Document:

Exhibit 10.1

AGREEMENT

BETWEEN OWNER AND DESIGN/BUILDER

ON THE BASIS OF A STIPULATED PRICE

 

THIS AGREEMENT is made and entered into this 6th day
of December, 2004 by and between LSCP, L.P., an Iowa limited partnership
(hereinafter called OWNER) and ICM,
Inc., a Kansas corporation (hereinafter called DESIGN/BUILDER).

 

OWNER and DESIGN/BUILDER, in consideration of the mutual covenants
hereinafter set forth, agree as follows:

 

Article 1.       THE PROJECT AND
WORK.

 

1.01.        DESIGN/BUILDER shall
complete all Work for the Project as specified or indicated in the Contract
Documents. The Project is generally described as a retrofit of OWNER’s existing
fuel-grade ethanol plant located in or around Marcus, Iowa that increases the
capacity of said plant to fifty-two (52) million gallons per year of denatured
fuel-grade ethanol.  The DESIGN/BUILDER’s
Work includes engineering services, labor, materials, and equipment in
connection with such retrofit.  A more
specific statement of the scope of work to be provided by DESIGN/BUILDER is
described in Exhibits A and B.

 

Article 2.       CONTRACT TIMES.

 

2.01.        Days to
Achieve Substantial Completion and Final Payment.  The Work will be completed and ready for
final payment of the Contract Price in accordance with paragraph 13.08 of the
General Conditions within thirty (30) days after the date the OWNER shuts down
the plant in late March or early April of 2005, unless otherwise provided in
the Contract Documents.  During such
30-day period, DESIGN/BUILDER anticipates that the plant will need to be shut
down for no more than four (4) days in order for DESIGN/BUILDER to complete the
Work.

 

Article 3.       CONTRACT PRICE.

 

3.01.        OWNER shall pay
DESIGN/BUILDER the Contract Price for completion of the Work in accordance with
the Contract Documents.  The Contract
Price may be adjusted as provided by the General Conditions.  For all Work, OWNER shall pay to
DESIGN/BUILDER a price equal to the aggregate of (i) Four Million Six Hundred
Thousand Dollars ($4,600,000), and (ii) amounts due and payable by OWNER to
DESIGN/BUILDER under paragraph 2 of Exhibit B.

 

3.02.        Unless otherwise
expressly agreed by the parties, the Work to be performed by DESIGN/BUILDER
shall include only those items listed in Exhibits A and B.  Owner shall be responsible for any and all
other items relating to such retrofit.

 

3.03         DESIGN/BUILDER and
OWNER agree to maintain the insurance coverage, limits, and deductibles set
forth in Exhibit D.

 

Article 4.       PAYMENT
PROCEDURES

 

4.01         Payment of Contract
Price.  DESIGN/BUILDER shall
submit and OWNER will process Applications for Payment of the Contract Price in
accordance with Article 13 of the General Conditions and Sections 4.01.A.
through C. below.

 

1

 

              A.      Down Payment. On
or before delivery of the Notice to Proceed, OWNER shall make a down payment of
Ten Percent (10%) of the Contract Price to DESIGN/BUILDER, which shall be
applied toward the first progress payment with any excess applied toward
immediately successive progress payments thereafter.

 

              B.       Progress Payments.  OWNER shall make progress payments on account
of all of the remaining balance of the Contract Price on the basis of
DESIGN/BUILDER’s Applications for Payment. 
Progress payments shall be due and payable in accordance with 13.04 of
the General Conditions.  All such
payments will be measured by the acceptable Schedule of Values established
under paragraph 2.03.A of the General Conditions.  No retainage will be withheld from such
payments.

 

              C.       Final Payment.  OWNER shall pay the remaining balance, if
any, of the Contract Price to DESIGN/BUILDER in accordance with paragraph 13.08
of the General Conditions; provided, however, OWNER may withhold from such
payment such amounts as the parties may mutually agree is the reasonable value
or cost for DESIGN/BUILDER to complete all remaining or incomplete punch list
items.

 

Article 5.       INTEREST.

 

5.01.        All moneys not paid by
OWNER to DESIGN/BUILDER when due hereunder shall bear interest at the rate of
Eighteen Percent (18%) per annum, compounded monthly, from the due date thereof.

 

Article 6.       DESIGN/BUILDER’S
REPRESENTATIONS.

 

6.01.        DESIGN/BUILDER makes
the following representations:

 

             A.      DESIGN/BUILDER has examined and carefully
studied the Contract Documents listed in Sections 7.01.A through C (including
the representations and warranties concerning the performance criteria set
forth in Exhibit A), and, to the extent prepared (but not yet approved by
OWNER) prior to the Effective Date, the documents described in Section 7.01.D.3
and .4.

 

             B.       DESIGN/BUILDER is familiar with and is
satisfied as to all federal, state and local Laws and Regulations in existence
on the Effective Date that may affect cost, progress, performance, furnishing,
and completion of the Work in accordance with the Contract Documents.

 

             C.       DESIGN/BUILDER is familiar with the work
to be performed by OWNER and others at the Site that relates to the Work as
indicated in the Contract Documents.

 

             D.       DESIGN/BUILDER has correlated the
information known to DESIGN/BUILDER, reports and drawings identified in the
Contract Documents, and all additional examinations, investigations, tests,
studies and data with the Contract Documents.

 

             E.       DESIGN/BUILDER has given OWNER written
notice of all conflicts, errors, ambiguities or discrepancies that
DESIGN/BUILDER has discovered in the Contract Documents and the written
resolution thereof by OWNER is acceptable to DESIGN/BUILDER, and the Contract
Documents are sufficient to indicate and convey understanding of all terms and
conditions for performance and furnishing of the Work.

 

2

 

Article 7.       CONTRACT
DOCUMENTS.

 

7.01.        The Contract
Documents which comprise the entire agreement between OWNER and DESIGN/BUILDER
concerning the Work consist of the following:

 

                A.    This Agreement (pages 1 to 4, inclusive).

 

                B.    Exhibits to this Agreement (A to D,
inclusive).

 

                C.    General Conditions of the Contract Between
Owner and Design/Builder (pages 1 to 35, inclusive).

 

                D.    The following which may be delivered, prepared,
or issued after the Effective Date of this Agreement and are not attached
hereto.

 

                1.      Notice to Proceed.

 

                2.     All Written Amendments and other documents
amending, modifying or supplementing the Contract Documents pursuant to
paragraph 3.03.A of the General Conditions.

 

                3.     Specifications as defined in paragraph
1.01.A.32 of the General Conditions.

 

                4.     Drawings as defined in paragraph 1.01.A.16
of the General Conditions.

 

7.02.        There are no Contract
Documents other than those listed above in this Article 7.  The Contract Documents may only be amended,
modified or supplemented as provided in paragraph 3.03.A of the General
Conditions.

 

Article 8.       MISCELLANEOUS.

 

8.01.        The attached General
Conditions of the Contract between Owner and Design/Builder are referred to
herein as the General Conditions.

 

8.02.        Terms used in this
Agreement which are defined in Article 1 of the General Conditions will have
the meanings indicated therein.

 

8.03.        No assignment by a
party hereto of any rights under or interests in the Contract Documents will be
binding on another party hereto without the written consent of the party sought
to be bound, which consent shall not be unreasonably withheld; and,
specifically but without limitation, moneys that may become due and moneys that
are due may not be assigned without such consent (except to the extent that the
effect of this restriction may be limited by law), and unless specifically
stated to the contrary in any written consent to an assignment no assignment
will release or discharge the assignor from any duty or responsibility under
the Contract Documents.

 

8.04.        OWNER and
DESIGN/BUILDER each binds itself, its successors, assigns and legal
representatives to the other party hereto, its successors, assigns and legal
representatives in respect to all covenants, agreements and obligations
contained in the Contract Documents.

 

8.05.        Any provision or part
of the Contract Documents held to be void or unenforceable under any Law or
Regulation shall be deemed stricken, and all remaining provisions shall
continue to be valid 

 

3

 

and binding upon OWNER and DESIGN/BUILDER, who agree that the Contract
Documents shall be reformed to replace such stricken provision or part thereof
with a valid and enforceable provision that comes as close as possible to
expressing the intention of the stricken provision.

 

8.06.        This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which shall constitute one agreement that is binding upon
all of the parties hereto, notwithstanding that all parties are not signatories
to the same counterpart.  Facsimile
signatures of the parties hereto shall be binding.

 

8.07.        This Agreement will
be effective on the date first written above. 
Within _____________ (10) days of such effective date, OWNER
shall provide to DESIGN/BUILDER the Notice to Proceed and evidence, acceptable
to DESIGN/BUILDER, of funding for the Project.

 

IN WITNESS WHEREOF, OWNER and DESIGN/BUILDER have signed this Agreement
on the date first written above.

 

	
  OWNER: Little Sioux Corn
  Processors, LP

  	
   

  	
  DESIGN/BUILDER: ICM, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Stephen G. Roe

  	
   

  	
  By:

  	
  /s/ Dave Vander Griend

  	
   

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  CEO

  	
   

  

Name:___________________________

Addresses for giving notices and representatives:

 

	
  Name:

  	
  Stephen G. Roe

  	
   

  	
  Name:

  	
  Dave Vander Griend

  	
   

  
	
  Title:

  	
  General Manager

  	
   

  	
  Title:

  	
  C.E.O.

  	
   

  
	
  Address:

  	
  4808 F Ave., Marcus, IA

  	
   

  	
  Address:

  	
  310 N. First Street, Colwich, KS

  	
   

  
	
  Phone:

  	
  712-376-2815

  	
   

  	
  Phone:

  	
  316-796-0900

  	
   

  
	
  Facsimile:

  	
  712-376-2815

  	
   

  	
  Facsimile:

  	
  316-796-0570

  	
   

  

 

4

 

Exhibit
A

to

Agreement
Between Owner and Design/Builder

On the
Basis of a Stipulated Price

 

Performance Criteria

 

                DESIGN/BUILDER
represents and warrants to OWNER that the completed Project will satisfy the
following performance criteria.  Prior to
final payment under paragraph 13.08 of the General Conditions, DESIGN/BUILDER
shall commission the Project and conduct a seven-day performance test to
establish compliance with the following performance criteria.  Compliance shall be computed on the average
over the seven-day performance test.  If
the Project fails to reach such performance criterion, then DESIGN/BUILDER
shall (at no additional cost to OWNER) make such changes in design,
construction, or equipment as required to meet the criterion, and conduct
another seven day performance test. 
DESIGN/BUILDER makes no other representation, warranty or guarantee
concerning the Project including, without limitation, production of DDGS or
CO2, or compliance with any applicable atmospheric emissions standards.

 

Table 1  ethanol plant criteria—52 MGY capacity

	
  Criteria

  	
  Specification

  	
  Testing Statement

  	
  Documentation

  
	
  Plant Capacity—fuel-grade ethanol

  	
  Capable of operating at a rate of 52 million gallons per year of
  denatured fuel grade ethanol meeting the specifications of ASTM 4806 and
  capable of operating at a rate of 675 gallons per minute beer column feed
  rate.

  	
  Seven-day performance test

  	
  Concurrence of production records and a written report from
  DESIGN/BUILDER.

  

 

5

 

Exhibit
B

to

Agreement
Between Owner and Design/Builder

On the
Basis of a Stipulated Price

 

1.             Items
Included in Scope of Work:

(a)           Develop ISO Piping
Drawings

(b)           Review Permitting at Site

(c)           Revise Permitting as
needed

(d)           *Install grating on top of
Stillage Tanks

(e)           *Extend Concrete at Wet
Feed Pad which consists of:

Design
Concrete structure for walls and floor

Purchase
and deliver rebar and concrete materials

Pour
footings for concrete walls

Pour
concrete walls

Pour
extended floor

(f)            Install Expansion of RO
System which consists of:

Purchase
and deliver RO system components which consists of:

                6-3 array RO Filter System

                Tonkaflo high pressure pump

                RO system control package

                4th multimedia filter

Iron Recovery System with 3
cone bottomed tanks, related pumps, chemical feed system, and valves &
control system

Run
additional piping

Run
additional conduit and wires to unit

Install
RO system based on US Water design

(g)           Replace Liq Pump
which consists of:

Purchase
and deliver Liq Pump

Install
Liq Pump

Modify
Suction and Discharge Piping

(h)           Replace Fermenter Spray
Ball CIP Pump which consists of:

Purchase
and deliver CIP Pump

Install
CIP Pump

Modify
Suction and Discharge Piping

(i)            Add onto Process Building
MCC which consists of:

Determine
electrical load requirements and availability

Purchase
and deliver MCC components

Install
new MCC cabinet

Install
new motor starters

Run
Main Power lines to motor starters

Run
Conduit from MCC to cable tray network

(j)            Add onto Grain Silo MCC
which consists of:

Determine
electrical load requirements and availability

Purchase
and deliver MCC components

 

6

 

Install
new MCC cabinet

Install
new motor starters

Run
Main Power lines to motor starters

                (k)           *Build Extension onto
Maintenance Shop which consists of:

Design
Concrete and Structural Steel for Building

Purchase
and deliver Steel and Siding

Purchase
and deliver culvert and rebar

Reroute
Enzyme unloading line

Reroute
Acid unloading line

Install
culvert at ditch

Pour
Concrete driveway

Pour
Concrete containment area

Pour
footings for steel columns

Remove
Garage and Man Door from building

Install
Structural Steel for building

Install
Steel Siding

Install
Roof on Building

Extend
conduit and wires for garage door blower

Install
Lights in Building

Install
Heating units in building

Install
Conduit/Wire/Electrical Receptacles

Run
plant air and water lines

Install
Garage and Man Doors on building

(l)            *Extend Process Building
at Fermenters which consists of:

Design
Concrete and Structural Steel for Building

Purchase
and deliver Steel and Siding

Purchase
and deliver rebar

Remove
Garage and Man Door from building

Pour
footings for steel columns

Install
sump pit in floor

Pour
Slab floor

Install
Structural Steel for building

Install
Steel Siding

Install
Roof on Building

Build
pipe rack for pipes to new Fermenter

Extend
conduit/wires and relocate garage door blower

Install
lights in extended section

Extend
plant air and water hose lines

Install
Garage and Man Doors on building

(m)          Install Roller Mills
which consists of:

Design
support structure for Roller Mills

Design
Ductwork pieces

Purchase
and deliver Roller Mills and related equip

Run
conduit and wires for Roller Mills

Run
conduit and wires for instrumentation

Build
Support for Roller Mills

 

7

 

Fab
new duct transition pieces

Install
new duct pieces

Install
Roller Mills

Complete
Programming for instruments and motor control

(n)           Install New Fermenter
which consists of:

Review
Underground drawings

Review
Soil Analysis

Design
Foundation

Design
Steel for access and top of tank platform

Site
Work for foundation

Pour
foundation for Fermenter

Build
Tank on site

Install
access and top of tank platform

Install
Fermenter Agitator

Purchase
and deliver Fermenter Agitator

Purchase
and deliver CIP Spray Balls

Purchase
and deliver CO2 Pressure/Vac Relief

Purchase
and deliver Level Transmitter

Purchase
and deliver (2) Temperature Transmitters

Purchase
and deliver Fermenter Cooler Recir Pump

Purchase
and deliver Fermenter #4 Drain Pump

Purchase
and deliver Fermenter Cooler

Purchase
and deliver Cooling Tower Control Valve

Purchase
and deliver Chiller Water Control Valve

Purchase
and deliver 12” digital valve

Purchase
and deliver 3” digital valve

Purchase
and deliver 6” digital valve

Build
New CO2 Header

Build
new vent lines from fermenters

Build
CIP line to top of new Fermenter

Install
Fermenter #4 Drain Pump

Run
Supply line to Drain Pump

Run
Discharge line from Drain Pump

Run
Conduit and wires to Fermenter Drain Pump

Run
Conduit and wires to Drain Pump Flow Transmitter

Run
Conduit and wires to EV Valves

Pour
slab foundation for Recirc Pump

Install
Fermenter Cooler Recirc Pump

Pour
slab foundation for Fermenter Cooler

Set
new Fermenter Cooler

Run
Cooling water lines to/from Cooler

Run
Beer Supply line to Cooler

Run
Conduit and wires to Fermenter Recirc Pump

Run
Conduit and wires to Fermenter Agitator

Run
Conduit and wires to instrumentation

Run
Ferm #4 to Beer Well line

 

8

 

Run
Supply line to Fermenter Recirc Pump

Run
new Ferm Feed line to #4 Ferm

Run
CIP line to Fermenter #4 Ferm Feed line

Make
Tie in on transfer to Beer Well line

Make
Tie in on CIP Line

Make
Tie in on Cooling supply/return lines

Make
Tie in on Chilled Water line

Make
tie in on Fermenter Feed line

Complete
Programming for instruments and motor control

(o)           Install CO2 Booster Fan
which consists of:

Purchase
and deliver Booster Fan

Purchase
and deliver Pressure Transmitter

Design
Platform

Build
and Install Platform

Set
Fan onto Platform

Build
CO2 Supply to fan

Build
Fan discharge ductwork

Run
conduit and wires to Pressure Transmitter

Run
conduit and wires to Booster Fan

Make
Tie ins on CO2 line

Complete
Programming for instruments and motor control

                (p)           Install Slurry Tank
which consists of:

Review
Underground drawings

Review
Soil Analysis

Design
Foundation

Design
Steel for ladder and top of tank platform

Site
work for Slurry Tank foundation

Pour
foundation for new Slurry Tank

Pour
Slab foundation for Slurry Pump

Build
Slurry Tank on site

Install
ladder and top of tank platform

Purchase
and deliver Slurry Tank Agitator

Purchase
and deliver Slurry Tank Pump

Purchase
and deliver Level Transmitter

Purchase
and deliver Level Control Valve

Purchase
and deliver steam eductors

Purchase
and deliver Temp Transmitter

Purchase
and deliver Temp Control Valve

Set
Slurry Tank #2 pump

Run
conduit and wires for Slurry Tank Pump

Run
conduit and wires for Slurry Tank Agitator

Run
conduit and wires for instrumentation

Run
Slurry Tank #1 to #2 Transfer Pipe

Run
Slurry Tank #2 vent line

Run
Slurry Tank #2 discharge line

Install
Steam eductors on Slurry Tank #2

 

9

 

Run
Steam line to Slurry Tank #2

Make
tie in on Slurry #1 Discharge

Make
tie in for Slurry #2 Vent

Make
tie in for Slurry #2 Discharge

Make
tie in on Steam line for Tank #2 heaters

Insulate
Tank and Piping

Complete
Programming for instruments and motor control

                (q)           Upgrade Hydro-heater
which consists of:

Purchase
and deliver new hydro-heater

Install
new hydro-heater

(r)            Install Liquefaction Tank
which consists of:

Review
Underground drawings

Review
Soil Analysis

Design
Foundation

                *Design Steel for ladder and top of tank platform (3
tanks)

Site
work for Liq Tank foundation

Pour
foundation for new Liq Tank

Fab
Liq Tank at the site

*Repair
existing Liq Tank

*Install
ladder and top of tank platform (3 tanks)

Purchase
and deliver Liq Tank Agitator

Purchase
and deliver Level Transmitter

Purchase
and deliver Piping and Valves

Install
Liq Tank Agitator

Run
conduit and wires for Liq Tank Agitator

Run
conduit and wires for instrumentation

Run
feed line to new Liq Tank

Run
Overflow line from new Liq Tank

Make
tie in on Liq Feed Line

Add
port to existing Liq #1 for new overflow line

Install
10” valve into feed line to existing Liq #1

Insulate
Tank and Piping

Complete
Programming for instruments and motor control

Install
Mole Sieve Bottles

Review
Underground drawings

Review
Soil Analysis

Design
Foundation and Containment Dike

Design
Steel for top of tank platform

Design
Steel for additional Regen Condenser Support

Site
work for Sieve Bottle foundation

Pour
foundation for Sieve Bottles

Pour
Containment Dike around Sieve Bottles

Pour
slab foundation for Regen Pump

Purchase
and deliver Sieve Bottles

Purchase
and deliver Pressure Transmitters

Purchase
and deliver Temperature Transmitters

 

10

 

Purchase
and deliver Steam Flow Control Valve

Purchase
and deliver Mole Feed Control Valve

Purchase
and deliver Mole Feed Flow Transmitter

Purchase
and deliver EV Valves

Purchase
and deliver Pressure Relief Valves

Purchase
and deliver Regen Condenser

Purchase
and deliver Regen Eductor

Purchase
and deliver additional Regen Pump

Purchase
and deliver Mole Sieve Pressure Control Valve

Purchase
and deliver Mole Feed Vaporizer

Purchase
and deliver Structural Steel components

Purchase
and deliver rebar and concrete materials

Purchase
and deliver Piping and Valves

Set
Bottles onto foundation

Install
Beads and internal equipment into bottles

Build
support for Regen Condenser

Set
Regen Condenser onto support

Set
Regen Pump

Run
conduit and wires to Regen Pump

Build
Valve Trees for feed/regen/depressure distributors

Install
Valve Trees and valves onto Bottles

Run
conduit and wires to valves and instrumentation

Run
Regen line from Valve Trees to Regen Condenser

Run
Regen Condensate line from Condenser to Regen Eductor

Run
Regen Pump Supply and Discharge lines

Set
new Mole Vaporizer

Run
Mole Feed line to new Mole Vaporizer

Run
Vapor line from Vaporizer to Valve Trees

Run
Vapor Product line to Evap Inlet

Run
Condensate line to Existing Condensate line

Make
Tie in on Regen Tank

Make
Tie in on Regen Pump Suction

Make
Tie in on Mole Feed line

Make
Tie in on Existing Condensate line

Make
Tie in on Evap Inlet

Make
Tie in on Steam supply to vaporizer

Insulate
Bottles, Vaporizer and Piping

Complete
Programming for instruments and motor control

 

2.             The
above items marked with an asterisk (*) are not included in the $4,600,000
portion of the Contract Price. 
DESIGN/BUILDER will perform those items for an amount determined
pursuant to paragraph 10.02 of the General Conditions.  DESIGN/BUILDER’s fee for overhead and profit
under paragraph 10.02.C.1 shall be fifteen percent (15%) of the costs for
subcontracts, materials and equipment. 
Prior to commencing work on each of those items, DESIGN/BUILDER shall provide
a detailed estimate of the cost of such item to OWNER and obtain OWNER’s
approval to perform such work.

 

11

 

Exhibit
C

to

Agreement
Between Owner and Design/Builder

On the
Basis of a Stipulated Price

 

LICENSE
AGREEMENT

 

THIS
LICENSE AGREEMENT (this “License Agreement”) is entered into and made
effective as of the 6th day of December,
2004 (“Effective Date”) by and between LSCP, L.P., an Iowa limited
partnership (“OWNER”), and ICM, Inc., a Kansas corporation (“DESIGN/BUILDER”).

 

                WHEREAS,
OWNER and DESIGN/BUILDER have entered into that certain Agreement Between Owner
and Design/Builder on a Basis of a Stipulated Price dated December 6,
2004 (the “Design/Build Agreement”) concerning the performance of certain work
by DESIGN/BUILDER for the retrofit of OWNER’s ethanol plant currently located
in or near Marcus, Iowa (the “Plant”);

 

                WHEREAS,
DESIGN/BUILDER owns certain proprietary technology and information, and will be
using such technology and information in performing its obligations under the
Design/Build Agreement; and

 

                WHEREAS,
OWNER desires to be granted a limited license to use that proprietary
technology and information in connection with the design, construction and
operation of the Plant, and DESIGN/BUILDE desires to grant to OWNER such
limited license, all upon the terms and conditions set forth herein;

 

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

 

1.             Certain Proprietary Property (as defined below) will be
used in the design, construction and operation of the Plant.

 

2.             Upon OWNER’s payment in full of all
amounts due and owing under the Design/Build Agreement (including any license
fee set forth therein, if any), DESIGN/BUILDER grants to OWNER a perpetual
limited license to use the Proprietary Property solely in connection with the
design, construction and operation of the Plant, subject to the limitations
provided herein.  This License may be
terminated by DESIGN/BUILDER upon OWNER’s failure to cure any default by OWNER
of any material duty or obligation of OWNER hereunder within thirty (30) days
after written notice thereof is given by DESIGN/BUILDER.

 

3.             The Proprietary Property includes, without limitation,
documents, Operating Procedures (hereinafter defined), operating methods,
techniques, protocols, procedures, plans and processes, and other information
relating to design, construction and operation of the Plant including the
design, arrangement, configuration, and specifications of (i) the combinations
of distillation, evaporation, and alcohol dehydration equipment (including, but
not limited to, pumps, vessels, tanks, heat exchangers, piping, valves and
associated electronic control equipment) and all documents supporting those
combinations; (ii) the combination of the distillers grain drying (DGD), and
heat recovery steam generation (HRSG) equipment (including, but not limited to,
pumps, vessels, tanks, heat exchangers, piping and associated electronic
control equipment) and all documents supporting those combinations; 

 

12

 

and (iii) the computer
system, known as the distributed control system (DCS and/or PLC) (including,
but not limited to, the software configuration, programming, parameters, set
points, alarm points, ranges, graphical interface, and system hardware
connections) and all documents supporting that system.  The “Operating Procedures” include, without
limitation, the process equipment and specifications manuals, standards of
quality, service protocols, data collection methods, construction
specifications, training methods, engineering standards and any other
information prescribed by ICM from time to time concerning the Proprietary
Property and operations of the Plant. 
Proprietary Property shall not include any information or materials that
OWNER can demonstrate by written documentation: 
(i) was lawfully in the possession of OWNER prior to disclosure by ICM;
(ii) was in the public domain prior to disclosure by ICM; (iii) was disclosed
to OWNER by a third party having the legal right to possess and disclose such
information or materials; or (iv) after disclosure by ICM comes into the public
domain through no fault of OWNER or its employees, agents, partners, officers,
contractors, consultants or other representatives (hereinafter collectively
referred to as “Representatives”). 
Information and materials shall not be deemed to be in the public domain
merely because such information is embraced by more general disclosures in the
public domain, and any combination of features shall not be deemed to be within
the foregoing exceptions merely because individual features are in the public domain
if the combination itself and its principles of operation are not in the public
domain.

 

4.             Between the parties, DESIGN/BUILDER has the exclusive
right and interest in and to the Proprietary Property and the goodwill
associated therewith.

 

5.             OWNER will not, directly or
indirectly, contest the ownership of the Proprietary Property.  Any and all modifications to the Proprietary
Property by OWNER (or its Representatives) shall be the property of
DESIGN/BUILDER.  OWNER shall promptly
notify DESIGN/BUILDER of any such modification and OWNER agrees to assign all
of its right, title and interest in such modification to DESIGN/BUILDER.

 

6.             OWNER’s use of the Proprietary Property does not give
OWNER any ownership interest or other interest in or to the Proprietary
Property except for the limited license granted to OWNER herein.  Nothing in this License Agreement shall be
construed or interpreted as granting OWNER a license to use the Proprietary
Property in connection with any expansion or enlargement of the Plant beyond
the size and configuration originally contemplated in the Design/Build
Agreement.

 

7.             OWNER shall pay no license fee or royalty to
DESIGN/BUILDER for OWNER’s use of the Proprietary Property pursuant to the
limited license granted to OWNER, other than the amounts described in paragraph
2 above.

 

8.             OWNER’s failure to materially comply with the Operating
Procedures shall void all representations, warranties or guarantees concerning
the performance of the Plant given by DESIGN/BUILDER, directly or indirectly,
under the Design/Build Agreement or otherwise.

 

9.             OWNER
may not assign the limited license granted herein, in whole or in part, without
the prior written consent of DESIGN/BUILDER, which will not be unreasonably
withheld or delayed.  Prior to any
assignment, OWNER shall obtain from such assignee a written instrument, in form
and substance reasonably acceptable to DESIGN/BUILDER, agreeing to be bound by
all the terms and provisions of this License Agreement.  Any assignment of this License Agreement
shall not release OWNER from (i) its duties and obligations hereunder
concerning the disclosure and use of the Proprietary Property, or (ii) damages
to DESIGN/BUILDER resulting from, or arising out of, a breach of such duties or
obligations by OWNER or its Representatives. 
DESIGN/BUILDER may assign its 

 

13

 

right, title and interest in the Proprietary
Property, in whole or part, subject to the limited license granted herein.

 

10.           The Proprietary Property is confidential and
proprietary.  OWNER shall keep the
Proprietary Property confidential and shall use all reasonable efforts to
maintain the Proprietary Property as secret and confidential for the sole use
of OWNER and its Representatives in the design, construction, and operation of
the Plant.  OWNER shall retain all
Proprietary Property at its place of business and/or the Plant.  Failure to so maintain the Proprietary
Property as confidential shall entitle DESIGN/BUILDER to any damages stemming
from such failure, to include without limitation, reasonable attorneys’
fees.  OWNER shall not at any time
without DESIGN/BUILDER’s prior written consent, copy, duplicate, record, or
otherwise reproduce the Proprietary Property, in whole or in part, for any
unauthorized persons, or otherwise make the same available to any unauthorized
person.  OWNER shall not disclose the
Proprietary Property except to its Representatives who are directly involved
with the design, construction or operation of the Plant, and even then only to
such extent as is necessary and essential for such Representatives’
involvement.  OWNER shall inform such
Representatives of the confidential and proprietary nature of such
information.  OWNER shall make all
reasonable efforts to safeguard the Proprietary Property from disclosure by its
Representatives to anyone other than permitted hereby.  In the event that OWNER or its
Representatives are required by law to disclose the Proprietary Property, OWNER
shall provide DESIGN/BUILDER with prompt written notice of same so that
DESIGN/BUILDER may seek a protective order or other appropriate remedy.  In the event that such protective order or
other appropriate remedy is not obtained, OWNER or its Representatives will
furnish only that portion of the Proprietary Property which in the reasonable
opinion of its or their legal counsel is legally required.

 

11.           OWNER agrees to
indemnify DESIGN/BUILDER for any and all damages (including, without
limitation, reasonable attorneys’ fees) arising out of or resulting from any
unauthorized disclosure or use of the Proprietary Property by OWNER or its
Representatives.  OWNER agrees that
DESIGN/BUILDER would be irreparably damaged by reason of any violation of the
provisions contained herein and that any remedy at law for a breach of such
provisions would be inadequate. 
Therefore, DESIGN/BUILDER shall be entitled to seek injunctive or other
equitable relief in a court of competent jurisdiction against OWNER or its
Representatives, or both, for any breach or threatened breach of OWNER’s duties
and obligations contained herein without the necessity of proving actual
monetary loss or posting any bond.  It is
expressly understood that the remedy described herein shall not be the
exclusive remedy of DESIGN/BUILDER for any breach of such covenants, and
DESIGN/BUILDER shall be entitled to seek such other relief or remedy, at law or
in equity, to which it may be entitled as a consequence of any breach of such
duties or obligations.

 

12.           All provisions of
this License Agreement shall survive and remain in full force and effect
notwithstanding any termination or expiration of the Design/Build Agreement.

 

13.           The
laws of the State of Kansas and the United States of America shall govern the
validity of the provisions contained herein, the construction of such
provisions, and the interpretation of the rights and duties of the
parties.  Any legal action brought to
enforce or construe the provisions of this License Agreement shall be brought
in courts located in Kansas, and the parties agree to and hereby submit to the
exclusive jurisdiction of such courts and agree that they will not invoke the
doctrine of forum non conveniens or other similar defenses in any such action
brought in such courts.

 

14.           OWNER
agrees to notify DESIGN/BUILDER promptly of any attempt by any unauthorized
person to use the Proprietary Property, and of any action involving the
Proprietary Property that is threatened or instituted by any person against
OWNER; and if any action is so instituted against 

 

14

 

OWNER, DESIGN/BUILDER is hereby
authorized (but not obligated) to defend the action on OWNER’s behalf, and to
take whatever other steps DESIGN/BUILDER deems necessary to defend such action
and/or otherwise to protect its ownership and rights in the Proprietary
Property.  Whenever OWNER learns of any
infringement or threatened infringement of the Proprietary Property, OWNER
shall forthwith give written notice thereof to DESIGN/BUILDER and provide
DESIGN/BUILDER with all information it has acquired with respect thereto.  DESIGN/BUILDER shall determine, in its
absolute discretion, whether to institute or defend such proceedings, as the
case may be, with regard to each of the foregoing matters.  OWNER shall not institute any proceedings
relating to the Proprietary Property, in any capacity, without the prior
written consent of DESIGN/BUILDER.  In
the event that DESIGN/BUILDER undertakes the defense or prosecution of any such
proceedings, OWNER agrees to execute and deliver such documents and do such
things, including, without limitation, being made a party to such proceedings,
at DESIGN/BUILDER’s expense, as may be deemed necessary or advisable by counsel
on behalf of DESIGN/BUILDER in order to assist DESIGN/BUILDER in enforcing its
right, title and interest in the Proprietary Property.

15.           The provisions of the Design/Build Agreement (including
without limitation, Section 16.06 of the General Condition thereto) are part
of, and incorporated into, this License Agreement and this License Agreement
should be interpreted consistently therewith.  
Unless otherwise defined herein or unless the context otherwise
requires, capitalized terms used herein shall have the meaning given to such
terms in the Contract Documents.  In the
event any of the provisions of this License Agreement is contrary to any
provision in the Design/Build Agreement (or any other document referenced
therein), the provision of this License Agreement shall supercede and have
precedence over such contrary provision. 
The terms and conditions of this License Agreement and the Design/Build
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede any prior understandings, agreements or
representations by or between the parties, written or oral.

 

16.           DESIGN/BUILDER
represents and warrants that OWNER’s use of the Proprietary Property in
accordance with the terms of this License Agreement does not infringe any
patent or other proprietary right or interest of any third party.  Subject to the limitations of liability set
forth in Section 16.06 of the General Condition of the Design/Build Agreement,
DESIGN/BUILDER agrees to defend, indemnify and hold harmless OWNER from and against
any and all costs (including reasonable attorneys’ fees) arising out of or
resulting from the actual or alleged infringement of any patent or other
proprietary right or interest of a third party pertaining to OWNER’s use of the
Proprietary Property.  OWNER shall
promptly notify DESIGN/BUILDER upon becoming aware of such infringement
claim.  DESIGN/BUILDER, in order to avoid
such infringement claims, shall have the right at its expense to substitute
non-infringing equipment, materials and processes so they become
non-infringing, or to obtain the necessary licenses to use the infringing
equipment, materials or processes provided that such substituted and modified
equipment, materials or processes shall meet all the requirements and be
subject to all the provisions of the Design/Build Agreement.

 

17.           This License Agreement may not be modified or amended at
any time without the written consent of the parties.

 

18.           All notices, requests, demands, reports, statements or
other communications (herein referred to collectively as “Notices”) required to
be given hereunder or relating to this License Agreement shall be in writing
and shall be deemed to have been duly given on the date of delivery if sent to
such party by overnight courier service (such as DHL) at the respective address
of such party set forth above.   Any
party hereto may, at any time, designate a different address to which Notices
shall be directed by providing written notice in the manner set forth in this
paragraph.

 

15

 

19.           In the event that any of the terms, conditions, covenants
or agreements contained in this License Agreement, or the application of any
thereof, shall be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable, such term, condition, covenant or agreement shall be
deemed void ab initio and shall be deemed severed from this License
Agreement.  In such event, and except if
such determination by a court of competent jurisdiction materially changes the
rights, benefits and obligations of the parties under this License Agreement,
the remaining provisions of this License Agreement shall remain unchanged
unaffected and unimpaired thereby and, to the extent possible, such remaining
provisions shall be construed such that the purpose of this License Agreement
and the intent of the parties can be achieved in a lawful manner.

 

20.            The duties and obligations herein contained shall bind,
and the benefits and advantages shall inure to, the respective successors and
assigns of the parties hereto.

 

21.           The waiver by any party hereto of the breach of any term,
covenant, agreement or condition herein contained shall not be deemed a waiver
of any subsequent breach of the same or any other term, covenant, agreement or
condition herein, nor shall any custom, practice or course of dealings arising
among the parties hereto in the administration hereof be construed as a waiver
or diminution of the right of any party hereto to insist upon the strict
performance by any other party of the terms, covenants, agreement and conditions
herein contained.

 

22.           In this License Agreement, where applicable, (i)
references to the singular shall include the plural and references to the
plural shall include the singular, and (ii) references to the male, female, or
neuter gender shall include references to all other such genders where the
context so requires.

 

IN WITNESS WHEREOF, the parties hereto have executed this
License Agreement, the Effective Date of which is indicated on page 1 of this
License Agreement.

 

	
  OWNER:

  	
  DESIGN/BUILDER:

  
	
   

  Little Sioux Corn Processors, LP

  	
   

  ICM,
  Inc.

  
	
   

  By:  /s/ Steven G. Roe

  	
   

  By:  /s/  Dave Vander Griend 

  
	
   

  Title:  President

  	
   

  Title:  C.E.O.

  
	
   

  Date Signed: 
  December 1, 2004

  	
   

  Date Signed: 
  December 6, 2004

  
	
   

  Address for giving notices:

  	
   

  Address for giving notices:

  
	
   

   

   

  	
   

  301
  N First Street

  
	
   

   

  	
   

  Colwich, KS  67030

  

 

16

 

Exhibit
D

to

Agreement
Between Owner and Design/Builder

On the
Basis of a Stipulated Price

 

INSURANCE

 

DESIGN/BUILDER will maintain the
following coverage and limits:

 

1.             Commercial General
Liability

                $1,000,000 limit
per occurrence

                $2,000,000 per
annual aggregate

 

2.             Commercial Auto
Liability Insurance

$1,000,000 per accident

 

3.             Workers
Compensation

                Statutory state
coverage

                Employers
Liability $1,000,000

 

4.             Umbrella (Excess)
Liability

                $5,000,000 per
occurrence

 

OWNER will maintain the following
coverage and limits:

 

1.             Commercial General
Liability

                $1,000,000 limit
per occurrence

                $2,000,000 per
annual aggregate

 

2.             Commercial Auto
Liability Insurance

$1,000,000 per accident

 

3.             Workers
Compensation

                Statutory state
coverage

                Employers
Liability $500,000

 

4.             Umbrella (Excess)
Liability

                $5,000,000 per
occurrence

 

5.             Builder’s Risk

                Limit to be not
less than the contract price

 

17

 

GENERAL
CONDITIONS OF THE

CONTRACT
BETWEEN

OWNER
AND DESIGN/BUILDER

 

ARTICLE 1—DEFINITIONS

 

1.01       Defined
Terms

 

      A.    Wherever used in these General Conditions or in the other
Contract Documents the following terms have the meanings indicated which are
applicable to both the singular and plural thereof:

 

                   1.       Agreement—The
Agreement Between Owner and Design/Builder on the Basis of a Stipulated Price
covering the Work.  Other Contract
Documents are incorporated into the Agreement and made a part thereof as
provided therein.

 

                   2.       Application
for Payment—The form which is to be used by
DESIGN/BUILDER in requesting progress or final payments and which is to be
accompanied by such supporting documentation as is required by the Contract
Documents.

 

                   3.       Asbestos—Any
material that contains more than one percent (1%) asbestos and is friable or is
releasing asbestos fibers into the air above current action levels established
by the United States Occupational Safety and Health Administration.

 

                   4.       Bonds—Performance
and payment bonds and other instruments of security.

 

                   5.       Cash Flow
Projection—A schedule prepared by DESIGN/BUILDER
estimating that portion of the Contract Price to be due during each month of
performance.

 

                   6.       Change Order—A
written order which is signed by DESIGN/BUILDER and OWNER which authorizes an
addition, deletion or revision in the Work, or an adjustment in the Contract
Price or the Contract Times, issued on or after the Effective Date of the
Agreement.

 

                    7.     Construction—The performing
or furnishing of labor, the furnishing and incorporating of materials and
equipment into the Work and the furnishing of services (other than Design
Professional Services) and documents, all as required by the Contract
Documents.  Construction includes the
materials and equipment incorporated into the Project.

 

                    8.     Construction Subagreement—A
written agreement between DESIGN/BUILDER and a construction contractor for
provision of Construction.

 

                    9.     Contract Documents—The
Agreement and related exhibits, the Notice to Proceed, these General
Conditions, the Specifications and the Drawings together with all Change
Orders, and Written Amendments, issued on or after the Effective Date of the
Agreement.

 

                   10.    Contract
Price—The moneys payable by OWNER to DESIGN/BUILDER for
completion of the Work in accordance with the Contract Documents.

 

                   11.    Contract
Times—The number of days or the dates stated in the
Agreement (i) to achieve Substantial Completion, and (ii) to complete the Work
so that it is ready for final payment of the Contract Price in accordance with
paragraph 13.08.

 

18

 

                   12.     defective—An
adjective which when modifying the term Construction refers to Construction
that is unsatisfactory, faulty or deficient, in that it does not conform to the
Contract Documents, or does not meet the requirements of any inspection,
reference standard, test or approval referred to in the Contract Documents, or
has been damaged prior to OWNER’s final payment.

 

                   13.     DESIGN/BUILDER—ICM,
Inc., a Kansas corporation.

 

                   14.     Design
Subagreement—A written agreement between DESIGN/BUILDER
and a design professional for provision of Design Professional Services.

 

                   15.     Design
Professional Services—Services provided by or for
licensed design professionals during Construction, or operational phases of the
Project, including the development of drawings, Specifications, and other
design submittals specified by the Contract Documents and required to be
performed by licensed design professionals..

 

                   16.     Drawings—Those
portions of the Contract Documents prepared by or for DESIGN/BUILDER and
approved by OWNER consisting of drawings, diagrams, illustrations, schedules
and other data which show the scope, extent, and character of the Work.

 

                   17.     Effective
Date of the Agreement—The date indicated in the Agreement
on which it becomes effective, but if no such date is indicated it means the
date on which the Agreement is signed and delivered by the last of the two
parties to sign and deliver.

 

                   18.     Engineer—A
duly licensed individual or entity designated by DESIGN/BUILDER to perform or
furnish specified Design Professional Services in connection with the Work.

 

                    19.   Hazardous Condition—The
presence at the Site of Asbestos, Hazardous Waste, PCB’s, Petroleum Products or
Radioactive Materials in such quantities or circumstances that there is a
danger to persons or property.

 

                   20.    Hazardous
Waste—The term Hazardous Waste shall have the meaning
provided in Section 1004 of the Solid Waste Disposal Act (42 USC Section 6903).

 

                   21.    Laws and
Regulations; Laws or Regulations—Any and all applicable
laws, rules, regulations, ordinances, codes, permits, and orders of any and all
governmental bodies, agencies, authorities and courts having jurisdiction.

 

                   22.    Liens—Charges,
security interests or encumbrances upon real property or personal property.

 

                   23.    Notice to Proceed—A
written notice given by OWNER to DESIGN/BUILDER fixing the date on which the
Contract Times will commence to run.

 

                   24.    OWNER—The
public body, or authority, individual or entity with whom DESIGN/BUILDER has
entered into the Agreement and for whom the Work is to be provided.

 

                   25.     PCBs—Polychlorinated
biphenyls.

 

                   26.     Petroleum—Petroleum,
including crude oil or any fraction thereof which is liquid at standard
conditions of temperature and pressure (60 degrees Fahrenheit and 14.7 pounds
per square inch 

 

19

 

                   absolute), such
as oil, petroleum, fuel oil, oil sludge, oil refuse, gasoline, kerosene, and
oil mixed with other non-Hazardous Wastes and crude oils.

 

                   27.     Project—The
Construction to be provided under the Contract Documents as provided in
paragraph 1.01 of the Agreement.

 

                   28.     Radioactive
Material—Source, special nuclear, or byproduct material
as defined by the Atomic Energy Act of 1954 (42 USC Section 2011 et seq.) as
amended from time to time.

 

                   29.    Schedule of
Values—A schedule prepared by DESIGN/BUILDER and
acceptable to OWNER indicating that portion of the Contract Price to be paid
for each major component of the Work.

 

                   30.    Site—Lands
or other areas designated in the Contract Documents as being furnished by OWNER
for the performance of the Construction, storage, or access.

 

                   31.    Specifications—Those
portions of the Contract Documents prepared by or for DESIGN/BUILDER and
approved by OWNER consisting of written technical descriptions of materials,
equipment, construction systems, standards and workmanship as applied to the
Construction and certain administrative details applicable thereto.

 

                   32.    Subcontractor—An
individual or entity other than a Supplier or Engineer having a direct contract
with DESIGN/BUILDER or with any other Subcontractor for the performance of a
part of the Work.

 

                   33.    [not used]

 

                   34.    Substantial
Completion—The time at which the Construction (or a
specified part) has progressed to the point where it is sufficiently complete,
in accordance with the Contract Documents, so that ethanol can be produced at
the capacity of 52 million gallons per year. 
The terms “substantially complete” and “substantially completed” as
applied to the Construction refer to Substantial Completion of Construction.

 

                     35.    Supplier—A
manufacturer, fabricator, supplier, distributor, materialman or vendor having a
direct contract with DESIGN/BUILDER or with any Subcontractor to furnish
materials or equipment to be incorporated in the Work by DESIGN/BUILDER or any
Subcontractor.

 

                   36.     Work—The
entire completed construction or the various separately identifiable parts
thereof required to be performed or furnished under the Contract
Documents.  Work includes and is the
result of performing or furnishing Design Professional Services and
Construction required by the Contract Documents.

 

                   37.     Written
Amendment—A written amendment of the Contract Documents,
signed by OWNER and DESIGN/BUILDER on or after the Effective Date of the
Agreement and normally dealing with the nonengineering or nontechnical rather
than strictly design or construction-related aspects of the Contract Documents.

 

20

 

ARTICLE 2—PRELIMINARY MATTERS

 

2.01     Commencement
of Contract Times; Notice to Proceed

 

                A.            The Contract Times will commence to
run on the day indicated in the Notice to Proceed.  A Notice to Proceed may be given at any time
within the period of time set forth in Section 9.07 of the Agreement.

 

2.02     Starting
the Work

 

       A.     DESIGN/BUILDER shall start to perform the Work on the date when
the Contract Times commence to run.

 

2.03     Before
Starting Construction

 

       A.     DESIGN/BUILDER shall submit the following for review within ten
(10) days after commencement of the Contract Times:

 

                            1.      A
preliminary progress schedule indicating the times (number of days or dates)
for starting and completing the various stages in the design and construction
of the Work;

 

                    2.     A
preliminary Schedule of Values for all of the Work, which will include
quantities and prices of items aggregating the Contract Price and will
subdivide the Work into component parts in sufficient detail acceptable to
OWNER to serve as the basis for progress payments during performance of the
Work.  Such prices will include a pro
rata amount of overhead and profit applicable to each item of Work; and

 

                    3.     A
preliminary Cash Flow Projection.

 

      B.     Before any Work is started, DESIGN/BUILDER and OWNER shall each
deliver to the other, with copies to each additional insured, certificates of
insurance (and other evidence of insurance which either of them or any
additional insured may reasonably request) which DESIGN/BUILDER and OWNER
respectively are required to purchase and maintain in accordance with
paragraphs 5.02.A, 5.04.A and 5.04.B.

 

2.04       Initial
Conference

 

      A.    Within twenty (20) days after the Contract Times start to run, a
conference by telephone or in person with OWNER, DESIGN/BUILDER and others as
appropriate will be held to establish a working understanding among the parties
as to the Work and to discuss the design concepts, schedules referred to in
paragraph 2.03.A, processing Applications for Payment, maintaining required
records, items required pursuant to paragraph 8.01.A.6 and other matters.

 

2.05       Initially
Acceptable Schedules

 

      A.    At least ten (10) days before submission of the first Application
for Payment a conference by telephone or in person with DESIGN/BUILDER, OWNER
and others as appropriate will be held to review for acceptability the
schedules submitted in accordance with paragraph 2.03.A.  DESIGN/BUILDER shall have an additional ten
(10) days to make corrections and adjustments and to complete and resubmit the
schedules.  No progress payment shall be
made to DESIGN/BUILDER until the schedules are submitted to and acceptable to
OWNER as provided below. The progress 

 

21

 

schedule will be acceptable to OWNER as providing an orderly progression
of the Work to completion within the Contract Times, but such acceptance will
neither impose on OWNER responsibility for the sequencing, scheduling or
progress of the Work nor interfere with or relieve DESIGN/BUILDER from
DESIGN/BUILDER’s full responsibility therefor. 
The format and structure of the progress schedule will be acceptable to
OWNER.  OWNER’s acceptance shall not be
deemed to confirm that the schedule is a reasonable plan for performing the
Work.  DESIGN/BUILDER’s Schedule of
Values and Cash Flow Projection will be acceptable to OWNER as to form and
substance.

 

ARTICLE 3—CONTRACT DOCUMENTS: 
INTENT, AMENDING, REUSE

 

3.01     Intent

 

       A.     The Contract Documents comprise the entire agreement between
OWNER and DESIGN/BUILDER concerning the Work. 
The Contract Documents are complementary; what is called for by one is
as binding as if called for by all.  The
Contract Documents will be construed in accordance with the laws of the State
of Kansas.  Except as otherwise required
by applicable Laws and Regulations, the Contract Documents shall govern the
obligations of the parties regarding the Work and Project.

 

       B.     It is the intent of the Contract Documents to describe a
functionally complete Project to be designed and constructed in accordance with
the Contract Documents.  Any Work,
materials or equipment that may reasonably be inferred from the Contract
Documents or from prevailing custom or trade usage as being required to produce
the intended result will be furnished and performed whether or not specifically
called for.  When words or phrases which
have a well-known technical or construction industry or trade meaning are used
to describe work, materials or equipment, such words or phrases shall be
interpreted in accordance with that meaning.

 

3.02     References

 

       A.     Reference to standards, specifications, manuals or codes of any
technical society, organization or association, or to the Laws or Regulations
of any governmental authority, whether such reference be specific or by
implication, shall mean the latest standard, specification, manual, code or
Laws or Regulations in effect on the Effective Date of the Agreement except as
may be otherwise specifically stated in the Contract Documents.

 

      B.     No provision of any standard, specification, manual, code or
instruction shall be effective to change the duties and responsibilities of
OWNER, DESIGN/BUILDER or any of their subcontractors, consultants, agents, or
employees from those set forth in the Contract Documents, nor shall it be
effective to assign to OWNER any duty or authority to supervise or direct the
furnishing or performance of the Work or any duty or authority to undertake
responsibility inconsistent with the provisions of Article 8 or any other
provision of the Contract Documents.

 

3.03                     Amending and Supplementing
Contract Documents

 

      A.    The Contract Documents may be amended to provide for additions,
deletions and revisions in the Work or to modify the terms and conditions
thereof in one or more of the following ways:

 

                     1.    A
Change Order; or

 

                     2.    A formal
Written Amendment.

 

22

 

3.04                       Reuse
of Documents

 

         A.   All documents including Drawings and Specifications prepared or
furnished by DESIGN/BUILDER pursuant to the Contract Documents are instruments
of service in respect of the Project and DESIGN/BUILDER shall retain an
ownership and property interest therein whether or not the Project is
completed.  OWNER may make and retain
copies for information and reference in connection with the use and occupancy
of the Project by OWNER and others; however, such documents are not intended or
represented to be suitable for reuse by OWNER or others on extensions of the
Project or on any other project.  Any
reuse without written verification or adaptation by DESIGN/BUILDER for the
specific purpose intended will be at OWNER’s sole risk and without liability or
legal exposure to DESIGN/BUILDER, and OWNER shall indemnify and hold harmless
DESIGN/BUILDER, Subcontractors, and Engineer from all claims, damages, losses
and expenses including attorneys’ fees arising out of or resulting
therefrom.  Any such verification or
adaptation will entitle DESIGN/BUILDER to further compensation at rates to be
agreed upon by OWNER and DESIGN/BUILDER.

 

       B.     In addition to paragraph 3.04.A, all documents including
Drawings and Specifications prepared or furnished by DESIGN/BUILDER pursuant to
the Contract Documents are subject to the use and disclosure restrictions set
forth in Exhibit C attached to the Agreement. 
Nothing contained in paragraph 3.04.A. shall be construed or interpreted
as granting OWNER any rights or interest in the PROPRIETARY PROPERTY (as
defined in Exhibit C) other than as expressly provided in Exhibit C attached to
the Agreement.

 

ARTICLE 4—AVAILABILITY OF LANDS; DIFFERING SITE CONDITIONS; REFERENCE
POINTS; HAZARDOUS CONDITIONS

 

4.01     Availability
of Lands

 

       A.     OWNER shall furnish, as indicated in the Contract Documents, the
lands upon which the Construction is to be performed, rights-of-way and
easements for access thereto, and such other lands which are designated for the
use of DESIGN/BUILDER.

 

      B.     Upon reasonable written request, OWNER shall furnish
DESIGN/BUILDER with a correct statement of record legal title and legal
description of the lands upon which the Construction is to be performed and
OWNER’s interest therein.  OWNER shall
identify any encumbrances or restrictions not of general application but
specifically related to use of lands so furnished with which DESIGN/BUILDER
will have to comply in performing the Work. 
Easements for permanent structures or permanent changes in existing
facilities will be obtained and paid for by OWNER, unless otherwise provided in
the Contract Documents.

 

      C.     OWNER shall provide any of its lands and access thereto that may
be required for temporary construction facilities or storage of materials and
equipment.

 

4.02       Differing
Site Conditions

 

      A.    DESIGN/BUILDER shall promptly, and before the conditions are
disturbed, give a written notice to OWNER of (i) subsurface or latent physical
conditions at the Site which differ materially from those indicated in the
OWNER’s geotechnical report for the Project site or the land and grading
specifications required by DESIGN/BUILDER, or (ii) unknown physical conditions
at the Site, of an 

 

23

 

unusual nature, which differ materially from those ordinarily
encountered and generally recognized as inhering in work of the character
called for by the Contract Documents.

 

      B.     OWNER will investigate the site conditions promptly after
receiving the notice.  If the conditions
do materially so differ and cause an increase or decrease in the DESIGN/BUILDER’s
cost of performing any part of the Work, an equitable adjustment shall be made
under this clause and the Contract Price modified in writing by Change Order in
accordance with Article 9.

 

      C.     No request by DESIGN/BUILDER for an equitable adjustment under
paragraph 4.02 shall be allowed unless DESIGN/BUILDER has given the written
notice required; provided that the time prescribed in paragraph 9.02.A for
giving written notice may be extended by OWNER.

 

4.03       Reference
Points  

 

      A.    DESIGN/BUILDER shall be responsible for laying out the
construction and shall protect and preserve the reference points established by
OWNER pursuant to paragraph 8.01.A.6.e and shall make no changes or relocations
without the prior written approval of OWNER. 
DESIGN/BUILDER shall report to OWNER whenever any reference point or
property monument is lost or destroyed or requires relocation because of
necessary changes in grades or locations, and shall be responsible for the
accurate replacement or relocation of such reference points or property
monuments by professionally qualified personnel.

 

4.04     Hazardous
Conditions

 

       A.     OWNER represents and warrants that there is no Hazardous
Condition or materials that could create a Hazardous Condition existing at the
Site as of the Effective Date of the Agreement that has not been previously
disclosed in writing by OWNER to DESIGN/BUILDER and that OWNER will be
responsible for any Hazardous Condition encountered at the Site which was not
identified in the Contract Documents to be within the scope of the Work.  OWNER shall not be responsible for materials
creating a Hazardous Condition brought to the Site by DESIGN/BUILDER,
Subcontractors, Suppliers or anyone else for whom DESIGN/BUILDER is
responsible.

 

       B.     DESIGN/BUILDER and any affected Subcontractor shall immediately
(i) stop all Construction in connection with such Hazardous Condition and in any
area affected thereby (except in an emergency as required by paragraph 6.15),
and (ii) notify OWNER (and thereafter confirm such notice in writing).  OWNER shall promptly determine the necessity
of retaining a qualified expert to evaluate such Hazardous Condition or take
corrective action, if any. 
DESIGN/BUILDER shall not be required to resume Construction in
connection with such Hazardous Condition or in any such affected area until
after OWNER has obtained any required permits related thereto and delivered to
DESIGN/BUILDER special written notice (i) specifying that such Hazardous
Condition and any affected area is or has been rendered safe for the resumption
of Construction, or (ii) specifying any special conditions under which such
Construction may be resumed safely.  If
OWNER and DESIGN/BUILDER cannot agree as to entitlement to or the amount or
extent of an adjustment, if any, in Contract Price as a result of such
Construction stoppage or such special conditions under which Construction is
agreed by DESIGN/BUILDER to be resumed, either party may make a claim therefor
as provided in Article 9.

 

       C.     To the fullest extent permitted by Laws and Regulations, OWNER
shall indemnify and hold harmless DESIGN/BUILDER, Subcontractors, Suppliers,
Engineers and the officers, directors, employees, agents, other consultants and
subcontractors of each and any of them from and against all 

 

24

 

claims, costs, losses and damages (including but not limited to all
reasonable fees and charges of engineers, architects, attorneys and other
professionals and all court or arbitration or other dispute resolution costs)
arising out of or resulting from such Hazardous Condition.  Nothing in this paragraph 4.04.C shall
obligate OWNER to indemnify any individual or any entity, including
DESIGN/BUILDER, from and against the consequences of that individual’s or
entity’s own negligence or willful misconduct. 
OWNER shall not be obligated to indemnify or hold harmless
DESIGN/BUILDER, Subcontractors, Suppliers or any other individual or any entity
for any such claim, cost, loss or damage arising out of or resulting from
materials creating a Hazardous Condition brought to the Site by DESIGN/BUILDER,
Subcontractors, Suppliers or any other party for whom DESIGN/BUILDER is
responsible.  DESIGN/BUILDER shall
indemnify and hold harmless OWNER and OWNER’s officers, directors, employees,
agents, other consultants and subcontractors and any of them from and against
all claims, costs, losses and damages (including but not limited to all
reasonable fees and charges of engineers, architects, attorneys and other
professionals and all court or arbitration or other dispute resolution costs)
arising out of or resulting from materials creating a Hazardous Condition
brought to the Site by DESIGN/BUILDER, Subcontractors, Suppliers or any other
party for whom DESIGN/BUILDER is responsible.

 

ARTICLE 5—BONDS AND INSURANCE

 

5.01       Performance,
Payment and Other Bonds

 

       A.     DESIGN/BUILDER shall not be required to furnish a performance,
payment or any other Bonds.

 

5.02     DESIGN/BUILDER’s
Liability Insurance

 

       A.     DESIGN/BUILDER shall purchase and maintain such Commercial
General Liability (subject to customary exclusions in respect of professional
liability), Automobile Liability and Worker’s Compensation insurance as is
appropriate for the Work being performed and furnished and as will provide
protection from claims set forth below which may arise out of or result from
DESIGN/BUILDER’s performance and furnishing of the Work and DESIGN/BUILDER’s
other obligations under the Contract Documents, whether it is to be performed
or furnished by DESIGN/BUILDER, any Subcontractor or Supplier, or by anyone
directly or indirectly employed by any of them to perform or furnish any of the
Work, or by anyone for whose acts any of them may be liable:

 

                    1.     Claims
under workers’ compensation, disability benefits and other similar employee
benefit acts;

 

                    2.     Claims
for damages because of bodily injury, occupational sickness or disease, or
death of DESIGN/BUILDER’s employees;

 

                    3.     Claims
for damages because of bodily injury, sickness or disease, or death of any
person other than DESIGN/BUILDER’s employees;

 

                     4.      Claims for damages insured by customary
personal injury liability coverage which are sustained (i) by any person as a
result of an offense directly or indirectly related to the employment of such
person by DESIGN/BUILDER, or (ii) by any other person for any other reason;

 

25

 

                   5.       Claims for damages, other than to the
Work itself, because of injury to or destruction of tangible property wherever
located other than claims under paragraph 5.02.A.7. below, including loss of
use resulting therefrom;

 

                   6.       Claims for damages because of bodily
injury or death of any person or property damage arising out of the ownership,
maintenance or use of any motor vehicle; and

 

                   7.       Claims for professional errors and
omissions arising from the Design Professional Services provided for the
Project.

 

                   B.     The policies of insurance required by
paragraph 5.02.A shall:

 

                   1.       With respect to insurance required by
paragraphs 5.02.A.3 through 5.02.A.6 inclusive, include as additional insureds
OWNER and any other persons or entities identified in writing by OWNER, all of
whom shall be listed as additional insureds, and include coverage for the
respective officers and employees of all such additional insureds;

 

                   2.       Include at least the specific coverages
and be written for not less than the limits of liability set forth in Exhibit D
or required by Laws or Regulations, whichever is greater;

 

                   3.       Include completed operations insurance;

 

                   4.       Include contractual liability insurance
covering DESIGN/BUILDER’s indemnity obligations under paragraphs 6.06, 6.10 and
6.19;

 

                   5.       Contain a provision or endorsement that
the coverage afforded will not be cancelled, materially changed or renewal
refused until at least thirty (30) days prior written notice has been given to
OWNER and each other additional insured to whom a certificate of insurance has
been issued (and the certificates of insurance furnished by the DESIGN/BUILDER
pursuant to paragraph 5.08.B will so provide);

 

      6.       Remain in effect at least until final payment and at all times
thereafter when DESIGN/BUILDER may be correcting, removing or replacing defective
Construction in accordance with paragraphs 12.06 and 12.07;

 

                   7.      With respect to completed operations
insurance, remain in effect for at least one year after final payment (and
DESIGN/BUILDER shall furnish OWNER and each other additional insured to whom a
certificate of insurance has been issued evidence satisfactory to OWNER and any
such additional insured of continuation of such insurance at final payment);
and

 

                   8.      DESIGN/BUILDER shall maintain in effect
all insurance coverage required under this paragraph at the DESIGN/BUILDER’S
sole expense with insurance companies (and policies) approved by OWNER and
lawfully authorized to do business in the jurisdiction in which the Project is
located.  If the DESIGN/BUILDER fails to
obtain or maintain any insurance coverage required under this Agreement, the
OWNER may purchase such coverage and charge the expense to the DESIGN/BUILDER,
or terminate this Agreement for cause in accordance with paragraph 14.02 below.

 

 

26

 

5.03        OWNER’s Liability
Insurance

 

       A.     In addition to the insurance required to be provided by
DESIGN/BUILDER under paragraph 5.02, OWNER, at OWNER’s option, may purchase and
maintain at OWNER’s expense OWNER’s own liability insurance as will protect
OWNER against claims which may arise from operations under the Contract
Documents.

 

5.04     Property
Insurance

 

       A.   OWNER shall purchase and maintain property insurance upon the
Construction at the Site in the amount of the full replacement cost thereof at
the OWNER’s sole expense with insurance companies (and policies) approved by
DESIGN/BUILDER and lawfully authorized to do business in the jurisdiction in
which the Project is located (subject to such deductible amounts as may be
agreed to by OWNER and DESIGN/BUILDER or as may be required by Laws and
Regulations).  This insurance will:

 

                    1.     Include
the interests of OWNER, DESIGN/BUILDER, Subcontractors, and any other persons
or entities listed as an insured or additional named insured;

 

                      2.     Be
written on a Builder’s Risk “all-risk” or equivalent policy form that shall at
least include insurance for physical loss and damage to the Construction,
temporary buildings, falsework and all materials and equipment in transit, and
shall insure against at least the following perils or causes of loss:  fire, lightning, extended coverage, theft,
vandalism and malicious mischief, earthquake, collapse, debris removal,
demolition occasioned by enforcement of Laws and Regulations, water damage,
flood, system testing, and such other perils or causes of loss as may be agreed
in writing by DESIGN/BUILDER and OWNER;

 

                   3.       Include expenses incurred in the repair
or replacement of any insured property (including but not limited to fees and
charges of engineers and architects);

 

                   4.       Cover materials and equipment stored at
the Site or at another location that was agreed to in writing by OWNER prior to
being incorporated in the Construction, provided that such materials and
equipment have been included in an Application for Payment approved by OWNER;
and

 

5.       Be maintained in effect
until final payment is made unless otherwise agreed to in writing by OWNER and
DESIGN/BUILDER with thirty (30) days written notice to each other additional
insured to whom a certificate of insurance has been issued.

 

      B.     OWNER shall purchase and maintain such boiler and machinery
insurance or additional property insurance as DESIGN/BUILDER may reasonably
require or required by Laws and Regulations which will include the interests of
OWNER, DESIGN/BUILDER, Subcontractors, and other individuals and entities
listed as an insured or additional insured.

 

                         C.     All
the policies of insurance (and the certificates or other evidence thereof)
required to be purchased and maintained by OWNER in accordance with paragraph
5.04 will contain a provision or endorsement that the coverage afforded will
not be cancelled or materially changed or renewal refused until at least thirty
(30) days prior written notice has been given to DESIGN/BUILDER and to each
other additional insured to whom a certificate of insurance has been issued.

 

       D.     OWNER shall not be responsible for purchasing and maintaining
any property insurance to protect the interests of DESIGN/BUILDER,
Subcontractors, Suppliers, Engineers or others in the Work to the extent of any
deductible amounts agreed to by OWNER and DESIGN/BUILDER.  The 

 

27

 

risk of loss within such identified deductible amounts will be borne by
DESIGN/BUILDER, Subcontractor or others suffering any such loss and if any of
them wishes property insurance coverage within the limits of such deductible
amount, each may purchase and maintain it at the purchaser’s own expense.

 

       E.      If DESIGN/BUILDER requests in writing that other special insurance
be included in the property insurance policies provided under paragraph 5.04,
OWNER shall, if possible, include such insurance, and the cost thereof will be
charged to DESIGN/BUILDER by appropriate Change Order or Written Amendment.  Prior to commencement of the Work at the
Site, OWNER shall in writing advise DESIGN/BUILDER whether or not such other
insurance has been procured by OWNER.

 

5.05        Waiver
of Subrogation Rights

 

      A.     OWNER and DESIGN/BUILDER intend that all policies purchased in
accordance with paragraph 5.04 will protect OWNER, DESIGN/BUILDER, Engineers,
Subcontractors, others who may have a financial interest in the Project, and
all other individuals or entities listed as insureds or additional insureds in
such policies and will provide primary coverage for all losses and damages
caused by the perils or causes of loss covered thereby.  All such policies shall contain provisions to
the effect that in the event of payment of any loss or damage the insurers will
have no rights of recovery against any of the insureds or additional insureds
thereunder.  Each party waives all rights
against the other party and its officers, directors, employees, members, and
agents for all losses and damages caused by, arising out of or resulting from
any of the perils or causes of loss covered by such policies and any other
property insurance applicable to the Work.

 

5.06       Receipt
and Application of Proceeds

 

      A.    Any insured loss under the policies of insurance required by
paragraph 5.04 will be adjusted with OWNER and made payable to OWNER as
fiduciary for the benefit of insureds, as their interests may appear, subject
to the requirements of any applicable mortgage clause and of paragraph
5.06.B.  OWNER shall deposit in a separate
account any money so received, and shall distribute it in accordance with such
agreement as the parties in interest may reach. 
If no other special agreement is reached the damaged Work shall be
repaired or replaced, the moneys so received applied on account thereof and the
Work and the cost thereof covered by an appropriate Change Order or Written
Amendment.

 

      B.     OWNER as fiduciary shall have power to adjust and settle any
loss with the insurers unless one of the parties in interest shall object in
writing within fifteen (15) days after the occurrence of loss to OWNER’s
exercise of this power.  If such
objection be made, OWNER as fiduciary shall make settlement with the insurers
in accordance with such agreement as the parties in interest may reach.  If no such agreement among the parties in interest
is reached, OWNER as fiduciary shall adjust and settle the loss with the
insurers and, if required in writing by any party in interest, OWNER as
fiduciary shall give bond for the proper performance of such duties..

 

5.07       Acceptance
of Insurance; Option to Replace

 

       A.    If either party has any objection to the coverage afforded by or
other provisions of the insurance required to be purchased and maintained by
the other party in accordance with Article 5 on the basis of their not
complying with the Contract Documents, the objecting party shall so notify the
other party in writing within thirty (30) days after receipt of the
certificates (or other evidence requested) required by paragraph 2.03.B.  OWNER and DESIGN/BUILDER shall each provide
to the 

 

28

 

other such additional information in respect of insurance provided as
the other may reasonably request.  If
either party does not purchase or maintain all of the insurance required of
such party by the Contract Documents, such party shall notify the other party
in writing of such failure to purchase prior to the start of the Work, or of
such failure to maintain prior to any change in the required coverage.  Without prejudice to any other right or
remedy, the other party may elect to obtain equivalent insurance to protect
such other party’s interests at the expense of the party who was supposed to
provide such coverage, and a Change Order or Written Amendment shall be issued
to adjust the Contract Price accordingly.

 

5.08               Licensed Sureties and
Insurers; Certificates of Insurance

 

       A.     All insurance required by the Contract Documents to be purchased
and maintained by OWNER or DESIGN/BUILDER shall be obtained from insurance
companies that are duly licensed or authorized in the jurisdiction in which the
Project is located to issue insurance policies for the limits and coverages so
required.  Such insurance companies shall
also meet such additional requirements and qualifications as may be agreed in
writing by DESIGN/BUILDER and OWNER.

 

      B.      DESIGN/BUILDER shall deliver to OWNER, with copies to each
additional insured, certificates of insurance (and other evidence of insurance
requested by OWNER or any other additional insured) which DESIGN/BUILDER is
required to purchase and maintain in accordance with paragraph 5.02.A.  OWNER shall deliver to DESIGN/BUILDER, with
copies to each additional insured, certificates of insurance (and other
evidence of insurance requested by DESIGN/BUILDER or any other additional
insured) which OWNER is required to purchase and maintain in accordance with
paragraphs 5.04.A and 5.04 B.

 

ARTICLE 6—DESIGN/BUILDER’S RESPONSIBILITIES

 

6.01       Design
Professional Services

 

      A.    Standard of Care:  DESIGN/BUILDER shall perform or furnish
Design Professional Services and related services in all phases of the
Project.  The standard of care for all
such services performed or furnished under this Agreement will be the care and
skill ordinarily used by members of the engineering profession practicing under
similar conditions at the same time and locality.  Notwithstanding the foregoing, DESIGN/BUILDER
shall perform or furnish Design Professional Services under this Agreement to
achieve the Performance Criteria set forth in Exhibit A.

 

      B.     Preliminary Design Phase:  During the preliminary design phase,
DESIGN/BUILDER shall:

 

                   1.       Consult with OWNER to understand OWNER’s
requirements for the Project and review available data.

 

                   2.       Advise OWNER as to the necessity of OWNER
providing or obtaining from others additional reports, data or services of the
types provided in paragraph 8.01.A.6.a-g and assist OWNER in obtaining such
reports, data, or services.

 

                   3.       Identify and analyze requirements of
governmental authorities having jurisdiction to approve the portions of the
Project designed or specified by DESIGN/BUILDER with whom consultation is to be
undertaken in connection with the Project.

 

29

 

                   4.       Obtain such additional geotechnical and
related information which it deems necessary for performance of the Work.

 

                   C.     [not used]

 

      D.     Construction Phase.  During Construction, DESIGN/BUILDER shall
provide Engineering and Design Professional Services as necessary to complete
the Project.

 

      E.     Operational Phase:  During the operational phase, DESIGN/BUILDER
shall:

 

                   1.      Provide assistance in connection with the
start-up, testing, refining and adjusting of any equipment or system.

 

Other than assistance normally provided in the industry after final
payment, nothing in this paragraph 6.01.E. shall be interpreted or construed as
obligating DESIGN/BUILDER to perform or provide such assistance to OWNER after
final payment and acceptance of the Work under paragraph 13.08 below.

 

6.02     Supervision
of Construction

 

      A.    DESIGN/BUILDER shall supervise, inspect and direct the
Construction competently and efficiently, devoting such attention thereto and
applying such skills and expertise as may be necessary to provide the
Construction in accordance with the Contract Documents.  A representative of the DESIGN/BUILDER shall
be located at the construction site from the later of (i) the date that is five
(5) days after the date the Notice to Proceed is provided by OWNER to
DESIGN/BUILDER in accordance with Section 8.07 of the Agreement, or (ii) January
10, 2005, until the date of Substantial Completion.  DESIGN/BUILDER shall be solely responsible
for the means, methods, techniques, sequences and procedures employed for the
provision of Construction. 
DESIGN/BUILDER shall be responsible to see that the completed
Construction complies accurately with the Contract Documents and shall keep
OWNER advised as to the quality and progress of the Construction.

 

 

6.03       Labor,
Materials and Equipment

 

      A.    DESIGN/BUILDER shall provide competent, suitably qualified personnel
to survey and lay out the Construction and perform Construction as required by
the Contract Documents. DESIGN/BUILDER shall at all times maintain good
discipline and order at the Site.

 

       B.     Unless otherwise specified in the Contract Documents, DESIGN/BUILDER
shall furnish or cause to be furnished and assume full responsibility for
materials, equipment, labor, transportation, construction equipment and
machinery, tools, appliances, fuel, power, light, heat, telephone, water,
sanitary facilities, temporary facilities and all other facilities and
incidentals necessary for the furnishing, performance, testing, start-up and
completion of the Work.  DESIGN/BUILDER
will direct the checkout of utilities and operations of systems and equipment.

 

       C.     All materials and equipment incorporated into the Work shall be
of good quality and new.  All warranties
and guarantees specifically called for by the Contract Documents shall
expressly run to the benefit of OWNER. 
If reasonably required by OWNER, DESIGN/BUILDER shall furnish
satisfactory evidence (including reports of required tests) as to the kind and
quality of materials and equipment.  All
materials and equipment shall be applied, installed, connected, erected, used,
cleaned and conditioned in accordance with instructions of the applicable
Supplier.

 

30

 

6.04     Progress
Schedule

 

       A.     DESIGN/BUILDER shall adhere to the progress schedule established
in accordance with paragraph 2.05.A as it may be adjusted from time to time.

 

                   1.      DESIGN/BUILDER shall submit to OWNER for
acceptance proposed adjustments in the progress schedule that will not change
the Contract Times.  Such adjustments
will conform generally to the progress schedule then in effect.

 

                   2.      Proposed adjustments in the progress
schedule that will change the Contract Times shall be submitted in accordance
with the requirements of Article 11. 
Such adjustments may only be made by a Change Order or Written
Amendment.

 

6.05     Concerning
Subcontractors, Suppliers and Others

 

       A.     DESIGN/BUILDER shall not employ any Subcontractor, Engineer,
Supplier or other individual or entity against whom OWNER may have reasonable
objection.  DESIGN/BUILDER shall not be
required to employ any Subcontractor, Engineer, Supplier or other individual or
entity to furnish or perform any of the Work against whom DESIGN/BUILDER has
reasonable objection.

 

      B.     DESIGN/BUILDER shall be fully responsible to OWNER for all acts
and omissions of the Subcontractors, Engineers, Suppliers and other individuals
or entities performing or furnishing any of the Work under a direct or indirect
contract with DESIGN/BUILDER.  Nothing in
the Contract Documents shall create for the benefit of any such Subcontractor,
Engineer, Supplier or other individual or entity any contractual relationship
between OWNER and any such Subcontractor, Engineer, Supplier or other
individual or entity, nor shall it create any obligation on the part of OWNER
to pay or to see to the payment of any moneys due any such Subcontractor, Engineer,
Supplier or other individual or entity except as may otherwise be required by
Laws and Regulations.

 

      C.     DESIGN/BUILDER shall be solely responsible for scheduling and
coordinating Subcontractors, Engineers, Suppliers and other individuals and
entities performing or furnishing any of the Work under a direct or indirect
contract with DESIGN/BUILDER. 
DESIGN/BUILDER shall require all Subcontractors, Engineers, Suppliers
and such other individuals and entities performing or furnishing any of the
Work to communicate with the OWNER through DESIGN/BUILDER.

 

      D.     All services performed or provided to and material and equipment
supplied to DESIGN/BUILDER by a Subcontractor or Supplier will be pursuant to
an appropriate Design Subagreement or Construction Subagreement between
DESIGN/BUILDER and the Subcontractor, Engineer or Supplier which specifically
binds the Subcontractor, Engineer or Supplier to the applicable terms and
conditions of the Contract Documents for the benefit of OWNER.  Whenever any such agreement is with a
Subcontractor, Engineer or Supplier who is listed as an additional insured on
the property insurance provided in paragraph 5.04.A or 5.04.B, the agreement
between the DESIGN/BUILDER and the Subcontractor, Engineer or Supplier will
contain provisions whereby the Subcontractor, Engineer or Supplier waives all
rights against OWNER, DESIGN/BUILDER, and all other additional insureds for all
losses and damages caused by any of the perils or causes of loss covered by
such policies and any other property insurance applicable to the Work.  If the insurers on any such policies require
separate waiver forms to be signed by any Subcontractor, Engineer or Supplier,
DESIGN/BUILDER will obtain the same.

 

31

 

6.06       Patent
Fees and Royalties

 

       A.     DESIGN/BUILDER shall pay all license fees and royalties and
assume all costs incident to the use in the performance of the Work or the
incorporation in the Work of any invention, design, process, product or device
(other than any increased license fees, royalties and costs arising out of or
resulting from a Change Order) which is the subject of patent rights or
copyrights held by others.  To the
fullest extent permitted by Laws and Regulations,  DESIGN/BUILDER shall indemnify and hold
harmless OWNER, from and against all claims, costs, losses and damages
(including but not limited to all reasonable fees and charges of engineers,
architects, attorneys and other professionals and all court or arbitration or
other dispute resolution costs) arising out of or resulting from any
infringement of patent rights or copyrights incident to the use in the
performance of the Work or resulting from the incorporation in the Work of any
invention, design, process, product or device.

 

6.07     Permits
and Utilities

 

       A.     Unless otherwise provided in the Contract Documents, OWNER shall
obtain and pay for all necessary permits and licenses.  DESIGN/BUILDER shall assist OWNER, when
necessary, in obtaining such permits and licenses.  OWNER shall pay all governmental charges and
inspection fees necessary for the prosecution of the Construction, which are
applicable on the Effective Date of the Agreement.  OWNER shall pay all charges of utility owners
for connections to the Work, OWNER shall pay all charges of such utility owners
for capital costs related thereto and OWNER shall pay for all charges for use
or consumption of such utilities relating to the performance of the Work.

 

6.08     Laws
and Regulations

 

       A.     DESIGN/BUILDER shall give all notices and comply with all Laws
and Regulations of the place of the Project which are applicable to furnishing
and performance of the Work.  OWNER shall
not be responsible for monitoring DESIGN/BUILDER’s compliance with any Laws or
Regulations.

 

      B.     If DESIGN/BUILDER performs any Work knowing or having reason to
know that it is contrary to Laws or Regulations, DESIGN/BUILDER shall bear all
costs arising therefrom.

 

      C.     Changes in Laws and Regulations not known on the Effective Date
of the Agreement having an effect on the cost or time of performance may be the
subject of a claim under Article 9.

 

6.09       Taxes

 

      A.    OWNER shall pay to DESIGN/BUILDER all sales, consumer, use, gross
receipts and other similar taxes which are applicable during the performance of
the Work and are either paid by DESIGN/BUILDER or are required to be reimbursed
by DESIGN/BUILDER to its Subcontractors, Suppliers, or Engineers.

 

32

 

6.10       Use
of Site and Other Areas

 

       A.     DESIGN/BUILDER shall confine construction equipment, the storage
of materials and equipment and the operations of construction workers to those
lands and areas permitted by the OWNER and other land and areas permitted by
Laws and Regulations, rights-of-way, permits and easements, and shall not unreasonably
encumber the premises with construction equipment or other materials or
equipment.  DESIGN/BUILDER shall be
responsible for any damage to any such land or area, or to the owner or
occupant thereof or of any adjacent land or areas, resulting from the
performance of the Construction. 
Notwithstanding the foregoing sentence, DESIGN/BUILDER shall not be
responsible for, or any damage relating to, restoration of the landscaping or
seeding of any such land or area and DESIGN/BUILDER shall only be responsible
for restoring such land or area to the condition of such land or area at the
time DESIGN/BUILDER completed the original construction of the plant.  Should any claim be made by any such owner or
occupant because of the performance of the Construction, DESIGN/BUILDER shall
promptly settle with such other party by negotiation or otherwise resolve the
claim by arbitration or other dispute resolution proceeding or at law.  DESIGN/BUILDER shall, to the fullest extent
permitted by Laws and Regulations, indemnify and hold harmless OWNER and anyone
directly or indirectly employed by OWNER from and against all claims, costs,
losses and damages (including, but not limited to, all reasonable fees of
engineers, architects, attorneys and other professionals and court and
arbitration or other dispute resolution costs) arising out of or resulting from
any claim or action, legal or equitable, brought by any such owner or occupant
against OWNER, or any other party indemnified hereunder to the extent caused by
or based upon DESIGN/BUILDER’s performance of the Construction.

 

       B.     During the performance of the Construction, DESIGN/BUILDER shall
keep the premises free from accumulations of waste materials, rubbish and other
debris resulting from the Construction. 
At the completion of the Construction, DESIGN/BUILDER shall remove all
waste materials, rubbish and debris from and about the premises as well as all
tools, appliances, construction equipment, temporary construction and machinery
and surplus materials.  DESIGN/BUILDER
shall leave the Site clean and ready for occupancy by OWNER at Substantial
Completion.  DESIGN/BUILDER shall restore
to original condition all property not designated for alteration by the
Contract Documents.

 

       C.     DESIGN/BUILDER shall not load nor permit any part of any
structure to be loaded in any manner that will endanger the structure, nor
shall DESIGN/ BUILDER subject any part of the Work or adjacent property to
stresses or pressures that will endanger it.

 

6.11     Record
Documents

 

       A.     DESIGN/BUILDER shall maintain at its office one record copy of
all Drawings, Specifications, Written Amendments, and Change Orders, in good
order and annotated to show all changes made during Construction.  These record documents will be available to
OWNER for reference.  Unless otherwise
provided herein, upon completion of the Work, these record documents, including
a reproducible set of record drawings, will be delivered to OWNER.  DESIGN/BUILDER shall not be obligated to
provide to OWNER (i) an electronic copy of any Drawings or Specifications, or
(ii) any isometrics or piping models. 
Within 180 days after the date of successful completion of the
performance test set forth in Exhibit A, DESIGN/BUILDER shall provided to OWNER
a copy of the final As-Built Drawings and operation and maintenance manuals.

 

33

 

6.12             Safety
and Protection

 

       A.     DESIGN/BUILDER shall be responsible for initiating, maintaining
and supervising all safety precautions and programs in connection with the
Construction.  DESIGN/BUILDER shall take
all necessary precautions for the safety of, and shall provide the necessary
protection to prevent damage, injury or loss to:

 

                   1.      All persons on the Site or who may be
affected by the Construction;

 

                   2.      All Work and materials and equipment to be
incorporated therein, whether in storage on or off the Site; and

 

                   3.       Other property at the Site or adjacent
thereto, including trees, shrubs, lawns, walks, pavements, roadways,
structures, utilities and underground facilities not designated for removal,
relocation or replacement in the course of construction.

 

Notwithstanding the foregoing, DESIGN/BUILDER shall not be responsible
for initiating, maintaining or supervising any safety precautions or programs
relating to the operation of the plant or any person on the Site who is not an
employee of DESIGN/BUILDER or one of its Subcontractors or Suppliers.  OWNER shall not be responsible for
initiating, maintaining and supervising any safety precautions and programs in
connection with the Construction or any person on the Site who is an employee
of DESIGN/BUILDER or one of its Subcontractors or Suppliers.

 

      B.     DESIGN/BUILDER shall comply with applicable Laws and Regulations
of any public body having jurisdiction for safety of persons or property or to
protect them from damage, injury or loss; and shall erect and maintain all
necessary safeguards for such safety and protection.  DESIGN/BUILDER shall notify owners of
adjacent property and of underground facilities and utility owners when
prosecution of the Work may affect them, and shall cooperate with them in the
protection, removal, relocation and replacement of their property.  All damage, injury or loss to any property
caused, directly or indirectly, in whole or in part, by DESIGN/BUILDER, any
Subcontractor, Supplier or any other individual or entity directly or
indirectly employed by any of them to perform or furnish any of the Work or
anyone for whose acts any of them may be liable, shall be remedied by
DESIGN/BUILDER.  DESIGN/BUILDER’s duties
and responsibilities for safety and for protection of the construction shall
continue until (i) such time as all the Work is completed and OWNER has issued
a notice to DESIGN/BUILDER in accordance with paragraph 13.09 that the Work is
acceptable or, (ii) in the event DESIGN/BUILDER is excluded from the Site under
paragraph 13.05.B. after Substantial Completion, the date DESIGN/BUILDER is
excluded from the Site.

 

6.13       [not used]

 

6.14       Hazard
Communication Programs  

 

      A.    DESIGN/BUILDER shall be responsible for coordinating any exchange
of material safety data sheets or other hazard communication information
required to be made available to or exchanged between or among employers at the
Site in accordance with Laws or Regulations.

 

34

 

6.15     Emergencies

 

       A.     In emergencies affecting the safety or protection of persons or
the construction or property at the Site or adjacent thereto, DESIGN/BUILDER,
without special instruction or authorization from OWNER, is obligated to act to
prevent threatened damage, injury or loss. 
DESIGN/BUILDER shall give OWNER prompt written notice if DESIGN/BUILDER
believes that any significant changes in the Construction or variations from
the Contract Documents have been caused thereby.  If a change in the Contract Documents is
required because of the action taken by DESIGN/BUILDER in response to such an
emergency, a Change Order will be issued to document the consequences of such
action.

 

6.16       [not used]

 

6.17       Continuing
the Work

 

      A.    DESIGN/BUILDER shall carry on the Work and adhere to the progress
schedule during all disputes or disagreements with OWNER.  No Work shall be delayed or postponed pending
resolution of any disputes or disagreements, except as DESIGN/BUILDER and OWNER
may otherwise agree in writing or as otherwise provided in the Contract
Documents.

 

6.18                     DESIGN/BUILDER’s General
Warranty and Guarantee

 

      A.    DESIGN/BUILDER warrants and guarantees to OWNER that all
Construction will be in accordance with the Contract Documents and will not be defective. DESIGN/BUILDER’s warranty and guarantee hereunder
excludes defects or damage caused by:

 

                   1.       Abuse, modification or improper
maintenance or operation by persons other than DESIGN/BUILDER, Subcontractors
or Suppliers; or

 

                   2.       Normal wear and tear under normal usage.

 

      B.     DESIGN/BUILDER’s obligation to perform and complete the Work in
accordance with the Contract Documents shall be absolute.  Except as provided in paragraph 12.08, no
action by OWNER will constitute an acceptance of Work that is not in accordance
with the Contract Documents or a release of DESIGN­/BUILDER’s obligation to
perform the Work in accordance with the Contract Documents, including but not
limited to the following:

 

                   1.       Observations by OWNER;

 

                   2.       The making of any progress or final pay­ment;

 

                   3.      The issuance of a certificate of
Substantial Completion;

 

                   4.      Use or occupancy of the Work or any part
thereof by OWNER;

 

                   5.      Any acceptance by OWNER or any failure to
do so;

 

                   6.      Any review and approval of a Submittal;

 

                   7.      Any inspection, test or approval by
others; or

 

35

 

                     8.   Any correction of defective Construction by
OWNER.

 

       C.  DESIGN/BUILDER shall, at final completion, assign to OWNER all
manufacturer’s warranties for materials and equipment incorporated into the
Project; provided, however, in the event of a claim by OWNER against
DESIGN/BUILDER, OWNER shall use its best efforts to cooperate with
DESIGN/BUILDER in the enforcement of any applicable warranty.

 

6.19     Indemnification

 

OWNER and DESIGN/BUILDER are and will be throughout the term of the
Agreement independent contractors as to each other.  Each party recognizes that it shall be solely
responsible for its own conduct, including without limitation its own fault, as
to any aspect of the Agreement.  In the
event any claim is made or any action is filed by a third party arising out of
this Agreement or the services to be performed under it, the parties anticipate
that each will defend said claim or action on its own behalf, and will pay,
settle, or otherwise dispose of any demand or judgment against it consistent
with the provisions of the Kansas comparative negligence statute, K.S.A.
§60-258a, in effect on the date of this Agreement.  In the event either party is made to respond
in damages for the fault of the other party, then the other party agrees to
indemnify and hold harmless the first party (including its officers, directors,
employees, and agents) from any payment that it has to make, including without
limitation the payment of reasonable attorneys’ fees incurred in resisting,
settling, or otherwise disposing of the demand, on account of the other party’s
fault.  In regard to the indemnity
obligation in this paragraph 6.19 or any other provision of the General
Conditions, neither party shall make a payment for which indemnity will be
sought from the other party without first providing such other party written
notice of the claim and an opportunity to assume the defense.

 

ARTICLE 7—OTHER CONSTRUCTION

 

7.01       Related
Construction at Site

 

      A.    OWNER may perform other Work related to the Project at the Site
by OWNER’s own forces, or let other direct contracts therefor or have other
work performed by utility owners. 
Written notice thereof will be given to DESIGN/BUILDER prior to starting
any such other work.

 

       B.     DESIGN/BUILDER shall afford each other contractor who is a party
to such a direct contract and each utility owner (and OWNER, if OWNER is
performing the additional work with OWNER’s employees) proper and safe access
to the Site and a reasonable opportunity for the introduction and storage of
materials and equipment and the execution of such other work and shall properly
connect and coordinate the Construction with theirs.  DESIGN/BUILDER shall do all cutting, fitting
and patching of the Work that may be required to make its several parts come
together properly and integrate with such other work.  DESIGN/BUILDER shall not endanger any work of
others by cutting, excavating or otherwise altering their work and will only
cut or alter their work with the written consent of OWNER and the others whose
work will be affected.

 

       C.     If the proper execution or results of any part of DESIGN/BUILDER’s
Work depends upon work performed or services provided by others under this
Article 7, DESIGN/BUILDER shall inspect such other work and appropriate
instruments of service and promptly report to OWNER in writing any delays,
defects or deficiencies in such other work or services that render it unavailable
or unsuitable for the proper execution and results of DESIGN/BUILDER’s
Work.  DESIGN/BUILDER’s failure so to
report will constitute an acceptance of such other work as fit and proper for
integration with 

 

36

 

DESIGN/BUILDER’s Work except for latent or nonapparent defects and
deficiencies in such other work.

 

ARTICLE 8—OWNER’S RESPONSIBILITIES

 

8.01     General

 

      A.     OWNER shall do the following in a timely manner so as not to
delay the services of DESIGN/BUILDER.

 

                   1.       Designate in writing a person to act as
OWNER’s representative with respect to the services to be rendered under this
Agreement.

 

                   2.       Provide such legal services as OWNER may
require with regard to land use and governmental permitting issues pertaining
to the Project including any such land use or governmental permitting issues
that may be raised by DESIGN/BUILDER.

 

                   3.       If requested in writing by
DESIGN/BUILDER, furnish reasonable evidence satisfactory to DESIGN/BUILDER,
that sufficient funds are available and committed for the entire cost of the
Project.  Unless such reasonable evi­dence
is furnished, DESIGN/BUILDER is not required to commence or continue any Work,
or may, if such evidence is not presented within a reasonable time, stop Work
upon fifteen (15) days’ notice to the Owner.

 

                   4.       Make payments to DESIGN/BUILDER promptly
when they are due as provided in Article 13.

 

                   5.       Furnish lands and easements as set forth
in paragraph 4.01.A.

 

                   6.       Furnish to DESIGN/BUILDER, as re­quired
for performance of DESIGN/BUILDER’s services the following, all of which
DESIGN/BUILDER may use and rely upon in performing services under this
Agreement:

 

a.     Environmental assessment
and impact statements;

 

b.    Property, boundary,
easement, right-of-way, topographic and utility surveys;

 

c.     Property descriptions;

 

d.    Zoning, deed and other land
use re­strictions;

 

e.     Engineering surveys to
establish refer­ence points for design and construction which in OWNER’s
judgment are necessary to enable DESIGN/BUILDER to  proceed with the Work;

 

f.     Assistance in filing
documents required to obtain necessary approvals of governmental authorities
having jurisdiction over the Project; and

 

g.    Subsurface data.

 

                   7.      [not used].

 

37

 

                   8.      Provide information known to or in the
possession of OWNER relating to the presence of materials and substances at the
site which could create a Hazardous Condition.

 

                   9.      Perform all items designated as OWNER’s
responsibilities in the Agreement and Exhibit B.

 

8.02    
Scope of OWNER’s Safety and Hazardous Waste Responsibilities

 

       A.     OWNER shall not supervise, direct or have control or authority
over, nor be responsible for, DESIGN/BUILDER’s means, methods, techniques,
sequences or procedures of Construction or the safety precautions and programs
incident thereto, or for any failure of DESIGN/BUILDER to comply with Laws and
Regulations applicable to the furnishing or perfor­mance of the Work.  OWNER will not be responsible for
DESIGN/BUILDER’s failure to perform or furnish the Work in accordance with the
Contract Documents.

 

ARTICLE 9—CHANGES IN THE WORK; CLAIMS

 

9.01                     General—Rights and
Obligations

 

      A.    Without invalidating the Agreement, OWNER may, at any time or
from time to time, request additions, deletions or revisions in the Work within
the general scope of the contract by a Written Amendment or a Change
Order.  If DESIGN/BUILDER agrees to such
Written Amendment or Change Order, which agreement shall not be unreasonably withheld,
DESIGN/BUILDER shall promptly proceed with the Work involved which will be
performed under the applicable provisions of the Contract Documents (except as
otherwise specifi­cally provided).

 

9.02       Notice
of Intent to Make Claim

 

      A.    If OWNER and DESIGN/BUILDER are unable to agree as to the extent,
if any, of an adjust­ment in the Contract Price or an adjustment of the
Contract Times that should be allowed as a result of any order of OWNER
pursuant to paragraph 9.01.A or other occurrence for which the Contract
Documents provide that such adjustment(s) may be made, a claim may be made
therefor.  Written notice of intent to
make such a claim shall be submitted to the other party promptly and in no
event more than thirty (30) days after the start of the occurrence or event
giving rise to the claim.

 

9.03       Claim
Documentation

 

      A.    Substantiating documentation shall be submitted by the claiming
party within thirty (30) days after delivery of the notice required by
paragraph 9.02.A.

 

9.04       Decision

 

      A.    The other party shall render a decision on the claim no more than
thirty (30) days after the receipt of the substantiating documentation required
by paragraph 9.03.A.   This decision will
be final and binding unless the claiming party gives notice of intention to
exercise its rights under Article 15 within thirty (30) days of receipt of the
decision and exercises such rights within thirty (30) days of giving the notice
of intent.

 

9.05       Time
Limit Extension

 

      A.    The time limits of paragraphs 9.03.A and 9.04.A may be extended
by mutual agreement.

 

38

 

9.06       Exceptions

 

       A.     DESIGN/BUILDER shall not be entitled to an increase in the
Contract Price with respect to any Work performed that is not contemplated by
the Contract Documents as amended, modified and supplemented as provided in
paragraph 3.03.

 

9.07     Execution
of Change Orders

 

      A.      OWNER and DESIGN/BUILDER shall execute appropriate Change
Orders or Written Amendments covering:

 

                   1.      changes in the Work which are (i) ordered
by OWNER pursuant to paragraph 9.01, (ii) required because of acceptance of defective Construction under paragraph 12.08 or correcting defective Work under paragraph 12.09 or (iii) agreed to by
the parties; and

 

                   2.      changes in the Contract Price or Contract
Times which are agreed to by the parties.

 

ARTICLE 10—CHANGE OF CONTRACT PRICE

 

10.01   General

 

       A.     The Contract Price constitutes the total com­pensation (subject
to authorized adjustments) payable to DESIGN/BUILDER for performing the Work.

 

      B.     The Contract Price may only be changed by a Change Order or by a
Written Amendment.  Any claim for an
adjustment in the Contract Price shall be based on written notice delivered by
the party making the claim to the other party promptly in accordance with
paragraph 9.02.A.

 

      C.     The value of any Work covered by a Change Order or of any claim
for an increase or decrease in the Contract Price will be determined as
follows:

 

                   1.       By a mutually agreed lump sum (which may
include an allowance for overhead and profit not necessari­ly in accordance
with paragraph 10.02); or

 

                   2.       Where agreement to a lump sum is not
reached under paragraph 10.01.C.1, on the basis of the Cost of the Work
(determined as provided in paragraph 10.02) plus a DESIGN/BUILDER’s Fee for
over­head and profit (determined as provided in para­graph 10.02.C).

 

10.02     Cost
of the Work

 

      A.    Costs Included:  The term Cost of the Work means the sum of
all costs necessarily incurred and paid by DESIGN/BUILDER in the proper perfor­mance
of work authorized only by a Change Order or Written Amendment (together “Change
Order Work”).  Except as otherwise may be
agreed to in writing by OWNER, such costs shall be in amounts no higher than
those prevailing in the locality of the Project, shall include only the
following items and shall not include any of the costs itemized in paragraph
10.02.B:

 

39

 

                   1.       Payroll costs for employees in the direct
employ of DESIGN/BUILDER in the performance of the Change Order Work under the
then current schedule of job classifications and hourly rates of
DESIGN/BUILDER.

 

                   2.      Cost of all materials and equipment fur­nished
and incorporated in the Change Order Work, including costs of transportation
and storage thereof, and Suppliers’ field services required in connection
therewith.

 

                   3.      Payments made by DESIGN/BUILDER to
Subcontractors for Change Order Work performed or furnished by Subcontractors.

 

                   4.      Payments made by DESIGN/BUILDER to
Engineers (not employees of DESIGN/BUILDER or its affiliates) for Design
Professional Services provid­ed or furnished by Engineers under a Design
Subagreement for Change Order Work.

 

                   5.      Costs of special consultants (including
but not limited to testing laboratories and surveyors, but excluding employees
of DESIGN/BUILDER or its affiliates) employed for services specifically related
to Change Order Work.

 

                   6.      Supplemental costs including the following
items:

 

                                a.      The
proportion of necessary transportation, travel and subsistence expenses of DE­SIGN/BUILDER’s
employees incurred in discharge of duties connected with Change Order Work.

 

                            b.    Cost,
including transportation and maintenance, of all materials, supplies, equip­ment,
machinery, appliances, office and tempo­rary facilities at the Site and hand
tools not owned by the workers, which are consumed in the performance of Change
Order Work, and cost less market value of such items used but not con­sumed
which remain the property of DESIGN/BUILDER.

 

                            c.     Rentals
of all Work equipment and machinery and the parts thereof whether rented from DESIGN/BUILDER
or others in accordance with rental agreements approved by OWNER, and the costs
of transportation, loading, unloading, installation, dismantling and removal
thereof—all in accordance with the terms of said rental agreements.  The rental of any such equipment, machinery
or parts shall cease when the use thereof is no longer neces­sary for Change
Order Work.

 

                            d.    Sales,
consumer, use or similar taxes related to Change Order Work, paid by
DESIGN/BUILDER or required to be reimbursed by DESIGN/BUILDER to its
Subcontractors, Suppliers, or Engineers.

 

      B.     Costs Excluded:  The term Cost of the Work shall not include
any of the following:

 

                     1.      Payroll costs and other compensation of
DESIGN/BUILDER’s officers, executives, princi­pals (of partnerships and sole
proprietorships), general managers, architects, attorneys, auditors,
accountants, purchasing and contracting agents, expediters, timekeepers, clerks
and other personnel employed by DESIGN/BUILDER whether at the Site or in
DESIGN/BUILDER’s principal or a branch office for general administration of the
Work and not specifically included in the agreed 

 

40

 

upon schedule of job classifications referred to in paragraph 10.02.A.1
— all of which are to be considered administrative costs covered by the
DESIGN/BUILDER’s fee.

 

                     2.      Expenses of DESIGN/BUILDER’s princi­pal
and branch offices other than DESIGN/BUILDER’s office at the Site.

 

                     3.      Any part of DESIGN/BUILDER’s capital
expenses, including interest on DESIGN/BUILDER’s capital employed for the Work
and charges against DESIGN/BUILDER for delinquent payments.

 

                    4.     Costs
due to the negligence of DESIGN/BUILDER, any Subcontractor, or anyone directly
or indirectly employed by any of them or for whose acts any of them may be
liable, including but not limited to, the correction of defective
Work, disposal of materials or equipment wrongly sup­plied and making good any
damage to property.

 

                      5.    Other
overhead or general expense costs of any kind and the costs of any item not
specifically and expressly included in paragraph 10.02.A.

 

       C.  Fee:

 

                                                1.   A mutually agreed fee or, in the event the
parties can not agree upon a fee, DESIGN/BUILDER’s fee for overhead and profit
on Change Orders priced by paragraph 10.01.C.2 (whether additive or deductive)
shall be fifteen percent (15%) of the Cost of the Change Order Work for
subcontracts, materials and equipment.

 

                              2.    When
both additions and credits are involved in any one change, the adjustment in
DESIGN/BUILDER’s fee shall be computed on the basis of the net change in
accordance with paragraph 10.02.C.1 above.

 

      D.     Documentation:  Whenever the cost of any Work is to be
determined pursuant to paragraphs 10.02.A and 10.02.B, DESIGN/BUILDER will
estab­lish and maintain records thereof in accordance with generally accepted
accounting practices and submit in a form acceptable to OWNER an itemized cost
breakdown together with supporting data.

 

ARTICLE 11—CHANGE OF CONTRACT TIMES

 

11.01     General

 

        A.   The Contract Times may only be changed by a Change Order or a
Written Amendment.  Any claim for an
adjustment of the Contract Times shall be based on written notice pursuant to
paragraph 9.02.

 

        B.    All Contract Times are of the essence of the Agreement.

 

11.02               Time Extensions

 

        A.    Where DESIGN/BUILDER is prevented from
completing any part of the Work within the Contract Times due to delay beyond
the control of DESIGN/BUILDER, the Contract Times will be extended in an amount
equal to the time lost due to such delay if a claim is made therefor as
provided in Article 9.  Delays beyond the
control of DESIGN/BUILDER shall include, but not be limited to, 

 

41

 

acts or neglect by OWNER, governmental agencies, acts or neglect of
utility owners or other contractors performing other construction work as
contemplated by Article 7, fires, floods, epidemics, abnormal weather
conditions or acts of God.  Delays
attributable to and within the control of a Subcontractor or Supplier shall be
deemed to be delays within the control of DESIGN/BUILDER.

 

         B.   Nothing
in this paragraph 11.02 bars a change in Contract Price pursuant to Article 10
to compensate for the direct costs incurred by DESIGN/BUILDER due to delay,
interference, or disruption directly attributable to actions or inactions of
OWNER.  However, OWNER shall not be
liable to DESIGN/BUILDER for costs or damages arising out of or resulting from
(i) delays caused by or within the control of DESIGN/BUILDER, or (ii) delays
beyond the control of both parties including but not limited to fires, floods,
epidemics, abnormal weather conditions, acts of God or acts or neglect by
governmental agencies, utility owners, or other contractors performing other
work as contemplated by Article 7.

 

ARTICLE 12—TESTS AND INSPECTIONS; CORRECTION, REMOVAL OR ACCEPTANCE OF DEFECTIVE CONSTRUCTION

 

12.01     Notice
of Defects

 

        A.   Each party shall give the other prompt written notice of all defective Construction of which such party has actual
knowledge.  All defective
Construction may be rejected, corrected or accepted as provided in this Article
12.

 

12.02     Access
to Construction

 

      A.   Upon advance notice to and approval by DESIGN/BUILDER, which will
not be unreasonably withheld, OWNER, other representatives and personnel of
OWNER, independent testing laboratories and governmental agencies with
jurisdictional interests will have access to the Construction at the Site at
reasonable times for their observation, inspecting and testing.  DESIGN/BUILDER shall provide them proper and
safe conditions for such access and advise them of DESIGN/BUILDER’s Site safety
procedures and programs so that they may comply therewith as applicable.

 

 

 

12.03   Tests
and Inspections

 

      A.      If the Contract Documents or Laws or Regulations of any public
body having jurisdiction require any part of the Construction specifically to
be inspected, tested or approved, DESIGN/BUILDER shall assume full
responsibility for arranging and obtaining such inspections, tests or
approvals, pay all costs in connection therewith, and furnish OWNER the
required certificates of inspection or approval.  DESIGN/BUILDER shall also be responsible for
arranging and obtaining and shall pay all costs in connection with any
inspections, tests or approvals required for OWNER’s acceptance of materials or
equipment to be incorporated in the Construction or of materials, mix designs,
or equipment submitted for approval prior to DESIGN/BUILDER’s purchase thereof
for incorporation in the Construction. 
Nothing in this paragraph shall be interpreted or construed as
obligating DESIGN/BUILDER to obtain, furnish or pay the costs of any permit,
inspection, test or approval required by the applicable State or the United
States Environmental Protection Agency for the construction or operation of the
Project (including, without limitation, any atmospheric emissions compliance
reports), all of which shall be the responsibility of OWNER.

 

42

 

      B.      DESIGN/BUILDER shall give OWNER reasonable notice of the
planned schedule for all required inspections, tests or approvals.

 

      C.      If any Construction (or the construction work of others) that
is required to be inspected, tested or approved is covered by DESIGN/BUILDER
without written concurrence of OWNER, it must, if requested by OWNER, be
uncovered for observation at DESIGN/BUILDER’s expense unless DESIGN/BUILDER has
given OWNER timely notice of DESIGN/BUILDER’s intention to cover the same and
OWNER has not acted with reasonable promptness in response to such notice.

 

12.04   Uncovering
Construction

 

      A.      If any Construction is covered contrary to the written request
of OWNER, it must, if requested by OWNER, be uncovered for OWNER’s observation
and recovered at DESIGN/BUILDER’s expense.

 

      B.     If OWNER considers it necessary or advisable that covered
Construction be observed by OWNER or inspected or tested by others,
DESIGN/BUILDER, at OWNER’s request, shall uncover, expose or otherwise make
available for observation, inspection or testing as OWNER may require, that
portion of the Construction in question, furnishing all necessary labor,
material and equipment.  If it is found
that such Construction is defective,
DESIGN/BUILDER shall pay all costs caused by or resulting from such uncovering,
exposure, observation, inspection and testing (including but not limited to all
reasonable fees and charges of engineers and other professionals) and OWNER
shall be entitled to an appropriate decrease in the Contract Price, and, if the
parties are unable to agree as to the amount thereof, may make a claim therefor
as provided in Article 9.  If
however, such Construction is not found to be defective,
DESIGN/BUILDER shall be allowed an increase in the Contract Price directly
attributable to such uncovering, exposure, observation, inspection, testing, replacement
and rework; and, if the parties are unable to agree as to the amount or extent
thereof, DESIGN/BUILDER may make a claim therefor as provided in Article 9.

 

12.05        OWNER May Stop the Construction

 

      A.    If the Construction is defective, or
DESIGN/BUILDER fails to supply sufficient skilled workers or suitable materials
or equipment, or fails to furnish or perform the Construction in such a way
that the completed Construction will conform to the Contract Documents, OWNER
may order DESIGN/BUILDER to stop Construction or any portion thereof, until the
cause for such order has been eliminated; however, this right of OWNER to stop
Construction will not give rise to any duty on the part of OWNER to exercise
this right for the benefit of DESIGN/BUILDER or any other party.

 

12.06        Correction or Removal of
Defective Construction

 

       A.     Prior to acceptance and final payment under paragraph 13.09
below, OWNER will have authority to disapprove or reject defective
Construction and will have authority to require special inspection or testing
of the Construction whether or not the Construction is fabricated, installed or
completed.  DESIGN/BUILDER shall
promptly, either correct all defective
Construction, whether or not fabricated, installed or completed, or, if the
Construction has been rejected by OWNER, remove it from the Site and replace it
with non-defective Construction. 
DESIGN/BUILDER shall bear all costs of such correction or removal
(including but not limited to reasonable fees and charges of engineers,
architects, attorneys and other professionals, all court or arbitration or
other dispute resolution costs, and all costs of repair or replacement of work
of others) made necessary thereby. 
Nothing in this 

 

43

 

paragraph shall be interpreted or construed as requiring DESIGN/BUILDER
to correct or remove and replace defective Construction accepted by OWNER
pursuant to paragraph 12.08 below.

 

12.07   Correction
Period

 

       A.     If within one (1) year after the date of Substantial Completion
or such longer period of time as may be prescribed by Laws or Regulations or by
the terms of any applicable special guarantee required by the Contract
Documents or by any specific provision of the Contract Documents, any
Construction is found to be defective,
DESIGN/BUILDER shall promptly, without cost to OWNER and in accordance with
OWNER’s written instructions, (i) correct such defective
Construction, or, if it has been rejected by OWNER, remove it from the Site and
replace it with Construction that is not defective, and
(ii) satisfactorily correct or remove and replace any damage to other
Construction or the work of others resulting therefrom.  If DESIGN/BUILDER does not promptly comply
with the terms of such instructions, or in an emergency where delay would cause
serious risk of loss or damage, OWNER may have the defective
Construction corrected or the rejected Construction removed and replaced, and
all costs and damages caused by or resulting from such removal and replacement
(including but not limited to all reasonable fees and charges of engineers,
architects, attorneys and other professionals, all court or arbitration or
other dispute resolution costs, and all costs of repair or replacement of work
of others) will be paid by DESIGN/BUILDER, subject to the provisions of
paragraph 16.06.  Nothing in this
paragraph shall be interpreted or construed as requiring DESIGN/BUILDER to
correct or remove and replace defective Construction accepted by OWNER pursuant
to paragraph 12.08 below.

 

       B.  Where defective Construction (and
damage to other Construction resulting therefrom) has been corrected, removed
or replaced under this paragraph 12.07, the correction period hereunder with
respect to such Construction will be extended for an additional period of one
(1) year after such correction or removal and replacement has been
satisfactorily completed.

 

12.08            Acceptance of Defective
Construction

 

      A.     If, instead of requiring correction or removal and replacement
of defective Construction, OWNER prefers to
accept it, OWNER may do so.  If any such
acceptance occurs prior to final payment, a Change Order will be issued
incorporating the necessary revisions in the Contract Documents with respect to
the Construction; and OWNER shall be entitled to an appropriate decrease in the
Contract Price, and, if the parties are unable to agree as to the amount
thereof, OWNER may make a claim therefor as provided in Article 15, subject to
the provisions of paragraph 16.06 below. 
If the acceptance occurs after final payment, an appropriate amount will
be paid by DESIGN/BUILDER to OWNER, and, if the parties are unable to agree as
to the amount thereof, OWNER may make a claim therefor as provided in Article
15, subject to the provisions of paragraph 16.06 below.  Notwithstanding the foregoing, any defective
Construction known by OWNER and not disclosed to DESIGN/BUILDER at the time of
acceptance and final payment under paragraph 13.09 shall be deemed to be
accepted by OWNER and DESIGN/BUILDER shall have no obligation to correct, or
remove and replace such defect, or make any payment to OWNER with respect
thereto.

 

44

 

ARTICLE 13—PAYMENTS TO DESIGN/BUILDER AND COMPLETION

 

13.01   Schedule
of Values

 

       A.     The Schedule of Values established as provided in paragraph
2.05.A will serve as the basis for progress payments and will be incorporated
into a form of Application for Payment acceptable to OWNER.

 

13.02   Application
for Progress Payment

 

        A.    At least ten (10) days before the date established for each
progress payment (but not more often than once a month), DESIGN/BUILDER shall
submit to OWNER for review and approval an Application for Payment filled out
and signed by DESIGN/BUILDER covering the Work completed as of the date of the
Application and accompanied by such supporting documentation as is required by
the Contract Documents or as is reasonably requested by OWNER’s primary lender
for the Project.  The amount of retainage
with respect to progress payments will be as stipulated in the Agreement.

 

        B.    With each Application for Payment, DESIGNBUILDER shall submit
interim lien waivers for all subcontractors and first tier suppliers with a
contract value in excess of $5,000.00. 
The interim lien waivers shall be effective through the immediately
preceding payment.  OWNER may withhold
from any progress payment the amount applicable to any lien waivers not
received for any preceding Application for Payment for which payment was made
by OWNER.

 

13.03     DESIGN/BUILDER’s
Warranty of Title

 

      A.    DESIGN/BUILDER warrants and guarantees that title to all
construction materials and equipment covered by any Application for Payment,
whether incorporated in the Project or not, will pass to OWNER no later than
the time of payment free and clear of all Liens.  This paragraph 13.03.A does not apply to any
documents covered by paragraph 3.04.

 

13.04        Progress Payments

 

      A.    Progress payments shall be made by the OWNER to the
DESIGN/BUILDER according to the following procedure:

 

                     1.      OWNER will, within ten (10) days of
receipt of each Application for Payment, either indicate in writing its
acceptance of the Application and state that the Application is being processed
for payment, or return the Application to DESIGN/BUILDER indicating in writing
its reasons for refusing to accept the Application and the exact amount(s) in
dispute.  All undisputed amounts will
become due and be paid by OWNER to DESIGN/BUILDER not more than ten (10) days
after OWNER’s acceptance or rejection of such Application, as the case may be.

 

                      2.     If
the OWNER should fail to pay the DESIGN/BUILDER at the time the payment of any
amount becomes due, then DESIGN/BUILDER may, at any time thereafter, upon
serving written notice that DESIGN/BUILDER will stop the Work within seven (7)
days after receipt of the notice by the OWNER, and after such seven (7) day
period, stop the Work until payment of the amount owing has been received,
including interest thereon.  Written
notice shall be deemed to have been duly served if sent by certified mail to
the last known business address of the OWNER.

 

45

 

                      3.     Payments
due but unpaid shall bear interest at the rate specified in the Agreement.  Any disputed payment shall be due at the time
mutually determined by the parties or, if applicable, the time determined by
the arbitrator under paragraph 15.01.

 

                      4.     No
Progress Payment nor any partial or entire use or occupancy of the Project by
the OWNER shall constitute an acceptance of any Work not in accordance with the
Contract Documents.

 

       B.     OWNER may refuse to make the whole or any part of any such
payment or, because of subsequently discovered evidence or the results of
subsequent inspections or tests, nullify any previous payment, to the extent
that is reasonably necessary to protect OWNER from loss because:

 

                            1.     The
Work is defective, or completed Work has been
damaged, requiring correction or replacement;

 

                            2.     The
Contract Price has been reduced by Written Amendment or Change Order;

 

                            3.     OWNER
has been required to correct defective Work
or complete Work in accordance with paragraph 12.09.A;

 

                            4.     OWNER
has actual knowledge of the occurrence of any of the events enumerated in
paragraphs 14.02.A.1 through A.3 inclusive;

 

                            5.     Claims
have been made against OWNER on account of DESIGN/BUILDER’s performance or
furnishing of the Work;

 

                            6.     The
provisions of paragraph 13.02.B are applicable; or

 

                            7.     Liens
have been filed in connection with the Work, except where DESIGN/BUILDER has
delivered a specific Bond satisfactory to OWNER to secure the satisfaction and
discharge of such Liens.

 

13.05   Substantial Completion

 

      A.    When DESIGN/BUILDER considers the
Construction ready for its intended use DESIGN/BUILDER shall notify OWNER in
writing that the Construction is substantially complete (except for items
specifically listed by DESIGN/BUILDER as incomplete) and request that OWNER
issue a certificate of Substantial Completion. 
Within a reasonable time thereafter, OWNER and DESIGN/BUILDER shall make
an inspection of the Construction to determine the status of completion.  If OWNER does not consider the Construction
substantially complete, OWNER will notify DESIGN/BUILDER in writing giving the
reasons therefor.  If OWNER considers the
Construction substantially complete, OWNER will prepare and deliver to
DESIGN/BUILDER a certificate of Substantial Completion which shall fix the date
of Substantial Completion.  There shall
be attached to the certificate a list of items to be completed or corrected before
final payment.  Such list of items to be
completed or corrected may be amended by OWNER for a period of sixty (60) days
following the date DESIGN/BUILDER requests that OWNER issue a certificate of
Substantial Completion and DESIGN/BUILDER shall not be responsible for
completing or correcting items not listed by OWNER within such time.  At the time of delivery of the certificate of
Substantial Completion OWNER will deliver to DESIGN/BUILDER a written
determination as to division of responsibilities pending final payment between
OWNER and DESIGN/BUILDER with respect to security, operation, safety,
maintenance, heat, utilities, insurance and warranties and guarantees.

 

46

 

      B.     OWNER will have the right to exclude DESIGN/BUILDER from the
Site after the date of Substantial Completion, but OWNER will allow
DESIGN/BUILDER reasonable access to complete or correct items on the list of
items to be completed.

 

13.06     Final Inspection

 

      A.    Upon written notice from DESIGN/BUILDER that
the entire Construction or an agreed portion thereof is complete, OWNER will
make a final inspection with DESIGN/BUILDER and will notify DESIGN/BUILDER in
writing of all particulars in which this inspection reveals that the
Construction is incomplete or defective.  DESIGN/BUILDER shall immediately take such
measures as are necessary to complete such Construction or remedy such
deficiencies.

 

13.07     Final Application for Payment

 

      A.  After DESIGN/BUILDER has completed all such
corrections to the satisfaction of OWNER and delivered in accordance with the
Contract Documents all maintenance and operating instructions, schedules,
guarantees, certificates or other evidence of insurance required by paragraph
5.08.B, certificates of inspection, marked-up record documents (as provided in paragraph
6.11) and other documents, DESIGN/BUILDER may make application for final
payment of the Contract Price following the procedure for progress
payments.  Such final Application for
Payment shall be accompanied (unless previously delivered) by:  (i) all documentation called for in the
Contract Documents, including but not limited to the evidence of insurance
required by subparagraph 5.02.B.7, (ii) consent of the surety, if any, to final
payment, and (iii) complete and legally effective releases or waivers
(satisfactory to OWNER) of all Liens arising out of or filed in connection with
the Work.  In lieu of such releases or
waivers of Liens and as approved by OWNER, DESIGN/BUILDER may furnish receipts
or releases in full and an affidavit of DESIGN/BUILDER that: (i) the
releases and receipts include all labor, services, material and equipment for
which a Lien could be filed, and (ii) all payrolls, material and equipment
bills and other indebtedness connected with the Work for which OWNER or OWNER’s
property might in any way be responsible have been paid or otherwise
satisfied.  If any Subcontractor or
Supplier fails to furnish such a release or receipt in full, DESIGN/BUILDER may
furnish a Bond or other collateral satisfactory to OWNER to indemnify OWNER
against any Lien.

 

 13.08    Final
Payment and Acceptance

 

      A.    If OWNER is satisfied that the Work has been
completed and DESIGN/BUILDER’s other obligations under the Contract Documents
have been fulfilled, OWNER will, within ten (10) days after receipt of such final
Application for Payment, give written notice to DESIGN/BUILDER that the Work is
acceptable.  Otherwise, OWNER will return
the Application to DESIGN/BUILDER, indicating in writing the reasons for
refusing to process final payment, in which case DESIGN/BUILDER shall make the
necessary corrections and resubmit the Application.  Thirty (30) days after the presentation by
DESIGN/BUILDER to OWNER of an acceptable Application and accompanying
documentation, in appropriate form and substance and with OWNER’s notice of
acceptability, the final payment under section 4.01C. of the Agreement shall
become due and payable by OWNER to DESIGN/BUILDER.

 

      B.     If, through no fault of DESIGN/BUILDER, final completion of the
Work is significantly delayed, OWNER shall, upon receipt of DESIGN/BUILDER’s
final Application for Payment, and without terminating the Agreement, make
payment of the balance due for that portion of the Work 

 

47

 

fully completed and accepted.  If
the remaining balance to be held by OWNER for Work not fully completed or
corrected is less than the retainage stipulated in the Agreement, the written
consent of the surety to the payment of the balance due for that portion of the
Work fully completed and accepted shall be submitted by DESIGN/BUILDER to OWNER
with the Application for such payment. 
Such payment shall be made under the terms and conditions governing
final payment, except that it shall not constitute a waiver of claims.

 

13.09   Waiver
of Claims

 

       A.     The making and acceptance of final payment of the Contract Price
will constitute:

 

                            1.     A
waiver of all claims by OWNER against DESIGN/BUILDER, except claims arising
from unsettled Liens, from defective
Construction appearing after final inspection pursuant to paragraph 13.06, from
failure to comply with the Contract Documents or the terms of any special
guarantees specified therein, or from DESIGN/BUILDER’s continuing obligations
under the Contract Documents; and

 

                            2.     a
waiver of all claims by DESIGN/BUILDER against OWNER other than those
previously made in writing and still unsettled, or from OWNER’s continuing
obligations under the Contract Documents.

 

ARTICLE 14—SUSPENSION OF WORK AND TERMINATION

 

14.01   Owner
May Suspend Work

 

       A.     At any time and without cause, OWNER may suspend the Work or any
portion thereof for a period of not more than ninety (90) days by notice in
writing to DESIGN/BUILDER which will fix the date on which Work will be
resumed.  DESIGN/BUILDER shall resume the
Work on the date so fixed. 
DESIGN/BUILDER may be allowed an adjustment in the Contract Price or an
extension of the Contract Times, or both, directly attributable to any such
suspension if DESIGN/BUILDER makes a claim therefor as provided in Article
9.  If requested by DESIGN/BUILDER in
connection with the performance of the Work, OWNER shall suspend operations of
the plant and OWNER shall be responsible for any and all costs associated with
such suspension.

 

14.02   OWNER
May Terminate for Cause

 

       A.    The occurrence of any one or more of the following events
justifies termination for cause:

 

1.        DESIGN/BUILDER
persistently fails to perform the Work in accordance with the Contract
Documents (including, but not limited to, failure to supply sufficient skilled
workers or suitable materials or equipment or failure to adhere to the progress
schedule established under paragraph 2.05.A as revised from time to time.)

 

2. DESIGN/BUILDER intentionally or
willfully disregards Laws or Regulations of any public body having
jurisdiction.

 

3. DESIGN/BUILDER otherwise
breaches or violates in any material way any provisions of the Contract
Documents.

 

48

 

                     4.      DESIGN/BUILDER fails to timely pay its
Consultants or Subcontractors any undisputed amounts.

 

                     5.      DESIGN/BUILDER files a voluntary petition
of bankruptcy, or an involuntary petition of bankruptcy is filed that is not
dismissed within 90 days after the date of such filing.

 

      B.     OWNER may, after giving DESIGN/BUILDER written notice of the
occurrence of an event in paragraph 14.02.A and twenty (20) days therefrom to
remedy such event (or, if such event is not capable of being remedied within
such twenty (20) days, such number of days as is reasonably needed to remedy
such event), and to the extent permitted by Laws and Regulations, terminate the
services of DESIGN/BUILDER, exclude DESIGN/BUILDER from the Site and take
possession of the Work incorporate in the Work all materials and equipment
stored at the Site or elsewhere for which OWNER has paid DESIGN/BUILDER and
finish the Work as OWNER may deem expedient. 
In such case DESIGN/BUILDER shall not be entitled to receive any further
payment other than reimbursement for DESIGN/BUILDER’s payments to
Subcontractors and Suppliers for labor, services, equipment and materials prior
to the date of termination, but only to the extent not previously paid by
OWNER.  If the unpaid balance of the
Contract Price exceeds all reasonable costs incurred by OWNER resulting from
completing the Work (including but not limited to all reasonable fees and
charges of engineers, architects, attorneys and other professionals and all
court or arbitration or other dispute resolution costs) such excess will be
paid to DESIGN/BUILDER.  If all reasonable
costs incurred by OWNER to complete the Work (including but not limited to all
reasonable fees and charges of engineers, architects, attorneys and other
professionals and all court or arbitration or other dispute resolution costs)
exceed the unpaid balance of the Contract Price, DESIGN/BUILDER shall pay the
difference to OWNER subject to the provisions of paragraph 16.06.  When exercising any rights or remedies under
this paragraph OWNER shall be required to obtain a reasonable price for the
Work performed.

 

      C.     Where DESIGN/BUILDER’s services have been so terminated by
OWNER, the termination will not affect any rights or remedies of OWNER against
DESIGN/BUILDER then existing or which may thereafter accrue.  Any payment of moneys due DESIGN/BUILDER by
OWNER will not release DESIGN/BUILDER from liability.

 

      D.     Nothing in this paragraph shall be interpreted or construed as
requiring DESIGN/BUILDER to perform any additional services after such
termination including, without limitation, the creation of any drawings,
specifications or any other document necessary to complete the Work.

 

14.03     OWNER
May Terminate for Convenience 

 

       A.     Prior to the date on which concrete is first poured at the Site
by DESIGN/BUILDER, OWNER may, without cause and without prejudice to any other
right or remedy of OWNER, elect to terminate the Agreement upon twenty (20)
days written notice to DESIGN/BUILDER. 
In such case, DESIGN/BUILDER shall be paid (without duplication of any
items) for:

 

       1.      Completed and acceptable Work executed in accordance with the
Contract Documents prior to the effective date of termination, including fair
and reasonable sums for overhead and profit on such Work;

 

       2.      Expenses sustained prior to the effective date of termination
in performing services and furnishing labor, materials or equipment as required
by the Contract Documents in connection with uncompleted Work, plus fair and
reasonable sums for overhead and profit on such expenses;

 

 

49

 

       3.      Amounts paid in settlement of terminated contracts with
Subcontractors, Engineers, Suppliers and others (including but not limited to
all reasonable fees and charges of engineers, architects, attorneys and other
professionals and all court or arbitration or other dispute resolution costs
incurred in connection with termination of contracts with Subcontractors,
Engineers and Suppliers); and

 

                    4.      Reasonable expenses directly attributable
to termination.

 

       B.  Except as otherwise provided in the Agreement, DESIGN/BUILDER shall
not be paid on account of loss of anticipated profits or revenue or other
economic loss arising out of or resulting from such termination.

 

14.04            DESIGN/BUILDER May Stop
Work or Terminate

 

      A.     If, through no act or fault of DESIGN/BUILDER, the Work is
suspended for a period of more than ninety (90) days by OWNER or under an order
of court or other public authority, or OWNER fails to act on any Application
for Payment within ten (10) days after it is submitted or OWNER fails for ten
(10) days to pay DESIGN/BUILDER any sum finally determined to be due, then
DESIGN/BUILDER may, upon seven (7) days written notice to OWNER, and provided
OWNER does not remedy such suspension or failure within that time, terminate
the Agreement and recover from OWNER payment on the same terms as provided in paragraph
14.03.  In lieu of terminating the
Agreement and without prejudice to any other right or remedy, if OWNER has
failed for ten days to pay DESIGN/BUILDER any sum finally determined to be due,
DESIGN/BUILDER may upon seven (7) days written notice to OWNER stop the Work
until payment is made of all such amounts due DESIGN/BUILDER, including
interest thereon.  The provisions of this
paragraph 14.04.A are not intended to preclude DESIGN/BUILDER from making claim
under Article 9 for an increase in Contract Price or Contract Times or
otherwise for expenses or damage directly attributable to DESIGN/BUILDER’s
stopping Work as permitted by this paragraph.

 

      B.

 

 

ARTICLE 15—DISPUTE RESOLUTION

 

15.01 
Dispute Resolution Agreement

 

     A.  OWNER and DESIGN/BUILDER agree that they will
first submit any and all unsettled claims, counterclaims, disputes and other
matters in question between them arising out of or relating to the Contract
Documents or the breach thereof (“disputes”), to mediation by a mutually agreeable,
impartial mediator, or if the parties cannot so agree, a mediator designated by
the American Arbitration Association (“AAA”) pursuant to its Construction
Industry Mediation Rules,  prior to
either of them initiating against the other a demand for arbitration pursuant
to paragraph 15.01.B through 15.01.E, unless delay in initiating arbitration
would irrevocably prejudice one of the parties. 
Any time limits within which to file a demand for arbitration shall be
suspended with respect to a dispute submitted to mediation within those same
applicable time limits and shall remain suspended until 10 days after the
termination of the mediation.  The
mediator of any dispute submitted to mediation under this Agreement shall not
serve as arbitrator of such dispute unless otherwise agreed.

 

      B.     All claims, disputes and other matters in question between OWNER
and DESIGN/BUILDER arising out of or relating to the Contract Documents or the
breach thereof (except for claims which 

 

50

 

have been waived by the making or acceptance of final payment as
provided by paragraph 13.09) will be decided by binding arbitration in
accordance with the Construction Industry Arbitration Rules of the AAA then in
effect, subject to the limitations of this paragraph 15.01.  The arbitrator shall have the discretion to
award reasonable attorneys’ fees and costs to the prevailing party.  This agreement so to arbitrate and any other
agreement or consent to arbitrate entered into in accordance herewith as
provided in this paragraph 15.01 will be specifically enforceable under the
prevailing law of any court having jurisdiction.

 

       C.  Notice of the demand for arbitration will be filed in writing with
the other party to the Agreement and with the designated arbitration
entity.  The demand for arbitration will
be made within a reasonable time after the claim, dispute or other matter in
question has arisen, and in no event shall any such demand be made after the date
when institution of legal or equitable proceedings based on such claim, dispute
or other matter in question would be barred by the applicable statute of
limitations.

 

       D.  Except as provided in paragraph 15.01.E below, no arbitration
arising out of or relating to the Contract Documents shall include by
consolidation, joinder or in any other manner any other individual or` entity
who is not a party to this contract unless:

 

                   1.      the inclusion of such other individual or
entity is necessary if complete relief is to be afforded among those who are already
parties to the arbitration, and

 

                   2.      such other individual or entity is
substantially involved in a question of law or fact which is common to those
who are already parties to the arbitration and which will arise in such
proceedings, and

 

                   3.      the written consent of the other
individual or entity sought to be included and of OWNER and DESIGN/BUILDER has
been obtained for such inclusion, which consent shall make specific reference
to this paragraph; but no such consent shall constitute consent to arbitration
of any dispute not specifically described in such consent or to arbitration
with any party not specifically identified in such consent.

 

       E.   Notwithstanding paragraph 15.01.D, if a claim, dispute or other
matter in question between OWNER and DESIGN/BUILDER involves the Work of a
Subcontractor, Supplier or Engineer either OWNER or DESIGN/BUILDER may join
such entity as a party to the arbitration between OWNER and DESIGN/BUILDER
hereunder.  DESIGN/BUILDER shall include
in all subcontracts required by paragraph 6.05.D a specific provision whereby
the Subcontractor consents to being joined in an arbitration between OWNER and
DESIGN/BUILDER involving the Work of such Subcontractor.  Nothing in this paragraph 15.01.E nor in the
provision of such subcontract consenting to joinder shall create any claim,
right or cause of action in favor of Subcontractor, Supplier or Engineer
against OWNER.

 

       F.   Notwithstanding the foregoing, the provisions of this Article 15
shall not apply to any claim by DESIGN/BUILDER of any breach or threatened
breach of any covenant contained in Exhibit C of the Agreement or the
provisions thereof.

 

51

 

ARTICLE 16—MISCELLANEOUS

 

16.01     Giving
Notice

 

      A.    Whenever any provision of the Contract Documents requires the
giving of written notice, it will be deemed to have been validly given:

 

                      1.     If
delivered in person to the individual or to a member of the firm or to an
officer of the corporation for whom it is intended;

 

                      2.     If
delivered at or sent by registered or certified mail, postage prepaid, to the
last business address known to the giver of the notice; or

 

                    3.     If
transmitted by facsimile, the time at which a machine generated confirmation
states the notice was received at the facsimile telephone number of the
intended recipient last known by the sender.

 

16.02   Computation
of Times

 

       A.     When any period of time is referred to in the Contract Documents
by days, it will be computed to exclude the first and include the last day of
such period.  If the last day of any such
period falls on a Saturday or Sunday or on a day made a legal holiday by the
law of the applicable jurisdiction, such day will be omitted from the
computation.

 

       B.     A calendar day of twenty-four hours measured from midnight to
the next midnight will constitute a day.

 

16.03   Notice
of Claim

 

       A.     Should OWNER or DESIGN/BUILDER suffer injury or damage to person
or property because of any error, omission or act of the other party or of any
of the other party’s employees or agents or others for whose acts the other
party is legally liable, claim will be made in writing to the other party
within a reasonable time of the first observance of such injury or damage.  The provisions of this paragraph 16.03.A
shall not be construed as a substitute for or a waiver of the provisions of any
applicable statute of limitations or repose.

 

16.04   Cumulative
Remedies

 

       A.     Except as provided in paragraph 16.06 of the General Conditions
below, the duties and obligations imposed by these General Conditions and the
rights and remedies available hereunder to the parties hereto, and, in
particular but without limitation, any general or specific warranties,
guarantees and indemnities imposed upon a party and all of the rights and
remedies available to the other party thereunder, are in addition to, and are
not to be construed in any way as a limitation of, any rights and remedies
available to any or all of them which are otherwise imposed or available by
Laws or Regulations, by special warranty or guarantee or by other provisions of
the Contract Documents, and the provisions of this paragraph will be as
effective as if repeated specifically in the Contract Documents in connection
with each particular duty, obligation, right and remedy to which they apply.

 

 

52

 

16.05     Survival
of Obligations

 

      A.   All representations, indemnifications, warranties and guarantees
made in, required by or given in accordance with the Contract Documents, as
well as all continuing obligations indicated in the Contract Documents, will
survive final payment, completion and acceptance of the Work and termination or
completion of the Agreement.

 

16.06      Limitation on OWNER’s Recovery of Damages and Waiver of Consequential
Damages

 

        A.    OWNER’s maximum cumulative recovery, for the Project as a whole,
of damages from DESIGN/BUILDER under the Contract Documents (including, without
limitation, OWNER’s correction of defective
Construction under paragraph 12.07.A., acceptance of defective
Construction under paragraph 12.08 and/or termination for cause under paragraph
14.02) shall be limited to $1,000,000.00.

 

        B.    Notwithstanding any other provision of the Contract Documents,
each party hereby waives all claims against the other party and such other party’s
employees and agents for any consequential damages that may arise out of or
relate to a breach of the Contract Documents or the performance of the Work
whether arising in contract, warranty, tort (including negligence), strict
liability or otherwise, including but not limited to losses of use, profits,
business, reputation or financing; provided, however, DESIGN/BUILDER does not
waive any claim against OWNER or OWNER’s employees or agents for any
consequential damages that may arise out of or relate to a breach of the
License Agreement attached hereto as Exhibit C.

 

 

53Exhibit
10.2

Sixth Amendment to
Construction Loan Agreement

 

This Sixth Amendment to Construction Loan Agreement is
dated as of the 2nd day of December, 2004, and is by and between LSCP, LLLP, an Iowa limited liability limited partnership (“BORROWER”)
and FIRST NATIONAL BANK OF OMAHA (“BANK”),
a national banking association established at Omaha, Nebraska.

 

WHEREAS, the BANK
and BORROWER executed a written Construction Loan Agreement dated as of July
25, 2002, which, together will all amendments thereto, is collectively called
the “AGREEMENT”.

 

WHEREAS, BORROWER has requested BANK to loan it up to
the sum of $5,400,000.00 (the “EXPANSION LOAN”) to assist BORROWER in
construction of improvements resulting in an expansion of its existing ethanol
plant (“EXPANSION PROJECT”).

 

Now, Therefore, in consideration of the AGREEMENT, and their mutual
promises made herein, BANK and BORROWER agree as follows:

 

1.                                       Terms which are typed herein as all
capitalized words and are not defined herein shall have same meanings as when
described in the AGREEMENT.

 

2.                                       Paragraph 1.19 (i) of the AGREEMENT is
hereby amended to read as follows:

 

                (i) as to the REVOLVING NOTE,
July 22, 2005; as to TERM NOTE 2, TERM NOTE 3, TERM NOTE 4, June 1, 2008; and
TERM NOTE 5, COMPLETION DATE.

 

3.             Effective immediately, paragraphs
1.1, 1.5 ,1.6, 1.7, 1.10, 1.25, 1.26, and 1.36 of the AGREEMENT are amended to
read:

 

1.1           “ASSIGNMENT OF EXPANSION CONTRACT”
means the assignment of the agreement (“EXPANSION CONTRACT”) between the
BORROWER and ICM, Inc. (the “GENERAL CONTRACTOR”) for preparation of PLANS and
construction of the EXPANSION PROJECT in accordance with PLANS therein
described, by which the BORROWER assigns, as additional security for repayment
of the OBLIGATIONS, the BORROWER’s interest in the EXPANSION CONTRACT in a form
acceptable to the BANK in the exercise of its reasonable discretion.

 

1.5           “CLOSING” shall mean the date on
which the BANK receives this AGREEMENT, executed by the BORROWER, together with
TERM NOTE 5.

 

1.6           “CONSTRUCTION LOAN TERMINATION DATE”
means the earlier of (i) the date which is ten months subsequent to CLOSING,
(ii) the COMPLETION DATE, or (iii) such earlier date upon which the BANK’s
commitment to make disbursements under TERM NOTE 5 is terminated.

 

1.7           “COMPLETION DATE” means the earlier
of September 1, 2005, or the date the BANK determines following a proper
inspection and in the exercise of BANK’s 

 

 

Page 1 of 7

 

 

reasonable
discretion, that the EXPANSION PROJECT has been completed in accordance with
the PLANS.

 

 

1.10         “DRAW REQUEST” means forms acceptable
to the BANK to be submitted to the BANK by BORROWER when a disbursement is
requested under TERM NOTE 5.

 

1.25         “PLANS” means the plans and
specifications prepared by the GENERAL CONTRACTOR for the EXPANSION PROJECT and
identified to this AGREEMENT by the GENERAL CONTRACTOR, the BORROWER and the
BANK.

 

1.26         “EXPANSION PROJECT” means the design
and construction of an addition to BORROWER’s ethanol plant, together with all
necessary and appropriate fixtures, equipment, attachments, and accessories, as
described in the PLANS, to be constructed on the PROPERTY.

 

1.36         “LIBOR RATE” shall mean (a) the
quotient of the (i) LIBOR BASE RATE divided by (ii) one minus the applicable
LIBOR RESERVE PERCENTAGE plus (b) 280 basis points in the case of the TERM NOTE
2, or 330 basis points in the case of TERM NOTE 5, or 380 basis points in the
case of TERM NOTE 3, TERM NOTE 4, and REVOLVING NOTE.  The LIBOR RATE shall be adjusted
automatically on and as of the effective date of any change in the LIBOR
RESERVE PERCENTAGE.

 

4.             The following additional paragraphs
2.14, 2.15, and 2.16 shall be added to the AGREEMENT, immediately following
existing paragraph 2.13:

 

2.14         EXPANSION LOAN.  The BANK agrees, on the terms and subject to
the conditions hereinafter set forth, to make, from time to time during the
period from the date of execution of this AGREEMENT to and including the
CONSTRUCTION LOAN TERMINATION DATE disbursements to the BORROWER in an aggregate
principal amount not to exceed the amount of the EXPANSION LOAN for the sole
purpose of paying approved construction costs of the EXPANSION PROJECT.  If, prior to the COMPLETION DATE, there is
paid to BANK a third party payment (a grant payment, for example), which is
applied to the EXPANSION LOAN, BANK will advance such amount, or a lesser sum,
as in BANK’s reasonable discretion is necessary to complete the EXPANSION
PROJECT.  Approved construction costs are
costs actually incurred in connection with the construction of the EXPANSION
PROJECT, which shall include but not be limited to costs of permits, licenses,
labor, supplies, materials, services, equipment, insurance premiums, real
estate taxes and interest on disbursements. 
Construction costs do not include the cost associated with termination
under §14 of the General Conditions of Contract to the EXPANSION CONTRACT.

 

2.15         “TERM NOTE 5” means the promissory note
of the BORROWER in the form of Exhibit 6-A evidencing borrowings under the
EXPANSION LOAN of up to a maximum amount of Five Million Four Hundred Thousand
($5,400,000.00) Dollars. Notwithstanding any provisions of TERM NOTE 5,
interest shall be payable at the rate provided therein only on such portions of
the EXPANSION LOAN proceeds as actually have been disbursed pursuant to this
AGREEMENT.

 

 

Page 2 of 7

 

 

2.16         Prior to CONSTRUCTION COMPLETION DATE,
BORROWER shall pay BANK interest only, due quarterly.  On CONSTRUCTION COMPLETION DATE, the outstanding
balance of TERM NOTE 5 will be added to the principal balance of TERM NOTE 3,
and thus repaid.

 

5.             Paragraph 8.7 of the AGREEMENT is
hereby amended, effective immediately, to read:

 

8.7           Addresses for Notices, Etc.  Except as otherwise expressly provided
herein, all notices, requests, demands and other communications provided for
under the LOAN DOCUMENTS shall be in writing and mailed or delivered to the
applicable party at its address indicated below:

 

If to the
BORROWER:                         LSCP, LLLP (d/b/a Little Sioux Corn Processors, L.P.)

                                                                4808
F Avenue

                                                                Marcus,
Iowa 50135

                                                                Attn:  Steve Roe

 

 

If to the BANK:                                    First National Bank of Omaha

                                                                1620
Dodge St. STOP 1050

                                                                Omaha,
NE 68197-1050

                                                                Attention:  Omer Sagheer

 

or, as to each
party, at such other address as shall be designated by such party in a written
notice to the other party complying as to delivery with the terms of this
Section. All such notices, requests, demands and other communications shall,
when mailed, be effective when deposited in the mails, addressed as aforesaid,
except that notices or requests to the BANK pursuant to any of the provisions
hereunder shall not be effective until received by the BANK.

 

6.             At CLOSING, and prior to any
advance of principal of the EXPANSION LOAN, BORROWER shall deliver to BANK, in
form reasonably acceptable to BANK, the following:

 

A.                                   TERM NOTE 5

 

B.                                     The ASSIGNMENT OF EXPANSION CONTRACT duly
executed by the BORROWER and consented to by the GENERAL CONTRACTOR and a copy
of the EXPANSION CONTRACT, together with the General Conditions of Contract
referred to therein.

 

C.                                     The PLANS for the EXPANSION PROJECT
certified by ICM, Inc. and the BORROWER.

 

D.                                    A disbursement agreement, in form
acceptable to BANK, by which AgStar Financial Services agrees to make the disbursements
of TERM LOAN 5 and to 

 

 

Page 3 of 7

 

 

                                                monitor payment of suppliers and
contractors furnishing goods and services for the EXPANSION PROJECT.

 

E.                                      A total project cost statement on the
EXPANSION PROJECT duly executed by the BORROWER and the GENERAL CONTRACTOR,
setting forth the anticipated total cost of the EXPANSION PROJECT’s completion.

 

F.                                      (reserved)

 

G.                                     An as built appraisal based upon the
PLANS to be performed by Natwick Associates Appraisal Services which shows the
as-completed value of the PROPERTY and EXPANSION PROJECT addressed to and
otherwise acceptable to BANK.

 

H.                                    A title binder, issued by AgStar
Financial Services, (the “TITLE COMPANY”) at BORROWER’s expense, constituting a
commitment by the TITLE COMPANY to issue a mortgagee’s title policy in favor of
the BANK as mortgagee under the MORTGAGE, that will be free from all standard
exceptions, including mechanics’ liens and all other exceptions not previously
approved by the BANK and that will insure the MORTGAGE to be a valid first lien
on the PROPERTY.

 

I.                                         (reserved)

 

J.                                        Copies of all PERMITS from the applicable
regulatory agencies from whom a permit or license is required.

 

K.                                    Copies of documents from the appropriate
state, federal, city or county authority having jurisdiction over the PROPERTY
and the EXPANSION PROJECT that provide to the reasonable satisfaction of the
BANK that the EXPANSION PROJECT when constructed in accordance with the PLANS
will comply in all material respects with all applicable ordinances, zoning,
subdivision, platting, environmental and land use requirements, without special
variance or exception, and such other evidence as the BANK shall reasonably
request to establish that the PROJECT and the contemplated use thereof are
permitted by and comply with all applicable use or other restrictions and
requirements in prior conveyances, zoning ordinances, environmental laws and
regulations, water shed district regulations and all other applicable laws or
regulations, and governmental authorities having jurisdiction over the
PROJECT.  BORROWER is not required to
obtain advance confirmation from any governmental body that the PROJECT will
comply with such ordinances, regulations and requirements.

 

L.                                      A signed opinion of counsel for the
BORROWER, addressed to the BANK, opining that: 1) the BORROWER is duly
organized and in good standing in the state of Iowa; 2) the BORROWER is
qualified in each state in which it does business and is legally required to be
qualified; 3) the BORROWER has the power to execute and deliver the LOAN
DOCUMENTS and to borrow money and perform in accordance with the terms of the
LOAN DOCUMENTS; 4) to the 

 

 

Page 4 of 7

 

 

                                                counsel’s knowledge, all actions and
consents by BORROWER necessary to the validity of the LOAN DOCUMENTS have been
obtained; 5) the LOAN DOCUMENTS have been duly signed and are the valid and
binding obligation of the BORROWER and enforceable in accordance with their
terms; and 6) to the best of counsel’s knowledge, the LOAN DOCUMENTS and the
transactions contemplated there under do not conflict with any provision of the
limited partnership agreement of BORROWER or any agreement binding upon the
BORROWER or its properties.

 

M.                                 A recently certified copy of the BORROWER’s
Limited Liability Limited Partnership Agreement, and any amendments, if
applicable.

 

N.                                    A recently certified copy of the BORROWER’s
Certificate of Limited Liability Limited Partnership and any amendments, if
applicable.

 

O.                                     BORROWER shall provide an assignment, in
form reasonably satisfactory to BANK, of all warranties existing at CLOSING and
after CLOSING, which have been issued or will be issued to BORROWER by
subcontractors and material suppliers to the EXPANSION PROJECT.

 

7.                                       At CLOSING, BORROWER shall pay to BANK an
origination fee in the sum of $40,500, which BANK will share with its loan
participants.

 

8.                                       BORROWER certifies by its execution
hereof that the representations and warranties set forth in Section 5 of the
AGREEMENT are true as of this date, except as to the status of BORROWER being a
limited partnership, and that no EVENT OF DEFAULT under the AGREEMENT, and no
event which, with the giving of notice or passage of time or both, would become
such an EVENT OF DEFAULT, has occurred as of this date.

 

9.                                       Except as amended hereby the parties
ratify and confirm as binding upon them all of the terms of the AGREEMENT.

 

In witness whereof
the parties set their hands as of the date first written above.

 

	
  First National Bank of Omaha

  	
   

  	
  LSCP, LLLP,

  
	
   

  	
   

  	
  an Iowa Limited Liability Limited Partnership

  
	
   

  	
   

  	
  By Little Sioux Corn Processors, L.L.C., Its

  
	
   

  	
   

  	
  General Partner

  

 

 

 

	
  By: /s/   Omer Sagheer

  	
   

  	
  By: /s/   Stephen G. Roe

  
	
           Omer
  Sagheer,

  	
   

  	
           Steve
  Roe, President of Little

  
	
           Commercial
  Loan Officer

  	
   

  	
           Sioux
  Corn Processors, L.L.C.

  

 

 

Page 5 of 7

 

 

NOTARY
ACKNOWLEDGMENT

 

	
  STATE OF IOWA

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF Cherokee

  	
  )

  

 

 

                On this 2 day of
November, 2004, before me, the undersigned, a Notary Public, personally
appeared Steve Roe, President of Little Sioux Corn Processors, L.L.C., General
Partner of LSCP, LLLP, on behalf of said entity, who executed the foregoing
instrument, and acknowledged that he executed the same as his voluntary act and
deed.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
    /s/Becky J. Nothem

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Notary Public

  	
   

  

 

 

 

Page 6 of 7

 

 

TERM PROMISSORY NOTE

(Term Note 5)

	
  Omaha, Nebraska

  	
   

  	
  $5,400,000.00

  
	
  Note Date: December 2, 2004

  	
   

  	
  Maturity Date: September
  1, 2005

  

 

 

                On or before September 1, 2005, LSCP, LLLP (“BORROWER”) promises to pay to the order of First National Bank of Omaha (“BANK”) at any of its offices
in Omaha, Nebraska the principal sum hereof, which shall be Five Million Four
Hundred Thousand and no/100 ($5,400,000.00) Dollars or so much thereof as may
have been advanced by BANK and shown on the records of the BANK to be
outstanding, under this Note and the Construction Loan Agreement (“AGREEMENT”)
executed by the BANK and BORROWER dated as of July 25, 2002, as it may, from
time to time, be amended.  This Note
evidences TERM NOTE 5 identified in the AGREEMENT.

                Interest on the principal amount
outstanding shall accrue based on one month LIBOR   + 330 basis points.  Interest shall be calculated on the basis of
a 360-day year, counting the actual number of days elapsed.  Interest on this promissory note shall be
payable quarterly.

                The AGREEMENT contains
additional terms of this Note, including, but not limited to enumerated events
of default, and the granting of liens to secure BORROWER’s performance. All
capitalized terms not otherwise defined herein shall have the same meanings as
set forth in the AGREEMENT.

                As provided in the AGREEMENT,
upon any such enumerated default, BANK may accelerate the due date of this Note
and declare all obligations set forth herein immediately due and payable, and
BANK shall also have such other remedies as are described in the  AGREEMENT and are provided by law. All makers
and endorsers hereby waive presentment, demand, protest and notice of dishonor,
consent to any number of extensions and renewals for any period without notice;
and consent to any substitution, exchange or release of collateral, and to the
addition or releases of any other party primarily or secondarily liable.

 

Executed as of the
2 day of December, 2004.

	
   

  	
   

  
	
   

  	
  LSCP, LLLP,

  
	
   

  	
  an Iowa Limited Liability Limited Partnership,

  
	
   

  	
  By Little Sioux Corn Processors, L.L.C.

  
	
   

  	
  Its General Partner

  

 

 

 

	
   

  	
  By:

  	
  /s/   Stephen G. Roe

  
	
   

  	
   

  	
  Steve Roe, President of Little

  
	
   

  	
   

  	
        Sioux Corn
  Processors, L.L.C.

  

 

 

 

 

Page 7 of 7

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