Document:

exv10w5

 

Exhibit 10.5

CONSTRUCTION-TERM LOAN AGREEMENT

     THIS CONSTRUCTION-TERM LOAN AGREEMENT (“Agreement”) is made and entered into this 26th day of
October, 2006, by and among BANKFIRST, a South Dakota state bank (“Lender”), and IOWA RENEWABLE
ENERGY, LLC an Iowa limited liability company (“Borrower”).

WITNESSETH:

     WHEREAS, Borrower has requested that Lender extend to it a construction-term loan as more
fully described in this Agreement (the “Loan”); and

     WHEREAS, Lender has agreed to extend the Loan to Borrower upon the terms and subject to the
conditions hereinafter set forth.

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

ARTICLE I.

DEFINITIONS

     Section 1.01 Defined Terms. As used in this Agreement the defined terms in this
Article I, and any other terms defined in this Agreement, i.e., those terms beginning with a
capital letter, will have the meanings ascribed to each such term (such meanings to be equally
applicable to both the singular and plural forms of the terms defined). Certain capitalized terms
used but not defined herein shall have the meaning ascribed to them in other Loan Documents.

	 	(a)	 	“Advance” — An advance of the Commitment by Lender to Borrower pursuant to
Article II hereof.
	 
	 	(b)	 	“Agreement” — This Construction-Term Loan Agreement, including any amendment
hereof or supplement hereto.
	 
	 	(c)	 	“Change in Control” – means the occurrence of one or more of the following
events: (a) acquisition of Control of the Borrower or any guarantor of any portion of
the Obligations (as defined in Section 7.13) by any person or entity or group of
persons or entities who does not Control the Borrower or such guarantor on the date of
this Agreement, or (b) occupation of a majority of the seats on the board of directors
(or other similar governing body) of Borrower or any guarantor of any portion of the
Obligations by persons who were neither (1) nominated by the immediately previous board
of directors or (2) appointed by directors so nominated.
	 
	 	(d)	 	“Commitment” — The commitment of Lender to make advances to Borrower to
construct the Project in an aggregate principal amount of up to and including THIRTY
FOUR MILLION SEVEN HUNDRED FIFTEEN THOUSAND AND NO/100 DOLLARS ($34,715,000).

 

 

	 	(e)	 	“Commitment Termination Date” – February 1, 2013, or the date of the
termination of Lender’s Commitment pursuant to Section 6.02 hereof, whichever date
occurs earlier.
	 
	 	(f)	 	“Completion Guaranty” – That certain Completion Guaranty dated of even date
herewith of General Contractor (“Completion Guarantor”).
	 
	 	(g)	 	“Construction Contract” – shall mean the Standard Form of Design-Build
Agreement and General Conditions Between Owner and Contractor dated May 2, 2006 between
Borrower and the General Contractor for the construction of the Project.
	 
	 	(h)	 	“Contractor” — Any person, including the General Contractor, who shall be
engaged to work on or to furnish materials, labor and supplies for the Project.
	 
	 	(i)	 	“Control” - means the power, directly or indirectly, either to (a) vote 5% or
more of securities having ordinary voting power for the election of directors (or
persons performing similar functions) of a person or entity, or (b) direct or cause the
direction of the management and policies of a person or entity, whether through the
ability to exercise voting power, by contract or otherwise. The terms “Controls,”
“Controlling,” “Controlled by,” and “under common Control with” have meanings
correlative thereto.
	 
	 	(j)	 	“Control Agreement” — An agreement among Lender, Borrower, and any third party
that maintains a deposit account or investment property in favor of Borrower, pursuant
to which Lender’s security interest in such assets is perfected under the Uniform
Commercial Code of the applicable jurisdiction of such account.
	 
	 	(k)	 	“Conversion Date” – February 1, 2008
	 
	 	(l)	 	“Current Assets” means the aggregate amount of assets of the Borrower which, in
accordance with GAAP, may be properly classified as current assets, after deducting
without limitation capitalized lease obligations.
	 
	 	(m)	 	“Current Liabilities” means (i) all Debt of the Borrower due on demand or
within one year from the date of determination thereof, and (ii) all other items
(including taxes accrued as estimated) which, in accordance with GAAP, may be properly
classified as current liabilities of the Borrower.
	 
	 	(n)	 	“Debt” means (i) all items of indebtedness or liability of Borrower which in
accordance with GAAP would be included in determining total liabilities as shown on the
liabilities side of Borrower’s balance sheet on the date as of which Debt is to be
determined, plus (ii) indebtedness secured by any mortgage, pledge, lien or security
interest on property of Borrower, whether or not the indebtedness secured thereby shall
have been assumed, plus (iii) guaranties, endorsements (other than for purposes of
collection in the ordinary course of business) and other contingent obligations of
Borrower in respect of, or to purchase or otherwise acquire indebtedness of others.

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	 	(o)	 	“Debt Service Coverage Ratio” shall mean the ratio of Project EBITDA (excluding
any federal or state tax credits or incentives) to the maximum principal and interest
payments on the Loan during each month (for the first twelve (12) months of Project
operations), and for the trailing twelve (12) consecutive months after the Project has
been in operation for twelve (12) months. Calculations of Debt Service Coverage Ratio
will exclude any required Sinking Fund payments and any required deposits to the Debt
Service Reserve Fund and shall exclude any principal and interest payments on any
subordinated loans, other financing or distributions to members or shareholders of the
Borrower.
	 
	 	(p)	 	“Disbursing Agent” – First American Title Insurance Company (Minneapolis
office).
	 
	 	(q)	 	“Disbursing Agreement” — The Disbursing Agreement of even date herewith,
executed by and between Borrower, Lender and the Disbursing Agent pertaining to the
disbursement of the Advances to or on behalf of Borrower.
	 
	 	(r)	 	“Draw Request” — The Draw Request form that is submitted to Lender when
Advances are requested in the form attached hereto as Exhibit A and
incorporated herein by reference.
	 
	 	(s)	 	“Drawings and Specifications” — The drawings and specifications prepared by the
design engineer and process engineer for the Project.
	 
	 	(t)	 	“Environmental Indemnity Agreement” — The Environmental Indemnity Agreement of
even date herewith from Borrower in favor of Lender.
	 
	 	(u)	 	“Environmental Laws” — Any international, federal, state or local statute, law,
regulation, order, consent, decree, judgment, permit, license, code, covenant, deed
restriction, common law, treaty, convention, ordinance or other requirement relating to
public health, safety or the environment, including, without limitation, those relating
to releases, discharges or emissions to air, water, land or groundwater, to the
withdrawal or use of groundwater, to the use and handling of polychlorinated biphenyls
or asbestos, to the disposal, treatment, storage or management of hazardous or solid
waste or Hazardous Substances or crude oil, or any fraction thereof, or to exposure to
toxic or hazardous materials, to the handling, transportation, discharge or release of
gaseous or liquid Hazardous Substances and any regulation, order, notice or demand
issued pursuant to such law, statute or ordinance, in each case applicable to the
Mortgaged Property of Borrower, including without limitation the following: (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Re-authorization Act of 1986; (ii) the Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and the Hazardous and Solid Waste Amendments of 1984; (iii) the Hazardous Materials
Transportation Act, as amended; (iv) the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1976; (v) the Safe Drinking Water Act; (vi) the Clean
Air Act, as amended; (vii) the Toxic Substances Control Act of 1976; (viii) the
Occupational Safety and Health Act of 1977, as amended; (ix) the Emergency Planning and
Community Right-to-Know Act of 1986; (x) the National

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	 	 	 	Environmental Policy Act of 1975; (xi) the Oil Pollution Act of 1990; and any
similar or implementing state law; and any other state or federal statute and any
further amendments to these laws providing for financial responsibility for cleanup
or other actions with respect to the release or threatened release of Hazardous
Substances or crude oil, or any fraction thereof and all rules and regulations
promulgated thereunder.

	 	(v)	 	“Equity” — $22,950,000, consisting of evidence (such as cancelled checks,
invoices or a certificate prepared by an independent accountant) has been previously
spent on Project Costs or is available and will be spent prior to the commencement of
Loan advances; and the difference between the Project Cost and the Commitment, being
the amount Borrower is required to invest in the Project in accordance with the
provisions of Section 3.01 of this Agreement.
	 
	 	(w)	 	“Event of Default” — One of the Events of Default specified in Section 6.01
hereof.
	 
	 	(x)	 	“Farm Products” – has the meaning ascribed thereto in the UCC (as defined
hereunder).
	 
	 	(y)	 	“Fixed Charge Coverage Ratio” – The ratio of Project EBITDA (excluding any
federal or state tax credits or incentives) to maximum Loan principal and interest
payments (excluding balloon principal payments at Loan maturity) plus maximum principal
and interest payments required on all other loans or other financing sources and all
capital leases during each month (for the first twelve (12) months of Project
operation), and for the trailing twelve (12) consecutive months after the Project has
been in operation for twelve (12) months.
	 
	 	(z)	 	“Food Security Act” means the Food Security Act of 1985, 7 U.S.C. § 1631, as
amended, and the regulations promulgated thereunder.
	 
	 	(aa)	 	“GAAP” – Generally accepted accounting principals in the United States, as in
effect from time to time, consistently applied.
	 
	 	(bb)	 	“General Contractor” – Renewable Energy Group, Inc.
	 
	 	(cc)	 	“Hard Costs” — The costs of constructing the Project that are set forth as Hard
Costs on the Project Cost Statement.
	 
	 	(dd)	 	“Hazardous Substance” — Any hazardous or toxic material, substance or waste,
pollutant or contaminant that is regulated under any statute, law, ordinance, rule or
regulation of any local, state, regional or federal authority having jurisdiction over
the Mortgaged Property of Borrower, or its use, including, but not limited to any
material, substance or waste, that is: (i) defined as a hazardous substance under any
Environmental Laws; (ii) a petroleum hydrocarbon, including crude oil or any fraction
thereof and all petroleum products; (iii) polychlorinated biphenyls; (iv) lead; (v)
urea formaldehyde; (vi) asbestos or asbestos containing materials; (vii) flammable
explosives; (viii) infectious materials; (ix) radioactive materials; (x) mold; or (xi)
defined or regulated as a hazardous substance or hazardous waste under any rules or
regulations promulgated under any Environmental Laws.

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	 	(ee)	 	“Inspecting Engineer” – The inspecting engineer retained by the Lender: Archer
Engineering.
	 
	 	(ff)	 	“Loan Documents” — This Agreement, the Note, the Mortgage, the Environmental
Indemnity Agreement and all other security or collateral documents executed by
Borrower, Completion Guarantor and/or Process and Performance Guarantor in connection
herewith or therewith.
	 
	 	(gg)	 	“Management and Operational Services Agreement” – That certain contract for
feedstock procurement, marketing and management by and between Borrower and Renewable
Energy Group, Inc., dated August 25, 2006.
	 
	 	(hh)	 	“Material Adverse Effect” — With respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding), whether singularly or in
conjunction with any other event or events, act or acts, condition or conditions,
occurrence or occurrences whether or not related, a material adverse change in, or a
material adverse effect on, (a) the business, results of operations, financial
condition, assets, or liabilities of Borrower, (b) the ability of Borrower or any other
party (other than Lender) to perform any of its obligations under the Loan Documents,
(c) the rights and remedies of Lender under any of the Loan Documents or (d) the
legality, validity or enforceability of any of the Loan Documents.
	 
	 	(ii)	 	“Material Contract” - An agreement to which Borrower is or hereafter becomes a
party which is material to the operation of Borrower’s business.
	 
	 	(jj)	 	“Mortgage” — The Construction Mortgage of even date herewith, executed by
Borrower to Lender creating a first priority mortgage on the Mortgaged Property and a
security interest in all of the personal property located thereon or used in connection
therewith as security for payment of the Note.
	 
	 	(kk)	 	“Mortgaged Property” — The land and improvements (including the Project)
situated in Washington County, Iowa, and other personal property located thereon, as
more particularly described in the Mortgage.
	 
	 	(ll)	 	“Note” — The promissory note from Borrower to Lender of even date herewith in
the original principal amount of THIRTY FOUR MILLION SEVEN HUNDRED FIFTEEN THOUSAND AND
NO/100 DOLLARS ($34,715,000).
	 
	 	(mm)	 	“Permitted Encumbrances” – Those matters set forth on Exhibit B annexed
hereto and made a part hereof.
	 
	 	(nn)	 	“Process and Performance Guaranty” – That certain Guaranty of Process and
Performance dated of even date herewith executed and delivered by General Contractor
(“Process and Performance Guarantor”).
	 
	 	(oo)	 	“Project” — The construction of a bio-diesel plant on the Mortgaged Property as
more fully described in the Construction Contract and the Drawings and Specifications.

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	 	(pp)	 	“Project Budget” – The total cost of completing the Project as set forth in the
Project Cost Statement.
	 
	 	(qq)	 	“Project Cost” – Approximately $57,665,000, being the estimated amount
necessary to complete the construction of the Project, including hard and soft costs.
	 
	 	(rr)	 	“Project Cost Statement” — The certificate of Borrower in which Borrower
certifies to Lender the total of all Hard Costs and Soft Costs necessary to complete
the Project in accordance with the Drawings and Specifications, and certifies to Lender
the amount and source of Borrower’s Equity, all as verified by Inspecting Engineer.
	 
	 	(ss)	 	“Project Documents” — Collectively the Construction Contract, the Drawings and
Specifications, the Sworn Construction Statement, the Project Cost Statement, and all
other contracts of Borrower or the General Contractor with respect to the Project.
	 
	 	(tt)	 	“Project EBITDA” – shall mean all gross Project revenues before interest,
taxes, depreciation and amortization (excluding any federal or state tax credits or
incentives) less: (1) all Project operating expenses; (2) deposits into an escrow
account (to be held by Lender) sufficient to fund annual real estate taxes; (3) amounts
required to pay Project management fees; (4) amounts required to pay all Project
insurance costs; (5) all regularly scheduled Loan principal and interest payments, and
(6) all deposits to the Debt Service Reserve have been made.
	 
	 	(uu)	 	“Soft Costs” — The cost of constructing the Project that are set forth as Soft
Costs on the Project Cost Statement.
	 
	 	(vv)	 	“Subordinated Debt” means all indebtedness of Borrower that is subordinated to
Lender pursuant to an agreement, which shall include loans made by members of Borrower
in accordance with its operating agreement and indebtedness which does not constitute a
Permitted Encumbrance, and otherwise reasonably acceptable to Lender.
	 
	 	(ww)	 	“Substantial Completion” — The date on which General Contractor issue a
Certificate of Substantial Completion of the Project and Borrower demonstrates
compliance with the conditions of Section 3.03 of this Agreement.
	 
	 	(xx)	 	“Sworn Construction Statement” — A sworn construction statement duly executed
by the General Contractor showing all Contractors having contracts or subcontracts for
specific portions of the work on the Project, and the amounts due or to become due to
each such Contractor, including all Hard Costs and expenses of any kind incurred and to
be incurred in connection with the Project.
	 
	 	(yy)	 	“Title Company” – First American Title Insurance Company.

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ARTICLE II.

COMMITMENT TO MAKE ADVANCES,

DISBURSEMENT PROCEDURES AND DEPOSIT OF FUNDS

     Section 2.01 The Advances. Lender agrees, on the terms and subject to the conditions
hereinafter set forth, to make Advances to Borrower from time to time during the period from the
date hereof to the Commitment Termination Date in an aggregate principal amount of up to and
including the maximum amount of the Commitment to pay for acquisition of the land, to pay for or to
reimburse Borrower for the payment of the costs actually incurred in connection with the Project,
that shall include but not be limited to costs of permits, licenses, labor, supplies, materials,
services, equipment and insurance premiums, but shall not include any profit to Borrower acting in
the capacity as developer or general contractor, establish an Interest Reserve and pay all closing
costs. The obligation of Borrower to repay the Advances shall be evidenced by the Note, containing
the terms relating to maturity, interest rate, and other matters as set forth therein. All
Advances shall be disbursed by the Disbursing Agent pursuant to the terms and conditions hereof and
the Disbursing Agreement. As used herein, the term “Disburse” or “Disbursement” shall mean the
disbursement of Advances made or to be made by the Disbursing Agent as provided herein and in the
Disbursing Agreement. Advances of Loan proceeds shall be made after all Borrower Equity has been
advanced.

     Section 2.02 Disbursement Procedures for Advances. For advances to fund the Project:

	 	(a)	 	Whenever Borrower desires to obtain an Advance hereunder, such requests to be
made no more often than monthly, Borrower shall submit to Lender and the Disbursing
Agent a Draw Request, duly executed on behalf of Borrower setting forth the information
requested therein. Each Draw Request shall be submitted at least ten (10) business
days before the date the Advance is desired. With respect to Hard Costs, each Draw
Request shall be limited to amounts equal to (i) the total costs actually incurred and
paid or owed by Borrower to the date of such Draw Request for work on the Project
acceptably completed, as approved by Lender, plus (ii) the cost of materials and
equipment not incorporated in the Project, but delivered to and suitably stored at the
Project site, less (iii) a commercially appropriate retainage amount based on the
recommendation of Lender’s Inspecting Engineer, which hold back shall be retained by
Lender until Substantial Completion of the Project (the “Retainage”), and less prior
Advances. Notwithstanding anything herein to the contrary, no Advance for material
stored at the Project site will be made by Lender unless Borrower shall advise Lender
of its intention to so store materials prior to their delivery and provides suitable
security for such storage. With respect to all Soft Costs, each Draw Request shall be
limited to the total of such costs actually incurred by Borrower to the date of such
Draw Request, less prior Advances for such costs. Each Draw Request shall be
accompanied by a certification by the General Contractor that (i) the Project is being
constructed in accordance with the Drawings and Specifications in a good and
workmanlike manner and that the work has been completed and the materials are in place
as indicated in the Draw Request, (ii) the undisbursed amount of the Commitment is in
an amount sufficient to pay the remaining unpaid costs and expenses anticipated to
complete the Project, and (iii) such other and further

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	 	 	 	information as may be requested by Lender from time to time. All Advances will be
made in accordance with the amounts assigned to the various items in the Sworn
Construction Statement and the Project Cost Statement (as amended from time to time
to reflect authorized change orders), and no Advance will be made for any amount in
excess of the values assigned such items in the Sworn Construction Statement and the
Project Cost Statement. Each Draw Request shall constitute an affirmation by
Borrower that all representations and warranties set forth in Article IV are true
and correct as of the date of such Draw Request.

	 	(b)	 	At the time of submission of each Draw Request, Borrower shall submit to Lender
and the Disbursing Agent the following:

	 	(i)	 	A written lien waiver with respect to all Hard Costs from each
Contractor for work done and materials supplied by it that were paid for
pursuant to the preceding Draw Request.
	 
	 	(ii)	 	Documentation reasonably acceptable to Lender (receipts,
canceled checks and the like) evidencing payment of all Soft Costs that were
paid in connection with the immediately preceding Draw Request, excluding
amounts drawn for payment of interest on the Advances or fees due to Lender.
	 
	 	(iii)	 	Such other supporting evidence as may be requested by Lender
or the Disbursing Agent to substantiate all payments that are to be made out of
the relevant Draw Request and/or to substantiate all payments then made with
respect to the Project.

	 	(c)	 	If on the date an Advance is desired Borrower has performed all of its
agreements and complied with all requirements therefor to be performed or complied with
hereunder including satisfaction of all applicable conditions precedent contained in
Article III hereof, Lender shall transmit to the Disbursing Agent the amount of the
requested Advance, less amounts owing to Lender (which will be applied directly by
Lender), and the Disbursing Agent will disburse such funds pursuant to and in
accordance with the terms of the Disbursing Agreement. Each Advance shall bear
interest at the rate provided in the Note from the date such Advance is transmitted by
Lender to the Disbursing Agent.

     Section 2.03 Deposit of Funds by Borrower. If Lender shall at any time determine that
the undisbursed amount of the Commitment is less than the amount required to pay all costs and
expenses of any kind that may be anticipated in connection with the Project, and if Lender shall
thereupon send written notice thereof to Borrower specifying the amount required to be deposited by
Borrower with the Disbursing Agent to provide sufficient funds to complete the Project, Borrower
shall, within thirty (30) calendar days of receipt of any such notice, deposit with the Disbursing
Agent the amount of funds specified in Lender’s notice. If
required by Lender after
reasonable consideration of all funds available including the
construction contingency fund, Borrower shall also deposit with the Disbursing Agent, within thirty (30) calendar days of demand
by Lender, funds equal to any increase in the Project Cost resulting from an authorized change
order. Borrower agrees that any funds

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deposited with the Disbursing Agent shall be disbursed by the Disbursing Agent before any
further disbursements of the Commitment.

     Section 2.04 Disbursements Without Receipt of Draw Request. Notwithstanding anything
herein to the contrary, Lender shall have the irrevocable right at any time and from time to time
to cause an advance of the Commitment or a disbursement of funds that are on deposit with Lender or
the Disbursing Agent to pay principal or interest on the Note as and when said payments become due
and to pay any and all costs and expenses referred to in Section 7.03 hereof, and following the
occurrence of an uncured Event of Default to pay any and all costs and expenses necessary to
complete the Project, or to satisfy any obligation of Borrower pursuant to the terms of this
Agreement or the other Loan Documents, all without receipt of a Draw Request from Borrower.

     Section 2.05 Additional Security. Borrower irrevocably assigns to Lender and grants
to Lender a security interest in, as additional security for the performance of the Obligations,
(as defined in Section 7.13) its interest in all funds held by the Disbursing Agent pursuant hereto
or the Disbursing Agreement, whether or not disbursed, all funds deposited by Borrower with Lender,
all reserves, including deferred payments, deposits, refunds, cost savings, and payments of any
kind relating to the construction of the Project and, to the extent assignable, all governmental
permits obtained for the lawful construction of the Project.

     Section 2.06 Suspension of Construction. If Lender determines that any work or
materials do not conform to the Drawings and Specifications or applicable law, or otherwise departs
from any of the requirements of this Agreement, Lender may require the work to be stopped and
withhold disbursement of Construction Loan Advances until the matter is corrected. In such event,
Borrower will promptly correct the work to Lender’s satisfaction. No such action by Lender will
affect Borrower’s obligation to complete the Project on or before the Conversion Date.

ARTICLE III.

CONDITIONS OF LENDING

     Section 3.01 Conditions Precedent to Lending. The obligation of Lender to make the
initial Advance hereunder shall be subject to the condition precedent that Borrower shall be in
compliance with the conditions contained in Section 3.02 and the further condition precedent that
Lender shall have received the following:

	 	(a)	 	The Note, Mortgage, Assignment of Leases and Rents, Completion Guaranty,
Process and Performance Guaranty, UCC Financing Statements, Environmental Indemnity
Agreement, Opinion of Borrower’s Counsel, Borrower’s organizational documents, and
other Loan Documents as required hereunder, all of which shall be satisfactory to
Lender and Lender’s legal counsel in form and content, and duly executed and delivered
to Lender.
	 
	 	(b)	 	A current appraisal prepared by a state licensed appraiser approved by Lender
indicating an appraised value of the Mortgaged Property as follows: an “as stabilized”
value of the Project that will result in a Loan to value ratio of not more than sixty
five percent (65%). The appraisal shall be addressed to Lender and state that it has
been prepared on Lender’s behalf. The form of the appraisal and the appraisal methods
shall otherwise be satisfactory to Lender

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	 	 	 	and shall conform to all requirements of State and Federal law. Upon completion of
construction, at the expense of Borrower, the appraiser shall reinspect and
recertify the value of the Mortgaged Property “as built.”

	 	(c)	 	A “marked-up commitment” for a mortgagee’s title insurance policy duly endorsed
by the Title Company that: (i) names Lender as primary insured in the full principal
amount of the Commitment; (ii) insures the Mortgage to be a valid first lien on the
Mortgaged Property; and (iii) is free from exceptions for (1) matters that would be
disclosed by a survey or inspection, (2) mechanics’, contractors’ or materialmen’s
liens and lien claims, (3) rights and claims of parties in possession, (4) easements or
claims of easements not shown by the public records, including appurtenant easements
and (5) other exceptions not specifically approved by Lender and as set forth in
Exhibit B. All real estate taxes are current and all levied and pending
assessments as of the date of the Mortgage shall be paid in full. The policy shall
include a Form 3.1 zoning endorsement, an ALTA Form 9 comprehensive endorsement, a
variable rate endorsement, a survey endorsement, and such other endorsements as Lender
may reasonably require under the circumstances. Any undefined easements shall be
defined and any appurtenant easements required for the Mortgaged Property must be
executed and delivered and must satisfy requirements of the Title Company and Lender in
the sole and uncontrolled discretion of the Title Company, Lender and Lender’s legal
counsel.
	 
	 	(d)	 	An ALTA survey of the Mortgaged Property, satisfactory to Lender and the Title
Company, prepared by a registered land surveyor, which will include the legal
description and area of the Mortgaged Property, show and certify to the perimeter lot
lines, dimensions and vectors, the location of all existing footings, foundations and
improvements, utilities, easements, rights of way, building set back lines, curb lines
and encroachments, and the intended location of the Project according to the Drawings
and Specifications to be submitted and approved by Lender as provided herein. Said
survey shall be prepared for Lender’s and the Title Company’s benefit and shall be
certified by the surveyor in form acceptable to Lender and Title Company. The survey
shall be updated, as necessary to show the footings or foundations of the Project when
the footings or foundation is completed, and shall be updated again to show the
location of the “as-built” Project prior to the final disbursement of Loan proceeds.
	 
	 	(e)	 	Copies of all building and other permits necessary for construction of the
Project. Lender shall also receive a certificate of the engineer (or the opinion of
Borrower’s legal counsel) to the effect that all permits required by any governmental
authority for construction and operation of the Project have been obtained.
	 
	 	(f)	 	Evidence satisfactory to Lender that the Project complies with all building
codes and zoning and subdivision ordinances applicable thereto, and that the Project
and its use thereof are in compliance with all other state, federal, and local laws and
regulations.
	 
	 	(g)	 	Copies of the contracts between Borrower and the General Contractor, as well as
the contracts between the General Contractor and all major subcontractors.

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	 	 	 	The Construction Contract shall be a fixed-price or maximum-cost contract. All such
contracts shall be in form satisfactory to Lender and Lender’s legal counsel and
shall, together with the Drawings and Specifications, be assigned to Lender. The
General Contractor, and any subcontractors or other contractors, if required by
Lender, shall consent to such assignments. Borrower shall also provide to Lender
any contract entered into by Borrower, or any proposed tenants or franchisees doing
business on the property of Borrower, directly with any contractor, engineer,
architect or professional concerning the provision of materials and/or labor and/or
services to the Project.
	 
	 	(h)	 	Internally prepared current financial statements of Borrower, certified as true
and correct by the party giving the same. All such financial statements shall (i)
indicate all assets, liabilities, contingent liabilities and income, and (ii) include
separate financial statements for each significant asset (e.g., if partnership
interests are shown as an asset, the financial statements of the partnership shall also
be provided). All financial and credit information must be satisfactory to Lender in
form and substance.
	 
	 	(i)	 	Satisfactory soil test borings and soil reports that are acceptable to Lender.
	 
	 	(j)	 	Written evidence from the proper municipal authorities and public utility
companies that all utilities, including water, electricity and natural gas, sewage and
related services are or will be available to the Mortgaged Property upon completion of
the Project.
	 
	 	(k)	 	All reciprocal easement agreements, maintenance agreements, and other easements
relating to the Mortgaged Property as Lender or Lender’s legal counsel may require, if
any, for parking, access, utility and other purposes, all of which shall be
satisfactory to Lender and Lender’s legal counsel in form and content.
	 
	 	(l)	 	Evidence satisfactory to Lender that no petroleum product or other Hazardous
Substance is present on the Mortgaged Property, and that no asbestos-containing
products, urea-formaldehyde foams or PCB’s are being used in the construction of the
Project. Such evidence shall include a Phase I Environment Report, and if necessary a
Phase II Environmental Report, prepared by a licensed engineer or other qualified
environmental consultant acceptable to Lender. The report shall be addressed to Lender
and state that it was prepared for Lender. If the report indicates that petroleum
products or other Hazardous Substances are present, the report shall identify such
materials and shall analyze (including cost and time factors) recommended methods of
removal. Borrower warrants that no asbestos containing-products, urea-formaldehyde
foam insulation or PCB’s will be used in the construction or equipping of the Project.
	 
	 	(m)	 	Delivery of the Sworn Construction Statement and the Drawings and
Specifications.
	 
	 	(n)	 	Delivery of the Project Cost Statement certified by the Borrower.

11

 

	 	(o)	 	Evidence satisfactory to Lender that Borrower has expended or has deposited
with the Lender or Disbursing Agent not less than the amount of the required Equity in
payment of costs and expenses incurred in connection with the Project that would be
otherwise properly payable from an Advance, together with satisfactory lien waivers for
Hard Costs paid with such funds.
	 
	 	(p)	 	The Disbursing Agreement, duly executed by the Disbursing Agent, Borrower and
Lender.
	 
	 	(q)	 	Delivery of a payment and performance bond from General Contractor.
	 
	 	(r)	 	Payment to Lender of a commitment fee of $433,938.00.
	 
	 	(s)	 	Copy of the Management and Operational Services Agreement.
	 
	 	(t)	 	Delivery of UCC, tax lien, judgment and bankruptcy searches for the Borrower.
	 
	 	(u)	 	Delivery of proof of insurance.
	 
	 	(v)	 	Deposit or allocate Equity funds already on deposit with Lender the amount of
$5,000,000 for working capital for the express purpose of hedging.
	 
	 	(w)	 	Delivery of all executed Loan Documents in proper form for recording or filing,
as applicable, and all necessary recordings and filings have been delivered to the
Title Company for recording or filing.
	 
	 	(x)	 	Lender shall have received from the Borrower the following, each, unless
otherwise noted, dated as of the Closing Date:

	 	(i)	 	Copies of Borrower’s charter documents and all amendments
thereto (the “Constituent Documents”), together with a good standing
certificate from the Secretary of State of the State of Iowa and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate
taxing authority of such state, each dated within thirty (30) days prior to the
Closing Date;
	 
	 	(ii)	 	A Certificate of Borrower certifying (A) its Constituent
Documents, (B) resolutions approving and authorizing the execution, delivery,
and performance of this Agreement and the other Loan Documents, certified as of
the Closing Date as being in full force and effect without modification or
amendment, and (C) incumbency of the appropriate officer executing this
Agreement and the other Loan Documents.

	 	(y)	 	Delivery by counsel to Borrower of a legal opinion concerning this transaction
in substantially the form attached as Exhibit D.
	 
	 	(z)	 	A Control Agreement related to each deposit or investment account maintained
with any party other than Lender.

12

 

	 	(aa)	 	A collateral assignment in favor of Lender of each Material Contract in
existence on the date hereof.

     Section 3.02 Further Conditions Precedent to All Advances. The obligation of Lender
to make any Advance hereunder including each subsequent Advance shall be subject to the condition
precedent that Borrower shall be in compliance with all conditions set forth in Sections 3.01 and
further conditions precedent that on the date of each Advance:

	 	(a)	 	No Event of Default hereunder, or event that would constitute such an Event of
Default but for the requirement that notice be given or that a period of grace or time
elapse, shall have occurred and be continuing and all representations and warranties
made by Borrower in Article IV shall continue to be true and correct as of the date of
such Advance.
	 
	 	(b)	 	No determination shall have been made by Lender that the undisbursed amount of
the Commitment is less than the amount required to pay all costs and expenses of any
kind that may be anticipated in connection with the Project; or if such a determination
has been made and notice thereof sent to Borrower, Borrower has deposited the necessary
funds with the Disbursing Agent or Lender in accordance with Section 2.03 hereof.
	 
	 	(c)	 	The disbursement requirements of Section 2.02 hereof and of the Disbursing
Agent set forth in the Disbursing Agreement have been satisfied.
	 
	 	(d)	 	If required by Lender or Disbursing Agent, Lender and the Disbursing Agent
shall be furnished with an updated Sworn Construction Statement for the Project.
	 
	 	(e)	 	Borrower shall have provided to Lender such evidence of compliance with all of
the provisions of this Agreement as Lender may reasonably request.
	 
	 	(f)	 	No license or permit necessary for the construction of the Project shall have
been revoked or the issuance thereof subjected to challenge before any court or other
governmental authority having or asserting jurisdiction thereover.

     Section 3.03 Conditions Precedent to the Final Advance. The obligation of Lender to
make the final Advance and to release the Retainage shall be subject to the condition precedent
that Borrower shall be in compliance with all conditions set forth in Sections 3.01 and 3.02 and,
further, that the following conditions shall have been satisfied:

	 	(a)	 	The Project, including all landscape and parking requirements, has been
substantially completed in accordance with the Drawings and Specifications and Lender
shall have received a Certificate of Completion from the General Contractor certifying
that (i) the construction of the Project has been completed in accordance with the
Drawings and Specifications (with the exception of any minor items (“Punch List
Items”)) (ii) all labor, services, materials and supplies used in the Project have been
paid for or will be paid for from the proceeds of the final Advance and (iii) the
completed Project conforms with all applicable zoning, land use planning, building and
environmental laws and regulations of the governmental authorities having jurisdiction
over the Project and the Mortgaged Property. The General

13

 

	 	 	 	Contractor shall also deliver to Lender a list of Punch List Items acceptable to
Lender, specifying dates by which the Punch List Items shall be completed, together
with General Contractor’s written contract to complete the Punch List Items as
specified. The amount of the final Advance and/or the Retainage to be released
shall be reduced by an amount equal to 150% of the scheduled value of the Punch List
Items, which sum shall be held by Lender pending the completion of the Punch List
Items to the satisfaction of Lender.

	 	(b)	 	Lender has received each of the following documents and approvals, each of
which shall be satisfactory to Lender and Lender’s legal counsel:

	 	(i)	 	An as-built survey;
	 
	 	(ii)	 	A final Sworn Construction Statement executed by the General
Contractor and Borrower;
	 
	 	(iii)	 	A final Certificate of Occupancy issued by the appropriate
municipal or governmental inspecting authority;
	 
	 	(iv)	 	All necessary and appropriate inspecting certifications;
	 
	 	(v)	 	An approval for disbursement from the Inspecting Engineer after
its final inspection of the Project.
	 
	 	(vi)	 	A title endorsement from the Title Company that reflects the
absence of any liens or other matters affecting title that are objectionable to
the Lender.
	 
	 	(vii)	 	Final lien waivers executed by the General Contractor and all
subcontractors.

     Section 3.04 Insurance.  Borrower shall obtain and shall continuously maintain
thereafter the following policies of insurance:

During Construction and Prior to Completion

Builder’s Risk Insurance — Builder’s Risk Insurance written on a completed
value basis in an amount equal to the full replacement cost of the building and
improvements at the date of completion with coverage available on the so-called
non-reporting “all risk” form of policy, including coverage against collapse and
water damage and fire, with standard non-contributing mortgagee clauses, such
insurance to be in such amounts and form and written by such companies as shall be
approved by Lender which approval shall not be unreasonably withheld, conditioned or
delayed, and the insurance certificates evidencing such policies (together with
appropriate endorsement thereto, evidence of payment of premiums thereon and written
agreements by the insurer or insurers therein to give Lender thirty (30) days’ prior
written notice of any intention to cancel).

Contractor’s Liability — Contractor’s Comprehensive General Liability
Insurance including operations, product liability, contingent liability operations,

14

 

operations of subcontractors, completed operations, contractual liability insurance
and comprehensive automobile liability insurance (including hired and non-owned
liability) and with combined single limit and general aggregate coverage for
personal and bodily injury and property damage of at least $2,000,000.00 for each
occurrence, $3,000,000.00 general aggregate and with $5,000,000.00 excess liability
coverage.

Worker’s Compensation — Statutory worker’s compensation coverage in the
required amounts.

Flood — Flood insurance if any part of the Mortgaged Property is now (or
subsequently determined to be) located in an area identified by the Federal
Emergency Management Agency as an area having special flood hazards and in which
flood insurance has been made available under the National Flood Insurance Act of
1968 (and amendment or successor act thereto) in an amount at least equal to the
lesser of the full replacement cost of all buildings and equipment on the Mortgaged
Property, the outstanding principal amount of the Note or the maximum limited of
coverage available with respect to the buildings and equipment under said Act;

After Completion

All Risk — All risk/open perils special form property insurance with
extended coverages including any building contents, sprinkler coverage, fire
coverage, Contingent Operations of Building Laws/Ordinance or Law Endorsement
(including demolition cost, loss to undamaged portions of any buildings and
increased cost of construction) with limits of 100% replacement cost and with no
co-insurance provision or if the insurance carrier requires, co-insurance provisions
with an agreed amount endorsement in amount acceptable to Lender, and with no
exclusions for terrorism or terrorist acts;

Boiler and Pressure Vessels — Insurance against loss or damage from i)
leakage of sprinkler systems and ii) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment, pressure vessels or
similar apparatus now or hereafter installed in any improvements on the Mortgaged
Property and including broad form boiler and machinery insurance (without exclusion
for explosion) covering all boilers or other pressure vessels, machinery and
equipment (including electrical equipment, sprinkler systems, heating and air
conditioning equipment, refrigeration equipment and piping) located in, on or about
the Mortgaged Property and any improvements thereon in an amount at least equal to
the full replacement cost of such equipment and the building or buildings housing
the same;

Rents/Income — Rents Loss or Business Interruption insurance covering risk
of loss due to the occurrence of any hazards insured against under the required fire
and extended coverage insurance in an amount equal to one (1) year’s loss of income
as such income may change from time to time due to changes in income from the
Mortgaged Property;

Flood — Flood insurance if any part of the Mortgaged Property now (or
subsequently determined to be) is located in an area identified by the Federal

15

 

Emergency Management Agency as an area having special flood hazards and in which
flood insurance has been made available under the National Flood Insurance Act of
1968 (and amendment or successor act thereto) in an amount at least equal to the
lesser of the full replacement cost of all buildings and improvements on the
Mortgaged Property, the outstanding principal amount of the Note or the maximum
limited of coverage available with respect to the buildings and improvements under
said Act;

CGL — Commercial general public liability insurance (including product
liability, completed operations, contractual liability, host liquor liability, broad
form property damage, and personal injuries, including death resulting therefrom)
and with combined single limit and general aggregate coverage for personal and
bodily injury and property damage of at least $2,000,000.00 for each occurrence,
$3,000,000.00 general aggregate and with $5,000,000.00 excess liability coverage.

Maximum deductible on all coverages and policies shall be no greater than $10,000.00. The
insurance carrier must be rated A, Class XII, or better, by Best’s Rating Service. Such insurance
policies shall be written on forms and with insurance companies satisfactory to Lender, shall be in
amounts sufficient to prevent Borrower from becoming a co-insurer of any loss thereunder, shall
insure Lender as a first mortgagee on the casualty and business interruption/loss of rents coverage
under a standard mortgagee clause and shall name Lender as an “additional insured” on all required
liability coverages and policies. Insurance certificates evidencing such insurance and evidence of
payment of premiums thereon and written agreements by the insurer or insurers therein to give
Lender thirty (30) days’ prior written notice of any intention to cancel. If no such copy is
available, Lender will accept a binder for a period not to exceed ninety (90) days. Borrower
shall, within thirty (30) days prior to the expiration of any such policy, deliver insurance
certificates evidencing the renewal of such insurance together with evidence of the payment of
current premiums therefor. Any vacancy, change of title, tenant occupancy or use, physical damage,
additional improvements or other factors affecting any insurance contract must be promptly reported
to Lender. All binders, certificates of insurance, and original or certified copies of policies
must name Borrower as a named insured, or as an additional insured, must include the complete and
accurate property address and must bear the original signature of the issuing insurance agent. In
the event of a foreclosure or trustee’s sale under the Mortgage or any acquisition of the Mortgaged
Property by Lender all such policies and any proceeds payable therefrom, whether payable before or
after a foreclosure sale, or during the period of redemption, if any, shall become the absolute
property of Lender to be utilized at its discretion. In the event of foreclosure or the failure to
obtain and keep any required insurance Borrower empowers Lender to effect the above insurance upon
the Mortgaged Property at Borrower’s expense and for the benefit of Lender in the amounts and types
aforesaid for a period of time covering the time of redemption from sale, and if necessary
therefore, to cancel any or all existing insurance policies. Borrower agrees to pay Lender such
fees as may be permitted under applicable law for the costs incurred by Lender in determining, from
time to time, whether the Mortgaged Property are located within an area having special flood
hazards. Such fees shall include the fees charged by any organization providing for such services.

     Section 3.05 No Waiver. The making of any Advance prior to fulfillment of any
condition thereof shall not be construed as a waiver of such condition, and Lender reserves

16

 

the right to require fulfillment of any and all such conditions prior to making any subsequent
Advance.

ARTICLE IV.

REQUIRED RESERVES, SINKING FUND AND ESCROW ACCOUNT

     Section 4.01 Interest Reserve. A sum in the amount of $1,571,062.00 shall be unfunded
and reserved for the payment of interest owed on the loan (the “Interest Reserve”). It is the
intent of the parties hereto, that all Advances made pursuant to a Draw Request shall include, but
not be limited to, an Advance from the unfunded Interest Reserve to pay interest then due under the
Loan. It is the further intent of the parties hereto that in the event an interest payment is due
under the terms of the Note but (i) no Draw Request has been made; or (ii) a Draw Request has been
submitted such that the interest payment cannot be timely made as part of the Draw Request, THEN
Lender may draw from the Interest Reserve to pay such accrued interest then due. If the term of
the Construction Phase (as defined in the Note) is extended or if the Interest Reserve is otherwise
depleted such that there would not be enough funds available to pay interest through the
Construction Phase, Borrower shall be required to replenish the Interest Reserve at the time of
extension or determination of depletion. Upon completion of the Construction Phase, all unused
funds in the Interest Reserve shall be advanced and deposited into the Debt Service Reserve. If at
any time the Interest Reserve is exhausted or Lender determines, at its sole discretion, it is
insufficient due to interest rate adjustments, Borrower will, within 10 calendar days of Lender’s
request, deposit with Lender an amount sufficient for the funding of interest payments over the
remaining term of the Loan.

     Section 4.02 Debt Service Reserve. At the Conversion Date, the balance of the
Interest Reserve shall be advanced and deposited into a custodial account in the name of Borrower
held with Lender or other national bank designated by Lender and reserved for any required debt
service of the Loan (the “Debt Service Reserve”). Commencing one month following the Conversion
Date, Borrower shall make monthly deposits to the Debt Service Reserve until such time as the
balance equals $1,319,265.00 (“Required Reserve Amount”). Monthly deposits shall consist of not
less than one-third (1/3) of all available monthly Project EBITDA. Lender may advance funds from
the Debt Service Reserve for the following purposes:

	 	(a)	 	In the Event of a Default in the payment of principal and/or interest under the
Note, Lender may advance funds from the Debt Service Reserve in an amount to cure such
default; and
	 
	 	(b)	 	In the event of a default in the payment of a premium of the property insurance
on the Mortgaged Property, Lender may advance funds from the Debt Service Reserve in an
amount necessary to cure such default.

In the event of an advance from the Debt Service Reserve to Lender to cure a default pursuant to
this section, Borrower shall, within ninety (90) days, deposit funds sufficient to bring the
balance of the Debt Service Reserve to the Required Reserve Amount. Interest on the Debt Service
Reserve monies is payable to Borrower and may be withdrawn annually provided there is no existing
or continuing Event of Default. Upon repayment of the Loan, all monies in the Debt Service Reserve
shall be payable to Borrower.

     Section 4.03 Capital Improvements Reserve. Commencing one month after the Conversion
Date, Borrower shall be required to deposit into a custodial account held with

17

 

Lender, or other national bank as approved by Lender, in the amount of $10,417 per month from
Project EBITDA (or other amount available after the required deposit has been made to the Debt
Service Reserve), up to a maximum of $125,000.00 (the “Reserve Cap”).

     If at any time the Capital Improvements Reserve falls below the Reserve Cap, the Borrower
shall replace such deficiency through monthly deposits as required above until the Capital
Improvements Reserve is fully replenished up to the Reserve Cap.

     At Lender’s option, following the Conversion Date, disbursements from the Capital Improvements
Reserve will be disbursed to Borrower (or paid directly by Lender) for capital improvements,
including but not limited to repairs, replacements and other capital improvements to the Project
plant and equipment. Lender shall have no obligation to disburse from the Capital Improvements
Reserve (i) if an Event of Default has occurred and is continuing hereunder, or (ii) for any other
purpose or to any other person other than for which the Capital Improvements Reserve was
established; provided that if an Event of Default has occurred, the Lender may
disburse from the Capital Improvements Reserve in its sole discretion to the repayment of the Loan
or to any of the Project Costs as it may determine in its discretion. Borrower hereby grants to
Lender a first security interest in the Capital Improvements Reserve. Amounts held in the Capital
Improvements Reserve shall be disbursed from time to time as required in increments as needed to
satisfy the item for which the Capital Improvements Reserve has been established. Such requests
shall be made not more often than monthly, in writing, addressed to the Lender certifying the
amount to be disbursed and accompanied by:

	 	(a)	 	An Application for Payment signed by the Borrower identifying the repairs
completed and/or labor and materials involved in completing the capital expenditures
and certifying that such work has been completed, and accompanied by all bills for
labor and material incurred, and/or receipts for purchase of furniture fixtures and
equipment.
	 
	 	(b)	 	If Lender requires, an inspection report from its retained inspector verifying
the work has been completed and installed as the case may be, in a good and workmanlike
manner and in compliance with all construction, use, building zoning and other
governing laws, rules and regulations and the Americans With Disabilities Act.
	 
	 	(c)	 	Such approval of the work done and/or final certificates of occupancy as may be
required by the municipality or governmental agency having jurisdiction over the
Project evidencing compliance with the applicable building codes and ordinances
governing the work.
	 
	 	(d)	 	Lien waiver from all laborers and materialmen performing work for which an
Application For Payment is submitted.

Lender may require that the Title Company issue a downdate endorsement to the policy dated as of
the disbursement date assuring no change in the insuring conditions and no further exceptions to
the policy. If Lender is satisfied that the requirements are satisfied, Lender shall, within ten
(10) business days thereafter, disburse the amount requested in the Application for Payment. At
its option, Lender may make such disbursement directly to the persons or entities supplying the
materials for or performing the repairs or to the Title Company for disbursement by the Title
Company to the payees.

18

 

     Section 4.04 Sinking Fund. Commencing one month after the Conversion Date, one third
(1/3) of all monthly Project EBITDA shall be applied to a reduction of Loan principal. At such
time as the outstanding principal balance of the Loan is reduced to an amount equal to or less than
$20,182,750.00, no additional deposits into the Sinking Fund will be required.

     Section 4.05 Working Capital Reserve. At Loan closing, Borrower shall deposit
$5,000,000.00 into a custodial account in the name of Borrower held with Lender or other national
bank designated by Lender which shall be reserved strictly for hedging purposes and as provided in
this Section 4.05, and Borrower shall be required to provide sufficient evidence of use
acceptable to Lender prior to any funding from such working capital reserve. The balance of any
loan or contingent grant by the Iowa Department of Economic Development to Borrower will be
reserved against the amount of this working capital reserve account and Borrower will not have
access to such funds to this extent.

     Section 4.06 Tax Escrow Account. Upon the occurrence of an Event of Default, Lender
may, in its sole discretion, require Borrower to deposit monthly into a custodial account held with
Lender, or other national bank as approved by Lender, an amount sufficient to fund the annual real
estate taxes. Disbursement from the Tax Escrow Account shall be made annually upon Borrower’s
request and presentation of tax statement.

ARTICLE V.

WARRANTIES, REPRESENTATIONS AND COVENANTS OF BORROWER

     Section 5.01 Representations and Warranties. Borrower represents and warrants as
follows:

	 	(a)	 	The Loan Documents to which Borrower is a party have been duly executed and
delivered to Lender by Borrower, as applicable, and each Loan Document constitutes the
legal, valid and binding obligations of Borrower enforceable in accordance with the
terms thereof (subject, as to enforceability, to limitations resulting from bankruptcy,
insolvency and other similar laws affecting creditors’ rights generally).
	 
	 	(b)	 	The Project and the intended use thereof for the purpose and in the manner
contemplated by this Agreement are permitted by and comply in all material respects
with all presently applicable use or other restrictions and requirements in prior
conveyances, zoning ordinances and all development, pollution control, water
conservation, environmental and other laws, regulations, rules and ordinances of the
United States and the State of Iowa and the respective agencies thereof, and the
political subdivision in which the Mortgaged Property is located.
	 
	 	(c)	 	There is no suit, action or proceeding pending or, to the knowledge of Borrower
threatened against or affecting Borrower before or by any court, arbitrator,
administrative agency or other governmental authority that if adversely determined,
singly or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.
	 
	 	(d)	 	Borrower has filed all federal and state tax returns and informational reports
required to be filed, which returns properly reflect the taxes owed by it for the
period covered thereby and Borrower has paid all taxes that are due pursuant

19

 

	 	 	 	to said returns and paid all present installments of any assessments, fees and other
governmental charges upon it or upon its property.
	 
	 	(e)	 	No consent, approval or authorization of or permit or license from or
registration with or notice to any federal or state regulatory authority or any third
party is required in connection with the making or the performance of the Loan
Documents, the Project, or with respect to any other aspect of the Project or the
Mortgaged Property, or, if so required, such consent, approval, authorization, permit
or license has been requested and obtained or such registration made or notice given or
such other appropriate action taken on or prior to the date hereof (other than with
respect to the occupancy of the Mortgaged Property that cannot be obtained until
completion of the Project).
	 
	 	(f)	 	Borrower is not in default of a material provision under any Material Contract,
instrument, decree or order to which it is a party or to which its property is bound or
affected.
	 
	 	(g)	 	There has been no material adverse change in the financial condition of
Borrower since the date of certification of Borrower’s financial statements previously
delivered to Lender.
	 
	 	(h)	 	Borrower is in compliance with all (a) applicable laws, rules, and regulations,
(b) orders of any governmental authority, and (c) all indentures, agreements or other
instruments binding upon it or its properties; except where non-compliance, either
singly or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
	 
	 	(i)	 	Borrower has good title to or a valid leasehold interest in all of the real and
personal property material to operation of Borrower’s businesses. Borrower owns, or is
licensed or otherwise has the right to use, all patents, trademarks, service marks,
trade names, copyrights and other intellectual property material to its business, and
the use thereof by Borrower does not infringe on the rights of any other party, except
for any such infringements that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect.
	 
	 	(j)	 	Borrower has disclosed to Lender all agreements, instruments, and corporate or
other restrictions to which Borrower is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates or
other information furnished by or on behalf of Borrower pursuant to this Agreement or
any other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by any other information so furnished) contains any material misstatement
of fact or omits to state any material fact necessary to make the statements therein,
not misleading.
	 
	 	(k)	 	Borrower has obtained all licenses, consents, approvals, authorizations and
permits of governmental authorities which Borrower is required to obtain in connection
with construction of the Project and operation of Borrower’s business, including but
not limited to any of the foregoing related to environmental laws, zoning and land-use
laws (including any requirement to

20

 

	 	 	 	obtain a special exception, if applicable), water use laws, waste disposal laws,
laws requiring construction permits, and occupancy certificates. Borrower has
provided true and correct copies of such licenses, consents, approvals,
authorizations and permits to Lender.

	 	(l)	 	Neither Borrower nor any of its affiliates is in violation of (a) any of the
foreign assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto, (b) Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by
the President of the United States (Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism) or (c)
the anti-money laundering provisions of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
ACT) Act of 2001, Public Law 107-56 (October 26, 2001) amending the Bank Secrecy Act,
31 U.S.C. Section 5311 et seq. Borrower shall i) ensure that no person or entity that
owns a controlling interest in or otherwise controls any Borrower is or shall be listed
on the Specially designated Nationals and Blocked Person List or other similar lists
maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the
Treasury or included in any Executive Orders, (ii) not use or permit the use of any
Loan proceeds to violate any of the foreign asset control regulations of OFAC or any
enabling statute or Executive Order Relating thereto, and (iii) comply with all
applicable Bank Secrecy Act (“BSA”) laws and regulations, as amended.
	 
	 	(m)	 	Borrower is not (i) an “investment company,” as defined in, or subject to
regulations under, the Investment Company Act of 1940, as amended, (ii) a “holding
company” as defined in, or subject to regulations under, the Public Utility Holding
Company Act of 1935, as amended, or (iii) otherwise subject to any other regulatory
scheme limiting its ability to incur debt.
	 
	 	(n)	 	Borrower is acting on its own behalf and that as of the date hereof, it is not
an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), which is subject to Title I of ERISA, nor a
plan as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended,
each of the foregoing hereinafter referred to collectively as a “plan,” and the assets
of the Borrower do not constitute “plan assets” of one or more such Plans within the
meaning of Department of Labor Regulation Section 2510.3-101, Borrower also represents,
warrants and covenants that it will not be reconstituted as a Plan or as an entity
whose assets constitute “plan assets.”
	 
	 	(o)	 	The Loans, including interest rates, fees and charges as contemplated hereby,
are business loan, and no proceeds thereof shall be used for personal, family or
consumer purposes; the Loan is an exempted transaction under the Truth in Lending Act,
12 U.S.C. § 1601 et seq.

     Section 5.02 Covenants. On and after the date hereof and until payment in full of the
Note and payment and performance of all other obligations of Borrower hereunder, and so long as any
portion of the Loan referenced herein remain in effect, Borrower agrees as follows:

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	 	(a)	 	The Mortgaged Property shall comply with all applicable restrictions,
conditions, ordinances, regulations and laws of governmental departments and agencies
having jurisdiction over the Mortgaged Property, and shall not violate any private
restrictions or covenants or encroach upon or interfere with easements affecting the
Mortgaged Property, and that Borrower will commence and carry on continuously,
diligently and with reasonable dispatch, the construction of the Project in conformance
to the Drawings and Specifications, free from all mechanic’s, laborer’s and material
man’s liens and in a good and workmanlike manner, and complete the same prior to the
maturity date of the Note.
	 
	 	(b)	 	To keep, perform, enforce and maintain in full force and effect all of the
terms, covenants, conditions and requirements of the Project Documents (other than
immaterial terms approved by Lender in the reasonable exercise of its discretion); not
to amend, modify, supplement, terminate, cancel or waive any of the terms, covenants,
conditions or requirements of any of said documents without the prior written consent
of Lender; and to execute and deliver such amendments, modifications, supplements and
extensions of said documents as may be reasonably requested by Lender.
	 
	 	(c)	 	To use its best efforts to require the General Contractor and each Contractor
to comply with all rules, regulations, ordinances and laws bearing on its conduct in
the construction of the Project.
	 
	 	(d)	 	To furnish to Lender as soon as possible and in any event within seven (7) days
after Borrower has obtained knowledge of the occurrence of an event that would
constitute an Event of Default hereunder or a violation of any of the covenants or
obligations of Borrower under this Agreement or that would cause any of the
representations or warranties hereunder to be false or misleading in any respect, or an
event that with the giving of notice or lapse of time or both would constitute an Event
of Default, that is continuing on the date of such statement, in which case Borrower
shall deliver a signed statement setting forth the details of such violation or event
and the action that has been taken, is being taken, or that Borrower proposes to take,
to correct the same.
	 
	 	(e)	 	To hold Lender harmless, and Lender shall have no liability or obligation of
any kind to Borrower, creditors of Borrower or any third party, in connection with any
defective, improper or inadequate workmanship performed in or about, or materials
supplied to the Mortgaged Property, or any mechanic’s, supplier’s or material man’s
liens arising as a result of such defective, improper or inadequate workmanship or
materials, and upon Lender’s request, to replace or cause to be replaced, any such
defective, improper or inadequate workmanship or materials.
	 
	 	(f)	 	To pay and discharge all taxes, assessments and governmental charges or levies
imposed upon Borrower or upon its income or profits, or upon its assets or properties,
prior to the date on which penalties attach thereto, and all lawful claims that, if
unpaid, might become a lien or charge upon the property or assets of Borrower;
provided, however, that Borrower shall not be required to pay any such tax, assessment,
charge, levy or claim, the payment of which is

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	 	 	 	being contested in good faith and by proper proceedings and for which it shall have
set aside adequate reserves.

	 	(g)	 	To keep the Mortgaged Property and all improvements, buildings and fixtures
thereon in good working order and condition.
	 
	 	(h)	 	As soon as available, and within one hundred twenty (120) days after the end of
each calendar year, a copy of the annual financial statements of Borrower, that shall
include the balance sheet of Borrower as at the end of such year and related statements
of income and expenses, statement of changes in financial position, a statement of
changes in capital accounts and a statement of allocation of distribution of profits
and losses of Borrower, all in reasonable detail, prepared in accordance with GAAP (or
tax accounting reconciled to GAAP) and reviewed by a reputable accounting firm. Such
statements shall be accompanied a Covenant Compliance Certificate in the form of
Exhibit C attached hereto and by the annual federal income tax returns of
Borrower, including all schedules, for the preceding taxable year as filed with the
Internal Revenue Service unless an extension has been obtained for filing taxes and
then within thirty (30) days after final filing.
	 
	 	(i)	 	Beginning with the first quarter after the completion of the Project, as soon
as available, and within thirty (30) days after the end of each quarter, a copy of the
quarterly financial statement of Borrower that shall include the balance sheet of
Borrower as at the end of such quarter and related statements of income and expenses,
statement of changes in financial position, a statement of changes in capital accounts
and a statement of allocation of distribution of profits and losses of Borrower, all in
reasonable detail, prepared in accordance with GAAP (or tax accounting reconciled to
GAAP). Such statements shall be accompanied by a Covenant Compliance Certificate in
the form of Exhibit C hereto.
	 
	 	(j)	 	As soon as possible, and within ninety days (90) days after the end of each
calendar year, an annual operating statement of the Project detailing the total
revenues received, total expenses incurred, total cost of all capital improvements,
total debt service and total cash flow, to be prepared and certified by Borrower in the
form approved by Lender, and, if available, any operating statement prepared by an
independent certified public accountant within thirty (30) days of the date of such
statement is made available to Borrower.
	 
	 	(k)	 	As soon as possible, and within ten (10) days after the end of each month, a
Covenant Compliance Certificate in the form attached hereto as Exhibit C.
	 
	 	(l)	 	Within ten (10) days after Lender’s request therefor, Borrower shall deliver to
Lender such other information as Lender may reasonably request from time to time.
	 
	 	(m)	 	Borrower shall maintain and preserve its existence as a limited liability
company and all rights, privileges, licenses, patents, patent rights, copyrights,
trademarks, trade names, franchises and other authority to the extent material and
necessary for the conduct of its business in the ordinary course as

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	 	 	 	conducted from time to time. Without at least 30 days prior written notice Borrower
shall not (i) change its legal name, (ii) change its state of organization, or (iii)
change the location of its chief executive office.

	 	(n)	 	Commencing the twelfth (12th) month following the Conversion Date,
the Borrower shall maintain a monthly Debt Service Coverage ratio of not less than 1.25
to 1.00.
	 
	 	(o)	 	Commencing the twelfth (12th) month following the Conversion Date,
the Borrower shall maintain a monthly Fixed Charge Coverage ratio of not less than 1.50
to 1.00.
	 
	 	(p)	 	Commencing the sixth (6th) month following the Conversion Date, and
monthly thereafter, Borrower shall maintain a ratio of Current Assets to Current
Liabilities of not less than 1.50 to 1.00.
	 
	 	(q)	 	Commencing at the end of the first full calendar year following the Conversion
Date, the Chief Financial Officer of the Borrower shall certify (and confirm by audit
report on the Borrower following fiscal year end) that the ratio of total Loan
principal and all other debt obligations of the Borrower to Project earnings before
interest, taxes, depreciation and amortization for the previous twelve (12) months
shall not be more than 2.50 to 1.00.
	 
	 	(r)	 	Promptly upon entering into a Material Contract, Borrower shall notify Lender
of the same and collaterally assign such Material Contract to Lender and, if requested
by Lender, cause the counter party to such Material Contract to consent to such
collateral assignment.
	 
	 	(s)	 	If Borrower acquires any Collateral which may have constituted Farm Products in
the possession of the seller or supplier thereof, Borrower shall, at its own expense,
use it best efforts to take such steps to insure that all liens and security interests
and encumbrances of any kind (except the security interests granted to Lender pursuant
hereto or under the Loan Documents) in such acquired Collateral are terminated or
release, including, without limitation, in the case of such Farm Products produced in a
state which has established a Central Filing System (as defined in the Food Security
Act), registering with the Secretary of State of such state (or such other party or
office designated by such state) and otherwise take such reasonable actions necessary,
as prescribed by the Food Security Act, to purchase Farm Products free of liens,
security interests and encumbrances of any kind (except the security interests granted
to the Lender pursuant hereto or under the Loan Documents); provide, however, that
Borrower may contest and need not obtain the release or termination of any lien,
security interest or encumbrance asserted by any creditor of any seller of such Farm
Products, so long as it shall be contesting the same by proper proceedings and maintain
appropriate accruals and reserves therefore in accordance with GAAP. Upon Lender’s
request, Borrower agrees to forward to Lender promptly after receipt copies of all
notices of liens and master lists of effective financing statements delivered to the
Borrower pursuant to the Food Security Act, which notices and/or lists pertain to any
of the Collateral. Upon the Lender’s request, Borrower agrees to provide Lender with
the names of persons or entities who supply Borrower with such Farm

24

 

	 	 	 	Products and such other information as Lender may reasonably request with respect to
such persons and entities.

	 	(t)	 	If any warehouse receipt or receipts in the nature of a warehouse receipt is
issued in respect of any portion of the Collateral, then Borrower (i) will not permit
such warehouse receipt or receipts in the nature thereof to be “negotiable” as such
terms is used in Article 7 of the UCC and (ii) will deliver all such receipts to Lender
(or person or entity designated by Lender) within five (5) days of Lender’s request and
from time to time thereafter. If no default or Event of Default or occurrence which
with the passage of time or the giving of notice would constitute a default or Event of
Default then exists, Lender agrees to deliver to Borrower any receipt so held by Lender
or its designated agent upon Borrower’s request in connection with Borrower’s sale or
other disposition of the underlying Collateral, if such disposition is in the ordinary
coarse of Borrower’s business.

     Section 5.03 Negative Covenants. Borrower agrees that without the prior written
consent of Lender:

	 	(a)	 	Borrower shall not grant any security interest in the Mortgaged Property or any
part thereof, or create or permit to be created or allow to exist any mortgage,
encumbrance or other lien upon the Mortgaged Property.
	 
	 	(b)	 	Borrower shall not agree or consent to any material changes in the Project
Documents; provided however, changes to the Project Documents which do not affect the
aesthetics or diminish the value of the Project and which are in an amount not
exceeding $100,000 in the aggregate shall not require Lender consent or approval or be
in violation of this section.
	 
	 	(c)	 	Borrower shall not incorporate in the Project any materials, fixtures or
property that are subject to the claims of any other person, whether pursuant to
conditional sales contract, security agreement, lease, mortgage or otherwise.
	 
	 	(d)	 	Borrower shall not assume, guaranty, or become an obligor or surety for the
obligations of any third party.
	 
	 	(e)	 	Borrower shall not incur any indebtedness other than the Loan and trade
payables in the ordinary course of its business.
	 
	 	(f)	 	Borrower shall not make any principal or interest payments on any subordinated
debt or other financing sources nor any distributions to shareholders or members of the
Borrower from Project EBITDA until the following have been paid in full: (1) regularly
scheduled Loan principal and interest payments; (2) amounts required to be deposited
into the Debt Service Reserve; (3) required Sinking Fund payments; and (4) required
deposits into Capital Improvements Reserve.
	 
	 	(g)	 	Borrower shall not maintain any deposit account or investment property (each as
defined in the UCC) with any party other than Lender that is not subject to a Control
Agreement.

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	 	(h)	 	Borrower will not engage in any business other than businesses of the type
conducted by Borrower on the date hereof and businesses reasonably related thereto.
	 
	 	(i)	 	Borrower will not purchase, hold or acquire any common stock, evidence of
indebtedness or other securities (including any option, warrant, or other right to
acquire any of the foregoing) of, make or permit to exist any loans or advances to, or
make or permit to exist any investment or any other interest in, any other person or
entity, or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other person or entity that constitute a business unit,
or create or form any subsidiary, except: loans or advances to employees, officers or
directors of Borrower in the ordinary course of business for travel, relocation and
related expenses; provided, however, that the aggregate amount of all such loans and
advances does not exceed $100,000 at any time.
	 
	 	(j)	 	Borrower will not convey, sell, lease, assign, transfer or otherwise dispose
of, any of its assets, business or property, whether now owned or hereafter acquired
except (a) the sale or other disposition for fair market value of obsolete or worn out
property or other property not necessary for operations disposed of in the ordinary
course of business; and (b) the sale of inventory in the ordinary course of business.
	 
	 	(k)	 	Borrower will not sell, lease or otherwise transfer any property or assets to,
or purchase, lease or otherwise acquire any property or assets from, or otherwise
engage in any other transactions with, any affiliate, except in the ordinary course of
business at prices and on terms and conditions not less favorable to Borrower than
could be obtained on an arm’s-length basis from unrelated third parties in comparable
transactions.
	 
	 	(l)	 	Borrower will not directly or indirectly, enter into, incur or permit to exist
any agreement that prohibits, restricts or imposes any condition upon the ability of
Borrower to create, incur or permit any lien upon any of its assets or properties,
whether now owned or hereafter acquired.
	 
	 	(m)	 	Borrower will not enter into any arrangement, directly or indirectly, whereby
it sells or transfers any property, real or personal, used or useful in its business,
whether now owned or hereinafter acquired, and thereafter rent or lease such property
or other property that it intends to use for substantially the same purpose or purposes
as the property sold or transferred.
	 
	 	(n)	 	Except to the extent as could not reasonably be expected to result in a
Material Adverse Effect, Borrower will not amend, modify or waive any of its rights
under (a) its certificate or articles of organization, operating agreement, bylaws or
other organizational documents or (b) any Material Contract.
	 
	 	(o)	 	Borrower will not make any significant change in accounting treatment or
reporting practices, except as required by generally accepted accounting principles, or
change its fiscal year.

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	 	(p)	 	Borrower will not use the proceeds of any Loan, directly or indirectly, for
“purchasing” or “carrying” any “margin stock” with the respective meanings of each of
such terms under Regulation U of the Board of Governors of the Federal Reserve System
as now and from time to time hereafter in effect, or for any purpose that violates the
provisions of Regulation U, T or X of the Board of Governors of the Federal Reserve
System, or for speculative purposes, including, without limitation, speculating in the
commodities and/or futures markets.

     Section 5.04 Environmental Representation, Warranties and Covenants, and Indemnities.
To induce Lender to make and fund the Loan, Borrower hereby represents, warrants, covenants and
agrees as follows:

	 	(a)	 	That, except as heretofore disclosed to Lender in writing (i) the Mortgaged
Property has never been used by Borrower or to the best of their knowledge by any
previous owners or occupants or current occupants to generate, manufacture, refine,
transport, treat, store, handle or dispose of any Hazardous Substances and no such
Hazardous Substances exist on the Mortgaged Property or in its soil or groundwater,
(ii) the Project will not be constructed with asbestos, asbestos containing materials,
urea formaldehyde insulation or any other chemical or substance that has been
determined to be a hazard to health and/or the environment, (iii) there does not
presently exist, nor to best of their knowledge have there been in the past, electrical
transformers or other equipment that have dielectric fluid-containing polychlorinated
biphenyls (PCBs) located in, on or under the Mortgaged Property, (iv) to the best of
Borrower’s knowledge, the Mortgaged Property has never contained any underground
storage tanks, (v) Borrower has not received or has any knowledge of any summons,
citation, directive, letter or other communication, written or oral, from any local,
state or federal governmental agency concerning the existence of Hazardous Substances
on the Mortgaged Property or in the immediate vicinity of the Mortgaged Property or the
releasing, spilling, leaking, pumping, pouring, emitting, emptying, or dumping of
Hazardous Substances onto the Mortgaged Property or into waters or other lands.
	 
	 	(b)	 	That Borrower shall (i) comply and shall cause all occupants of the Mortgaged
Property to comply with all federal, state and local laws, rules, regulations and
orders with respect to the discharge, generation, removal, transportation, storage and
handling of Hazardous Substances, (ii) remove any Hazardous Substances immediately upon
discovery of the same in accordance with applicable laws, ordinances and orders of
governmental authorities having jurisdiction thereof, (iii) pay or cause to be paid all
costs associated with such removal, (iv) prevent the migration of Hazardous Substances
from or through the Mortgaged Property onto or under other properties, (v) keep the
Mortgaged Property free of any lien imposed pursuant to any state or federal law, rule,
regulation or order in connection with the existence of Hazardous Substances on the
Mortgaged Property, (vi) not install or permit to be incorporated into any improvements
in the Mortgaged Property or to exist in or on the Mortgaged Property any asbestos,
asbestos containing materials, urea formaldehyde insulation or any other chemical or
substance that has been determined to be a

27

 

	 	 	 	hazard to health and/or the environment, (vii) not cause or permit to exist, as a
result of an intentional or unintentional act or omission on the part of Borrower,
or any occupant of the Mortgaged Property, a releasing, spilling, leaking, pumping,
emitting, pouring, emptying or dumping of any Hazardous Substances onto the
Mortgaged Property or into waters or other lands, and (viii) give all notifications
and prepare all reports required by Environmental Laws or any other law with respect
to Hazardous Substances existing on, released from or emitted from the Mortgaged
Property.

	 	(c)	 	That if Borrower fails to diligently dispose of or secure any Hazardous
Substance after discovery thereof in full compliance with all applicable laws and
regulations, Lender may at its option, but without any obligation whatsoever, proceed
to so dispose of or secure the Hazardous Substance or take such other action
necessitated or resulting therefrom at the cost and expense of Borrower. Borrower and
Guarantors further agree that in the Event of Default or if any Hazardous Substance is
discovered in, on or under the Mortgaged Property or is attributable to or affects the
Mortgaged Property, Borrower shall, at its expense, permit an environmental inspection,
audit, assessment, or other testing or monitoring of the Mortgaged Property, for the
sole benefit of Lender, to be conducted by Lender or by an independent agent selected
by Lender.
	 
	 	(d)	 	Borrower acknowledges and agrees that its obligations under this Section 5.04
are not and shall not be deemed to constitute mortgage debt, that such obligations are
not secured by the Mortgage, and that such obligations shall not be terminated or
otherwise affected by the sale of the Mortgaged Property in satisfaction or partial
satisfaction of the Note, any foreclosure of the Mortgage or by any proceeding or deed
in lieu of foreclosure or by any payment or performance of any other indebtedness or
obligation or by any passage of title to Lender or by any disposition by Lender of all
or any part of the Mortgaged Property or by any other action or thing, including any
anti-deficiency provisions of applicable law, and that such obligations are totally
independent of and unaffected by the terms of any Loan Documents or other writing or
agreement, and Borrower specifically forever waives any and all claims and defenses to
the contrary. The obligations of Borrower under this Section 5.04 shall survive
payment of the Note.

     Section 5.05 Covenants Related to Loan Conversion. As soon as possible, but in any
event prior to the Conversion Date, Borrower will provide the following to Lender:

	 	(a)	 	copies of all Material Contracts not previously delivered to Lender, along with
fully executed collateral assignments, consented to by the counter party if requested
by Lender, of such Material Contracts;
	 
	 	(b)	 	to the extent specifically requested by Lender, copies of all warranties from
suppliers covering materials, equipment and appliances included within the
Improvements;
	 
	 	(c)	 	an “as-built” survey which conforms with Lender’s requirements; and
	 
	 	(d)	 	such other documents, instruments, and certificates as Lender may request.

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ARTICLE VI.

EVENTS OF DEFAULT; RIGHTS AND REMEDIES

     Section 6.01 Event of Default Defined. As used herein, the term Event of Default
shall include each or all of the following events:

	 	(a)	 	Borrower shall fail to pay any principal or interest due under the Note or any
other amount payable hereunder when due.
	 
	 	(b)	 	Borrower or Guarantor shall default in the performance of any agreement, term,
provision, condition, or covenant required to be performed or observed by Borrower or
any guarantor hereunder or under the Loan Documents (other than non payment and other
than a covenant or agreement or default that is elsewhere in this Agreement or in the
Loan Documents specifically dealt with) required to be performed or observed by
Borrower hereunder or any other Loan Document or other agreement with or in favor of
Lender which is not cured within thirty (30) days of delivery of written notice of
default, or if the breach is of such a nature that it cannot reasonably be cured or
remedied within the thirty (30) day period, the time period for cure shall be extended
for such period as may be necessary to cure such failure with reasonable diligence, but
not to exceed sixty (60) days after such written notice.
	 
	 	(c)	 	Any financial information, statement, certificate, representation or warranty
given to Lender by Borrower (or any of their representatives) in connection with
entering into this Agreement or the other Loan Documents and/or any borrowing
hereunder, or required to be furnished under the terms hereof or the Loan Documents,
shall prove to be untrue in any material respect (as determined by Lender in the
exercise of its reasonable judgment) as of the time when given.
	 
	 	(d)	 	Borrower shall be in default under the terms of any loan agreement, promissory
note, guaranty, lease, conditional sales contract or other agreement, document or
instrument evidencing, governing or securing any indebtedness owing by Borrower to
Lender, and the period of grace, if any, to cure said default shall have passed, unless
such default or the underlying claim is being contested by Borrower based on a
legitimate, good faith argument and Borrower has bonded or reserved sufficient monies
to satisfy such default or underlying claim.
	 
	 	(e)	 	Borrower shall be in default under the terms of any loan agreement, promissory
note, lease, conditional sale contract or other agreement, document or instrument
evidencing, governing or securing any indebtedness in excess of $100,000 owed by
Borrower to any third party, and the period of grace, if any, to cure said default
shall have passed, unless such default or the underlying claim is being contested by
Borrower based on a legitimate, good faith argument and Borrower or has bonded or
reserved sufficient monies to satisfy such default or underlying claim.
	 
	 	(f)	 	Any final judgment shall be obtained against Borrower that, together with all
other outstanding unsatisfied judgments against Borrower shall exceed the sum of
$100,000 and shall remain unvacated, unbonded or unstayed for a period of

29

 

	 	 	 	30 days following the date of entry thereof, unless such default or the underlying
claim is being contested by Borrower based on a legitimate, good faith argument and
Borrower has bonded or reserved sufficient monies to satisfy such default or
underlying claim.

	 	(g)	 	(i) Borrower shall cease to exist; (ii) any bankruptcy, insolvency or
receivership proceedings, or an assignment for the benefit of creditors, shall be
commenced by Borrower or any Guarantor under any federal or state law; or (iii) if an
order for relief under any present or future federal bankruptcy act or similar state or
federal law shall be entered against Borrower, or if a petition or answer requesting or
proposing the entry of such order for relief or the adjudication of Borrower as a
debtor or a bankrupt or its or their reorganization under any present or future state
or federal bankruptcy act or any similar federal or state law shall be filed in any
court and such petition or answer shall not be discharged or denied within sixty (60)
days after the filing thereof or; (iv) Borrower shall become the subject of any
out-of-court settlement with substantially all of its creditors; or (v) Borrower is
unable or admits in writing its inability to pay its debts as they mature.
	 
	 	(h)	 	There is a material adverse change in the financial condition of Borrower or in
any collateral securing the Loan.
	 
	 	(i)	 	Borrower shall enter into any merger or consolidation transaction, or liquidate
or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series of related
transactions, all or a substantial part of its property, business, or assets, except as
permitted by this Agreement or unless the prior written consent of Lender is first
obtained.
	 
	 	(j)	 	A survey shows that the Project encroaches upon any easements, unvacated
street, building or parking set-backs, or upon any adjoining property to the extent
Lender concludes such encroachment could result in a Material Adverse Effect.
	 
	 	(k)	 	The construction of the Project is abandoned or shall be unreasonably delayed
or be discontinued for a period of forty-five (45) consecutive calendar days or such
number of days as is deemed to be reasonable by Lender under the particular
circumstances of the delay, in each instance, for reasons other than acts of God, fire,
storm, strikes, blackouts, labor difficulties, riots, inability to obtain materials,
equipment or labor, governmental restrictions or any similar cause over which Borrower
is unable to exercise control.
	 
	 	(l)	 	The construction of the Project is abandoned or shall be unreasonably delayed
or be discontinued for a period of ninety (90) consecutive calendar days as a result of
or arising from acts of God, fire, storm, strikes, blackouts, labor difficulties,
riots, inability to obtain materials, equipment or labor, governmental restrictions or
any similar cause over which Borrower is unable to exercise control.

30

 

	 	(m)	 	Lender shall determine that additional sums are to be deposited with Lender to
provide for the completion of the Project and Borrower shall fail to deposit such sums
as required by said Section 2.04 of this Agreement.
	 
	 	(n)	 	All or any portion of the Project or the Mortgaged Property, or the legal,
equitable or any other interest herein, shall be sold, transferred, assigned, leased or
otherwise disposed of except as permitted by this Agreement or unless the prior written
consent of Lender is first obtained.
	 
	 	(o)	 	At the time any Advance is requested by Borrower, the title to the Mortgaged
Property is not reasonably satisfactory to Lender, regardless of whether the lien,
encumbrance or other question existed at the time of any prior Advance.
	 
	 	(p)	 	The Project is materially damaged or destroyed by other casualty and the loss,
in the reasonable judgment of Lender, is not adequately covered by insurance actually
collected or in the process of collection, unless such amount to be collected is
contested by Borrower based on a legitimate, good faith basis and Lender is satisfied,
in its sole determination, that Borrower is able to restore the Project to its
condition immediately prior to such damage or destruction.
	 
	 	(q)	 	An Event of Default occurs under any of the Loan Documents. Reference is
hereby made to the Loan Documents for additional occurrences constituting an Event of
Default hereunder.
	 
	 	(r)	 	Borrower has failed to inject additional equity or provide additional
collateral as required under Sections 2.03 or 7.20.
	 
	 	(s)	 	A Change in Control occurs or exists.
	 
	 	(t)	 	Lender reasonably deems itself insecure.

     Section 6.02 Rights and Remedies. Upon the occurrence of an Event of Default Lender
may, at its option, exercise any and all of the following rights and remedies (and any other rights
and remedies available to it):

	 	(a)	 	Lender may terminate the Commitment and any further obligation to fund Advances
hereunder.
	 
	 	(b)	 	Lender may, by written notice to Borrower, declare immediately due and payable
all unpaid principal of and accrued interest on the Note, together with all other sums
payable hereunder, and the same shall thereupon be immediately due and payable without
presentment or other demand, protest, notice of dishonor or any other notice of any
kind, all of which are hereby expressly waived; provided, however, that upon the filing
of a petition commencing a case naming Borrower as debtor under the United States
Bankruptcy Code, the principal of and all accrued interest on the Note shall be
automatically due and payable without any notice to or demand on Borrower or any other
party.

31

 

	 	(c)	 	Lender shall have the right, in addition to any other right of set-off, to
apply any amounts Borrower has deposited with Lender or Disbursing Agent against any
sums due pursuant to the Note and Mortgage.
	 
	 	(d)	 	In addition to and not in lieu of all other rights and remedies hereunder, if
Lender has not received, within 10 days of written notice, any financial information,
statement and/or certificate, required to be furnished under the terms hereof or the
Loan Documents, Lender shall have the right to assess a late fee in the amount of $25
per document, per day.
	 
	 	(e)	 	Lender shall have the right, in addition to any other rights provided by law or
in equity, to enforce its rights and remedies under the Loan Documents.

     Section 6.03 Additional Remedies Upon Event of Default During Construction. Upon the
occurrence of an Event of Default prior to the date Substantial Completion occurs, and at any time
thereafter during the continuance of such event, Lender may, in addition to all other available
remedies, enter upon Borrower’s property and proceed either in its own name or in the name of
Borrower (which authority is coupled with an interest and is irrevocable by Borrower) to complete
the Project or cause the Project to be completed, at the cost and expense of Borrower. If Lender
elects to complete or cause the Project to be completed, it may do so according to the Drawings and
Specifications or according to such changes, alterations or modifications in and to the Drawings
and Specifications as Lender deems appropriate. Lender may enforce or cancel all contracts of
Borrower relating to construction and enter into other contracts which Lender deems advisable in
its sole judgment. Borrower will forthwith turn over and duly assign to Lender, as Lender may from
time to time require, contracts relating to construction and installation of improvements related
to the Project, the Drawings and Specifications, blueprints, shop drawings, bonds, building
permits, bills and statements of accounts pertaining to the Project, whether paid or not, and any
other instruments or records in the possession of Borrower pertaining to the Project. Borrower
will pay to Lender, on demand, any amount or amounts expended by Lender in so completing
construction of the Project, together with any costs, charges, or expenses incident thereto or
resulting therefrom. In the event that a proceeding is instituted against Borrower for recovery
and reimbursement of any amount expended by Lender in connection with the completion of
construction of the Project, a statement of such expenditures, verified by the affidavit of an
officer of Lender, will be prima facie evidence of the amounts so expended and of the propriety of
and necessity for such expenditures, and the burden of proving to the contrary will be upon
Borrower. Lender may apply the undisbursed amount of the Construction Loan Commitment to bring
about the completion of construction of the Project and to pay the costs thereof; and if such funds
are insufficient, in Lender’s sole judgment, to complete construction of the Project, Borrower
agrees to promptly deliver and pay to Lender amounts as Lender may from time to time demand for the
purpose of completing construction of the Project or of paying any liability, charge or expense
which may have been incurred or assumed by Lender under or in performance of this Agreement. It is
expressly understood and agreed that in no event will Lender be obligated or liable in any way to
complete the Project or to pay for any Project Costs.

ARTICLE VII.

MISCELLANEOUS

     Section 7.01 Inspections. Borrower shall be responsible for making inspections of the
Project during the course of the construction of the Project and shall determine to its own

32

 

satisfaction that the work done or the materials supplied by the Contractors to whom payment
is to be made out of each Advance has been properly done or supplied in accordance with the
applicable contracts with such Contractors. If any work or materials supplied by a Contractor are
not satisfactory to Borrower, Borrower will immediately notify Lender in writing of such fact. It
is expressly understood and agreed that Lender or Inspecting Engineer may conduct such inspections
of the Project as Lender may reasonably deem necessary for the protection of Lender’s interest, and
that any such inspections of the Project by Lender or Inspecting Engineer will be made and will be
issued solely for the benefit and protection of Lender, and that Borrower will not be entitled to
rely thereon, but shall reimburse Lender for any out-of-pocket costs and expenses associated
therewith. Lender shall also have the right to examine at reasonable times all books, accounts and
records relating to the operation of the Project. The books of account and all other records
relating to, or reflecting of, Borrower and the Project shall be kept at Borrower’s corporate
offices and shall be made available to Lender and its representatives on reasonable notice at all
reasonable times for examination, audit, inspection and transcription. Except during the
continuance of a Default or Event of Default, the costs of such examination shall be at Lender’s
expense.

     Section 7.02 Indemnification by Borrower. Borrower shall bear all loss, expense
(including reasonable attorneys’ fees) and damage in connection with and agrees to indemnify and
hold harmless Lender, its agents, servants and employees and any holder of a participation interest
as contemplated in Section 7.18 for, from and against all claims, demands and judgments made or
recovered against Lender, its agents, servants and employees, because of bodily injuries, including
death, at any time resulting therefrom, and/or because of damages to property of Lender or others
(including loss of use) from any cause whatsoever, arising out of, incidental to, or in connection
with the Project or the operation of the Mortgaged Property, whether or not due to any act of
omission or commission, including negligence of Borrower or any Contractor or of their employees,
servants or agents, except for Lender’s gross negligence and willful misconduct. Borrower’s
liability hereunder shall not be limited to the extent of insurance carried by or provided by
Borrower or subject to any exclusions from coverage in any insurance policy. The obligations of
Borrower under this Section 7.02 shall survive the repayment of the Note. Whenever Borrower is
obligated to indemnify or defend Lender or any holder of a participation interest as contemplated
in Section 7.18 under the terms of this Agreement or under the terms of any other Loan Document,
such indemnity obligations shall run to the favor of Lender and its directors, officers, employees,
agents, contractors, subcontractors, licensees, invitees, successors and assigns, including any
holder of a participation interest as contemplated in Section 7.18.

     Section 7.03 Fees. Borrower shall reimburse Lender upon demand for all out-of-pocket
costs and expenses including without limitation, reasonable attorneys’ fees, appraisal fees
(including appraisal fees incurred by Lender under Section 7.20 of this Agreement), survey fees,
inspection fees, closing charges, documentary or tax stamps, recording and filing fees, Inspecting
Engineer fees, insurance premiums and service charges, paid or incurred by Lender in connection
with (i) the preparation, negotiation, approval, execution and delivery of the Loan Documents, and
any other documents and instruments related hereto or thereto, (ii) the negotiation of any
amendments or modifications to any of the foregoing documents, instruments or agreements and the
preparation of any and all documents necessary or desirable to effect such amendments or
modifications, (iii) the review and approval of documents submitted to Lender pursuant to any of
the provisions hereof including the Draw Requests to be submitted in accordance with Section 2.02
hereof, and (iv) the enforcement

33

 

by Lender during the term hereof or thereafter of any of the rights or remedies of Lender
hereunder or under any of the foregoing documents, instruments or agreements or under applicable
law, including, without limitation, costs and expenses of collection of any amount due to Lender
under the Note or any of the Loan Documents, whether or not suit is filed with respect thereto and
whether such costs are paid or incurred, or to be paid or incurred, prior to or after entry of
judgment, and all costs and expenses including all reasonable attorneys’ fees incurred by Lender as
a result of the bankruptcy or insolvency of Borrower.

     Section 7.04 Addresses for Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic communication) and mailed or delivered, if to
Borrower, at its address: 1060 W. Monroe Street, Washington, IA 52353, Attn: Pam Dunbar; and if
to Lender, at its address: 150 South Fifth Street, Suite 3000, Minneapolis, MN 55402, Attention:
Tim Sery, or as to each party, at such other address as shall be designated by such party in a
written notice to the other party. All such notices and communications shall, when mailed or
delivered, be effective when deposited in the mails or delivered to Borrower or Lender, addressed
as aforesaid.

     Section 7.05 Amendments, Determinations by Lender, Consents, Etc. This Agreement and
the Loan Documents may not be amended or modified, nor may any of their terms (including, without
limitation, terms affecting the maturity of or rate of interest on the Note) be modified or waived,
except by written instruments signed by Lender and Borrower. In any instance where the consent or
approval of Lender may be given or is required, or where any determination, judgment or decision is
to be rendered by Lender under this Agreement or under any Loan Document, the granting, withholding
or denial of such consent or approval and the rendering of such determination, judgment or decision
shall be made or exercised by Lender at its sole and exclusive option and in its sole and absolute
discretion.

     Section 7.06 Time of the Essence. Time is of the essence in the performance of
Borrower’s obligations under this Agreement.

     Section 7.07 Waivers. No waiver by Lender of any right or remedy hereunder shall
operate as a waiver of any other right or remedy, or of the same right or remedy on a future
occasion. No delay on the part of Lender in exercising any right or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude other
or future exercise thereof or the exercise of any other right or remedy.

     Section 7.08 Remedies Cumulative. The rights and remedies herein specified of Lender
are cumulative and not exclusive of any rights or remedies that Lender would otherwise have at law
or in equity or by statute.

     Section 7.09 Governing Law and Entire Agreement. Borrower and Lender, by their
execution of this Agreement, expect and intend that this Agreement be governed by and construed
under the laws of the State of Minnesota and Borrower and Lender consent to the jurisdiction of the
State of Minnesota for all purposes. The Loan Documents contain the entire agreement of the
parties on the matters covered herein and therein.

     Section 7.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original, but such
counterparts shall together constitute one and the same instrument.

34

 

     Section 7.11 Term. This Agreement, and the terms and conditions hereof, shall survive
the execution and delivery of the Note and other Loan Documents and shall remain in full force and
effect until the Note is paid in full. The representations, warranties, covenants and agreements
of Borrower and guarantor survive the execution and delivery of the Note and other Loan Documents,
and where applicable, survive the repayment of the Note.

     Section 7.12 Successors and Assigns. This Agreement, and the terms and provisions
hereof, shall be binding upon Borrower and guarantor and each of its respective heirs, successors
and permitted assigns, and shall inure to the benefit of Lender, its successors and assigns;
provided, however, that Borrower may not transfer or assign this Agreement, including, without
limitation, its right to borrow hereunder, without the prior written consent of Lender.

     Section 7.13 Offsets. As additional security for the payment of the Note and the
other obligations of Borrower under this Agreement and the other Loan Documents and any other
obligations of Borrower to Lender of any nature whatsoever (collectively the “Obligations”),
Borrower hereby grants to Lender a security interest in, a lien on and an express contractual right
to set off against all depository account balances, cash and any other property of Borrower now or
hereafter in the possession of Lender or Disbursing Agent. Lender may, at any time upon the
occurrence of an Event of Default hereunder (notwithstanding any notice requirements or grace/cure
periods under this or other agreements between Borrower and Lender) set off against the Obligations
whether or not the Obligations (including future installments) are then due or have been
accelerated, all without any advance or contemporaneous notice or demand of any kind to Borrower,
such notice and demand being expressly waived.

     Section 7.14 Headings. The descriptive headings for the several Sections of this
Agreement are inserted for convenience only and shall not define or limit any of the terms or
provisions hereof.

     Section 7.15 Accounting. Unless otherwise expressly provided herein, or unless Lender
otherwise consents in writing, all accounting terms used herein that are not expressly defined in
this Agreement shall have the meanings respectively given to them in accordance with generally
accepted accounting principles and all financial statements and reports furnished to Lender
hereunder shall be prepared, and all computations and determinations pursuant hereto shall be made,
in accordance with generally accepted accounting principles and practices, consistently applied.

     Section 7.16 Not Joint Venture. Lender is not, and shall not by reason of any
provision of any of the Loan Documents, be or be deemed to be a joint venturer with or partner or
agent of Borrower.

     Section 7.17 Adequacy of Loan Proceeds. Lender has not made, nor shall it be deemed
to have made, any representation or warranty that the Commitment is or will be sufficient to
complete the Project.

     Section 7.18 Participations. Lender may, in its sole discretion, sell in whole or in
part, assign and convey to one or more financial institutions undivided participation interests in
and to the Loan and the Loan Documents and Borrower hereby consents to the same, and the disclosure
of all financial information of Borrower necessary to effectuate the same.

35

 

     Section 7.19 Relationship to Other Documents. The warranties, covenants and other
obligations of Borrower and the rights and remedies of Lender that are outlined in this Agreement
and the other Loan Documents are intended to supplement each other. In the event of any
inconsistencies in any of the terms in this Agreement and/or the Loan Documents, all terms shall be
cumulative so as to give Lender the most favorable rights set forth in the conflicting documents.

     Section 7.20 Reappraisals. Lender shall have the right (but not the obligation) to
obtain an update of the existing appraisal of the Mortgaged Property or a new appraisal of the
Mortgaged Property for the sole benefit of Lender but at the sole cost and expense of Borrower
under the following circumstances:

	 	(a)	 	Upon an Event of Default under this Agreement.
	 
	 	(b)	 	Lender has determined that the security for the Loan has been physically or
economically impaired in any manner.
	 
	 	(c)	 	If, for any reason, construction of the Project is delayed by more than sixty
(60) days beyond the construction schedule provided by the Borrower at Loan closing,
Lender may obtain, at the Borrower’s expense, one or more new or updated appraisals of
the Project by an appraiser acceptable to Lender. If the estimated as-stabilized
market value of the Project, as reported in the new or updated appraisal, results in a
ratio of aggregate loan to value ratio that is greater than sixty five percent (65)%,
the Borrower shall, within 30 days, inject additional cash equity or provide additional
collateral acceptable to Lender to reduce the ratio to sixty five percent (65%) or
less.

In any such event, Borrower shall fully cooperate with Lender and Lender’s appraiser as may be
necessary and shall allow Lender and/or Lender’s appraiser complete access to the Mortgaged
Property for the purpose of completing such appraisal of the Mortgaged Property.

     Section 7.21 Construction Signage. To the extent permitted by law, during
construction, Lender may place a sign on the Mortgaged Property specifying that it is participating
in the financing of the Project. Further, Lender may publicize the financing and may include a
general description of the Project in publicity releases.

     Section 7.22 WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     Section 7.23 Survival. All covenants, agreements, representations and warranties made
by Borrower herein and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement will be considered to have been relied upon by Lender and

36

 

will survive the execution and delivery of this Agreement, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that Lender may have had notice
or knowledge of any Event of Default or incorrect representation or warranty at the time any credit
is extended hereunder, and will continue in full force and effect as long as the principal of or
any accrued interest on the Loans or any fee or any other amount payable under this Agreement is
outstanding and unpaid and so long as either Commitment is in effect. The provisions of Section
8.24 will survive and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, and termination of the Commitments,
or this Agreement or any provision hereof. All representations and warranties made herein, in the
certificates, reports, notices, and other documents delivered pursuant to this Agreement will
survive the execution and delivery of this Agreement and the other Loan Documents.

     Section 7.24 Severability. Any provision of this Agreement or any other Loan Document
which is held to be illegal, invalid or unenforceable in any jurisdiction, will, as to such
jurisdiction, be ineffective to the extent of such illegality, invalidity or unenforceability
without affecting the legality, validity or enforceability of the remaining provisions hereof or
thereof; and the illegality, invalidity or unenforceability of a particular provision in a
particular jurisdiction will not invalidate or render unenforceable such provision in any other
jurisdiction.

     Section 7.25 Transferable Record. This Agreement, the Notes and the other Loan
Documents are “transferable records” as defined in applicable law relating to electronic
transactions. Therefore, Lender may, on behalf of Borrower, create a microfilm, optical disk or
electronic image of such Loan Documents that are authoritative copies under applicable law. Lender
may store such authoritative copies in microfilm or electronic form and destroy the paper original
as part of its normal business practices. Lender, on its own behalf, may control and transfer such
authoritative copies as permitted by applicable law.

     Section 7.26 Notice of Claims Against Lender; Limitation of Certain Damages. In order
to allow Lender to mitigate any damages to Borrower from Lender’s alleged breach of its duties
under the Loan Documents or any other duty, if any, to Borrower, Borrower agrees to give Lender
prompt written notice of any claim or defense it has against Lender, whether in tort or contract,
relating to any action or inaction by Lender under any Loan Document, or the transactions related
thereto, or of any defense to payment of the Obligations for any reason. The requirement of
providing timely notice to Lender represents the parties’ agreed-upon standard of performance
regarding claims against Lender. Notwithstanding any claim that Borrower may have against Lender,
and regardless of any notice Borrower may have given Lender, Lender will not be liable to Borrower
for consequential, punitive and/or special damages.

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS SHOULD
BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL
PROMISES, EXCEPT THOSE CONTAINED IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, MAY BE LEGALLY
ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT. THIS
NOTICE SHALL ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN
YOU AND LENDER. A MODIFICATION OF ANY OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN YOU AND
LENDER, WHICH OCCURS AFTER RECEIPT BY YOU OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN

37

 

INSTRUMENT. ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD
NOT BE RELIED UPON.

[SIGNATURE PAGE FOLLOWS]

38

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered as of the day and year first above written.

LENDER:

BANKFIRST,

a South Dakota state bank

By: /s/ James A. Lund                    

Its: Authorized Signatory

BORROWER:

IOWA RENEWABLE ENERGY, LLC,

an Iowa limited liability company

By
/s/ Michael J. Bohannan                    

Its Chairman

[SIGNATURE PAGE TO LOAN AGREEMENT]

39

 

EXHIBIT A

DRAW REQUEST

BANKFIRST

Attention:                    

     Pursuant to the Construction-Term Loan Agreement dated as of September ___, 2006 by and among
IOWA RENEWABLE ENERGY, LLC (“Borrower”) and BANKFIRST (“Lender”), Borrower hereby submits this Draw
Request to Lender pursuant to the Construction-Term Loan Agreement and certifies to Lender as
follows (capitalized terms being used with the respective meanings attributed thereto in the Loan
Agreement):

	 	1.	 	Requested Advance Date:                                         .
	 
	 	2.	 	Amount of requested Advance:                                         .
	 
	 	3.	 	The Project Costs to be paid with the proceeds of this requested Advance,
broken down by categories to correspond to the categories of Project Costs shown on the
Sworn Construction Statement and further broken down by payee and the amount of each
such payee, and all appropriate information relating thereto, are set forth on
Attachment 1 hereto.
	 
	 	4.	 	All Project Costs itemized on Attachment 1 are costs specified in the Project
Budget and are due and payable and do not exceed the Project Budget amount.
	 
	 	5.	 	On the date hereof, no default or Event of Default under the Construction-Term
Loan Agreement exists.
	 
	 	6.	 	As the date hereof, Borrower has not entered into or consented to any change
order or modification of the Project Documents that will increase Project Costs above
the limits allowed in the Construction — Term Loan Agreement or that will materially
delay completion of the Project except as previously disclosed to and approved by
Lender.
	 
	 	7.	 	After giving effect to the Advance herein requested, the amount of the unused
Commitment will be sufficient to pay all remaining unpaid Project Costs through
completion of the Project.
	 
	 	8.	 	Borrower hereby certifies that all representations and warranties of Borrower
made in the Construction — Term Loan Agreement are ratified and reaffirmed and are true
and correct in all respects as of the date hereof.

IOWA RENEWABLE ENERGY, LLC,

an Iowa limited liability company

By                                         

Its                                         

A-1 

 

EXHIBIT B

PERMITTED ENCUMBRANCES

	1.	 	Real estate taxes for the fiscal year 2005-2006, payable in 2006-2007 and thereafter.
	 
	2.	 	Levied and pending special assessments, if any.
	 
	3.	 	Easement for electric transmission purposes, together with any incidental rights, in favor of
Iowa Southern Utilities Company, as contained in the Transmission Line Easement, dated
November 24, 1967, recorded November 24, 1967, in Book 44 of Misc., Page 191 and as contained
in the Transmission Line Easement dated March 27, 1968, recorded April 4, 1968, in Book 44, of
Misc., Page 447.
	 
	4.	 	Rights of the public and others in and to 7th Street and the County Road as shown on the
Property Survey recorded March 14, 1995, in Plat Book 89, Page 87 and on the Plat of Survey
recorded July 9, 2004, as Document No. 04-3177.

B-1 

 

EXHIBIT C

COVENANT COMPLIANCE CERTIFICATE

     I,                                         , the                          
                of IOWA RENEWABLE ENERGY,
LLC (“Borrower”), pursuant to the Construction-Term Loan Agreement dated September ___, 2006, (the
“Agreement”), hereby certify to BANKFIRST, a South Dakota state bank (“Lender”) as follows:

     As of the close of business on                     , the following amounts and ratios were true
and correct:

	 	 	 	 	 	 	 
	 	1.	 	 	Debt Service Coverage Ratio
	 	 
	 	 	 	 	a. Actual Debt Service Coverage Ratio
	 	 
	 	 	 	 	 

	 	 
	 	 	 	 	b. Minimum Debt Service Coverage Ratio

	 	1.25 to 1.00
	 
	 	2.	 	 	Fixed Charge Coverage
	 	 
	 	 	 	 	a. Actual Fixed Charge Coverage
	 	 
	 	 	 	 	 

	 	 
	 	 	 	 	b. Minimum Fixed Charge Coverage

	 	1.50 to 1.00
	 
	 	3.	 	 	Current Assets to Current Liabilities
	 	 
	 	 	 	 	a. Actual Ratio of Current Assets to Current Liabilities
	 	 
	 	 	 	 	 

	 	 
	 	 	 	 	b. Minimum Ratio of Current Assets to Current Liabilities

	 	1.50 to 1.00
	 
	 	4.	 	 	Debt Obligations to Project Earnings (before EBITDA)
	 	 
	 	 	 	 	a. Actual Ratio of Debt Obligations to Project Earnings
	 	 
	 	 	 	 	 

	 	 
	 	 	 	 	b. Minimum Ratio of Debt Obligations to Project Earnings

	 	2.50 to 1.00

     AS OF THE DATE OF THIS CERTIFICATE, ALL CONDITIONS PRECEDENT HAVE BEEN MET AND NO EVENT HAS
OCCURRED WHICH CONSTITUTES AN EVENT OF DEFAULT AS DEFINED IN THE AGREEMENT.

Date of Certificate:                                         

 
Signature

C-1 

 

EXHIBIT D

LEGAL OPINION

October ___, 2006

BANKFIRST

150 South Fifth Street

Suite 3000

Minneapolis, Minnesota 55402

			
	     Re:	 	Construction-Term Loan Agreement dated October 10, 2006, between Iowa Renewable
Energy, LLC, as Borrower, and BANKFIRST (“Lender” or “you”)

Ladies/Gentlemen:

     We have acted as special counsel for Iowa Renewable Energy, LLC, an Iowa limited liability
company (“Borrower”) in connection with the borrowing by Borrower of monies from you (“Loan”) in
the principal sum of Thirty Four Million Seven Hundred Fifteen Thousand and No/100 Dollars
($34,715,000.00) as evidenced by the Loan Documents referred to hereinafter and the consummation of
the transactions described herein. This opinion is delivered to you pursuant to Section 3.01(z) of
the Construction-Term Loan Agreement (“Loan Agreement”) between Borrower and you. Capitalized
terms used, but not defined, herein shall have the meanings assigned to them in the Loan Agreement.

     In connection with this opinion we have examined copies of the following documents (the “Loan
Documents”) each of even date herewith:

	 	a.	 	the Loan Agreement;
	 
	 	b.	 	the Promissory Note (“Note”) of Borrower, in the principal sum of Thirty-Four
Million Seven Hundred Fifteen Thousand and no/100 Dollars ($34,715,000.00) due and
payable to your order; and
	 
	 	c.	 	the Mortgage (“Mortgage”) mortgaging certain real property (“Premises”) owned
by Borrower and more fully described in the Mortgage as security for the Note; and
	 
	 	d.	 	the Assignment of Contract Documents and Intangibles (“Assignment of Contract
Documents”); and
	 
	 	e.	 	the Assignment of Leases and Rents (“Assignments of Leases and Rents”); and

D-1 

 

	 	f.	 	the Collateral Assignment of Major Subcontracts (“Assignment of Major
Subcontracts”); and
	 
	 	g.	 	the Security Agreement (“Security Agreement”); and
	 
	 	h.	 	the Environmental Indemnity Agreement (“Environmental Indemnity”).

     In connection with the foregoing, we have reviewed and examined executed counterparts of the
above documents and the following (“Organizational Documents”):

	 	a.	 	Borrower’s Articles of Organization and all amendments, certified by the
Secretary of State of Iowa;
	 
	 	b.	 	Certified copies of Borrower’s operating agreement and all amendments thereto;
and
	 
	 	c.	 	Corporate Resolutions of Borrower in connection with the Loan and the
transactions contemplated thereby and records of proceedings and actions of members,
directors, officers and Board of Directors of Borrower with respect to matters
pertaining to this opinion.

     In addition we have examined originals or copies, certified or otherwise identified to our
satisfaction, of such other records, documents, agreements, instruments and other materials, and
have made such other investigation, as we have deemed necessary and appropriate to render the
opinions set forth in this letter. We have also examined and relied upon representations and
warranties as to matters of fact (other than facts constituting conclusions of law) contained in
and made pursuant to the Loan Documents and such other resolutions, documents and certificates as
we have deemed necessary or appropriate to enable us to render the opinions expressed herein, all
of which are subject to the limitations, assumptions and qualifications noted below.

     In rendering these opinions we have assumed and relied upon, but have not independently
verified:

     (i) the genuineness of all signatures on all documents, the legal capacity and competency for
all purposes relevant hereto of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to the authentic originals of all documents submitted to us as
copies, the correctness, completeness and accuracy of all facts set forth in all representations,
warranties and certificates referred to or identified in this opinion and all public records
reviewed, and that there are no documents, agreements or understandings to which the Lender is a
party between the Lender, on the one hand, and the Borrower on the other hand, other than the Loan
Documents, which would have an effect on the opinions set forth below;

D-2 

 

     (ii) In examining documents executed by parties other than the Borrower, we have assumed
that such parties had the requisite power, right and authority (corporate or otherwise) to execute,
deliver and perform all of their respective obligations thereunder and have also assumed the due
authorization by all requisite corporate action and execution and delivery of such documents by
such parties, and the validity, legality and binding effect of those documents on those parties.

     (iii) As to questions of fact material to our opinions, we have relied upon the
representations and warranties made in the Loan Documents and upon certificates of officers or
other representatives of the Borrower and of public officials (“Certificates”). We have not
independently or through third parties verified such representations and warranties or
Certificates, or made any independent investigation as to the existence of agreements, instruments
or other documents, orders, judgments or decrees by which the Borrower or any of its properties or
assets may be bound.

     (iv) The Lender and each of the parties to the Loan Documents, other than Borrower, whether
individually or on behalf of an entity, are duly authorized and have duly and validly executed and
delivered each such instrument, document, and agreement to be executed in connection with the Loan
Agreement and the loan/financing to which such party is a signatory, and such party’s obligations
set forth in the Loan Documents are its legal, valid, and binding obligations, enforceable in
accordance with their respective terms.

     (v) The terms and conditions reflected in the Loan Documents have not been amended, modified
or supplemented by any other agreement or understanding of the parties or waiver of any of the
material provisions of the Loan Documents.

     (vi) All applicable Loan Documents will be duly filed, indexed and recorded among the
appropriate official records, as set forth below, with all fees, charges and taxes having been
paid.

     (vii) There has not been any mutual mistake of fact or misunderstanding, fraud, duress or
undue influence.

     (viii) Lender and any agent acting for Lender have acted in good faith, and complied with the
requirement of fair dealing and conscionability, and without notice of any defense against
enforcement of any rights created by, or adverse claim to any property or security interest
transferred or created as part of the transaction.

     When used herein, the term “our knowledge” shall mean that we have no actual knowledge of
facts which are contrary to the opinion rendered, without having undertaken independent
investigation or verification of any such facts, and shall be limited to our reliance upon the
actual present knowledge of the following attorneys in our firm: Amy R. Piepmeier, Catherine C.
Cownie, Mark E. Roth, and Harold N. Schneebeck, who have devoted substantive attention to matters
for the Borrower within the last twelve months and not the knowledge of the firm generally. Except
as otherwise noted herein, we have undertaken no independent investigation or verification of such
matters.

     Based upon the foregoing, we are of the opinion that:

D-3 

 

     1. Each one of the Loan Documents have been duly executed and delivered by Borrower and
constitutes the legal, valid and binding obligation of Borrower enforceable in accordance with its
terms, except that enforcement of remedies may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in effect relating to creditors’
rights, or principles of equity, public policy, or the discretion of the court affecting generally
the enforcement of creditor’s remedies.

     2. Neither the borrowing of the Loan nor the execution and delivery of the Loan Documents nor
the performance of the provisions of the agreements therein contained on the part of Borrower will
contravene, violate or cause a default under the Organizational Documents, or to the best of our
knowledge, any agreement, mortgage, indenture, or lease or, any license, permit, judgment, decree,
order, statute, ordinance, rule or governmental regulation to which Borrower are subject or a party
or by which it or any of Borrower’s properties are bound.

     3. To the best of our knowledge, there are no suits, actions or proceedings at law or in
equity or by or before any governmental instrumentality or agency now pending against or, to the
best of our knowledge, threatened against Borrower and or any of Borrower’s properties, or both,
nor has any judgment, decree or order been issued against Borrower or its properties, which would
have a material adverse affect on the Premises or the financial condition of Borrower or such
properties.

     4. No consent, approval, order or authorization of, or designation, registration, declaration,
qualification or filing with any regulatory authority on the part of Borrower, other than those
already obtained, are necessary or required by law as a prerequisite to the execution and delivery
of the Loan Documents and the carrying out of the transactions contemplated by or the enforcement
of the remedies provided in the Loan Documents.

     5. Borrower is a limited liability company in good standing duly organized and validly
existing under the laws of the State of Iowa and has all requisite power and authorization to own
and operate the Premises, to enter into the Loan Documents to which it is a party, to conduct
Borrower’s affairs and to borrow the Loan and otherwise assume and perform the obligations on
Borrower’s part to be assumed and performed as contemplated by the Loan Documents. To our
knowledge, Borrower is in compliance with all laws, regulations, ordinances and orders of public
authorities applicable to it and is in compliance with all laws of the State of Iowa regulating
the doing of business in that State except such noncompliance which would not constitute a material
adverse effect.

     6. You have asked for our opinion that the Loan, including the interest payable thereunder,
and all fees paid in connection therewith, is governed by the laws of the state of Minnesota and is
not violative of any applicable usury law or other laws regulating the reservation, payment or
collection of interest and that a court of jurisdiction in the State of Minnesota will apply the
laws of the State of Minnesota in construing the Loan Documents. We are members of the Bar of the
State of Iowa and do not hold ourselves out as experts on the law of any other state. With regard
to any choice of law provisions in the Loan Documents, Iowa courts will generally uphold choice of
law contract provisions if the parties act in good faith and agree that the law of the state in the
United States where one of the parties is located governs. Therefore, it is likely that the courts
of the State of Iowa would enforce the provisions of the Loan Documents stipulating that the Loan
will be governed by the laws of the State of Minnesota. Assuming that the courts of the State of
Minnesota would employ the same choice of law rules as the courts of the State of Iowa, we believe
it is likely

D-4 

 

that the courts of the State of Minnesota would enforce the provisions of the Loan Documents
stipulating that the validity, construction and enforceability thereof will be governed by the laws
of the State of Minnesota; provided, however, that (i) the perfection and the effect of perfection
or nonperfection of a lien or security interest in any personal property referred to in any of the
foregoing documents may be governed by other states’ laws, and (ii) matters affecting interests in
real property may be governed by the laws of the state in which such property is located. With
respect to usury laws, the payment of interest at the highest rate provided for in the Loan
Documents is not usurious under Iowa Law.

     The foregoing opinions are based in part upon and subject to the assumptions, limitations,
qualifications and exceptions set forth below in addition to the qualifications, exceptions,
limitations and assumptions set forth above:

     (a). Our opinions as they relate to the legality, validity, binding effect and/or
enforceability of the Loan Documents are subject to the limitations that might result from
bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent or preferential
transfer, fraudulent conveyance, and other state and federal laws relating to or affecting the
rights or remedies of creditors generally, now or hereafter, in effect.

     (b). Our opinions as they relate to the legality, validity, binding effect and/or
enforceability of the Loan Documents are subject to the qualification that the availability of the
remedies of specific performance or injunctive relief, or any other equitable remedy, is subject to
the discretion of the court before which a proceeding therefor may be brought, equitable defenses
and the application of general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), including without limitation, concepts of
materiality, reasonableness, good faith, fair dealing and other similar doctrines affecting the
enforcement of agreements generally. Accordingly, certain remedies set forth in the Loan Documents
may be subject to equitable defenses and to the discretion of the court and may require further
notices and actions to be taken by the Lender prior to availing itself of such rights and remedies.

     (c). Except as expressly stated herein, we advise you that we have not conducted, nor do we
undertake to conduct, any independent review or investigation of, and no opinion is expressed or
implied as to the truth, accuracy or completeness of any of the representations, warranties or
other statements of the Borrower, or the partners, directors, officers or employees of the
Borrower, or any other person contained in any of the Loan Documents or in any exhibit, schedule or
attachment thereto.

     (d). We express or imply no opinion as to what actions the parties to the Loan Documents are
required to or may take or fail to take on or after the date hereof which, if taken or not taken,
would affect or impair the legality, validity, binding effect and/or enforceability of the Loan
Documents or the rights and remedies of the parties thereunder.

     (e). With respect to the legality, validity, binding effect and enforceability of the remedies
available to the Lender under the Uniform Commercial Code in force in the State of Iowa (“UCC”), we
have assumed that the Lender will enforce such remedies in accordance with the UCC and under such
circumstances and in a manner in which it is commercially reasonable to do so. In addition,
because a claimant bears the burden of proof required to support its claim, our opinion assumes
that you will undertake the effort and expense

D-5 

 

necessary to present your claims in the prosecution of any remedy accorded you under the Loan
Documents.

     (f). We express no opinion with respect to the legality, validity, binding effect and/or
enforceability of any provision of the Loan Documents: (i) purporting to provide for
indemnification, exoneration, exculpation or limitation of liability of a party for its action or
inaction, or for liability due to its own fault; (ii) stating that waivers of notice, or of rights
or remedies (or the delay in, omission of, or enforcement thereof) or the benefits of statutory
provisions or constitutional or common law rights will not operate as a waiver thereof, or broadly
or vaguely stated provisions waiving rights or waivers of unknown future rights or duties imposed
by law; (iii) declaring that the documents may only be amended or waived in writing; (iv)
consenting to jurisdiction or waiving statutes of limitation or jury trials; (v) purporting to
waive any requirement of reasonable or diligent performance or other care on Lender’s part with
respect to the recognition or preservation of Borrower’s rights to or interest in any property
subject to any security interest or lien granted thereby; (vi) providing that delays will not
operate as a waiver; (vii) attempting to modify or waive any requirements of commercial
reasonableness or notice arising under applicable state or federal laws or the due process clause
of the United States Constitution; (viii) purporting to ratify any action the Lender may take
without specifying the standards for such action; and (ix) certain other provisions in the Loan
Documents, including, without limitation, self-help provisions, provisions that purport to
establish evidentiary standards, provisions requiring the payment of a late payment or repayment
charge, fee, reinvestment charge, premium or penalty, however denominated, are or may be
unenforceable in whole or in part. We also express no opinion regarding the validity or
enforceability of the Loan Documents against any parties other than the Borrower.

     (g). Certain rights, remedies, waivers, indemnities and other provisions contained in the Loan
Documents, in addition to those specifically enumerated above, may be limited or rendered
ineffective by applicable Iowa laws or judicial decisions governing such provisions, or by public
policy considerations of paramount public interest, but such laws and judicial decisions do not
render the Loan Documents invalid as a whole, or substantially prevent or impair the practical
realization of the benefits intended by the Loan Documents.

     (h) We express no opinion as to zoning, subdivision or similar matters, the compliance of the
mortgaged property with building codes, restrictions or environmental laws, the title to or
ownership of any property of the Borrower, the sufficiency or accuracy of the description of any
collateral referred to in the Loan Documents, or the priority of any liens or security interests
purported to be created by the Loan Documents.

     (i) We express no opinion as to the effect of any federal or state tax lien on the rights and
remedies afforded under the Loan Documents or of the legal rights of governmental agencies of
attachment or forfeiture under various criminal statutes.

     (j) We express no opinion as to the validity or enforceability of any documents which we have
not examined, but which might be referenced or incorporated as a matter of law in a document which
we have examined.

     (k) We are members of the Bar of the State of Iowa and do not hold ourselves out as experts on
the law of any other state. Consequently, we have made no independent review of the laws of any
jurisdiction other than the State of Iowa and express no opinion as

D-6 

 

to the laws of any jurisdiction other than the State of Iowa and the federal laws of the United
States of America. We express no opinion with respect to (i) the laws of any other jurisdiction
nor any state or federal law or regulation governing BankFirst or (ii) the impact of such laws on
the Loan Documents or the transactions contemplated thereby. For purposes of this opinion we have
assumed that the internal laws (as opposed to the choice of law rules) of the State of Iowa and
applicable federal law would apply and have rendered our opinion on that basis. To the extent that
the law of another jurisdiction applies, we have assumed that the law of that jurisdiction would be
the same as Iowa law. Except as expressly stated herein, we render no opinion as to the
enforceability of any choice of law or forum selection provision.

     (l). We have not examined and express no opinion with respect to title to any property, nor do
we express any opinion with respect to the existence of encumbrances upon any property or the
attachment, validity, perfection or priority of any liens or security interests.

     (m) We express no opinion as to the solvency of the Borrower as of the date of this opinion
letter, and to the extent that any opinion herein is reliant upon the Borrower being solvent, such
opinion in limited accordingly.

     This opinion is limited to the specific legal issues addressed herein and no opinion is
implied or may be inferred beyond the matters expressly set forth herein. Our opinion is rendered
to you, the Lender, solely for your benefit in connection with consummation of the transactions set
forth in the Loan Documents and may not be used, circulated, quoted in whole or in part, filed
publicly or delivered to, relied upon, or otherwise referred to by any other person or for an other
purpose without our prior written consent. Our opinion is based upon the state of facts and the
law existing and in effect on the date hereof, which are subject to change prospectively or
retroactively, and we assume no obligation to revise, supplement or update this opinion in any
respect at any time subsequent to the date hereof in order to account for any change in the law
(whether or not hereinafter enacted or adopted) or future facts, events or circumstances affecting
any of the transactions contemplated by any of the Loan Documents.

     This opinion constitutes our entire opinion regarding the subject matter hereof and supersedes all
prior opinions regarding such subject matter.

Very truly yours,

D-7exv10w1

 

Exhibit 10.1

THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA

STANDARD FORM OF DESIGN-BUILD AGREEMENT AND GENERAL CONDITIONS

BETWEEN OWNER AND CONTRACTOR

(Where the Basis of Payment is a Lump Suns)

TABLE OF ARTICLES

	1.	 	AGREEMENT
	 
	2.	 	GENERAL PROVISIONS
	 
	3.	 	CONTRACTOR’S RESPONSIBILITIES
	 
	4.	 	OWNER’S RESPONSIBILITIES
	 
	5.	 	SUBCONTRACTS
	 
	6.	 	CONTRACT TIME
	 
	7.	 	CONTRACT PRICE
	 
	8.	 	CHANGES IN THE WORK
	 
	9.	 	PAYMENT
	 
	10.	 	INDEMNITY. INSURANCE AND WAIVER OF SUBROGATION
	 
	11.	 	TERMINATION OF THE AGREEMENT AND OWNER’S RIGHT TO PERFORM
CONTRACTOR’S RESPONSIBILITIES
	 
	12.	 	DISPUTE RESOLUTION
	 
	13.	 	MISCELLANEOUS PROVISIONS
	 
	14.	 	LIST OF CONTRACT DOCUMENTS

	 	 	 
	AGC DOCUMENT NO. 415 – STANDARD FORM OF DESIGN-BUILD AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND CONTRACTOR
	©1993. The Associated General Contractors of America

	 	- 1 -

 

 

This Agreement has important legal and insurance consequences. Consultation with an attorney and
insurance consultant is encouraged with respect to its completion or modification,

STANDARD FORM OF DESIGN-BUILD AGREEMENT AND

GENERAL CONDITIONS BETWEEN OWNER AND CONTRACTOR

(Where the Basis of Payment is a Lump Sum)

ARTICLE I

AGREEMENT

This Agreement is made this 10th day of March

In the year 2006, by and between the

	 	 	 
	OWNER
	 	 
	 
	 	 
	(Name and Address)

	 	Central Iowa Energy, LLC
	 

	 	2617 1st Avenue East
	 

	 	Newton, IA 50208
	and the
	 	 
	CONTRACTOR
	 	 
	(Name and Address)

	 	Renewable Energy Group, (REG)
	 

	 	406 First Street, P O Box 68
	 

	 	Ralston, IA 51459
	for services in connection with the following
	PROJECT

	 	                    New 30 Million Gallon Per Year Biodiesel Facility.

Notice to the parties shall be given at the above addresses.

ARTICLE 2

GENERAL PROVISIONS

2.1 TEAM RELATIONSHIP The Owner and the Contractor agree to proceed with the project on the
basis of trust, good faith and fair dealing. The Contractor aggress to procure the architectural
and engineering services set forth below, and to furnish construction and administration of the
Work.

2.2 ARCHITECT/ENGINEER Architectural and engineering services shall be procured from licensed,
independent design professionals retained by the Contractor or furnished by licensed employees of
the Contractor, or as permitted by the law of the state where the Project is located. The person
or entity providing architectural and engineering services shall be referred to as the
Architect/Engineer. If the Architect/Engineer is an independent design professional, the
architectural and engineering services shall be procured and payments shall be made pursuant to a
separate agreement between the Contractor and the Architect/Engineer. The architectural and
engineering services are independent of the work or services provided directly by the Contractor.
The Architect/Engineer for the Project is Todd & Sargent, Inc.

2.3 EXTENT OF AGREEMENT This Agreement is solely for the benefit of the parties, represents the
entire and integrated agreement between the parties, and supersedes all prior negotiations,
representations or agreements, either written or oral.

2.4 DEFINITIONS

.1 The Contract Documents consist of:

a. Change Orders and written amendments to this Agreement signed by both the Owner and
Contractor;

b.
This Agreement, except for the existing Contract Documents set forth
in item e below;

c.
The most current Documents approved by the Owner pursuant to
Subparagraph 3.1.1;

d. The information provided by the Owner pursuant to Clause 4.1.2.1;

e. The Contract Documents in existence at the time of this Agreement which are set forth
in Article 14;

f. The Owner’s Programs provided pursuant to Subparagraph 4.1.1.

In case of any inconsistency, conflict of ambiguity among the Contract Documents, the
Documents shall govern in the order in which they are listed above.

	 	 	 
	AGC DOCUMENT NO. 415 – STANDARD FORM OF DESIGN-BUILD AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND CONTRACTOR
	©1993. The Associated General Contractors of America

	 	- 2 -

 

 

.2 The Work is the Design Services procured in accordance with Paragraph 3.1, the
Construction Services provided in accordance with Paragraph 3.2, Additional Services in
accordance with Paragraph 3.7, and other services which are necessary to complete the Project
in accordance with and reasonably inferable from the Contract Documents.

.3 The term Day shall mean calendar day.

.4 A Subcontractor is a person or entity who has an agreement with the Contractor to perform
any portion of the Work. The term Subcontractor does not include the Architect/Engineer or
any separate contractor employed by the Owner or any separate contractor’s subcontractors.

.5 A subsubcontractor is a person or entity who has an assignment with a Subcontractor to
perform any portion of the Subcontractor’s work.

.6 Substantial Completion of the Work, or of a designated
portion, occurs on the date when construction is sufficiently complete in
accordance with the Contract Documents so that the Owner can occupy or utilize the Project,
or a designated portion, for the use for which it is intended.
This date shall be confirmed by a certificate of Substantial Completion signed by the Owner
and Contractor. The certificate shall state the respective responsibilities of the Owner and
Contractor for security, maintenance, heat, utilities, damage to the Work, and insurance.
The certificate shall also list the items to be completed or corrected, and establish the
time for their completion and correction.

.7 The Owner’s Program is an initial description of the Owner’s objectives, including
budgetary and time criteria, space requirements and relationships, flexibility and
expendability requirements, special equipment and systems, and site requirements.

ARTICLE 3

CONTRACTOR’S RESPONSIBILITES

The Contractor shall be responsible for procuring the design and for the construction of the
Work consistent with the Owner’s Program, as such Program may be modified by the Owner during the
course of the Work. The Contractor shall exercise reasonable skill and judgment in the performance
of the Work.

3.1 DESIGN SERVICES

3.1.1 DRAWINGS AND SPECIFICATIONS The Contractor shall submit for the Owner’s written approval
Drawings and Specifications based on the Contract Documents or any further development of Contract
Documents that have been approved in writing by the Owner. The Drawings and Specifications shall
set forth in detail the requirements for construction of the Work, and shall be based upon codes,
law or regulations enacted at the time of their preparation. Construction shall be in accordance
with these approved Drawings and Specifications. One set of these documents shall be furnished to
the Owner prior to commencement of construction. REG will provide “as-built” drawings to Owner
at Substantial Completion.

3.1.2 OWNERSHIP OF DOCUMENTS All documents shall remain the property of the Contractor and are not
to be used by the Owner without the written consent of the Contractor. Contractor vets in
Owner a limited irrevocable license to use the documents and work product in connection with
Owner’s occupancy, operation and repair of the Work/Project and Contractor shall provide with a
copy of the “as-built” plans related to the Work/Project.

3.2 CONSTRUCTION SERVICES

3.2.1 Construction will commence upon the issuance by the Owner of a written notice to proceed.

3.2.2 In order to complete the Work, the Contractor shall provide all necessary construction
supervision, inspection, construction equipment, construction labor, materials, tools and
subcontracted items.

3.2.3 The Contractor shall give all notices and comply with all laws and ordinances legally enacted
at the date of execution of the Agreement which govern the proper performance of the Work.

3.2.4 The Contractor shall maintain the Schedule of Work. This schedule shall indicate the dates
for the state and completion of the various stages of the construction including the dates when
information and approvals are required from the Owner. It shall be revised as required by the
conditions of the Work.

3.2.5 The Contractor shall assist the Owner in securing the building permits necessary for the
construction of the Project.

3.2.6 The Contractor shall take necessary precautions for the safety of its employees on the
Project, and shall comply will all applicable provisions of federal, state and municipal safety
laws to prevent accidents or injury to persons on, about or adjacent to the Project site. The
Contractor, directly or through its Subcontractors, shall erect and properly maintain at all times,
as required by the conditions and progress of the Work, necessary safeguards for the protection of
works and the public. The Contractor, however, shall not be responsible for the elimination or
abatement of safety hazards created or otherwise resulting from work at the Project site carried on
by the Owner or its employees, agents, separate contractors or tenants. The Owner agrees to cause
its employees, agents, separate contractors and tenants to abide by and fully adhere to all
applicable provisions of federal, state and municipal safety laws and regulations. The above
provision shall not relieve Subcontractors of their responsibility for the safety of persons or
property in the performance of their work, nor for compliance with all applicable provisions of
relevant laws.

3.2.7 The Contractor shall keep such full and detailed accounts as may be necessary for proper
financial management under this Agreement. The Owner shall be afforded access to all the
Contractor’s records, books, correspondence, instructions, drawings, receipts, vouchers, memoranda
and similar data relating to Change Order work performed on the basis of actual cost. The
Contractor shall preserve all such records for a period of three years after the final payment or
longer requested by law.

3.2.8 The Contractor shall provide periodic written reports to the Owner on the progress of the
Work as agreed to by the Owner and Contractor.

3.2.9 At all times the Contractor shall maintain the site of the Work free from debris and waste
materials resulting from the Work. At the completion of the Work, the Contractor shall remove from
the premises all construction equipment, tools, surplus materials, waste materials and debris.

3.3 HAZARDOUS MATERIAL

3.3.1 A Hazardous Material is any substance or material identified now or in the future as
hazardous under any federal, state or local law or regulation, or any other substance or material
which may be considered hazardous or otherwise subject to statutory or regulatory requirements
governing handling, disposal and/or clean-up. The Contractor shall not be obligated to commence or
continue Work until any known or suspected Hazardous
Material discovered at the Project site has been removed, rendered or determined to be harmless by
the Owner as certified by an independent testing

	 	 	 
	AGC DOCUMENT NO. 415 – STANDARD FORM OF DESIGN-BUILD AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND CONTRACTOR
	©1993. The Associated General Contractors of America

	 	- 3 -

 

 

laboratory and approved by the appropriate
government agency.

3.3.2 If after the commencement of the Work, known or suspected Hazardous Material is discovered at
the Project site, the Contractor shall be entitled to immediately stop Work in the affected area,
and the Contractor shall report the condition to the Owner and, if required, the government agency
with jurisdiction.

3.3.3 The Contractor shall not be required to perform any Work relating to or in the area of known
or suspected Hazardous Material without written mutual agreement.

3.3.4 The Owner shall be responsible for retaining an independent testing laboratory to determine
the nature of the material encountered and whether it is a Hazardous Material requiring corrective
measures and/or remedial action. Such measures shall be the sole responsibility of the Owner, and
shall be performed in a manner minimizing any adverse effect upon the Work of the Contractor. The
Contractor shall resume Work in the area affected by any Hazardous Material only upon written
agreement between the parties after the Hazardous Material has been removed or rendered harmless.

3.3.5 If the Contractor incurs additional costs and/or is delayed due to the presence of known or
suspected Hazardous Material, the Contractor shall be entitled to an equitable adjustment in the
Contract Price and/or the date of Substantial Completion.

3.3.6 To the fullest extent permitted by law, the Owner shall indemnify and hold harmless the
Contractor, Architect/Engineer, Subcontractors and Subsubcontractors, and the agents, officers,
directors and employees of each of them, from and against any and all claims, damages, losses,
costs and expenses, whether direct or indirect or consequential, including but not limited to
attorney’s fees, costs and expenses incurred in connection with litigation or arbitration, arising
out of or relating to the performance of the Work in any area affected by Hazardous Material.
To the fullest extent permitted by law, such indemnification shall apply regardless
of the fault, negligence, breach of warranty or contract or strict liability of the
indemniee.

3.3.7 Notwithstanding the proceeding provisions of this Section 3.3, owner is not responsible
for hazardous conditions and/or Hazardous Materials introduced to the Project site by Contractor,
or by its subcontractors or sub-subcontractors, or anyone from whose acts they may be liable.
Contractor shall indemnify, defend and hold harmless Owner and Owner’s officers, directors,
employees and agents from and against all claims, losses, damages, liabilities and expenses,
including attorneys fees and expenses, arising out of or resulting from those hazardous conditions
and/or Hazardous Materials introduced to the project site by Contractor or by its subcontractors,
sub-subcontractors or anyone from whose acts they may be liable.

3.3. 7.8 The terms of this Paragraph 3.3 shall survive the completion
of the Work under this Agreement and/or any termination of this Agreement.

3.4 ROYALTIES, PATENTS AND COPYRIGHTS The Contractor shall pay all royalties and license fees
which may be due on the inclusion of any patented or copyrighted materials, methods or systems
selected by the Contractor and incorporated in the Work. The Contractor shall defend indemnify and
hold the Owner harmless from all suits or claims for infringement of any patent rights or
copyrights arising out of such selection. The Owner agrees to defend, indemnify and hold the
Contractor harmless from any suits or claims of infringement of any patent rights arising out of
any patented materials, methods or systems specified by the Owner. Contractor grants to the
Owner a perpetual and irrevocable license to use any and all of Contractor’s technology and
proprietary property related to and/or incorporated into the Work/Project in connection with the
operation, maintenance and repair of the Work. Contractor represents and warrants that it has all
right and interest in and to the technology and proprietary property (or has obtained all such
rights and interests) related to the design, construction, operation, maintenance and repair of the
Work/Project and has the power and authority to grant the license to Owner as contemplated by this
Section. Owner shall pay no license fee or royalty to Contractor or to any other person for
Owner’s use of the technology and proprietary property. The consideration for the license is
included in the amounts payable by Owner to Contractor for the construction of the Work under this
Agreement. 

Patent Infringement: Contractor shall defend any action or proceeding brought against Owner
based on any claim that the Work, or any part thereof, or that the operation or use of the Work, or
any part thereof, constitutes infringement of any United States patent or copyright, now or
hereafter issued, including any claim relating to the failure of Contractor to pay royalties or
license fees. If Owner is enjoined from the operation or use of the Work, or any part thereof, as
a result of any patent or copyright suit, claim or proceeding, Contractor shall at its sole expense
take reasonable steps to procure the right to operate or use the Work. If Contractor cannot so
procure such right within a reasonable time, Contractor shall promptly, at Contractor’s expense,
(i) modify the Work so as to avoid infringement of any such patent or copyright or (ii) replace
such Work with work that does not infringe or violate any such patent or copyright; provided,
however, any modified or replacement Work to the project shall continue to enable the plant to meet
any and all performance guarantee criteria. Contractor shall indemnify and hold harmless Owner for
any and all damages and claims (including, without limitation, reasonable attorney fees) arising
out of or resulting from any claim of infringement with respect to the use of the technology and
proprietary property related to and/or incorporated into the Work/Project or for any breach of any
provision of this Section. All provisions of this Section shall survive and remain in full force
and effect notwithstanding any termination or expiration of this Agreement or the license granted
herein. 

3.5 TAX EXEMPTION If in accordance with the Owner’s direction an exemption is claimed for taxes,
the Owner agrees to defend, indemnify and hold the Contractor harmless from any liability, penalty,
interest, fine, tax assessment, attorneys fees or other expense or cost incurred by the Contractor
as a result of any action taken by the Contractor in accordance with the Owner’s direction.

3.6 WARRANTIES AND COMPLETION

3.6.1 The Contractor warrants that all materials and equipment furnished under this Agreement will
be new unless otherwise specified, of good quality in conformance with the Contract Documents, and
free from defective workmanship and materials. Warranties shall commence on the date of
Substantial Completion of the Work or of a designated portion. The
Contractor agrees to correct all construction performed under this Agreement which proves to be
defective in workmanship and materials within a period of one year from the date of Substantial
Completion as set forth in Paragraph 6.2 or for such longer periods of time as may be set forth
with respect to specific warranties required by the Contract Documents.

3.6.2 Those products, equipment, systems or materials incorporated in the Work at the direction of
or upon the specific request of the Owner shall be covered exclusively by the warranty of the
manufacturer. There are no warranties which extend beyond the description on the face thereof.
All other warranties expressed or implied including the warranty of merchantability and the
warranty of fitness for a particular purpose are expressly disclaimed.

3.6.3 The Contractor shall secure required certificates of inspection, testing or approval and
deliver them to the Owner.

3.6.4 The Contract shall collect all written warranties and equipment manuals and deliver them to
the Owner.

3.6.5 With the assistance of the Owner’s maintenance personnel, the Contractor shall direct the
checkout of utilities and operations of systems and

	 	 	 
	AGC DOCUMENT NO. 415 – STANDARD FORM OF DESIGN-BUILD AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND CONTRACTOR
	©1993. The Associated General Contractors of America

	 	- 4 -

 

 

equipment for readiness, and assist in their
initial state-up and testing.

3.6.6 Contractor guarantees and warrants that the Work/Project will achieve the performance
requirements with respect to the operation of the Work/Project set forth in that certain Process
Guarantee letter dated February 21, 2006, by and between the Contractor and Owner, which Process
Guarantee Letter is incorporated into this Agreement. In the event of Contractor’s breach of this
Agreement and warranty, Contractor shall take all action as necessary to remedy the deficiencies
that prevented the successful achievement of the performance requirements at Contractor’s sole cost
and expense. 

Performance tests will be conducted jointly by Contractor and Owner to verify achievement of
the performance requirements. If the performance tests fail to achieve the performance
requirements, Contractor shall promptly take such action as may be necessary to remedy, at its
expense, all deficiencies which prevented the successful completion of the performance test.
Contractor shall be required at its sole cost and expense, to conduct one or more additional
performance tests, until such time that the performance tests confirm that the corrective measures
have corrected the deficiencies and the Work/Project meets the performance requirements.

The Process Guarantee shall be deemed to have been met when the facility accumulates seven 24
hour periods, producing 90,909 gallons or more of biodiesel per 24 hour period. 

3.6.7 Contractor further warrants that the Work/Project shall demonstrate that is does not
exceed those air emissions levels cumulatively allocable to the Project contained in, and does not
violate the terms and conditions of, the air permits issues to the Owner for the Project. If the
Project fails to meet such air emission levels, then Contractor, at Contractor’s sole cost and
expense, shall correct any defects of deficiencies in the Work/Project as necessary so that the
Project does not violate or exceed such air emissions levels set forth in the air permits.
Contractor shall continue to take corrective measures until subsequent performance tests
demonstrate that the Project does not exceed the air emissions levels and otherwise complies with
the performance requirements. 

3.6.8 The standard of care for all design and construction services performed by Contractor
shall be the care and skill ordinarily used by members of the design and construction profession
practicing under similar conditions at the same time and locality of the project. Notwithstanding
this standard of care, the parties have agreed upon specific performance standards for certain
aspects of the Work, which standards should be set forth in any performance guarantee criteria.
The design and construction professional services shall be performed to achieve such standards.

3.7 ADDITIONAL SERVICES The Contractor shall provide or procure the following Additional Services
upon the request of the Owner. A written Agreement between the Owner and Contractor shall define
the extent of such Additional Services, such Additional Services shall be considered a Change in
the Work, unless they are specifically included in Article 14.

.1 Documentation of the Owner’s Program, establishing the Project budget, investigating
sources of financing, general business planning and other information and documentation as may
be required to establish the feasibility of the Project.

.2 Consultations, negotiations, and documentation supporting the procurement of Project financing.

.3 Surveys, site evaluations, legal descriptions and aerial photographs.

.4 Appraisals of existing equipment, existing properties, new equipment and developed properties.

.5 Soils, subsurface and environmental studies, reports and investigations required for
submission to governmental authorities or other having jurisdiction over the Project.

.6 Consultants and representations other than normal assistance in securing building permits,
before governmental authorities or others having jurisdiction over the Project.

.7 Investigation or making measured drawings of existing conditions or the verification of drawings or other Owner-provided information.

.8 Artistic renderings, models and mockups of the Project or any part of the Project or the Work.

.9 Inventories of existing furniture, fixtures, furnishings and equipment which might be under consideration for incorporation into the Work.

.10 Interior design and related services including procurement and placement of furniture,
furnishings, artwork and decorations.

.11 Making revisions to design documents after they have been approved by the Owner when
revisions are due to causes beyond the control of the Contractor.

.12 Design, coordination, management, expediting and other services supporting the procurement
of materials to be obtained, or work to be performed, by the Owner, including but not limited
to telephone systems, computer wiring networks, sound systems, alarms, security systems and
other specialty systems which are not part of this Agreement.

.13 Estimates, proposals, appraisals, consultations, negotiations and services in connection
with the repair and replacement of an insured loss.

.14 The premium portion of overtime work ordered by the Owner including productivity impact
costs.

.15 Document reproduction exceeding the limits provided for in this Agreement.

.16 Out-of-town travel by the Architect/Engineer in connection with the Work, except between
the Architect/Engineer’s office. Contractor’s office, Owner’s office and the Project site.

.17 Obtaining service contractor and training maintenance personnel, assisting
and consulting in the use of systems and equipment after the initial state-up and adjusting and
balancing of systems and equipment. Operator training requested by Owner
that extends past Contractors standard turn-key service will not be covered by this agreement.
Standard service includes two weeks of pre-startup off-site training along with one week of
on-site training. This is followed by two weeks of start-up support and off-site support as
needed for a period of one month. 

.18 Services for tenant or rental spaces not a part of this Agreement.

.19 Services requested by Owner or required by the Work which are not specified in the
Contract Documents and which are not normally part of the generally accepted design and
construction practice.

.20 Serving or preparing to serve as an expert witness in connection with any proceeding,
legal or otherwise, regarding the Project.

.21 Preparing reproducible record drawings from marked-up prints, drawings or other documents
that incorporate significant changes in the

	 	 	 
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Work made during the construction.

ARTICLE 4

OWNER’S RESPONSIBILITIES

4.1 INFORMATION AND SERVICES PROVIDED BY OWNER

4.1.1 The Owner shall provide full information in a timely manner regarding requirements for the
Project, including the Owner’s Program and other relevant information.

4.1.2 The Owner shall provide:

.1 all necessary information describing the physical characteristics of the site, including
surveys, site evaluations, legal descriptions, existing conditions, subsurface and
environmental studies, reports and investigations;

.2 inspection and testing services during construction as required by law or as mutually
agreed; and

.3 unless otherwise provided in the Contract Documents, necessary approvals, site plan
review, rezoning, easements and assessments, necessary permits, fees and charges required for
the construction, use, occupancy or renovation of permanent structures, including legal and
other required services.

4.1.3 The Owner shall provide reasonable evidence satisfactory to the Contractor, prior to
commencing the Work and during the progress of the Work, that sufficient funds are available and
committed for the entire cost of the Project, including an allowance for changes in the Work as may
be approved in the course of the Work. Unless such reasonable evidence is provided, the Contractor
shall not be required to commence or continue the Work. The Contractor may stop Work after seven
(7) days’ written notice to the Owner if such evidence is not presented within a reasonable time.
The failure of the Contractor to insist upon the providing of this evidence at any time shall not
be a waiver of the Owner’s obligation to make payments pursuant to this Agreement, not shall it be
a waiver of the Contractor’s right to request or insist that such evidence be provided at a later
date.

4.1.4 The Contractor shall be entitled to rely on the completeness and accuracy of the information
and services required by this Paragraph 4.1.

4.2 RESPONSIBILITIES DURING DESIGN

4.2.1 The Owner shall review and approve further development of the drawings and specifications as
set forth in Article 3.

4.3 RESPONSIBILITIES DURING CONSTRUCTION

4.3.1 The Owner shall review the Schedule of Work and timely respond to its obligations.

4.3.2 If the Owner becomes aware of any error, omission or failure to meet the requirements of the
Contract Documents or any fault or defect in the Work, the Owner shall give prompt written notice
to the Contractor.

4.3.3 The Owner shall communicate with the Contractor’s Subcontractors, suppliers and
Architect/Engineer only through the Contractor. The Owner shall have no contractual obligations to
Subcontractors, suppliers, or the Architect/Engineer.

4.3.4 The Owner shall provide insurance for the Project as provided in Article 10.

4.4 OWNER’S REPRESENTATIVE The Owner’s representative is Jim Johnston, Chairman, who is
agreed to by the Contractor. The representative:

.1 shall be fully acquainted with the Project:

.2 agrees to furnish the information and services required of the Owner pursuant to
Paragraph 4.1 so as not to delay the Contractor’s Work: and

.3 shall have authority to bind the Owner in all matters requiring the Owner’s approval,
authorization or written notice. If the Owner changes its representative or the
representative’s authority as listed above, the Owner shall notify the Contractor in advance
in writing. The Contractor shall have the right to approve any successor representative.

ARTICLE 5

SUBCONTRACTS

Work not performed by the Contractor with its own forces shall be performed by Subcontractors.

5.1 RETAINING SUBCONTRACTORS The Contractor shall not retain any Subcontractor to whom the Owner
has a reasonable and timely objection, provided that the Owner agrees to increase the Contract
Price for any additional costs incurred by the Contractor as a result of such objection. The
Contractor shall not be required to retain any Subcontractor to whom the Contractor has a
reasonable objection.

5.2 MANAGEMENT OF SUBCONTRACTORS The Contractor shall be responsible for the management of the
Subcontractors in the performance of their work.

5.3 MANAGEMENT OF SUBCONTRACT AGREEMENTS The Contractor shall provide for assignment of
subcontract agreements in the event that the Owner terminates this Agreement for cause as provided
in Paragraph 11.2. Following such termination, the Owner shall notify in writing those
subcontractors whose assignments will be accepted, subject to the rights of sureties, if any.

ARTICLE 6

CONTRACT TIME

6.1 COMMENCEMENT OF THE WORK The Work Field Construction
shall commence on or about March 20, 2006
and shall proceed in general accordance with the Schedule of Work as such schedule may be amended
from time to time, subject, however, to the provisions of Paragraph 3.3 and Subparagraph 4.1.3.

6.2 SUBSTANTIAL COMPLETION The date of Substantial Completion of the Work shall be no later than
12 months after actual field construction move in date, subject to adjustment in accordance
with the provisions of Article 8. Time shall be of the essence of this Agreement. Owner

	 	 	 
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and
Contractor agree that as liquidated damages for dely Contractor shall pay Owner $1,500 for each day
that expires after the time specified for substantial completion until the work is substantially
complete.

6.3 DELAYS IN THE WORK

6.3.1 If causes beyond the Contractor’s control delay the progress of the Work, then the Contract
Price and/or the date of Substantial Completion shall be modified by Change Order as appropriate.
Such causes shall include but not be limited to: changes ordered in the Work, acts or omissions of
the Owner or separate contractors employed by the Owner, the Owner preventing the Contractor from
performing the Work pending dispute resolution, Hazardous Materials, differing site conditions,
adverse weather conditions not reasonably anticipated, fire, unusual transportation delays, labor
disputes, or unavoidable accidents or circumstances.

6.3.2 In the event delays to the project are encountered for any reason, the parties agree to
undertake reasonable steps to mitigate the effect of such delays.

ARTICLE 7

CONTRACT PRICE

The Contract Price is $38,048,500 (Thirty-eight Million, Forty-Eight Thousand, Five Hundred
Dollars), subject to adjustment in accordance with the provisions of Article 8. Price is
per REG Proposal Letter dated February 21, 2006 and includes base bid, site development, gravel
roadways, excavation, backfill, railroad siding and switches, facility office building, lab
furnishings and equipment and sales tax. 

7.1 Allowances included in the Contract Price are as set forth below. Whenever the
actual cost is more than or less than the allowance, the Contract Price shall be adjusted by Change
Order as provided in Article 8.

Facility Office Building Allowance: $517,500.00

ARTICLE 8

CHANGES IN THE WORK

Changes in the Work which are within the general scope of this Agreement may be accomplished by
Change Order without invalidating this Agreement.

8.1 CHANGE ORDERS A Change Order is a written instrument, issued after execution of this
Agreement, signed by the Owner and Contractor stating their agreement upon a change and any
adjustment in the Contract Price and/or the date of Substantial Completion. Each adjustment in the
Contract Price resulting from a Change Order shall clearly separate the amount attributatble to
Design Services.

8.2 DETERMINATION OF COST An increase or decrease in the Contract Price resulting from a change
in the Work shall be determined by one or more of the following methods:

.1 unit prices set forth in this Agreement or as subsequently agreed;

.2 a mutually accepted, itemized lump sum; or

.3 if an increase or decrease cannot be agreed to as set forth in Subparagraphs 8.2.1 or
8.2.2 and the Owner issues a written order for the Contractor proceed with the change, the
adjustment in the Contract Price shall be determine by the reasonable expense and savings of
the performance of the Work resulting from the change. If there is a net increase in the
Contract Price, a reasonable adjustment shall be made in the Contractor’s overhead and
profit. In the case of a net decrease in cost, the amount of decrease in the Contract Price
will not include a reduction in overhead and profit. The Contractor shall maintain a
documented, itemized accounting evidencing the expenses and savings. The Contractor’s
overhead and profit for changes in Project resulting in an increase shall be 10%.

8.3 NO OBLIGATION TO PERFORM The Contractor shall not be obligated to perform changed Work until
a Change Order has been executed by the Owner and Contractor, except as provided in Subparagraph
8.2.3.

8.4 ADJUSTMENT OF UNIT PRICES If a proposed Change Order alters original quantities to a degree
that application of previously agreed to unit prices would be inequitable to either the Owner or
the Contractor, the unit prices and the Contract Price shall be equitably adjusted.

8.5 UNKNOWN CONDITIONS If in the performance of the Work the Contractor finds latent, concealed
or subsurface physical conditions which differ from the conditions the Contractor reasonably
anticipated, or if physical conditions are materially different than those normally encountered and
generally recognized as inherent in the kind of work provided for in this Agreement, then the
Contract Price and/or the date of Substantial Completion shall be equitably adjusted by Change
Order within a reasonable time after the conditions are first observed.

8.6 CLAIMS FOR ADDITIONAL COST OR TIME For any claim for an increase in the Contract Price and/or
an extension in the date of Substantial Completion, the Contractor shall give the Owner written
notice of the claim within twenty-one (21) days after the occurrence giving rise to the claim or
within twenty-one (21) days after the Contractor first recognizes the condition giving rise to the
claim, whichever is later. Except in an emergency, notice shall be given before proceeding with
the Work. Claims for design and estimating costs incurred in connection with possible changes
requested by the Owner, but which do not proceed, shall be made within twenty-one (21) days after
the decision is made not to proceed. Any changes in Contract Price and/or date of Substantial
Completion resulting from such claim shall be authorized by Change Order.

8.7 EMERGENCIES In any emergency affecting the safety of persons and/or property, the Contractor
shall act, at is discretion, to prevent threatened damage, injury or loss. Any change in the
Contract Price and/or extension of the date of Substantial Completion on account of emergency work
shall be determined as provided in this Article.

ARTICLE 9

PAYMENT

	 	 	 
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9.1 INITIAL PAYMENT Upon execution of this Agreement an initial payment of
                    dollars shall be made to the Contractor. The amount of the initial payment shall
be credited against                      the Contract Price at final payment. Prior to
signing of this Agreement the Owner has made several payments to the Contract for Phase 1, Phase 2
and pre-construction services. These payments totaling $1,800,000 and the Work attributed to them
become a part of this Agreement and are included in the Contract Price of this Agreement.
Retainage on this Project shall be in amount of 5% of each invoice and shall become due in
accordance with Article 9.2.7.

9.2 PROGRESS PAYMENTS Prior to submitting the first Application for Payment, the Contractor shall
provide a Schedule of Values satisfactory to the Owner, consisting of a breakdown of the Contract
Price, with a separate line for Design Services.

9.2.1 On or before the 30th day of each month after the Work has commenced, the
Contractor shall submit to the Owner an Application for Payment in accordance with the Schedule of
Values based upon the Work completed and materials stored on the site or at other locations
approved by the Owner.

9.2.2 Within ten (10) fifteen (15) days after receipt of
each monthly Application for Payment, the Owner shall pay directly to the Contractor the
appropriate amount for which Application for Payment is made, less amounts previously paid by the
Owner.

9.2.3 If the Owner fails to pay the Contractor at the time payment of any amount becomes due, then
the Contractor may, at any time thereafter, upon serving written notice that the Work will be
stopped within five (5) days after receipt of the notice by the Owner, and after such five (5) day
period, stop the Work until payment of the amount owing has been received.

9.2.4 Payments due but unpaid shall bear interest at the rate the Owner is paying on its
construction loan or at the current “prime rate” of bank, whichever is higher, plus two points.

9.2.5 The Contractor warrants and guarantees that title to all Work, materials and equipment
covered by an Application for Payment, whether incorporated in the Project or not, will pass to the
Owner upon receipt of such payment by the Contractor free and clear of all liens, claims, security
interests or encumbrances, hereinafter referred to as “liens.”

9.2.6 The Owner’s progress payment, occupancy or use of the Project, whether in whole or in part,
shall not be deemed an acceptance of any Work not conforming to the requirements of the Contract
Documents.

9.2.7 Upon Substantial Completion of the Work, the Owner shall pay the Contractor the unpaid
balance of the Contract Price, less a sum equal to the Contractor’s and Owners mutually agreed
upon estimated cost of completing any unfinished items as agreed to between the Owner and
Contractor as to extent and time for completion. The Owner thereafter shall pay the Contractor
monthly the amount retained for unfinished items as each item is completed. Contractor shall
notify Owner when it believes the Work is substantially complete. Within five (5) days of Owner’s
receipt of Contractor’s notice, Owner and Contractor will jointly inspect such Work to verify that
it is substantially complete in accordance with the Contract Documents. If such Work is
substantially complete, Contractor and Owner shall jointly prepare and issue a Certificate of
Substantial Completion that will set forth (i) the date of Substantial Completion of the Work
or portion thereof, (ii) the remaining items of Work that have to be
completed before final payment, (iii) provisions establishing Owner’s and Contractor’s
responsibility for the Project’s security, maintenance, utilities and insurance pending final
payment, and (iv) an acknowledgement that warranties commence to run on the date of Substantial
Completion, except as may otherwise be noted in the Certificate of Substantial Completion.

9.3 FINAL PAYMENT

9.3.1 Final payment, consisting of the unpaid balance of the Contract Price less the initial
payment made under Paragraph 9.1, shall be due and payable when the Work is fully completed.
Before issuance of final payment, the Owner may request satisfactory evidence that all payrolls,
materials bills and other indebtedness connected with the Work have been paid or otherwise
satisfied.

9.3.2 In making final payment the Owner waives all claims except for:

.1 outstanding liens;

.2 improper workmanship or defective materials appearing within one year after the date of
Substantial Completion;

.3 Work not in conformance with the Contract Documents; and

.4 terms of any special warranties required by the Contract Documents.

9.3.3 In accepting final payment, the Contractor waives all claims except those previously made in
writing and which remain unsettled.

9.3.4 At the time of submission of its final payment, Contractor shall provide the following
information: (1) An affidavit that there are no claims, obligations or liens outstanding or
unsatisfied for labor, services, material, etc., (2) A general release executed by REG
waiving all claims except those claims previously made in writing to Owner, (3) The delivery of the
operating manuals, warranties and other deliverables required by the contract documents, (4)
Certificates of Insurance confirming that required coverage will remain in effect consistent with
the requirements of the contract documents; and (5) Such other reasonable and customary
documents as necessary for owner and its lender to obtain the required clean title to the plant
which may include all final lien waivers from Contractor and its subcontractors.

9.3.5 Contractor shall indemnify, defend and hold harmless Owner from any claims or mechanics
liens brought against Owner or against the Project as a result of the failure of Contractor, 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 on in connection with the Work. Within
fifteen (15) days of receiving written notice from Owner that such a claim or mechanics lien has
been filed, Contractor shall commence to take the steps necessary to discharge said claim or lien,
including, if necessary, the furnishing of a mechanics lien bond. If Contractor fails to do so,
Owner will have the right to discharge the claim or lien and hold Contractor liable for costs and
expenses incurred including attorney’s fees. The foregoing obligation of Contractor shall be
subject to reasonable disputes that Contractor may have with respect to any claim or mechanics lien
provided Contractor provides written notice of such dispute to Owner and Owner agrees to delay the
enforcement of its rights under this Section.

ARTICLE 10

INDEMNITY, INSURANCE AND WAIVER OF SUBROGATION

10.1 INDEMNITY

10.1.1 To the fullest extent permitted by law, the Contractor shall defend, indemnify and hold the
Owner harmless from all claims for bodily injury and

	 	 	 
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property damage (other than to the Work itself
and other property insured under Paragraph 10.5), including resulting loss of use that may arise
from the performance of the Work, to the extent of the negligence attributed to such acts or
omissions by the Contractor, Subcontractors or anyone employed directly or indirectly by any of
them or by anyone for whose acts any of them may be liable. The Contractor shall not be required
to defend, indemnify or hold harmless the Owner for any acts, omissions or negligence of the Owner,
Owner’s employees, agents or separate contractors.

10.1.2 The Owner shall cause any other contractor who may have a contract with the Owner to
perform work in the areas where Work will be performed under this Agreement, to agree to indemnify
the Contractor, Subcontractors or anyone employed directly or indirectly by any of them or anyone
for whose acts any of them may be liable and hold them harmless from all claims for bodily injury
and property damage, other than property insured under Paragraph 10.5, that may arise from the
contractor’s operations. Such provisions shall be in a form satisfactory to the Contractor.

10.2 CONTRACTOR’S LIABILITY INSURANCE

10.2.1 The Contractor shall obtain and maintain insurance coverage for the following claims which
may arise out of the performance of this Agreement, whether resulting from the Contractor’s
operations or by the operations of any Subcontractor, anyone in the employ of any of them, or by an
individual or entity for whose acts they may be liable:

.1 workers’ compensation, disability benefit and other employee benefit claims under acts
applicable to the Work;

.2 under applicable employers liability law, bodily injury, occupational, sickness, disease
or death claims of the Contractor’s employees;

.3 bodily injury, sickness, disease, or death claims for damages to persons not employed by
the Contractor;

.4 usual personal injury liability claims for damages directly or indirectly related to the
person’s employment by the Contractor or for damages to any other person;

.5 damage to or destruction of tangible property, including resulting loss of use, claims
for property other than the work itself and other property insured under Paragraph
11.5 10.5  ;

.6 bodily injury, death or property damage claims resulting from motor vehicle liability in
the use, maintenance or ownership of any motor vehicle; and

.7 contractual liability claims involving the Contractor’s obligations under Subparagraph
11.1.1.

10.2.2 The Contractor’s Commercial General and Automobile Liability Insurance as required by
Subparagraph 11.2.1 shall be written for not less than the following limits of liability:

	 	 	 	 	 
	.1 Commercial General Liability Insurance
	 	 	 	 
	a. Each Occurrence Limit
	 	$	1,000,000	 
	 
	 	 	 
	b. General Aggregate
	 	$	2,000,000	 
	 
	 	 	 
	c. Products/Completed

Operations Aggregate
	 	$	2,000,000	 
	 
	 	 	 
	d. Personal and Advertising
Injury Limit
	 	$	1,000,000	 
	 
	 	 	 
	 
	 	 	 	 
	.2 Comprehensive Automobile Liability Insurance
	 	 	 	 
	a. Combined Single Limit Bodily

Injury and Property Damage
	 	$	1,000,000	 
	 
	 	 	 
	 
	 	Each occurrence	 
	Or
	 	 	 	 
	b. Bodily Injury
	 	$	N/A	 
	 
	 	 	 
	 
	 	Each Person	 
	 
	 	$	N/A	 
	 
	 	 	 
	 
	 	Each Occurrence
	c. Property Damage
	 	$	N/A	 
	 
	 	 	 
	 
	 	Each Occurrence	 
	.3 Umbrella Liability
	 	$	10,000,000	 
	 
	 	 	 

10.2.3 Commercial General Liability Insurance may be arranged under a single policy for the full
limits required or by a combination of underlying policies and an Excess or Umbrella Liability
policy.

10.2.4 The policies shall contain a provision that coverage will not be cancelled or not renewed
until at least thirty (30) days’ prior written notice has been given to the Owner. Certificates of
insurance showing required coverage to be in force shall be filed with the Owner prior to
commencement of the Work.

10.2.5 Products and Completed Operations insurance shall be maintained for a minimum period of at
least one (1) year(s) after either ninety (90) days following the date of Substantial
Completion or final payment, whichever is earlier.

10.3 PROFESSIONAL LIABILITY INSURANCE The Architect/Engineer’s professional liability insurance
for claims arising from the negligent performance of professional services under this Agreement
shall be written for not less than $1,000,000 per claim and in the aggregate with a
deductible not to exceed $100,000. These requirements shall be continued in effect for
one (1) year(s) after the date of Substantial Completion. If the Architect/Engineer
retains consultants for a portion of the design, their professional liability insurance coverage,
including deductible amounts, shall be set forth in Article 13 of this Agreement.

10.4 OWNER’S LIABILITY INSURANCE The Owner shall be responsible for obtaining and maintaining its
own liability insurance. Insurance for claims arising out of the performance of this Agreement may
be purchased and maintained at the Owner’s discretion.

10.5 INSURANCE TO PROTECT PROJECT

10.5.1 The Owner Contractor shall obtain and maintain
property insurance in a form acceptable to the Contractor
Owner upon the entire Project for the full cost of replacement at the time of any loss.
This insurance shall include as named insureds the Owner, Contract, Architect/Engineer,
Subcontractors

	 	 	 
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and Subsubcontractors. This insurance shall insure against loss from the perils of
fire and extended coverage, and shall include “all risk” insurance for physical loss or damage
including without duplication of coverage, at least: theft, vandalism, malicious mischief, transit,
collapse, falsework, temporary buildings, debris removal, flood, earthquake, resting, and damage
resulting from defective design, workmanship or material. The Owner
Contractor shall increase limits of coverage, to reflect estimated replacement cost. The
Owner Contractor shall be responsible for any co-insurance
penalties or deductibles. The cost of this insurance shall be billed to Owner outside of the
contract price at Contractor’s actual cost.

10.5.2 If the Owner occupies or uses a portion of the Project prior to its Substantial Completion,
such occupancy or use shall not commence prior to a time mutually agreed to by the Owner and the
Contractor and to which the insurance company or companies providing the property insurance have
consented by endorsing the policy or policies. This insurance shall not be cancelled or lapsed on
account of partial occupancy. Consent of the Contractor to such early occupancy or use shall not
be unreasonably withheld.

10.5.3 The Owner Contractor shall obtain and maintain boiler
and machinery insurance as necessary. The interest of the Owner, Contractor, Architect/Engineer,
Subcontractors and Subsubcontractors shall be protected under this coverage. This insurance
shall include testing with a limit of $10,000,000. If the Owner wishes boiled and testing limits
higher than $10,000,000, or other special coverages Contractor will attempt to include in the
Builders Risk policy. The cost of this insurance shall be billed to Owner outside of the contract
price at Contractor’s actual cost.

10.5.4 The Owner shall purchase and maintain insurance to protect the Owner, Contractor,
Architect/Engineer, Subcontractors and Subsubcontractors against loss of use of Owner’s property
due to those perils insured pursuant to Paragraph 10.5. Such policy will provide coverage for
expediting expenses of materials, continuing overhead of the Owner and the Contractor,
Architect/Engineer, Subcontractors and Subsubcontractors, necessary labor expense including
overtime, loss of income by the Owner and other determined exposures. Exposures of the Owner,
Contractor, Architect/Engineer, Subcontractors, Subsubcontractors, shall be determined by mutual
agreement with separate limits of coverage fixed for each item.

10.5.5 Upon the Contractor’s request, the Owner shall provide the Contractor with a copy of all
policies before an exposure to loss may occur. Copies of any subsequent endorsements shall be
furnished to the Contractor. The Contractor shall be given thirty (30) days’ notice of
cancellation, non-renewal, or any endorsements restricting or reducing coverage. The Owner shall
give written notice to the Contractor before commencement of the Work if the Owner will not be
obtaining property insurance. In that case, the Contractor may obtain insurance in order to
protect its interest in the Work as well as the interest of the Architect/Engineer, Subcontractors,
Subsubcontractors in the Work. The Contract Price shall be increased by the cost of the insurance
through Change Order. If the Contractor is damaged by failure of the Owner to purchase or maintain
property insurance or to so notify the Contractor, the Owner shall bear all reasonable costs
incurred by the Contractor arising from the damage.

10.6 PROPERTY INSURANCE LOSS ADJUSTMENT

10.6.1 Any insured loss shall be adjusted with the Owner and the Contractor and made payable to
the Owner and Contractor as trustee for the insureds, as their
interests may appear, subject to any applicable mortgagee clause.

10.6.2 Upon the occurrence of an insured loss, monies received will be deposited in a separate
account and the trustees shall make distribution in accordance with the agreement of the parties in
interest, or in the absence of such agreement, in accordance with an arbitration award pursuant to
Article 12. If the trustees are unable to agree between themselves on the settlement of the loss,
such dispute shall also be submitted for resolution pursuant to Article 12.

10.7 WAIVER OF SUBROGATION

10.7.1 The Owner and Contractor waive all rights against each other, the Architect/Engineer, and
any of their respective employees, agents, consultants, Subcontractors, Subsubcontractors, for
damages caused by risks covered by insurance provided in Paragraph 10.5 to the extent they are
covered by that insurance, except such rights as they may have to the proceeds of such insurance
held by the Owner and Contractor as trustees. The Contractor shall require similar waivers from
the Architect/Engineer and all Subcontractors, and shall require each of them to include similar
waivers in their subsubcontracts and consulting agreements.

10.7.2 The Owner waives subrogation against the Contractor, Architect/Engineer, Subcontractors and
Subsubcontractors on all property and consequential loss policies carried by the Owner on adjacent
properties and under property and consequential loss policies purchased for the Project after its
completion.

10.7.3 If the policies of insurance referred to in this Paragraph require an endorsement to
provide for continued coverage where there is a waiver of subrogation, the owners of such policies
will cause them to be so endorsed.

ARTICLE 11

TERMINATION OF THE AGREEMENT AND OWNER’S RIGHT TO

PERFORM CONTRACTOR’S RESPONSIBILITIES

11.1 TERMINATION BY THE CONTRACTOR

11.1.1 Upon seven (7) days’ written notice to the Owner, the Contractor may terminate this
Agreement for any of the following reasons:

.1 if the Work has been stopped for thirty (30) day period;

	 	a.	 	under court order or order of other governmental authorities having
jurisdiction;
	 
	 	b.	 	as a result of the declaration of a national emergency or other
governmental act during which, through no act or fault of the Contractor,
materials are not available; or
	 
	 	c.	 	because of the Owner’s failure to pay the Contractor in accordance
with this Agreement;

.2 if the Work is suspended by the Owner for sixty (60) days;

.3 if the Owner materially delays the Contractor in the performance of the Work’

.4 if the Owner otherwise materially breaches this Agreement: and such material breach
has not been cured by Owner within ten (10) days of written notice from Contractor of such
material breach; or

.5 if the Owner fails to furnish reasonable evidence that sufficient funds are available and
committed for the entire cost of the Project in accordance with Subparagraph 4.1.3 of this
Agreement.

11.1.2 Upon termination by the Contractor in accordance with Subparagraph 11.1.1. the Contractor
shall be entitled to recover from the Owner payment

	 	 	 
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for all Work executed and for any proven loss,
cost or expense in connection with the Work, plus all demobilization costs and reasonable damages.
In addition, the Contractor shall be paid an amount calculated as set forth either in Subparagraph
11.3.1 or 11.3.2 depending on when the termination occurs, and Subparagraphs 11.3.3 and 11.3.4.

11.2 OWNER’S RIGHT TO PERFORM CONTRACTOR’S OBLIGATIONS AND TERMINATION BY THE OWNER FOR CAUSE

11.2.1 If the Contractor persistently fails to perform any of its obligations under this
Agreement, the Owner may, after seven (7) days’ written notice, during which period the Contractor
fails to perform such obligation, undertake to perform such obligations. The Contract Price shall
be reduced by the cost to the Owner of performing such obligations.

11.2.2 Upon seven (7) days’ written notice to the Contractor and the Contractor’s surety, if any,
the Owner may terminate this Agreement for any of the following reasons:

.1 if the Contractor persistently utilizes improper materials and/or inadequately skilled
workers;

.2 if the Contractor does not make proper payment to laborers, material suppliers or
contractors;

.3 if the Contractor persistently fails to abide by the orders, regulations, rules,
ordinances or laws of governmental authorities having jurisdiction; or

.4 if the Contractor otherwise materially breaches this Agreement.

If the Contractor fails to cure within the seven (7) days, the Owner, without prejudice to any
other right or remedy, may take possession of the site and complete the Work utilizing any
reasonable means. In this event, the Contractor shall not have a right to further payment until
the Work is completed. This Agreement may be immediately terminated by Owner in the event
Contractor becomes financial insolvent. 

11.2.3 If the Contractor files a petition under the Bankruptcy Code, this Agreement shall
terminate if the Contractor or the Contractor’s trustee rejects the Agreement or, if there has been
a default, the Contractor is unable to give adequate assurance that the Contractor will perform as
required by this Agreement or otherwise is unable to comply with the requirements for assuming this
Agreement under the applicable provisions of the Bankruptcy Code.

11.2.4 In the event the Owner exercises its rights under Subparagraphs 11.2.1 or 11.2.2, upon the
request of the Contractor the Owner shall provide a detailed accounting of the cost incurred by the
Owner.

11.3 TERMINATION BY OWNER WITHOUT CAUSE If the Owner terminates this Agreement other than as set
forth in Paragraph 11.2, the Owner shall pay the Contractor for all Work executed and for any
proven loss, cost or expense in connection with the Work, plus all demobilization costs. In
addition, the Contractor shall be paid an amount calculated as set forth below:

.1 If the Owner terminates this Agreement prior to commencement of the construction, the Contractor shall be paid the unpaid balance of
the Contractor’s design costs as set forth in the Schedule of Values plus 5% of the remaining balance of the Contract Price.

.2 If the Owner terminates this Agreement after commencement of the construction, the Contractor shall be paid the unpaid balance of the
Contractor’s design costs as set forth in the Schedule of Values plus 10% of the remaining balance of the Contract Price.

.3 In either event, the initial payment as provided in Paragraph 9.1 shall be credited to the Owner’s account at the time of termination.

.4 The Owner shall also pay to the Contractor fair compensation, either by purchase or rental at the election of the Owner, for any
equipment retained. The Owner shall assume and become liable for obligations, commitments and unsettled claims that the Contractor has
previously undertaken or incurred in good faith in connection with the Work or as a result of the termination of this Agreement. As a
condition of receiving the payments provided under this Article 11, the Contractor shall cooperate with the Owner by taking all steps
necessary to accomplish the legal assignment of the Contractor’s rights and benefits to the Owner, including the execution and delivery of
required papers.

11.4 SUSPENSION BY THE OWNER FOR CONVENIENCE

11.4.1 The Owner may order the Contractor in writing to suspend, delay or interrupt all or
any part of the Work without cause for such period of time as the Owner may determine to be
appropriate for its convenience.

11.4.2 Adjustments caused by suspension, delay or interruption shall be made for increases
in the Contract Price and/or the date of Substantial Completion. No adjustment shall be made if
the Contractor is or otherwise would have been responsible for the suspension, delay or
interruption of the Work, or if another provision of this Agreement is applied to render an
equitable adjustment.

ARTICLE 12

DISPUTE RESOLUTION

12.1 INITIAL DISPUTE RESOLUTION If a dispute arises out of or relates to this Agreement or
its breach, the parties shall endeavor to settle the dispute first through direct discussions. If
the dispute cannot be settled through direct discussions, the parties shall endeavor to settle the
dispute by mediation under the Construction Industry Mediation Rules of the American Arbitration
Association before recourse to arbitration. Issues to be mediated are subject to the exceptions in
Paragraph 12.2 for arbitration. The location of the mediation shall be the location of the
Project. Once one party files a request for mediation with the other contracting party and with
the American Arbitration Association, the parties agree to conclude such mediation within sixty
(60) days of filing of the request.

12.2 AGREEMENT TO ARBITRATE Any controversy or claim arising out of or relating to this Agreement
or its breach not resolved by mediation, except for claims which have been waived by the making or
acceptance of final payment, shall be decided by arbitration in accordance with the Construction
Industry Arbitration Rules of the American Arbitration Association then in effect unless the
parties mutually agree otherwise. Notwithstanding Paragraph 13.2, this agreement to arbitrate
shall be governed by the Federal Arbitration Act.

12.3 NOTICE OF DEMAND A written demand for arbitration shall be filed with the American
Arbitration Association and the other party to this Agreement within a reasonable time after the
dispute or claim has arisen, but in not event after the applicable statute of limitations for a
legal or equitable proceeding would have run.

12.4 AWARD The arbitration award shall be final. Judgment upon the award may be confirmed in any
court having jurisdiction.

12.5 WORK CONTINUANCE AND PAYMENT Unless otherwise agreed in writing, the Contractor shall
continue the Work and maintain the

	 	 	 
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approved schedules during any arbitration proceedings. If the
Contractor continues to perform, the Owner shall continue to make payments in accordance with this
Agreement.

12.6 MULTIPARTY PROCEEDING The parties agree that all parties necessary to resolve a claim shall
be parties to the same arbitration proceeding. Appropriate provisions shall be included in all
other contracts relating to the Work to provide for the consolidation of arbitrations.

12.7 COST OF DISPUTE RESOLUTION The prevailing party in any dispute arising out of or relating to
this Agreement or its breach that is resolved by arbitration or litigation shall be entitled to
recover form the other party reasonable attorney’s fees, costs and expenses incurred by the
prevailing party in connection with such arbitration or litigation.

ARTICLE 13

MISCELLANEOUS PROVISIONS

13.1 ASSIGNMENT Neither the Owner nor the Contractor shall assign their interest in this
Agreement without the written consent of the other except as to the assignment of proceeds.
Owner can collaterally assign the Agreement to its lender without obtaining the prior written
consent to Contractor.

13.2 GOVERNING LAW This Agreement shall be governed by the law in effect at the location of this
Project.

13.3 SEVERABILITY The partial or complete invalidity of any one or more provisions of this
Agreement shall not affect the validity or continuing force and effect of any other provision.

13.4 NO WAIVER OF PERFORMANCE The failure of either party to insist, in any one or more
instances, on the performance of any of the terms, covenants or conditions of this Agreement, or to
exercise any of its rights, shall not be construed as a waiver or relinquishment of such term,
covenant or condition or right with respect to further performance.

13.5 TITLES The title given to the Articles of this Agreement are for ease of reference only and
shall not be relied upon or cited for any other purpose.

13.6 OTHER PROVISIONS

13.6.1 Contractor warrants and guarantees that the Project will be capable of obtaining
BQ-9000 accreditation.

13.6.2 Our intent is to build this project on a Merit Shop basis. Should we be required to
enter into any wage agreements (prevailing wage, Union, etc, ) the extra cost and/or time
associated with this will be treated as a Change in the Work under Article 8 of this agreement.

13.6.3 Owner is responsible to provide all commodities require for the start-up and/or testing
of the facility.

13.6.4 Performance and Payment Bonds have not been included in this Agreement. At Owner’s
request bonds will be provided and the Owner agrees to pay Contractor at Contractor’s actual cost
outside of this Agreement.

ARTICLE 14

EXISTING CONTRACT DOCUMENTS

The Contract Documents in existence at the time of execution of this Agreement are as follows:

Technical Specifications, dated February 21, 2006.

Contract Drawings, dated February 21, 2006.

20007 – GEN101.0TITLE SHEET & AERIAL VIEWS

20007 – GEN102.0PROJECT INFORMATION SHEET

20007 – STR101.0GENERAL STRUCTURAL SPECIFICIATIONS

20007-GAR111.0 SITE PLAN

20007-GAR112.0 GENERAL PLAN FACILITIES LAYOUT

20007-GAR113.0 GENERAL PLAN TANK FARM

20007-GAR211.0 TRUCK & RAIL LOAD/UNLOAD & HCL UNLOAD GRADE LEVEL PLAN

20007-GAR212.0 TRUCK & RAIL LOAD/UNLOAD UPPER LEVEL PLAN

20007-GAR213.0 GRADE LEVEL UTILITY AREA PLAN

20007-GAR214.0 PIPE BRIDGE LEVEL UTILITY AREA PLAN

20007-GAR215.0 TANK FARM PLAN SOUTH AREA

	 	 	 
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20007-GAR216.0 TANK FARM PLAN MIDDLE AREA

20007-GAR217.0 TANK FARM PLAN NORTH AREA

20007-GAR218.0 STORAGE AND FIRE PUMP BUILDING PLAN & SECTIONS

20007-GAR221.0 PIPE BRIDGE “A2”, “A3” AND “A4” ELEVATIONS

20007-GAR222.0 TRUCK & RAIL LOAN/UNLOAD FLARE SECTION

20007-GAR223.0 TRUCK LOAD & UNLOAD BLDG. & GRID “AB” PIPE BRIDGE SECTIONS

20007-GAR411.0 PROCESS & SUPPORT BLDG. MAIN LEVEL PLAN

20007-GAR412.0 PROCESS & SUPPORT BLDG. LOWER ACCESS LEVEL PLAN

20007-GAR413.0 PROCESS & SUPPORT BLDG. SECOND LEVEL PLAN

20007-GAR414.0 PROCESS & SUPPORT BLDG. THIRD LEVEL PLAN

20007-GAR415.0 PROCESS & SUPPORT BLDG. UPPER LEVEL PLAN

20007-GAR416.0 PROCESS & SUPPORT BLDG. TOWER LEVEL PLAN

20007-GAR421.0 PROCESS BUILDING SECTION AT GRID “CD” TO “CE”

20007-GAR422.0 PROCESS BUILDING SECTION AT GRID “CC” TO “CD”

20007-GAR423.0 PROCESS BUILDING SECTION AT GRID “CB” TO “CC”

20007-GAR424.0 PROCESS BUILDING SECTION AT GRID “CA” TO “CB”

20007-GAR425.0 PROCESS BUILDING SECTIONS

20007-GAR426.0 PROCESS BUILDING SECTIONS

20007-GAR427.0 CONTROL & UTILITY BUILDING SECTION

20007-GAR428.0 PRETREAT BUILDING & EMPLOYEE FACILITY SECTIONS

20007-GAR429.0 PRETREAT TOWER & SUPPORT BUILDING SECTIONS

20007-GAR711.0 TRUCK SCALE & ADMINITRATION BUILDING GRADE LEVEL PLAN

REG Proposal Letter, dated February 21, 2006

REG Process Guarantee Letter, dated February 21, 2006

	 	 	 
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This Agreement is entered into as of the date entered in Article 1.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	OWNER: CENTRAL IOWA ENERGY, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:

	 	/s/ Jeremie Ran
	 	 	 	BY:
	 	/s/ James Johnston	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	PRINT NAME: James Johnston	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	PRINT TITLE: Chairman 3-10-06	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	CONTRACTOR: RENEWABLE ENERGY GROUP	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:

	 	/s/ Vickie Ayers
	 	 	 	BY:
	 	/s/ Philip Sargent	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	PRINT NAME: Philip Sargent	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	PRINT TITLE: Member	 	 

	 	 	 
	AGC DOCUMENT NO. 415 – STANDARD FORM OF DESIGN-BUILD AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND CONTRACTOR
	©1993. The Associated General Contractors of America

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