
 Project site of a material or substance not required by the Contract
 Documents; (2) Project Manager’s or a Subcontractor’s negligent use, handling
 or disposal on the Project site of a material or substance required by the
 Contract Documents; or (3) the failure by Project Manager to perform its
 obligations under this Agreement, except to the extent that such damage, loss
 or expense is due to the fault or negligence of Owner. 

 
	
  

 	
  

 	
  

 
	
 § 4.2

 	
 EMERGENCIES 

 
	
  

 	
 In an
 emergency affecting safety of persons or property, Project Manager shall act
 to prevent threatened damage, injury or loss. Any change to the Scheduled
 Substantial Completion Date or the Cost of the Work shall be made only
 pursuant to a Change Order, and, in any event, shall not: (a) exceed Project
 Manager’s reasonable additional costs, fees and delays directly attributable
 to shut-down, delay and start-up due to the emergency or (b) unless the
 emergency is due to the fault of the Owner, Owner’s agents or Subcontractors,
 alter the Guaranteed Maximum Price. 

 
	
  

 	
  

 	
  

 
	
 ARTICLE 5  COMPENSATION

 
	
  

 	
  

 	
  

 
	
 § 5.1

 	
 COST OF THE WORK 

 
	
  

 	
 As full
 consideration and payment for the Work, Owner shall pay Project Manager the
 Cost of the Work, up to the Guaranteed Maximum Price. The Cost of the Work
 shall be determined under Article 6, which includes a project management fee
 of $350,000 (the “Project Manager’s Fee”). 

 
	
  

 	
  

 	
  

 
	
 § 5.2

 	
 GUARANTEED MAXIMUM PRICE 

 
	
  

 	
 The
 Guaranteed Maximum Price is equal to $8,350,000, which represents Project
 Manager’s budgeted Cost of the Work as described in Exhibit D, including the
 Contingency Fund and Project Manager’s Fee. Project Manager guarantees that
 the Cost of the Work shall not exceed the Guaranteed Maximum Price. To the
 extent the Cost of the Work exceeds the Guaranteed Maximum Price, Project
 Manager shall bear and be solely responsible for such amounts in excess of
 the Guaranteed Maximum Price without reimbursement or additional compensation
 from Owner. 

 

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 § 5.3

 	
 CONTINGENCY FUND 

 
	
  

 	
 Project
 Manager has included a contingency fund (the “Contingency Fund”) in the
 budgeted Cost of the Work to be used by Project Manager to accumulate cost
 savings and fund the costs of overruns. As the Work is performed and actual
 costs are determined, the difference between the itemized actual costs and
 the budgeted costs attached as Exhibit D will be used to reduce or add to the
 Contingency Fund. At Project completion, Owner and Project Manager shall
 split any funds remaining in the Contingency Fund on a 50% - 50% basis.
 However, nothing in this section, including any deficit in the Contingency
 Fund, shall affect the Guaranteed Maximum Price. 

 

	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE 6  COST OF THE WORK

 
	
  

 	
  

 	
  

 	
  

 
	
 § 6.1

 	
 INCLUDED COSTS

 
	
  

 	
 The term
 “Cost of the Work” shall mean any of the costs set forth in Sections 6.1.1
 through 6.1.6 to the extent such costs are reasonably and necessarily
 incurred by Project Manager in the proper performance of the Work, and not
 otherwise excluded under Section 6.2, plus Project Manager’s Fee of $350,000
 (subject to reduction if necessary to prevent the Cost of the Work from
 exceeding the Guaranteed Maximum Price). 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 6.1.1

 	
 Labor Costs
 related to Project Manager employees directly or indirectly engaged in
 performing the Work, wherever it occurs, compensated based upon the time and
 materials used according to Exhibit E, Ball Industrial Rate Sheet. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 6.1.2

 	
 Payments
 made by Project Manager to Subcontractors in accordance with the requirements
 of the Subcontracts, including fees and reimbursable expenses payable for
 professional services under approved Subcontracts. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 6.1.3

 	
 Costs of
 Materials and Equipment incorporated into Completed Construction 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Costs of
 materials and equipment incorporated or to be incorporated in the completed
 construction, including transportation and storage. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 Costs of
 materials described in subsection (a) in excess of those actually installed
 to allow for reasonable waste and spoilage. Unused excess materials, if any,
 shall become Owner’s property at the completion of the Work or, at Owner’s
 option, shall be sold by Project Manager. Any amounts realized from such
 sales shall be credited to Owner as a deduction from the Cost of the Work. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 6.1.4

 	
 Costs of
 Other Materials and Equipment, Temporary Facilities & Related Items 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Costs of
 transportation, storage, installation, maintenance, dismantling and removal
 of materials, supplies, temporary facilities, machinery, equipment and hand
 tools not customarily owned by construction workers that are provided by
 Project Manager and are fully consumed for the Work. Costs of such items that
 are not fully consumed shall be based on the cost or value of the item at the
 time it is first used for the Work less the value of the item when it is no
 longer used for the Work. All costs and values shall be based on the
 reasonable fair market value. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 Rental
 charges for temporary facilities, machinery, equipment and hand tools not
 customarily owned by construction workers that are provided by Project
 Manager at the Plant and costs of transportation, installation, minor
 repairs, dismantling and removal. Rental rates for Project Manager-owned
 equipment and quantities of equipment shall be as set forth on Exhibit E, or
 if not provided in Exhibit E, will be subject to Owner’s prior 

 

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 approval.
 The total rental cost of any Project Manager-owned item may not exceed the
 purchase price of any comparable item. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 Costs of
 removal of debris from the Plant of the Work and its proper and legal
 disposal. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 Costs of
 document reproductions, facsimile transmissions and long-distance telephone
 calls, postage and parcel delivery charges, telephone service at the Plant
 and reasonable petty cash expenses of the Plant office. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (e)

 	
 Reasonable
 expenses of Project Manager’s supervisory or administrative personnel incurred
 while traveling in discharge of duties connected with the Work. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (f)

 	
 Costs of
 materials and equipment suitably stored off the Plant. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 6.1.5

 	
 Miscellaneous Costs 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Premiums for
 that portion of insurance and bonds required by, and that can be directly
 attributed to, this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 Fees and
 assessments for Work-related permits, licenses and inspections. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 Fees of
 laboratories for tests required by the Contract Documents, except those
 related to defective or nonconforming Work for which reimbursement is
 excluded by other provisions of the Contract Documents. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 Royalties
 and license fees paid for the use of a particular design, process or product
 required by the Contract Documents; the cost of defending suits or claims for
 infringement of patent rights arising from such requirement of the Contract
 Documents; and payments made in accordance with legal judgments against
 Project Manager resulting from such suits of claims and payment of settlements
 made with the Owner’s consent. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (e)

 	
 Costs for
 electronic equipment and software directly related to the Work. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (f)

 	
 Deposits
 lost for causes other than Project Manager’s negligence or failure to fulfill
 a specific responsibility in the Contract Documents. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (g)

 	
 Reasonable
 expenses incurred in accordance with Project Manager’s standard written
 personnel policy for relocation and temporary living allowances of Project
 Manager’s personnel required for the Work; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (h)

 	
 Insurance deductibles
 for losses not caused by Project Manager, Subcontractors or any of their
 agents or employees. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 Legal,
 mediation and arbitration costs, including attorneys’ fees, other than those
 arising from disputes between the Owner and Project Manager, reasonably
 incurred by the Project Manager after the execution of this Agreement and in
 the performance of the Work and with the Owner’s prior written approval,
 which approval shall not be unreasonably withheld. 

 

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 § 6.1.6

 	
 Other Costs and Emergencies 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Costs
 incurred in taking action to prevent threatened damage, injury or loss in
 case of an emergency affecting the safety of persons and property. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 Costs of
 repairing or correcting damaged or nonconforming Work, provided that such
 damaged or nonconforming Work was not caused by negligence or Project
 Manager’s failure to fulfill an obligation imposed on it by the Contract
 Documents and only to the extent that the cost of repair or correction is not
 recovered by Project Manager from insurance, sureties, Subcontractors,
 suppliers, or others. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 Work
 stoppages and Subcontractor demobilization and remobilization charges beyond
 the Guaranteed Maximum Price due to breach of Owner’s obligations under
 Article 7 of this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 Project
 Manager’s capital costs at a rate of 2% over prime if caused by Owner’s
 failure to make payments required under Article 7 of this Agreement, starting
 30 days from the due date of the payment. 

 

	
  

 	
  

 	
  

 	
  

 
	
 § 6.2

 	
 COSTS NOT TO BE REIMBURSED 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 The Cost of
 the Work shall not include: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Project
 Manager’s capital expenses, including interest on Project Manager’s capital
 employed for the Work except as provided in § 6.1.6(d); 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Costs due to
 the negligence or failure of Project Manager, Subcontractors and suppliers or
 anyone directly or indirectly employed by any of them or for whose acts any
 of them may be liable, to fulfill a specific responsibility of this
 Agreement; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 All sales,
 use or similar taxes related to the Work shall be the Owner’s responsibility,
 are excluded from the Guaranteed Maximum Price and will be billed separately;
 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Any cost not
 specifically and expressly described in Sections 6.1.1 to 6.1.6; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Costs, other
 than costs included in Change Orders approved by Owner, that would cause the
 Guaranteed Maximum Price to be exceeded. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 6.3

 	
 PREPAYMENTS 

 
	
  

 	
 Project
 Manager may make Owner-funded advance payments to suppliers for materials or
 equipment only with Owner’s prior approval, and further provided that (i)
 Owner is satisfied that the equipment and materials are suitably stored at an
 acceptable location, (ii) the equipment and materials are protected by
 suitable insurance, and (iii) upon payment, Owner will receive the equipment
 and materials free and clear of all liens and encumbrances. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 6.4

 	
 DISCOUNTS, REBATES AND REFUNDS 

 
	
  

 	
 All cash
 discounts, trade discounts, rebates, refunds and amounts received from sales
 of surplus materials and equipment shall be credited to the Contingency Fund.
 Project Manager shall perform any acts reasonably necessary to obtain such
 discounts and reduce the Cost of the Work. 

 

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 § 6.5

 	
 ACCOUNTING RECORDS 

 
	
  

 	
 Project
 Manager shall keep full and detailed records and accounts related to the Cost
 of the Work and exercise such controls as may be necessary for proper
 financial management and as may be satisfactory to Owner. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 6.6

 	
 AUDITS 

 	
  

 	
  

 
	
  

 	
 Owner its
 agents and representatives shall, upon Substantial Completion, during regular
 business hours and upon reasonable notice, be afforded access to, and shall
 be permitted to audit and copy, Project Manager’s records and accounts,
 including complete documentation supporting accounting entries, books,
 correspondence, instructions, drawings, receipts, subcontracts,
 Subcontractor’s proposals, purchase orders, vouchers, memoranda and other
 data relating to the Contract Documents. Project Manager shall preserve these
 records for a period of three (3) years after final payment, or for such
 longer period as may be required by law. Each subcontract will provide, and
 Owner shall have, the foregoing audit rights with regard to the Subcontractor
 and the right to otherwise confirm Project Manager’s records with the
 Subcontractor’s records. 

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE 7  PAYMENTS

 
	
  

 	
  

 	
  

 	
  

 
	
 § 7.1

 	
 GENERALLY 

 
	
  

 	
 Owner will
 deposit with its lender into an escrow account and obtain commitments from
 its lender for advances of a total sum equal to the Guaranteed Maximum Price
 less any payments already made by Owner to Project Manager related to the
 Project. Subject to the approval by the lender of release of funds for each
 payment, payments of the Cost of the Work will be made to Project Manager
 from the escrow account according to a Schedule of Values under the
 procedures set forth in this Article. All payments hereunder are subject to
 the retainage provisions set forth in Section 7.4. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 7.2

 	
 PAYMENTS 

 
	
  

 	
  

 	
  

 
	
  

 	
 § 7.2.1

 	
 Owner shall
 make progress payments, equipment and material deposits, and purchase payments
 on account of the Cost of the Work to Project Manager based upon written
 applications for payment issued by Project Manager in form and substance
 acceptable to Owner (each, an “Application for Payment”). Project Manager
 acknowledges that Owner has provided it a copy of the Additional Improvements
 Reserve and Security Agreement by and among Owner, OSM-REO, LLC and First
 American Title Insurance Company (the “Additional Improvements Reserve and
 Security Agreement”). All Applications for Payment shall satisfy the
 requirements and conditions set forth in the Additional Improvements Reserve
 and Security Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 7.2.2

 	
 Project
 Manager shall submit to Owner, in the first (1st) week of each
 calendar month, its Application for Payment for all Work performed and not
 paid for during the previous calendar month. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 7.2.3

 	
 Applications
 for Payment shall show the percentage of completion of each portion of the
 Work as of the end of the period covered by the Application for Payment. The
 percentage of completion shall be the percentage of that portion of the Work
 which has actually been completed and shall include the costs of required
 equipment deposits and pre-payments. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 7.2.4

 	
 Each
 Application for Payment shall be based on, and computed in accordance with, a
 detailed Guaranteed Maximum Price Schedule of Values consistent with the
 preliminary Schedule of Values attached as Exhibit D that (i) subdivides the
 Work into its respective parts; (ii) allocates the entire Guaranteed Maximum
 Price among the various portions of the Work; (iii) shows Project Manager’s
 Fee separately and allocates it pro rata among the parts of the Work; and
 (iv) reduces the amount in the Application for Payment by retainage required
 by this Agreement and 

 

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 the
 aggregate amount of payments made by Owner. Each Application for Payment
 shall be subject to the prior review and approval of the Independent Engineer
 for consistency with the Schedule of Values and the Contract Documents. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 7.2.5

 	
 Provided the
 Application for Payment satisfies the requirements and conditions of the
 Additional Improvements Reserve and Security Agreement, Owner shall make
 payment of the amount to Project Manager, as determined under this Agreement,
 within Fourteen (14) days after receiving the 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
 Project, shall pass to Owner free and clear of all claims, liens,
 encumbrances, and security interests upon Project Manager’s receipt of
 payment therefor, and Project Manager shall provide Owner lien waivers to
 that effect. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 7.2.6

 	
 If Owner
 determines that Project Manager is not entitled to all or part of an
 Application for Payment, it will notify Project Manager in writing at least
 ten (10) days prior to the date payment is due. The notice shall indicate the
 specific amounts Owner intends to withhold, the reasons and contractual basis
 for the withholding, and the specific measures Project Manager must take to
 rectify Owner’s concerns. Project Manager and Owner will attempt to resolve
 Owner’s concerns before the date that payment is due. If the parties cannot
 resolve such concerns, the parties shall resolve the dispute as provided in
 this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 7.4

 	
 RETAINAGE 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 7.4.1

 	
 Owner will
 retain five percent (5%) of each payment. Owner shall release to Project
 Manager all retained amounts with the Final Payment. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 7.4.2

 	
 Project
 Manager shall retain five percent (5%) of each payment to each Subcontractor
 other than design professionals until the Subcontract is fully performed or
 such later date that Owner releases funds related to the Subcontract to
 Project Manager. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 7.5

 	
 FINAL PAYMENT 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 7.5.1

 	
 Project
 Manager shall deliver to Owner a request for final payment (the “Final
 Application for Payment”) when Project Manager believes Final Completion has
 been achieved in accordance with this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 7.5.2

 	
 Owner’s
 final payment to Project Manager of the entire unpaid balance of the Cost of
 the Work (the “Final Payment”) shall be made no later than 45 days after the
 issuance of the Final Application for Payment. However, Final Payment shall
 not be made by Owner unless and until: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Project
 Manager has fully performed this Agreement except for Project Manager’s
 responsibility to correct Work, and to satisfy other requirements, if any,
 which extend beyond Final Payment; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 the Project
 has successfully completed its Performance Test and signed by the Owner; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 a Final
 Application for Payment has been issued by Project Manager; and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 Project
 Manager has obtained and delivered to Owner complete and legally effective
 releases or conditional waivers of all liens arising out of or filed in
 connection with the Work, from Project Manager and from all Subcontractors,
 suppliers and other entities or 

 

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 persons
 performing work on, or furnishing materials to, the Project. Final,
 unconditional lien waivers will be submitted to the Owner within 14 days of
 receipt of Final Payment. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 7.5.3

 	
 Owner’s
 auditors will review and report in writing on Project Manager’s final
 accounting within 45 days after delivery of the final accounting to Owner by
 Project Manager. If Owner’s auditors report the Cost of the Work to be less
 than claimed by Project Manager, Project Manager shall be entitled to request
 mediation of the disputed amount. A request for mediation shall be made by
 Project Manager within 30 days after Project Manager’s receipt of a copy of
 Owner’s auditors report. Failure to request mediation within this 30-day
 period shall result in the substantiated amount reported by Owner’s auditors
 becoming binding on Project Manager. Pending a final resolution of the
 disputed amount, Owner shall pay Project Manager the amount certified by
 Owner’s auditors. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 7.5.4

 	
 If, after
 Final Payment, Owner requests Project Manager to correct defective or
 nonconforming Work and Project Manager incurs costs described in Section 6.1
 and not excluded by Section 6.2 to perform such Work, Owner shall reimburse
 Project Manager such costs and Project Manager’s Fee applicable thereto on
 the same basis as if such costs had been incurred prior to final payment.
 However, Owner shall not be required to make any reimbursements that would
 result in aggregate payments under this Agreement in excess of the Guaranteed
 Maximum Price. If Project Manager has received amounts from the Contingency
 Fund as provided in Section 5.3, such amounts shall be recalculated and
 appropriate credit given to Owner in determining the net amount to be paid by
 Owner to Project Manager under this Section 7.5.4. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 7.6

 	
 RELIANCE ON APPLICATIONS 

 
	
  

 	
 In taking
 action on Project Manager’s Applications for Payment, Owner shall be entitled
 to rely on the accuracy and completeness of the information furnished by
 Project Manager and shall not be deemed to represent that Owner has made a
 detailed examination, audit or arithmetic verification of the Applications
 for Payment or other supporting data; that Owner has made exhaustive or
 continuous on-site inspections; or that Owner has made examinations to
 ascertain how or for what purposes Project Manager has used amounts
 previously paid on account of this Agreement. Such examinations, audits and
 verifications, if required by Owner, will be performed by Owner’s auditors
 acting in the sole interest of Owner.

 
	
  

 	
  

 	
  

 	
  

 
	
 § 7.7

 	
 PROJECT MANAGER’S REPRESENTATIONS 

 
	
  

 	
 Project
 Manager warrants that upon submission of an Application for Payment, all Work
 for which payments have been received from Owner shall be free and clear of
 liens, claims, security interests or encumbrances in favor of Project Manager
 or any other person or entity performing work or furnishing materials
 relating to the Project. Project Manager’s Application for Payment shall
 constitute a representation by Project Manager to Owner that the Work has
 progressed to the point indicated in the Application for Payment, the quality
 of the Work is in accordance with the Contract Documents, and Project Manager
 is entitled to payment in the amount requested. Upon receipt of payment from
 Owner, Project Manager shall promptly pay all Subcontractors and suppliers
 the amount to which each is entitled in accordance with the terms of their
 respective contracts, and shall obtain and deliver to Owner lien waivers from
 each Subcontractor and supplier. Owner shall have no obligation for payment
 of a Subcontractor or supplier performing portions of the Work. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 7.8

 	
 PROJECT MANAGER’S PAYMENT OBLIGATIONS 

 
	
  

 	
 Project
 Manager will pay consultants and Subcontractors, in accordance with its
 contractual obligations to such parties, all the amounts Project Manager has
 received from Owner on account of their work. Project Manager will impose
 similar requirements on consultants and Subcontractors to pay those parties
 with whom they have contracted. Project Manager will indemnify and defend
 Owner against any claims for payment and mechanic’s liens as set forth in this
 Agreement. 

 

Page
25 of 34

	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE 8  INSURANCE AND BONDS

 
	
  

 	
  

 	
  

 	
  

 
	
 § 8.1

 	
 INSURANCE, GENERALLY 

 
	
  

 	
 Project
 Manager shall procure and maintain in force through the date of Final
 Completion, and shall cause the Design Engineer and the Subcontractors to
 purchase and maintain, insurance coverage as set forth in this section with
 the policy limits indicated from insurance companies authorized to do
 business in Iowa with a rating of Best Insurance Reports rating of “A-” or
 better and financial size category of “IX” or higher. Owner shall be named as
 an additional insured on the liability policies and loss payee on the
 property policies. Prior to commencing the Work hereunder, Project Manager
 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. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 8.1.1

 	
 Professional
 Liability – Errors & Omissions insurance: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 The Design
 Engineer (CJS Group Inc.), $5,000,000;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 Project
 Manager, $2,000,000; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 The
 Subcontractors (TBD), $1,000,000.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 8.1.2 

 	
 Additionally,
 Project Manager will maintain:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 $11,000,000
 of General Liability Insurance ($1,000,000 base + $10,000,00 umbrella)
 covering: property damage, including injury to or destruction of tangible
 property, including loss of use; bodily Injury, including claims by Project
 Manager’s employees or any other person for bodily injury, sickness, disease,
 or death; contractual liability (including Project Manager’s indemnity
 obligations); fire damage; medical expenses, and personal and advertising
 injury; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 Statutory
 Limits for claims arising under workers’ compensation, disability and other
 similar employee benefit laws applicable to the Work; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 $500,000
 covering personal injury or death or property damage resulting from
 ownership, use and maintenance of any motor vehicle; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 $11,000,000
 covering Completed Project / Ongoing Operations. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (e)

 	
 $1,000,000
 covering employer’s liability for claims by employees for bodily injury,
 sickness, disease, or death; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 8.1.3

 	
 The Project
 Manager shall provide insurance that conforms with the following
 requirements:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 Project
 Manager’s liability insurance shall specifically delete any design-build or similar
 exclusions that could compromise coverage because of the design-build
 delivery of the Project. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 All
 professional liability insurance polices shall specifically delete any
 design-build or similar exclusions that could compromise coverage because of
 the design-build delivery of the Project. 

 

Page
26 of 34

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 Project
 Manager, or its Subcontractors, as the case may be, shall be responsible for
 payment of all deductibles on Project Manager furnished and Subcontractor
 furnished insurance, except that Owner shall be responsible for such
 deductibles to the extent that claims result from the negligence of Owner or
 other parties for whom Owner is responsible. Deductibles that are the
 responsibility of Project Manager or a Subcontractor shall not be the basis
 for a claim for reimbursement from Owner. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (d)

 	
 If Project
 Manager fails to provide or maintain any of the insurance coverages required
 hereunder that are commercially available under reasonable terms and
 conditions and Owner has provided Notice to Project Manager of such failure
 and Project Manager fails to take steps to provide or maintain such coverage
 within fifteen (15) days after receipt of such notice, Owner shall have the
 right to provide or maintain such coverage at Project Manager’s expense
 either by direct charge or set-off against other amounts due to Project
 Manager. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 8.2

 	
 PERFORMANCE BOND 

 
	
  

 	
 Within ten
 (10) days of the Effective Date, Project Manager shall deliver to Owner a
 bond in form and substance satisfactory to Owner (the “Performance Bond”) in
 an amount equal to the Six Million Seven Hundred-Thousand Dollars
 ($6,700,000). The Performance Bond shall secure Project Manager’s obligations
 to complete the Work in accordance with this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 8.3

 	
 PAYMENT BOND 

 
	
  

 	
 Within ten
 (10) days of the Effective Date, Project Manager shall deliver to Owner a
 bond in form and substance satisfactory to Owner (the “Payment Bond”) in an
 initial amount equal to Six Million Seven Hundred-Thousand Dollars
 ($6,700,000). The Payment Bond shall secure Project Manager’s obligations to
 pay its Subcontractors, vendors and suppliers. The Payment Bond shall provide
 the conditions upon which Subcontractors, vendors and suppliers may draw upon
 such Payment Bond following Project Manager’s failure to pay amounts due such
 Subcontractors, vendors and suppliers. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 8.4

 	
 PERFORMANCE and PAYMENT BOND COVERAGE 

 
	
  

 	
 The
 Performance and Payment Bonds will each specifically state and incorporate
 the work each bond intends to cover, which shall be all labor, materials,
 supplies and equipment to be provided and reimbursable expenses to be
 incurred by Project Manager under this Agreement, except Management &
 Supervision, Professional Services, materials supplied by Owner (2
 Centrifuges & Brown Tank), Fees & Permits, General Liability
 Insurance, Contingency Fund, and Project Manager’s Fee. 

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE 9  DISPUTE RESOLUTION

 
	
  

 	
  

 	
  

 	
  

 
	
 § 9.1

 	
 DISPUTE AVOIDANCE 

 
	
  

 	
 The parties
 will communicate regularly to avoid or minimize disagreements. If disagreements
 arise, Project Manager and Owner each commit to resolving such disagreements
 in an amicable, professional and expeditious manner so as to avoid
 unnecessary losses, delays and disruptions to the Work. Project Manager and
 Owner will first attempt to resolve disagreements through discussions between
 Project Manager’s Designated Representative and Owner’s Designated
 Representative. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 9.2

 	
 NON-BINDING MEDIATION 

 
	
  

 	
 If, a
 disagreement cannot be resolved on terms satisfactory to both parties, the
 parties shall submit the disagreement to non-binding mediation. The mediation
 shall be conducted in Des Moines, Iowa by a mutually agreeable impartial
 mediator or, if the parties cannot so agree, a mediator designated by the
 American Arbitration Association (“AAA”) pursuant to its Construction
 Industry Arbitration Rules and Mediation Procedures. The mediation will be
 governed by and conducted pursuant to a mediation 

 

Page
27 of 34

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 agreement
 negotiated by the parties or, if the parties cannot so agree, by procedures
 established by the mediator. Mediation is a condition precedent to
 arbitration, unless the parties agree otherwise. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 9.3

 	
 ARBITRATION 

 
	
  

 	
 Any claim
 between Owner and Project Manager not resolved by mediation shall be subject
 to arbitration. Unless the parties mutually agree otherwise, the arbitrator
 shall be selected, and the arbitration administered, by the AAA in accordance
 with its Construction Industry Arbitration Rules. A demand for arbitration
 shall be made in writing, delivered to the other party to this Agreement, and
 filed with the person or entity administering the arbitration. The party
 filing a notice of demand for arbitration must assert in the demand all
 claims then known to that party on which arbitration is demanded. The arbitration
 proceeding shall take place at an agreeable location in Des Moines, Iowa. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 9.3.1 A demand for arbitration shall be
 made no earlier than concurrently with the filing of a request for mediation,
 but in no event shall it be made after the date when the institution of legal
 or equitable proceedings based on the claim would be barred by the applicable
 statute of limitations. For statute of limitations purposes, receipt of a
 written demand for arbitration by the person or entity administering the
 arbitration shall constitute the institution of legal or equitable
 proceedings based on the claim. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 9.3.2 The award rendered by the arbitrator
 shall be final, and judgment may be entered upon it in accordance with
 applicable law in any court having jurisdiction thereof. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 9.3.3 The foregoing agreement to arbitrate
 shall be specifically enforceable under applicable law in any court having
 jurisdiction thereof. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 9.4

 	
 DUTY TO CONTINUE PERFORMANCE 

 
	
  

 	
 Project
 Manager shall continue to perform the Work and Owner shall continue to
 satisfy its payment obligations to Project Manager pending the final
 resolution of any dispute or disagreement between Project Manager and Owner. 

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE 10  TERMINATION OR SUSPENSION

 
	
  

 	
  

 	
  

 	
  

 
	
 § 10.1

 	
 OWNER TERMINATION 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 10.1.1

 	
 FOR CONVENIENCE 

 
	
  

 	
  

 	
 Owner may
 terminate this Agreement upon not less than seven days’ written notice to
 Project Manager for Owner’s convenience and without cause. In such case,
 Owner shall pay to Project Manager an amount equal to the Cost of the Work
 incurred by Project Manager to the date of termination, including a pro rata
 portion of Project Manager’s Fee, minus the aggregate of previous payments
 made by Owner. Owner shall also pay Project Manager fair compensation, either
 by purchase or rental at the election of Owner, for any equipment owned by
 Project Manager which Owner elects to retain and which is not otherwise
 included in the Cost of the Work, provided that the aggregate amount payable
 by Owner under this Agreement shall not exceed the Guaranteed Maximum Price.
 To the extent that Owner elects to take legal assignment of subcontracts and
 purchase orders (including rental agreements), Project Manager shall, as a
 condition of receiving the payments referred to in this Article 10, execute
 and deliver all such papers and take all such steps, including the legal
 assignment of such subcontracts and other contractual rights of Project
 Manager, as Owner may require for the purpose of fully vesting in Owner the
 rights and benefits of Project Manager under such subcontracts or purchase
 orders. If Owner accepts assignment of subcontracts, purchase orders or
 rental agreements, Owner will reimburse or indemnify Project Manager for all
 costs previously paid by Project Manager under the subcontract, purchase
 order or rental agreement, if those costs would have been reimbursable as
 Cost of the Work if this Agreement had not been terminated. 

 

Page
28 of 34

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 If Owner
 chooses not to accept assignment of any subcontract, purchase order or rental
 agreement that would have constituted a Cost of the Work had this Agreement
 not been terminated, Project Manager will terminate the subcontract, purchase
 order or rental agreement, and Owner will pay Project Manager the costs
 necessarily incurred by Project Manager because of such termination. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 10.1.2

 	
 FOR CAUSE 

 
	
  

 	
  

 	
 Owner may
 terminate this Agreement upon not less than seven days’ written notice to
 Project Manager if Project Manager breaches any provision of the Contract
 Documents, defaults in the performance of the Work, fails to provide a
 sufficient number of skilled workers, fails to supply the materials required
 by the Contract Documents, fails to timely pay design consultants or
 Subcontractors or fails to perform the Work with promptness and diligence to
 ensure the Work is completed by the date of Final Completion. Such
 termination shall be without prejudice to any other remedy of Owner. In
 addition to all other remedies, Owner may take possession of the Project site
 and all materials, equipment and documents, and proceed to finish the Work by
 whatever reasonable method Owner deems advisable. Project Manager shall not
 be entitled to receive any further payments under the Contract Documents
 until the Work is finally completed in accordance with the Contract
 Documents. If Owner’s cost and expense of completing the Work exceeds the
 unpaid balance of the Cost of the Work, then Project Manager shall be
 obligated to promptly pay the difference to Owner. However, if Owner’s cost
 and expense of completing the Work is equal to or less than the unpaid
 balance of the Cost of the Work, Owner shall promptly pay Project Manager any
 amounts remaining unpaid that were accrued prior to the termination, without
 regard for Project Manager’s Fee. Owner’s 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 Project
 Manager’s default. 

 

	
  

 	
  

 	
  

 	
  

 
	
 § 10.2

 	
 PROJECT MANAGER TERMINATION 

 
	
  

 	
 Unless such
 event is cured within ten (10) days from Owner’s receipt of Project Manager’s
 written notice, Project Manager may terminate this Agreement and recover from
 Owner payment as described in Section 10.1.1, plus any costs actually
 incurred due to such termination and damages, if the Work is stopped for a
 period of 45 consecutive days through no act or fault of Project Manager or a
 Subcontractor, sub-Subcontractor or their agents or employees or any other
 persons or entities performing portions of the Work under direct or indirect
 contract with Project Manager, due to any of the following: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Issuance of
 an order of a court or other public authority having jurisdiction that
 requires all Work to be stopped for 45 consecutive days; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 An act of
 government, such as a declaration of national emergency that requires all
 Work to be stopped; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Because
 Owner has not issued a payment and has not notified Project Manager of the
 reason for withholding payment beyond the time stated in the Contract
 Documents; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 repeated
 suspensions, delays or interruptions of the entire Work by Owner constitute
 in the aggregate more than 75 percent of the total number of days scheduled
 for completion, or 120 days in any 365-day period, whichever is less; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Because
 Owner has repeatedly failed to fulfill Owner’s obligations under the Contract
 Documents with respect to matters necessary to the progress of the Work. 

 

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 § 10.3

 	
 SUSPENSION 

 
	
  

 	
 Project
 Manager may stop work for Owner’s failure to pay amounts properly due under
 Project Manager’s Application for Payment if, after providing written notice
 to Owner that Project Manager will stop work unless such event is cured
 within ten (10) days from Owner’s receipt of Project Manager’s notice, Owner
 fails to cure or reasonably commence to cure such problem and thereafter
 diligently pursue such cure to completion. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 10.4

 	
 BANKRUPTCY 

 
	
  

 	
 If either
 Owner or Project Manager 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, 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 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. 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. Such rights and remedies shall not 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
 Project Manager to stop Work under any applicable provision of this
 Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE 11  MISCELLANEOUS PROVISIONS

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.1

 	
 REPRESENTATIONS AND WARRANTIES 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 11.1.1

 	
 Each of
 Project Manager 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 and to perform its obligations and consummate the transactions
 contemplated under the Contract Documents; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (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 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (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. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 11.1.2

 	
 Project
 Manager further represents that it has the necessary financial resources to
 fulfill its obligations under this Agreement and that all Work, including all
 materials and equipment 

 

Page
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 furnished as
 part of the construction, shall be new unless otherwise approved by Owner in
 writing, of good quality, in conformance with the Contract Documents and all
 legal requirements, and free of defects in materials and workmanship. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.2

 	
 GOVERNING LAW 

 
	
  

 	
 The
 Agreement shall be governed by the laws of the State of Iowa except that the
 Federal Arbitration Act shall govern any arbitration. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.3

 	
 ASSIGNMENT 

 
	
  

 	
 Owner and
 Project Manager, respectively, bind themselves and their agents, successors,
 assigns and legal representatives to this Agreement. Neither Owner nor
 Project Manager shall assign this Agreement without the written consent of
 the other, except that Owner may assign this Agreement to a lender providing
 financing for the Project if the lender agrees to assume Owner’s rights and
 obligations under this Agreement. If either party attempts to make an
 assignment without consent required above, that party shall remain legally
 responsible for all of its obligations under this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.4

 	
 SCOPE 

 
	
  

 	
 The Contract
 Documents represent the entire and integrated agreement between Owner and
 Project Manager and supersede all prior negotiations, representations or
 agreements, either written or oral, provided the separate Agreement for
 Pre-Construction Phase responsibilities entitled “Phase 1 Engineering
 Services-Scope Definition,” shall govern services provided under that
 Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.5

 	
 AMENDMENTS 

 
	
  

 	
 This
 Agreement may be amended only by written instrument signed by both parties. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.6

 	
 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 in the preamble.
 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, (iii) by facsimile, by the time stated
 in a machine-generated confirmation that notice was received at the facsimile
 number of the intended recipient, or (iv) by electronic mail, on the earlier
 of actual receipt or one (1) business day after it is sent. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.7

 	
 THIRD-PARTY BENEFICIARIES 

 
	
  

 	
 Except as
 expressly provided herein, this Agreement is intended to be solely for the
 benefit of Owner, Project Manager and permitted assigns, and is not intended
 to and shall not confer any rights or benefits on any person not a signatory
 hereto. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.8

 	
 NON-DISCLOSURE OBLIGATION 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Except as
 required by court order, subpoena, or applicable law (including, without
 limitation, either party’s disclosure obligations under federal or state
 securities laws), or as permitted under subpart (b), the parties: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 will hold in
 confidence, and will use only for the purposes of completing the Project, any
 and all Confidential Information disclosed to each other. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 shall not
 disclose to third parties any Confidential Information without the express
 written consent of the other party, which consent shall not be unreasonably
 withheld. 

 

Page
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 (iii)

 	
 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. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 The parties
 may disclose Confidential Information to their respective lenders, agents,
 and/or consultants, including without limitation the Independent Engineer,
 only as reasonably necessary in connection with the financing of the Project
 or to enable them to advise the parties with regard to the Contract Documents
 and the Project or as specifically provided in this Agreement, provided that
 the party to whom Confidential Information is to be disclosed first agrees to
 be obligated to maintain the confidentiality of any information received. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 The term
 “Confidential Information” means (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. Confidential
 Information does not include information that falls into any of the following
 categories: information that, at the time of disclosure hereunder, is in the
 public domain; information that enters the public domain other than by breach
 of this Agreement or the obligation of confidentiality; 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; information obtained by the recipient from a third party
 having an independent right to disclose this information; and information
 that is available through discovery by independent research without use of or
 access to the Confidential Information acquired from the other party. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.9

 	
 PUBLICITY AND ADVERTISING 

 
	
  

 	
 Project
 Manager 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 Owner, unless prior written
 consent is obtained from Owner. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.10

 	
 COUNTERPARTS 

 
	
  

 	
 This
 Agreement may be executed in 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. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.11

 	
 SURVIVAL 

 
	
  

 	
 The
 representations, warranties and covenants set forth herein including without
 limitation the Warranties under Section 2.9 and the Performance Guarantee
 under Section 2.13 of this Agreement, shall survive (in full force and
 effect) the expiration or termination of this Agreement and shall continue to
 apply after termination of this Agreement or the transfer of a party’s
 interest in this Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.12

 	
 COOPERATION WITH OWNER’S LENDER AND INDEPENDENT ENGINEER. 

 
	
  

 	
 § 11.12.1

 	
 In
 connection with any financing of the Project, Project Manager shall, if
 requested by Owner: (1) deliver to the Owner’s Lender certified copies of its
 corporate charter and bylaws, resolutions, incumbency certificates, legal
 opinions (covering such items as the validity and enforceability of the
 Contract Documents and the due organization and existence of Project
 Manager), a consent to receive service of process in Iowa, and such other
 items as Owner’s Lender may reasonably request, and (2) fulfill all
 obligations and comply with all procedures, and require its Subcontractors,
 vendors and suppliers to fulfill all obligations and comply with 

 

Page
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 all
 procedures that may result from Owner’s financing arrangements, by providing
 all information reasonably requested by Owner’s Lender. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 11.12.2

 	
 Project
 Manager agrees that upon notice that Owner has assigned its rights under the
 Contract Documents to Owner’s Lender as security for its obligations to
 Owner’s Lender: Project Manager shall deliver to Owner’s Lender all notices
 given under the Contract Documents to Owner at the same time and in the same
 manner as given to Owner; Owner’s Lender shall be entitled to exercise all
 rights and to cure any defaults of Owner under the Contract Documents and
 Project Manager shall accept such exercise or cure as though it had been done
 by Owner; Project Manager shall not make any demands under the Contract
 Documents on account of any default by Owner without giving prior written
 notice to Owner’s Lender and providing Owner’s Lender an opportunity to cure
 such default; and Project Manager shall execute such further agreements or
 documents reasonably requested by Owner’s Lender providing assurances and
 other protections to Owner’s Lender in furtherance of the provisions set
 forth above in connection with the financing of the Work. Project Manager
 further agrees that if Owner’s Lender succeeds to the interests of Owner in
 foreclosure or otherwise, Project Manager shall continue to perform in a
 timely manner all of its obligations under the Contract Documents and shall
 recognize Owner’s Lender or any substitute entity with sufficient financial
 and other resources to perform Owner’s obligations hereunder nominated by
 Owner’s Lender in the place of Owner. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 11.12.3

 	
 Project
 Manager and Owner acknowledge that the Owner’s Lender, as a condition to
 providing financing for the Plant, shall require Owner to provide the
 Independent Engineer with certain participation and review rights with
 respect to Project Manager’s performance of the Work. Project Manager acknowledges
 and agrees that such participation and review rights shall consist of the
 right to (i) enter the Plant and inspect the Work upon reasonable notice to
 Project Manager; (ii) attend all start-up and testing procedures; and (iii)
 review and approve such other items for which Owner is required by Owner’s
 Lender to obtain the concurrence, opinion or a certificate of the Independent
 Engineer or the Owner’s Lender pursuant to the Financing Documents which
 items do not materially alter the rights or obligations of Project Manager
 (collectively, the “Oversight Items”). Project Manager agrees to provide
 information reasonably requested by Independent Engineer regarding the
 performance of the Work. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 11.12.4

 	
 Notwithstanding
 anything to the contrary contained in Section 11.12.3, all the rights of the
 Independent Engineer with respect to the Oversight Items derive from the
 corresponding rights of Owner under the Contract Documents, and as such,
 neither increase Owner’s rights hereunder nor increase Project Manager’s
 obligations hereunder. The exercise of any such rights by Independent
 Engineer shall be completed within the same time periods as are set forth in
 the Contract Documents for the exercise of the corresponding rights by Owner
 and Owner shall be solely responsible for obtaining any review, inspection or
 approval from Independent Engineer as required by Owner’s Lender. Should
 Owner fail to provide any required response to Project Manager within the
 time periods set forth in the Contract Documents due to the action or
 inaction of the Independent Engineer, such failure shall have the same effect
 under the Contract Documents as if such failure had been caused by the action
 or inaction of Owner. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 11.12.5

 	
 For purposes
 hereof, Project Manager may rely solely upon Owner and shall have no duty to
 inquire as to whether or not the Independent Engineer has exercised its
 rights with respect to the Oversight Items or has provided Owner with any
 approval Owner may be required by Owner’s Lender to obtain from the
 Independent Engineer. 

 

Page
33 of 34

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 § 11.12.6

 	
 Owner’s
 Lender shall be a third-party beneficiary of the Performance Guarantee
 described in Section 2.13 and the Warranties described in Section 2.9, with
 the right to enforce the Performance Guarantee Criteria and Warranties
 whether or not Owner is in default of its obligations to Owner’s Lender or
 Owner’s Lender exercises its right to assume Owner’s rights under this
 Agreement. 

 
	
  

 	
  

 	
  

 	
  

 
	
 § 11.13

 	
 CLOSING AND FINANCING CONTINGENCY. Owner and
 Project Manager agree that this Agreement is subject to Owner (a) closing on
 the purchase of the Plant; and (b) receiving a complete full funding
 commitment within 45 days of the signing of this Agreement. If Owner does not
 close on the purchase of the Plant, or if a full funding commitment is not
 received within 45 days of the signing of this Agreement, the terms and
 conditions of this Agreement terminate. 

 

This Agreement is entered into and executed by the parties as of the
Effective Date. 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 PROJECT MANAGER:

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Ball
 Industrial Services, LLC

 	
  

 	
 Ball
 Construction Services, LLC

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 /s/ James D.
 Hagberg

 	
  

 	
 /s/ Robert
 E. Sodders

 
	
 Signature

 	
  

 	
 Signature

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Print Name: 

 	
 JAMES D.
 HAGBERG

 	
  

 	
 Print Name:

 	
    Robert
 E. Sodders

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Title: 

 	
 VICE
 PRESIDENT

 	
  

 	
 Title:

 	
    President

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 OWNER:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Soy Energy,
 LLC

 	
  

 	
  

 	
  

 
	
  

 	
 8-11-10

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
           /s/
 Charles Sand

 	
  

 	
  

 	
  

 
	
 Signature

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Print Name:

 	
    Charles
 Sand

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Title:

 	
    Chairman

 	
  

 	
  

 	
  

 

Page 34 of 34EXHIBIT 10.6 TO SOY ENERGY, LLC FORM 10-Q FOR THE QUARTER ENDED JULY 31, 2010

Exhibit 10.6

	
  

 	
  

 	
  

 
	
  

 
	
  

 
	
  

 
	
  

 
	
  

 
	
  

 
	
  

 
	
  

 
	
  

 
	
 RPMG 

 
	
 RPMG, Inc.

 
	
  

 
	
  

 
	
  

 
	
  

 
	
  

 
	
  

 
	
  

 
	
  

 
	
 NON-POOLED

 
	
 BIODIESEL

 
	
 MARKETING
 AGREEMENT WITH 

 
	
 SOY
 ENERGY, LLC

 
	
  

 	
  

 	
  

 
	
  

 
	

 
	

 
	
  

 
	
  

 
	
  

 
	
  

 
	
  

 
	
  

 

***PORTIONS OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SEC.

Page 1 of 13

BIODIESEL MARKETING AGREEMENT

          THIS
BIODIESEL MARKETING AGREEMENT (this “Agreement”) is entered into this 12th day of August, 2010 (the
“Effective Date”), by and between RPMG, INC., a Minnesota corporation,
hereinafter referred to as “RPMG”; and Soy Energy, LLC, an Iowa limited
liability company, hereinafter referred to as “PRODUCER.” 

          WITNESSETH:

          WHEREAS, RPMG is a corporation engaged in the
business of marketing renewable fuels and co-products; and, 

          WHEREAS, PRODUCER is negotiating the purchase of a
biodiesel production facility in Mason City, Iowa (the “Facility”); and, 

          WHEREAS, the parties have agreed that, for the term
of this Agreement, the sale and marketing of all of the biodiesel produced by
PRODUCER at the Facility should be undertaken by RPMG on the terms and
conditions provided in this Agreement. 

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

          1.          Commencement. The parties acknowledge that PRODUCER
presently is negotiating the purchase of the Facility, and that if such
purchase is successfully completed, PRODUCER intends to construct certain
improvements to the Facility before beginning biodiesel production at the
Facility. If PRODUCER completes said purchase and construction improvements, it
will thereafter begin producing biodiesel at the Facility that will be subject
to the terms of this Agreement on and after the date of such production (the
“Commencement Date”). In the event that the Commencement Date has not occurred
on or before July 15, 2011, either party shall have the option to terminate
this Agreement by giving the other party twenty-one (21) days’ written notice
of such termination, and this Agreement shall be of no further force or effect
after delivery of such termination notice. 

          2.          Marketing Representative. Subject to the terms and conditions of this
Agreement, and except as provided in this Section 2, RPMG shall be the sole
marketing representative for the entire biodiesel production of PRODUCER at the
Facility. RPMG shall use commercially reasonable efforts to market and sell all
biodiesel produced at the Facility and delivered by PRODUCER to RPMG pursuant
to the terms of this Agreement. Notwithstanding the foregoing, RPMG agrees that
PRODUCER may enter into other agreements with suppliers of corn oil or other
feedstock pursuant to which PRODUCER will produce biodiesel from the feedstock
supplied by such supplier and sell the biodiesel produced from the feedstock
supplied by such supplier as directed by such supplier (each a “Tolling
Agreement”). The parties agree that any biodiesel produced pursuant to a
Tolling Agreement shall be excluded from and shall not be subject to the terms
of this Agreement. 

          3.          Biodiesel Specifications. The Facility has a full production capacity
of approximately 30 million gallons of biodiesel per year. The parties
acknowledge that PRODUCER will not be producing biodiesel at full production
capacity of the Facility at the Commencement Date, that PRODUCER anticipates
increasing biodiesel production following the Commencement Date, and that
PRODUCER is not making any representation or warranty as to when, if ever, it
will produce biodiesel at the full production capacity. All of the biodiesel
produced by PRODUCER at the Facility and marketed by RPMG hereunder will, when
delivered to a common carrier by PRODUCER in the manner provided by 

Page 2 of 13

Section
4 below, be 100% biodiesel (i.e., B100) satisfying ASTM D6571 specifications.
The parties acknowledge that the Facility is anticipated to commence biodiesel
production by July 15, 2011, and that PRODUCER will make commercially
reasonable efforts to begin production by that time; however, the parties
acknowledge and agree that PRODUCER is not making any representations or
warranties regarding the date of commencement of biodiesel production at the
Facility. PRODUCER promptly shall advise RPMG of any change in the anticipated
date of commencement of production. 

         4.          Loading. The Facility shall include commercially reasonable railcar and tank
truck access of a size and design recognized as appropriate in the biodiesel
industry to handle production of approximately 30 million gallons of biodiesel
per year. Such railcar and tank truck loading facilities shall be in compliance
with all applicable industry and governmental safety standards and shall be
capable of delivering a minimum of 250 gallons of biodiesel per minute to
railcars and trucks combined. In addition, the Facility shall have sufficient
biodiesel storage capacity for not less than 12 days average biodiesel
production. RPMG shall schedule the loading and shipping of all outbound
biodiesel purchased hereunder. All labor and equipment necessary to load trucks
and rail cars and other associated loading costs shall be supplied and borne by
PRODUCER without charge to RPMG. PRODUCER shall handle the biodiesel in a good
and workmanlike manner in accordance with the commercially-reasonable written
requirements of RPMG and normal industry practice. PRODUCER shall visually
inspect all trucks and rail cars to assure, to the extent commercially
practical, (i) cleanliness so as to avoid contamination of the biodiesel, and
(ii) that such trucks and railcars are in a condition suitable for transporting
the biodiesel. RPMG and RPMG’s agents shall be given commercially reasonable
access to the Facility in accordance with the terms set forth in Exhibit A,
which may be amended by mutual agreement of the parties in writing, from time
to time. RPMG’s employees and RPMG’s agents shall comply with all reasonable
safety rules and procedures promulgated by PRODUCER and provided to RPMG
reasonably in advance and in writing, and shall comply with all applicable
requirements of any governmental authority, including all applicable laws and
regulations. PRODUCER shall supply to RPMG or its agents product description
tags, certificates of analysis, bills of lading and/or material safety data
sheets that are applicable to all biodiesel shipments. In the event that
PRODUCER fails to provide the labor, equipment and facilities it is obligated
to provide hereunder that are necessary to meet the loading schedule that is
applicable hereunder, PRODUCER shall be responsible for all costs and expenses,
including without limitation, actual demurrage and wait time incurred by RPMG
resulting from or arising in connection with PRODUCER’s failure to do so.
Notwithstanding any provision to the contrary herein, PRODUCER shall be solely
responsible for any damage to any trucks, railcars, equipment, or vessels
caused by acts or omissions of PRODUCER and its consignees. 

         5.          Risk of Loss. RPMG will be responsible for and shall bear
the risk of loss of all biodiesel marketed for PRODUCER by RPMG from the time
the biodiesel crosses the loading flange at the Facility and the common carrier
or customer accepts for loading the biodiesel at the Facility in either a
railcar, tank truck or other transport vehicle. Delivery of such biodiesel by
PRODUCER to RPMG, for purposes of this Agreement, shall be made at the time the
product crosses the loading flange at the Facility. 

         6.          Specific Marketing Tasks. RPMG shall be responsible for the
marketing, sale and delivery of all the biodiesel production from the Facility
for which RPMG is responsible under Section 2 hereof during the term of this
Agreement, including, but not limited to: 

	
  

 	
  

 	
  

 
	
  

 	
 §

 	
 Scheduling sufficient railcar,
 tank trucks and other transport; 

 
	
  

 	
§

 	
 Negotiating
 the rates and tariffs to be charged for delivery of such biodiesel production
 to the customer(s); 

 
	
  

 	
 §

 	
 Promoting and advertising
 the sale of such biodiesel;

 
	
  

 	
 §

 	
 Tracking delivery; 

 

Page 3 of 13

	
  

 	
  

 	
  

 
	
  

 	
 §

 	
 Negotiating
 all biodiesel purchase agreements with customers; monitoring compliance
 therewith; and any addressing any complaints in connection therewith to the
 satisfaction of PRODUCER, RPMG and the customer as applicable;

 
	
  

 	
§

 	
 Providing
 invoicing and accounts receivable management for sales of such biodiesel; and
 

 
	
  

 	
 §

 	
 Accounting
 for all sales and related expenses and collection of accounts, including any
 legal procedures as may be necessary in connection therewith. 

 

         7.          Negotiation of Biodiesel Price. RPMG will use commercially reasonable
efforts to obtain the best price for all biodiesel sold by it under the terms
of this Agreement, but shall have complete discretion to fix the price, terms
and conditions of the sale as long as the same are in accordance with this
Agreement. RPMG shall communicate with PRODUCER the terms and conditions of
sales of PRODUCER’s biodiesel, including, without limitation, meeting
periodically with PRODUCER to discuss pricing and other terms and conditions of
sale. 

         8.          Marketing Fee. PRODUCER shall pay to RPMG a monthly
marketing fee (the “Marketing Fee”) equal to ***. 

         9.          Product Payment. RPMG monthly will calculate the estimated
gross price for biodiesel produced at the Facility for which RPMG is
responsible under this Agreement to be shipped for the succeeding month less
the estimated distribution expense applicable to said biodiesel divided by the
estimated gallons of biodiesel to be shipped for the succeeding month (the “Net
Sales Price Per Gallon”). RPMG on a weekly basis will pay 90% of the Net Sales
Price Per Gallon multiplied by the number of gallons of biodiesel delivered by
PRODUCER to RPMG for the period, on an average net 10-day basis (e.g. payment
on Wednesday shall be for biodiesel delivered during the seven-day period
ending on the previous Wednesday). The remaining balance owed, if any, based on
actual gross sales less actual distribution expense and less the Marketing Fee
shall be paid within 15 days after the end of each month. Distribution expense
means the actual out-of pocket costs for expenditure obligations to third
parties incurred by RPMG in marketing PRODUCER’s biodiesel production,
including but not limited to transportation costs, rail car costs, rail car
utilization, rail tariff rate charges, truck freight charges, demurrage,
terminal lease, terminal throughput, terminal shrinkage, insurance, accounting,
legal, taxes, bonding, letters of credit, brokerage, testing, licenses and
fees, ETS expense, miscellaneous netback expenses and other expenses and
working capital costs directly related to sale of PRODUCER’s product, hedging
costs and other distribution costs directly incurred in connection with
marketing PRODUCER’s product. Payment shall be accompanied by a detailed
reconciliation of the sales price, distribution expense and Marketing Fee. 

         10.        Audit. PRODUCER shall have the right to inspect the books and records of
RPMG for the purpose of auditing calculations of the payment to PRODUCER for
the preceding year. Within ninety (90) days following the end of RPMG’s fiscal
year end, PRODUCER shall give written notice to RPMG of its desire to conduct
an audit and RPMG shall provide reasonable access to all financial information
necessary to complete such audit. The audit shall be conducted by an accounting
firm agreeable to both parties and shall be completed within 60 days after the
completion of RPMG’s annual audit by its independent auditors, but no later
than 150 days following RPMG’s fiscal year end, except that if RPMG has not
completed its independent audit within 90 days after the end of its fiscal
year, RPMG and PRODUCER shall agree on a reasonable extension of time for
PRODUCER to complete its audit. PRODUCER is hereby authorized to provide to its
lenders the audit report completed for Producer pursuant to this Section. The
cost of the audit shall be the responsibility of PRODUCER unless the auditor
determines that RPMG underpaid PRODUCER by more than three percent (3%) for the
period audited, in which case RPMG shall pay the cost of the audit. If the
auditor determines that RPMG underpaid PRODUCER by any amount for the period
audited, RPMG shall promptly pay the amount of 

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

Page 4 of 13

such
underpayment to PRODUCER, and if the auditor determines that RPMG overpaid
PRODUCER by any amount, PRODUCER shall promptly pay the amount of such
overpayment to RPMG. The determination of the auditor shall be final and
binding on both parties. If PRODUCER fails to exercise its right to audit as
provided in this Section 10 for any year, it shall be deemed to have waived any
claim to dispute the payments, provided that in the event PRODUCER’s lender is
in possession of the Facility within 180 days after the completion of RPMG’s
annual audit by its independent auditors, then such lender shall have the right
to conduct an audit pursuant to this Section 10 even if PRODUCER has not
previously elected to exercise its right to audit as provided in this Section
10 for such year. 

          11.          Estimated 12-Month Volume. At least 120 days prior to the then most
current estimated date for commencement of biodiesel production at the
Facility, PRODUCER will provide RPMG with PRODUCER’s best estimate of its
anticipated monthly biodiesel production for the twelve (12) months beginning
on the estimated date of commencement of biodiesel production. RPMG
acknowledges that PRODUCER intends to ramp up production after the Commencement
Date, and that monthly production may vary significantly during such ramp-up
period, and may vary at other times. On or before the first day of each month
thereafter, PRODUCER will provide RPMG an updated estimate of PRODUCER’s
anticipated monthly biodiesel production for the rolling next twelve (12)
months, so that RPMG will at all times during this Agreement have current
biodiesel production estimates from PRODUCER for the next rolling twelve (12)
months. RPMG shall be entitled to rely upon such estimates in marketing and
selling the PRODUCER’s biodiesel production, provided that RPMG shall be
obligated to perform its obligations hereunder regardless of the variances in
actual production from estimated production. 

          12.          Option of RPMG to Limit Total Sales Position. RPMG reserves the right, upon delivery of
written notice to PRODUCER, to limit RPMG’s biodiesel marketing efforts with
respect to the biodiesel production of PRODUCER at the Facility to the rolling
next six (6) months of production from the date of PRODUCER’s receipt of such
notice, or, in the case of biodiesel to be marketed on a flat-price basis, the
rolling next three (3) months of production from the date of PRODUCER’s receipt
of such notice. 

          13.          Biodiesel Shortage/Open Market Purchase. If PRODUCER is unable to deliver its
estimated monthly biodiesel production and if as a consequence of the
non-delivery and in order to meet its sale obligation to third parties, RPMG is
required to purchase biodiesel, RPMG may purchase biodiesel in the marketplace
to meet its delivery obligations on such terms and conditions as it deems
appropriate in its sole discretion, provided that RPMG shall utilize
commercially reasonable efforts to make any such open market purchases at the
lowest available price. If RPMG as a result thereof incurs a financial loss,
PRODUCER will reimburse RPMG for any such loss net of any gains. For purposes
of this Section 13, the terms “loss” and “gain” shall be calculated as the
difference between the aggregate price to be received by RPMG under its sale
obligations to third parties and the aggregate cost of RPMG’s open market
purchases. 

          14.          Rail Car Leases. PRODUCER will lease approximately 12 railcars
to be used by PRODUCER based on the anticipated production of the Facility, and
all lease costs and demurrage will be the responsibility of PRODUCER. Upon
PRODUCER’s request, RPMG shall assist PRODUCER with obtaining contacts at rail
car leasing companies. 

          15.          No “Take or Pay”. The parties agree that this is not a “take
or pay contract” and that RPMG’s obligations are limited to biodiesel passing
custody to a common carrier or customer at PRODUCER’s Facility or delivered to
RPMG in the manner provided in Section 5 above. 

          16.          Term; Termination. The initial term of this Agreement shall
commence on the Effective Date and subject to Section 1 hereof, continue for a
period of *** from the first day of the month in which 

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

Page 5 of 13

PRODUCER
initially delivers biodiesel produced at the Facility to RPMG for shipment as
provided in Section 4 above (the “Initial Term”). This Agreement shall
thereafter automatically renew for successive *** year terms (each a “Renewable
Term”) following the end of the Initial Term unless either party gives written
notice of non-renewal to the other party not less than one hundred eighty (180)
days before the end of the then current Initial Term or any Renewal Term.
Notwithstanding the foregoing, either party may terminate this Agreement upon
written notice to the other party if the other party breaches this Agreement
and fails to cure the breach within thirty (30) days after receipt of written
notice of such breach or if the other party becomes insolvent, files or has
filed against it a petition in bankruptcy that is not dismissed within thirty
(30) days, or has a receiver appointed over its assets. This Agreement may also
be terminated by mutual written agreement of the parties or as provided in
Section 1 hereof. Upon termination of this Agreement, the parties shall be
obligated to pay any and all payments due to the other party through the date
of termination and to satisfy any continuing obligations provided by Section 19
below, but shall otherwise have no further obligation to each other under this
Agreement. 

          17.          Force Majeure. In the event either party is unable by
Force Majeure to carry out its obligations under this Agreement, it is agreed
that on such party’s giving notice in writing, or by telephone and confirmed in
writing, to the other party as soon as possible after the commencement of such
Force Majeure event, the obligations of the party giving such notice, so far as
and to the extent they are affected by such Force Majeure, shall be suspended
from the date of commencement of such Force Majeure and through the remaining
period of such Force Majeure, but for no longer period, and such Force Majeure
shall so far as possible be remedied with all reasonable dispatch; provided,
however, a party’s obligation to make payments of any amounts due and payable
to the other party under this Agreement then accrued hereunder prior to the
occurrence of such Force Majeure shall not be suspended and PRODUCER shall
remain obligated for any loss or expense to the extent provided in Sections 11
and 13. The term “Force Majeure” as used in this Agreement shall mean: riots or
civil disturbances; interference by civil or military authorities; wars, or
acts of other public enemy or acts of terrorism; earthquakes, storms, floods,
or other acts of God; compliance with federal, state or local laws, rules or
regulations, acts, orders, or directives, of any official or agency of federal,
state or local governments; disruptions, breakdowns or accidents to
transportation equipment or facilities; prorationing by transporters;
embargoes, expropriation or condemnation by government or governmental
authorities; and any other cause which is not reasonably within the control of
the party claiming suspension. 

          18.          Licenses and Permits; Records. PRODUCER and RPMG at all times shall have
and maintain all of the licenses and permits necessary to operate the Facility
and perform their obligations hereunder. PRODUCER and RPMG shall comply with
all applicable laws, regulations, rules and requirements of governmental
authorities, including but not limited to, the Renewable Fuels Standard RINS
reporting requirements. In addition, PRODUCER shall establish record-keeping
and reporting systems compatible with RPMG’s load out reporting systems,
currently ETS and AccuLoad III. RPMG shall maintain all necessary
record-keeping and reporting systems to meet its obligations hereunder,
including, without limitation, such systems as are necessary for RPMG to
satisfy its marketing duties under Section 6; to properly calculate payments
and fees due under Sections 8 and 9; and to complete the audit activities
referenced in Section 10. 

          19.          Obligation to Deliver After Termination. If this Agreement is terminated in
accordance with Section 16 hereof, PRODUCER shall be obligated to deliver to
RPMG for marketing in accordance with this Agreement sufficient biodiesel to
cover all gallons of PRODUCER’s biodiesel which RPMG has committed for sale to
customers at the time of termination, and the parties, in the course of such
marketing with respect to committed sales made prior to delivery of the
termination notice, shall be obligated to perform their obligations under this
Agreement with respect to such biodiesel. 

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

Page 6 of 13

          20.          Good and Marketable Title. PRODUCER represents that it will have good
and marketable title to all of the biodiesel marketed for it by RPMG at the
time of delivery to RPMG and that said biodiesel will be free and clear of all
liens and encumbrances, provided that this Section shall not be applicable to
any open market purchases of biodiesel made by RPMG under Section 13 hereof. 

          21.          Independent Contractor. Nothing contained in this Agreement will be
interpreted to make either party the agent of the other for any purpose
whatsoever. Without limiting the foregoing, RPMG and its employees shall be
deemed to be independent contractors, with full control over the manner and
method of performance of the services they will be providing on behalf of
PRODUCER under this Agreement. 

          22.          Samples. PRODUCER will take and retain for a minimum of 90 days at least one
sample of biodiesel per Batch. A “Batch” is defined as any time new biodiesel
product is introduced into PRODUCER’s finished product tank. At the reasonable
request of RPMG, PRODUCER agrees to provide RPMG with samples of its biodiesel
produced at the Facility so that RPMG may test such biodiesel for product
quality on a regular basis. RPMG shall provide PRODUCER with copies of any
testing results received by RPMG. 

          23.          Insurance. During the entire term of this Agreement, PRODUCER will maintain
insurance coverage that is standard, in the reasonable opinion of RPMG, for a
company of its type and size that is engaged in the production and selling of
biodiesel. At a minimum, PRODUCER’s insurance coverage must include: 

	
  

 	
  

 	
  

 
	
  

 	
  (i)

 	
 Comprehensive general
 product and public liability insurance, with liability limits of at least $5
 million in the aggregate. 

 
	
  

 	
  

 	
  

 
	
  

 	
  (ii)

 	
 Property
 and casualty insurance adequately insuring its production facilities and its
 other assets against theft, damage and destruction on a replacement cost
 basis. 

 
	
  

 	
  

 	
  

 
	
  

 	
  (iii)

 	
 RPMG
 shall be added as an additional insured under the comprehensive general
 product and public liability insurance policy and the property and casualty
 insurance policy. 

 
	
  

 	
  

 	
  

 
	
  

 	
  (iv)

 	
 Workers’ compensation
 insurance to the extent required by law. 

 

                         PRODUCER
will not change its insurance coverage during the term of this Agreement,
except to increase it or enhance it, without the prior written consent of RPMG,
which consent will not be unreasonably withheld. 

          24.          Indemnifications and Hold Harmless – PRODUCER. If a third party makes a claim against RPMG
or any of its directors, officers, employees, agents or affiliates (“RPMG
Related Persons”) directly as the result of the actions or omissions of
PRODUCER or any of its directors, managers, officers, employees, agents or
affiliates (“PRODUCER Related Persons”), including, but not limited to, claims
relating to the quality of biodiesel produced by PRODUCER, then PRODUCER agrees
to indemnify RPMG and the RPMG Related Persons and to hold them harmless from
any liabilities, damages, costs and/or expenses, including costs of litigation
and reasonable attorneys fees, which RPMG or RPMG Related Persons incur as a
result of any such actions or omissions of PRODUCER or PRODUCER Related
Persons. 

          25.          Indemnifications and Hold Harmless – RPMG. If a third party makes a claim against
PRODUCER or any of its directors, managers, officers, employees agents or
affiliates (“PRODUCER Related Persons”) directly as the result of the actions
or omissions of RPMG or any of its directors, 

Page 7 of 13

managers,
officers, employees, agents or affiliates (“RPMG Related Persons”), then RPMG
agrees to indemnify and hold harmless PRODUCER and the PRODUCER Related Persons
from and against any liabilities, damages, costs and/or expenses, including
costs of litigation and reasonable attorneys fees, which PRODUCER OR PRODUCER
Related Persons incur as a result of any such actions or omissions of RPMG or
RPMG Related Person 

          26.          Setoff Rights. If PRODUCER defaults on any of its
obligations hereunder or with respect to any order made pursuant to this
Agreement or breaches this Agreement, then (i) PRODUCER shall be liable to the
extent specified in this Agreement for damages incurred by RPMG in connection
with such default or breach, and (ii) RPMG may, upon delivery of prior written
notice to PRODUCER, offset the amount of such damages against any amounts
otherwise payable by RPMG to PRODUCER. If RPMG defaults on any of its
obligations hereunder or with respect to any order made pursuant to this
Agreement or breaches this Agreement, then (i) RPMG shall be liable to the
extent specified in this Agreement for damages incurred by PRODUCER in
connection with such default or breach, and (ii) PRODUCER may, upon delivery of
prior written notice to RPMG, offset the amount of such damages against any
amounts otherwise payable by PRODUCER to RPMG. 

          27.          Recoupment of Overpayments. RPMG shall have the right to recoup the
amount of any overpayments made by RPMG to PRODUCER hereunder or with respect
to any order made pursuant to this Agreement during the preceding year. 

          28.          Survival of Terms/Dispute Resolution. All representations, warranties and
agreements made in connection with this Agreement will survive the termination
of this Agreement. The parties will, therefore, be able to pursue claims
related to those representations, warranties and agreements after the
termination of this Agreement, unless those claims are barred by the applicable
statute of limitations. Similarly, any claims that the parties have against
each other that arise out of actions or omissions that take place while this
Agreement is in effect will survive the termination of this Agreement. This
means that the parties may pursue those claims even after the termination of
this Agreement, unless applicable statutes of limitation bar those claims. The
parties agree that, should a dispute between them arise in connection with this
Agreement, the parties will, in good faith, attempt to mediate such dispute prior
to the filing of any action in any court. Such mediation shall occur at a place
that is mutually agreeable, and shall be conducted by a mediator to be selected
by mutual agreement of the parties. 

          29.          Choice of Law. The parties agree that this Agreement will
be governed by, interpreted under and enforced in accordance with Minnesota
law. 

          30.          Assignment. Neither party may assign its rights or obligations under this
Agreement without the written consent of the other party, which consent will
not be unreasonably withheld. Notwithstanding the foregoing, RPMG consents to
the assignment of this Agreement by PRODUCER to its lender in connection with
the PRODUCER’s securing of debt financing for the Facility. 

          31.          Entire Agreement Amendment. This Agreement constitutes the entire
agreement between the parties regarding the subject matter hereof. There are no
oral promises, conditions, representations, understandings, interpretations, or
terms of any kind (including as conditions or inducements to the execution
hereof in effect between the parties), except as expressed in this Agreement.
No amendment, change or addition shall be made to this Agreement except by a
written document signed by all parties hereto. 

          32.          Execution of Counterparts. This Agreement may be executed by the
parties in any number of separate counterparts, each of such counterparts being
deemed by the parties to be an original 

Page 8 of 13

instrument; and all of such counterparts,
taken together, shall be deemed to constitute one and the same instrument. 

          33.          Counterpart Includes Facsimile. The parties specifically agree and
acknowledge that a counterpart produced by virtue of a facsimile (“fax”) machine
or .pdf file shall be binding upon the parties. 

          34.          Binding Effect. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective heirs,
personal representatives, successors and assigns. 

          35.          Confidential Information. The parties acknowledge that they will be
exchanging information about their businesses under this Agreement which is
confidential and proprietary, and the parties agree to handle that confidential
and proprietary information in the manner described in this Section 34. 

          a.
          Definition of Confidential Information.
For purposes of this Agreement, the term “Confidential Information” means
information related to the business operations of PRODUCER or RPMG and
disclosed by one party (sometimes referred to herein as the “disclosing party”)
to the other party (sometimes referred to herein as the “receiving party”) that
meets all of the following criteria: 

	
  

 	
  

 
	
  

 	
 (i)          The
 information must not be generally known to the public, and must not be a part
 of the public domain. 

 
	
  

 	
  

 
	
  

 	
 (ii)         The
 information must belong to the party claiming it is confidential, and must be
 in that party’s possession. 

 
	
  

 	
  

 
	
  

 	
 (iii)        The
 information must have been protected and safeguarded by the party claiming it
 is confidential by measures that were reasonable under the circumstances
 before the information was disclosed to the other party.

 
	
  

 	
  

 
	
  

 	
 (iv)        Written
 information must be clearly designated in writing as “Confidential
 Information” by the party claiming it is confidential before it is disclosed
 to the other party, except that all information about costs and prices will
 always be considered Confidential Information under this Agreement, without
 the need for specifically designating it as such.

 
	
  

 	
  

 
	
  

 	
 (v)         Verbal
 Confidential Information which is disclosed to the other party must be
 summarized in writing, designated in writing as “Confidential Information,”
 and transmitted to the other party within ten (10) days of the verbal
 disclosure. 

 

          Notwithstanding
the foregoing, the term “Confidential Information” shall exclude, and the
obligations of this Section 34 shall not apply to, information which: 

	
  

 	
  

 
	
  

 	
               (i)          a
 receiving party can demonstrate was known to the receiving party at or prior
 to the time of disclosure by the disclosing party; 

 
	
  

 	
  

 
	
  

 	
               (ii)         is or becomes generally available to the
 public at or after the time of disclosure by the disclosing party other than
 through any act or omission of the receiving party;

 
	
  

 	
  

 
	
  

 	
               (iii)        is
 or was developed by the receiving party completely independent of any
 Confidential Information it received from the disclosing party; or 

 

Page 9 of 13

	
  

 	
  

 
	
  

 	
              (iv)          is
 or was received by the receiving party from a third party, that, to the
 knowledge of the receiving party, was free to make such disclosure without
 breach of any legal obligation to the disclosing party. 

 

          b.          Limitations on the Use of Confidential Information.
Each party agrees that it will not use any Confidential Information that it
obtains about the other party for any purpose, other than to perform its
obligations under this Agreement.  

          c.          The Duty not to Disclose Confidential Information.
Each party agrees that it will not disclose any Confidential Information about
the other party to any third person or organization, other than their
respective legal counsel and accountants who have a reasonable need to know
such Confidential Information, without first getting written consent to do so
from the other party. Notwithstanding the foregoing, if a receiving party or
anyone to whom such receiving party transmits Confidential Information in accordance
with this Section 34 is requested or required (by deposition, interrogatories,
requests for information or documents in legal proceedings, subpoenas, civil
investigative demand or similar process, SEC filings or administrative
proceedings) to disclose any Confidential Information, such receiving party
will give the disclosing party prompt written notice of such request or
requirement so that the disclosing party may seek an appropriate protective
order or other remedy and/or waive compliance with the provisions of this
Section 34, and the receiving party will cooperate with the disclosing party to
obtain such protective order. The fees and costs of obtaining such protective
order, including payment of reasonable attorney’s fees, shall be paid for by
the disclosing party. If such protective order or other remedy is not obtained
or the disclosing party waives compliance with this Section 34 of this
Agreement, the receiving party (or such other persons to whom such request is
directed) will furnish only that portion of the Confidential Information which,
in the opinion of legal counsel for the receiving party, is legally required to
be disclosed, and upon the disclosing party’s request, use commercially
reasonable efforts to obtain assurances that confidential treatment will be
accorded to such Confidential Information.  

          d.          The Duty to Notify the Other Party in Cases of
Improper Use or Disclosure. Each party agrees to immediately
notify the other party if it becomes aware of any improper use or any improper
disclosure of the Confidential Information of the other party at any time
during the term of this Agreement.  

          e.          Protection of the
Confidential Information.
Each party agrees to develop effective procedures for protecting the
Confidential Information that it obtains from the other party, and to implement
those procedures with the same degree of care that it uses in protecting its
own Confidential Information.  

          f.          Return of the Confidential
Information. Immediately
upon the termination of this Agreement, each party agrees to return to the
other party all of the other party’s Confidential Information (including copies
thereof) that is in its possession or under its control.  

          g.          Disclosure in SEC Filings. Notwithstanding any other provision
contained in this Agreement, RPMG acknowledges and agrees that the disclosure
of this Agreement and the transactions contemplated hereby by PRODUCER (i) on a
Form 8-K or other report filed with the Securities and Exchange Commission at
any time after the date hereof (including the filing of the text of this
Agreement with such report), or (ii) in a customary press release or on a
customary analyst call, will not be violation of this Section 34. Upon RPMG’s
request, PRODUCER will cooperate with any reasonable requests of RPMG to
request confidential treatment concerning sensitive/confidential items in
connection with the events described in (i) and (ii) above.  

Page 10 of 13

          h.           Survival. Notwithstanding any other provision of this
Agreement, the provisions of this Section 34 shall survive termination of this
Agreement and remain in effect for a period of five (5) years thereafter.  

          36.          Remedies Non-Exclusive. Except as otherwise expressly provided in
this Agreement, any remedy provided for in this Agreement shall be cumulative
and in addition to, and not in lieu of, any other remedy set forth herein or
any other remedy otherwise available at law or in equity. 

          37.          Notices. Any notice or other communication required or permitted hereunder
shall be in writing and shall be considered delivered in all respects when it
has been delivered by hand, mailed by U.S. mail postage prepaid, sent by
facsimile with delivery confirmed, or one day after transmission via electronic
mail, addressed as follows: 

	
  

 	
  

 	
  

 
	
  

 	
 TO:

 	
 RPMG, Inc.

 
	
  

 	
  

 	
 1157 Valley Park Drive,
 Suite 100 

 
	
  

 	
  

 	
 Shakopee, MN 55379 

 
	
  

 	
  

 	
 Facsimile No. 952-465-3222
 

 
	
  

 	
  

 	
 Email: 

 
	
  

 	
  

 	
  

 
	
  

 	
 TO:

 	
 Soy Energy, LLC

 
	
  

 	
  

 	
 P.O. Box 663 

 
	
  

 	
  

 	
 Marcus, IA 51305 

 
	
  

 	
  

 	
 Facsimile No. 

 
	
  

 	
  

 	
 Email: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 With a copy to: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Thomas
 D. Johnson 

 
	
  

 	
  

 	
 666 Grand Avenue, Suite
 2000 

 
	
  

 	
  

 	
 Des Moines, Iowa 50309

 
	
  

 	
  

 	
 Facsimile No.:
 515-323-8514

 
	
  

 	
  

 	
 Email: johnson@brownwinick.com

 

          37.          Severability.
If any provision or provisions of this Agreement are held invalid, illegal or
unenforceable by a court of competent jurisdiction, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.  

 [Signature Page Follows] 

Page 11 of 13

IN WITNESS WHEREOF, the parties hereto have set their hands the day and year first
written above. 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 RPMG,
 INC.

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By

 	
  /s/ Steven L. Dietz

 	
  

 
	
  

 	
 Its

 	
  Chief Operating Officer

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 SOY
 ENERGY, LLC

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By

 	
  /s/ Charles Sand

 	
  

 
	
  

 	
 Its

 	
  Chairman

 	
  

 

Page 12 of 13

EXHIBIT A

Terms and Procedures Relating to Loading and Shipment 

Except
by special arrangement(s) in advance, biodiesel shall be available for loading
and shipment twenty-four (24) hours per day, Monday through Sunday, except on
scheduled holidays. Trailers and rail cars shall be visually inspected by
PRODUCER prior to loading. If unsanitary conditions exist and cannot be
corrected on site, the trailer or rail car shall be rejected by PRODUCER and
RPMG shall be notified. 

Page 13 of 13

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