Document:

Exhibit 10.24

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

AGREEMENT

BETWEEN OWNER AND DESIGN/BUILDER

ON THE BASIS OF A STIPULATED PRICE

THIS AGREEMENT is made and entered into this 14th day of July, 2006 by
and between Heartland Grain Fuels, LP, a South Dakota limited partner company
(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 the design and construction of
a dry mill fuel-grade ethanol plant to be located in or near Aberdeen, South
Dakota, as described in more detail in Exhibit B to this Agreement.  The Work includes such engineering, labor,
materials, and equipment to design, construct, startup and achieve guaranteed
performance criteria of a dry mill ethanol plant capable of producing no less
than forty (40) million gallons per year of denatured fuel-grade ethanol and no
less than two hundred two thousand (202,000) tons per year of wet distillers’
grains, as set forth in the Contract Documents. 
A more detailed described of the Work is set forth in the attached
Exhibits (other than OWNER’s responsibilities set forth therein).

Article 2.        CONTRACT TIMES.

2.01.        Days to
Achieve Substantial Completion and Final Payment.  The Work will be Substantially Completed
within [*] days after the date when the Contract Times commence to run as
provided in paragraph 2.01.A of the General Conditions, and completed and ready
for final payment in accordance with paragraph 13.08 of the General Conditions
within one hundred eighty (180) days after Substantial Completion , unless
otherwise provided in the Contract Documents.

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 of [*] (the “Contract Price”).

3.02.        The Work to be
performed by DESIGN/BUILDER shall not include those items designated as OWNER’s
responsibilities in the Contract Documents. 
Those items designated as OWNER’s responsibilities in the Contract
Documents shall include all design, procurement, fabrication, installation and
start-up associated with such items.

3.03         DESIGN/BUILDER shall
provide to OWNER the training described in Exhibit G.

3.04         In accordance with
paragraph 5.02 of the General Conditions, DESIGN/BUILDER agrees to maintain the
insurance coverages, limits, and deductibles set forth in Exhibit H.

 1
 

 

Article 4.        PAYMENT
PROCEDURES

4.01         DESIGN/BUILDER shall
submit and OWNER will process Applications for Payment in accordance with
Article 13 of the General Conditions and Sections 5.01.A. through C. below.

A.    Down Payment.
OWNER shall make a down payment of 10% of CONTRACT PRICE to DESIGN/BUILDER,
which shall be applied toward and credited to 10% of each progress
payment.  At the time of execution of the
Agreement, OWNER shall pay [*]of such down payment to DESIGN/BUILDER less any portion
of such down payment previously paid by OWNER to DESIGN/BUILDER under the
letter of intent between the parties, if any. 
Upon delivery of the Notice to Proceed, OWNER shall pay the remaining
balance of such down payment to DESIGN/BUILDER.

B.     Progress
Payments; Retainage.  OWNER
shall make progress payments on account of the Contract Price on the basis of
DESIGN/BUILDER’s Applications for Payment, as provided in this Section
4.01.B.  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.

1.     Prior to Substantial
Completion, such progress payments will be made in an amount equal to the
percentage indicated below, but, in each case, less the aggregate of payments
previously made and less such amounts as OWNER may withhold in accordance with
paragraph 13.04.B of the General Conditions.

a.   Ninety-five percent (95%) of
Work completed (with the balance being retainage).

b.  Ninety-five percent (95%)
(with the balance being retainage) of the cost of materials and equipment not
incorporated in the Work (but delivered, suitably stored and accompanied by
documentation satisfactory to OWNER as provided in paragraph 13.02.A of the
General Conditions).

2.     Upon Substantial
Completion, payment will be made in an amount sufficient to increase total
payments to DESIGN/BUILDER to One Hundred percent (100%) of the Contract Price,
less (i) such amounts as OWNER may withhold in accordance with paragraph
13.04.B of the General Conditions, (ii) amounts mutually agreed by the parties
for completion of Punch List Items, and (iii) [*].  Amounts withheld for Punch List Items shall
be paid by OWNER to DESIGN/BUILDER as such Work is completed.

3.     Upon successful completion
of the seven-day performance test described in Exhibit A, OWNER shall pay
DESIGN/BUILDER the [*] retained pursuant to Section 4.01.B.2.(iii) above.

C.           Final
Payment.  OWNER shall pay the
remainder of the Contract Price, if any, to DESIGN/BUILDER in accordance with
paragraph 13.08 of the General Conditions.

Article 5.        INTEREST.

5.01.        All monies not paid
when due as provided in Article 13 of the General Conditions shall bear
interest at the rate of Eighteen percent (18%) per annum.  If it is determined that OWNER incorrectly
withheld payment of any disputed payment, then such payment shall bear interest
from the date such payment would have otherwise been due until the date
actually paid to DESIGN/BUILDER.

 2
 

 

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, 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.

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 5, inclusive).

B.           Exhibits to this
Agreement (A to M, 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.             Written Notice to
Proceed, in the form substantially similar to Exhibit M attached hereto.

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.31 of the General Conditions.

4.            Drawings as defined
in paragraph 1.01.A.15 of the General Conditions.

 3
 

 

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, permitted 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 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 date first written above. 
Within ninety (90) days after such effective date, OWNER shall provide
to DESIGN/BUILDER the Notice to Proceed and evidence, acceptable to DESIGN/BUILDER,
of funding for the Project.

 4
 

 

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

	
  OWNER: Heartland
  Grain Fuels, LP

  	
  DESIGN/BUILDER: ICM, Inc.

  
	
   

  	
   

  
	
  By:_____/s/
  Bill Paulson_____________

  	
  By:/s/ Dave VanderGriend

  
	
  Title:______General
  Manager_________

  	
  Title:_President______________________

  
	
   

  	
   

  
	
  Addresses for
  giving notices and representatives:

  	
   

  
	
   

  	
   

  
	
  Name:______________________________

  	
  Name:_Dave VanderGriend_____________

  
	
  Title:_______________________________

  	
  Title:_President_______________________

  
	
  Address:____________________________

  	
  Address:310 N. First Street, Colwich, KS

  
	
  Phone:______________________________

  	
  Phone: 316-796-0900

  
	
  Facsimile:___________________________

  	
  Facsimile: 316-796-0570

  
	
   

  	
   

  

 

 5

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 achieve each of the following performance
criteria.  After DESIGN/BUILDER
determines the Plant is ready for start-up, DESIGN/BUILDER, with OWNER’s labor
forces, will start-up the Plant and conduct a seven-day performance test to
establish compliance with each of the performance criteria except the
atmospheric emissions.  Compliance shall
be measured simultaneously for all criteria, and computed on the average over
the seven-day performance test.  If the
Project fails to reach any 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 criteria, and conduct another seven day
performance test.  Upon successful
completion of a seven-day performance test, the Plant shall be considered to
have achieved the performance criteria listed below (other than the atmospheric
emissions criteria) for purposes of the foregoing representation and warranty
of DESIGN/BUILDER.

Table
1  ethanol plant criteria  40 MGY capacity

	
  Criteria

  	
   

  	
  Specification

  	
   

  	
  Testing
  Statement

  	
   

  	
  Documentation

  
	
  Plant Capacity — fuel-grade ethanol

  	
   

  	
  Operate at a rate of 40 million gallons per year of
  denatured fuel grade ethanol meeting the specifications of ASTM 4806

  	
   

  	
  Seven-day performance test

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wet Distillers Grains OR Dry Distillers Grains

  	
   

  	
  Operate at rate of 202,000 tons per year of
  approximately 67% moisture WDGS OR 128,000 tons per year of approx. 11%
  moisture DDG.

  	
   

  	
  Determined by calculation of mass flow from
  centrifuge (s) in a seven- day performance test

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Carbon Dioxide

  	
   

  	
  Approximately 115,000 tons per year of raw CO2 gas.

  	
   

  	
  Determined as a function of fermented gallons in a
  seven-day performance test.

  	
   

  	
  Mass flow calculation by DESIGN/BUILDER.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Grain to Ethanol Conversion ratio; Corn/Sorghum
  56#/bu., 16% or less moisture, zero aflatoxin tolerance

  	
   

  	
  Not be less than 2.8 denatured gallons (2.67 gallons
  undenatured) of ethanol per bushel of ground corn.

  	
   

  	
  As determined by meter readings during a seven-day
  performance test.

  	
   

  	
  Concurrence of production records and written
  analysis by DESIGN/BUILDER.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Electrical Energy

  	
   

  	
  .75 kWh per denatured gallon of fuel grade ethanol.
  Does not include kWh used to operate CO2plant, CO2 gas system, grain handling
  system or Chiller.

  	
   

  	
  As determined by meter readings during a seven-day
  performance test.

  	
   

  	
  Concurrence of production records and written
  analysis by DESIGN/BUILDER.

  

 

  
  
 

 

	
  Natural Gas

  	
   

  	
  Consumption shall not exceed 34,000 Btu per
  denatured gallon of fuel-grade ethanol.

  	
   

  	
  As determined by meter readings during a seven-day
  performance test.

  	
   

  	
  Concurrence of production records and written
  analysis by DESIGN/BUILDER.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Process Water Discharge

  	
   

  	
  zero gallons under normal operations

  	
   

  	
  Process discharge meter readings during seven day
  performance test

  	
   

  	
  Plant control system reports from DESIGN/BUILDER

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Atmospheric Emissions

  	
   

  	
  As prescribed and approved by the applicable
  Department of Environmental Quality or similar agency for the State in which
  the Plant is located as of the Effective Date of the Agreement.

  	
   

  	
  As determined by written emissions compliance report
  from a third party mutually selected by the parties confirming regulatory
  compliance of the air emissions performance tests prescribed by the
  applicable Department of Environmental Quality or similar agency for the
  State in which the Plant is located as of the Effective Date of the
  Agreement.

  	
   

  	
  As determined by written emissions compliance report
  from a third party mutually selected by the parties confirming regulatory
  compliance of the air emissions performance tests prescribed by the
  applicable Department of Environmental Quality or similar agency for the
  State in which the Plant is located as of the Effective Date of the
  Agreement.

  

 

OWNER’s failure to
materially comply with the operating procedures issued by DESIGN/BUILDER shall
void the foregoing performance criteria and all other guarantees and warranties
set forth in the Contract Documents.

OWNER understands
that the startup of the plant requires resources and cooperation of OWNER,
vendors and other suppliers to the Project. 
DESIGN/BUILDER disclaims any liability and OWNER indemnifies DESIGN/BUILDER
for non-attainment of the foregoing performance criteria directly or indirectly
caused by the material non-performance or negligence of third parties not
retained by DESIGN/BUILDER.

 

  
  

 
  

Exhibit B

to

Agreement Between Owner and Design/Builder

On the Basis of a Stipulated Price

General Project Scope:

Construct a no less than forty (40) million gallon per
year (MGY) dry mill fuel-grade ethanol plant located in or near Aberdeen, South
Dakota.  The plant will grind
approximately 14.3 million bushels per year to produce approximately forty (40)
MGY of fuel-grade ethanol denatured with five percent gasoline (or a similar
product).  The plant will also produce
not less than 202,000 tons per year of 67% moisture Wet Distillers Grains with
Solubles (WDGS), and approximately 115,000 tons per year of raw carbon dioxide
(CO2) gas.

OWNER to provide DESIGN/BUILDER a level site and which
shall have a soil load bearing capacity 
as specified in the attached table.

Ground grain will be mixed in a slurry tank and routed
through a working system consisting of a hydroheater, cook tube, and flash
tank.  The mash will continue through
liquefaction and associated heat exchangers to fermentation.  Simultaneously, propagated yeast will be
added to the mash as the fermenter is filling. 
After batch fermentation is complete, the beer will be pumped to the
beer well and then to the beer column to vaporize the alcohol from the mash.

Alcohol streams are dehydrated in the distillation
column, the side stripper and the molecular sieve system.  Two hundred proof alcohol is pumped to the
tank farm shift tanks and blended with five percent denaturant as the product
is being pumped into a final storage tank.

Corn mash from the beer stripper is dewatered by
decanter type centrifuge.  Wet cake from
the centrifuge is conveyed to the wetcake pad or drying system.  Water in the thin stillage can be evaporated
and recycled by the Bio-Methanation system.

Fresh water for the boilers, cooking and other
processes will be obtained from area process wells or city water system that
supply the needs of the plant.  Boiler
water may be conditioned in regenerative softeners will be pumped through a
deaerator scrubber and into a deaerator tank. 
Appropriate boiler chemicals will be added as preheated water is sent to
the boiler.

DESIGN/BUILDER will provide its standard design for
the fire pump house and water treatment space. 
Procurement and construction of fire protection package will be provided
by owner.

The design includes a compressed air system consisting
of compressors, a receiver tank, pre-filter, coalescing filter and air dryer.

The design also incorporates the use of a
clean-in-place (CIP) system for cleaning cook, fermentation, distillation,
evaporation, centrifuges and other systems. 
Fifty percent caustic soda is received by truck and stored in a
tank.  The CIP system uses tanks for
receiving, make-up, CIP return and CIP waste which is fed to the
methanator.  The CIP system includes a
CIP Tank, a 50% Caustic tank, and a Waste CIP tank.  A screen is used to remove the solids.

Under normal operating circumstances, the Plant will
not have any wastewater discharges that have been in contact with corn and
sorghum mash, cleaning system or contact process water.  A bio-methanator manufactured by
DESIGN/BUILDER/Phoenix will reduce the organic acids in process water allowing
complete reuse within the Plant and is included in the Contract Price.  The

  
  
 

 
  

Plant will have blowdown discharges from the cooling
tower, water softeners, and Reverse Osmosis system.  OWNER is responsible for all permits,
purchase and installation of pumps, waterline construction, sanitary sewer
construction, necessary to discharge the blowdown from the cooling tower, water
softeners, and Reverse Osmosis system.

Carbon Dioxide (CO2) is a co-product of the
fermentation process.  CO2 is allowed
under current Laws and Regulations to be vented to the atmosphere.  Installation of a plant or system to capture,
clean and compress the CO2 is not included in the Work.  OWNER, at its cost, may add a blower, certain
associated equipment and a small amount of piping to move the CO2 from the
fermenter to a collection point for sale or further processing.

Most of the processes within the Plant will be
computer controlled by a Siemens/Moore APACS distributed control system with
graphical user interface and three workstations all located in the plant
control room, which is included in the Contract Price.  No workstation is provided for the administrative
building or any other location.  It is
estimated that the system will consist of 200 discrete inputs, 200 discreet
outputs, 175 analog inputs and 120 analog outputs.  Programmable logic controllers (PLCs) will
control certain process equipment.

*[Optional:  A
description of the scope of work relating to the grain handling system is
attached to the Agreement as Exhibit B-1 and incorporated herein.]

The Work provided by DESIGN/BUILDER will meet
specifications, criteria, and allowances as provided in the Construction Permit
and all other applicable Laws and Regulations enacted as of the Effective Date.

  
  

 
  

[OPTIONAL]

Exhibit B-1

to

Agreement Between Owner and Design/Builder

On the Basis of a Stipulated Price

SCOPE OF WORK FOR
HEARTLAND GRAIN FUELS, LP GRAIN HANDLING SYSTEM

Whole Grain Transfer — (Heartland Grain Scope)

·                  OWNER is responsible for all items required to transfer the whole grain
from the OWNER’S existing grain facilities to the inlet of the proposed
grinding bin above the hammermills. 
OWNER shall be responsible for all design, procurement, and installation
of any required equipment, structural, electrical, and all other required items
associated with the whole grain transfer system.  Transfer rate of whole grain to be mutually
agreed by OWNER and DESIGN/BUILDER prior to design.

Dust Control System — Whole Grain Transfer system (Heartland Grain Scope)

·                  The dust control system will pick-up dust laden air at the grinder bin,
or as required.

·                  One dust filter with fan, sized to meet the air permit requirements, will
receive dust laden air from the ducting at the grain handling system and will
discharge the collected dust into the receiving transfer drag conveyor.

Grinding
System (ICM scope)

·                  One steel structure will support the grinder
bin and related equipment.

·                  One rotary scalper/screener rated at 3000 BPH will receive grain from the
receiving and reclaim legs and discharge to the grinding bin

·                  One 5000 BU steel grinding bin will feed the hammer mills.

·                  Two 1,200 BPH hammer mills will grind the
grain.

·                  One dust filter with fan, sized to meet the air permit requirements, will
collect dust from the hammer mills and discharge to the ground grain conveyor.

Ground
Grain Transfer to Plant (ICM scope)

·                  The ground grain will be transferred from the
hammer mills to the ethanol plant at 3,000 BPH, using belt or drag conveyors.

DDG
Transfer - Dryer to Flat Storage (ICM scope)

·                  DESIGN/BUILDER
to provide and install the ductwork and supports required for the transfer of
DDG from the dryer to the existing flat storage cooling cyclone inlet
flange.  If any additional equipment is
required to transfer the DDG to the existing flat storage, OWNER will enter
into a Change Order with DESIGN/BUILDER to provide and install the required
equipment.

DESIGN/BUILDER
reserves the right to change, modify, or otherwise re-design any part of the
proposed grain handling system at the sole discretion of DESIGN/BUILDER on the
basis of safety, performance, or any other consideration deemed necessary by
DESIGN/BUILDER.

  
  
 

 
  

Exhibit C

to

Agreement Between Owner and Design/Builder

On the Basis of a Stipulated Price

Buildings
and Structures by DESIGN/BUILDER:

Construction
of buildings and structures, as listed in Table 2 and Table 3, is included in
the Contract Price.

Table 2 Ancillary Buildings and Structures
by DESIGN/BUILDER 

	
  Building

  	
   

  	
  Type

  	
   

  	
  Preliminary

  Dimensions

  	
   

  	
  Addition Info

  
	
  MCC Buildings

  	
   

  	
  CMU block wall, insulated, climate controlled

  	
   

  	
  20’ x 10’

  	
   

  	
  Located near cooling tower and grain storage silos
  or milling building.

  
	
  Cooling Tower

  	
   

  	
  Douglas Fir Structure Induced Draft Counter Flow

  	
   

  	
  34’ x 90’

  	
   

  	
  Includes three (3) cooling tower cells

  
	
  Admin Building Scale

  	
   

  	
  Above ground, Grain supply trucks

  	
   

  	
  Owners
  Responsibility

  	
   

  	
  Located near Admin. Bldg.

  
	
  Wetcake Pad

  	
   

  	
  Cast-in-Place Concrete Structure

  	
   

  	
  100’ x 100’

  	
   

  	
   

  

 

Table 3 Buildings and Structures
by DESIGN/BUILDER 

	
  Building

  	
   

  	
  Type

  	
   

  	
  Preliminary Dimensions

  	
   

  	
  Addition Info

  
	
  Process

  	
   

  	
  Structural steel, steel siding - Insulated

  	
   

  	
  60’ x 140’ x 35’

  	
   

  	
  Includes laboratory, control room & offices, MCC
  room

  
	
  Energy Center

  	
   

  	
  Structural steel, steel siding - Insulated

  	
   

  	
  90’ x 100’ x30’

  	
   

  	
  Includes centrifuge area, office, MCC room

  
	
  Evaporation

  	
   

  	
  Structural steel, steel siding - Insulated

  	
   

  	
  50’ x 45’ x 35’

  	
   

  	
   

  
	
  Grain Receiving

  	
   

  	
  Structural Steel, steel siding, roof insulation only

  	
   

  	
  Owners
  Responsibility

  	
   

  	
   

  

 

  
  

 
  

Exhibit D

to

Agreement Between Owner and Design/Builder

On the Basis of a Stipulated Price

Administration Building
by OWNER:

The Contract Price does
not include the cost of the following additional items:

Table
4 Administration Building 

	
  Description

  	
   

  	
  Additional Description

  	
   

  	
  Est. Amount

  	
   

  
	
  Administration
  Building

  	
   

  	
  Free standing (37’ x
  70’ x 10’)

  	
   

  	
  $

  	
  300,000

  	
   

  
	
  Office
  Computer System

  	
   

  	
  Microsoft
  Windows 2000 network server and five personal computers, one laser printer.
  Includes setup, software and labor.

  	
   

  	
  $

  	
  40,000

  	
   

  
	
  Telephone
  System

  	
   

  	
  Digital
  phone system with voice mail for office and plant.

  	
   

  	
  $

  	
  15,000

  	
   

  
	
  Office
  Copier & fax machine

  	
   

  	
  Black
  & white with sheet feeder and collator. Plain paper fax machine.

  	
   

  	
  $

  	
  10,000

  	
   

  
	
  Office Furniture

  	
   

  	
  Office
  desks, chair & side chairs, conference room table & chairs, three
  four-drawer filing cabinets, and 10 two-drawer filing cabinets.

  	
   

  	
  $

  	
  25,000

  	
   

  

 

  
  
 

 
  

Exhibit E

to

Agreement Between Owner and Design/Builder

On the Basis of a Stipulated Price

OWNER’S Required Permits and Services List:

OWNER
shall provide all of the permits, authorizations and services, including but
not limited to:

1)              Land and Grading — Land and Grading — OWNER
shall provide the Site near or in Aberdeen, South Dakota.  OWNER shall obtain all legal authority to use
the Site for its intended purpose and perform technical due diligence for
DESIGN/BUILDER to perform including but not limited to proper zoning approvals,
elevation restrictions, soil tests, and water tests. The Site shall be rough
graded per DESIGN/BUILDER specifications and be within six inches of final
grade including the rough grading for Site roadways.  The Site soils shall be modified as required
to provide a minimum allowable soil bearing pressure as specified in the
attached table for all foundation elements. 
The site soils shall be modified as required to provide a minimum
allowable soil bearing pressure of 4,500 pounds per square foot in the
fermenter area, 6,500 pounds per square foot in the grain storage concrete
silos area and 3,000 pounds per square foot for all other foundation
elements.  The soils beneath the
foundation elements shall not exceed the total or differential settlements such
that the Plant is unable to perform its intended purpose.  If the existing soil conditions are such that
over-excavation and re-compaction or pilings are required, OWNER will be
responsible for this work.  OWNER is also
responsible for any dewatering required at the site during construction.

Other items to be provided
by the OWNER include, but are not limited to, the following: initial site
survey (boundary and topographic) as required by the design engineers, layout
of the property corners including two construction benchmarks, soil borings and
subsequent geotechnical report (the results of which are acceptable to
DESIGN/BUILDER and consistent with the specifications set forth herein)
describing recommendation for roads, foundations and if required, soil
stabilization/remediation, site engineering and detailed drawings (to the
extent not provided by DESIGN/BUILDER), land disturbance permit, erosion
control permit, site grading as described above with minimum soil standards,
placement and maintenance of erosion control measures, access road from a city,
county, state or federal road designed to meet city or local county road
standards (provided that such road must contain a minimum of twelve (12) inches
of crushed rock with geo-fabric and compacted base), storm and sanitary sewers,
water main branches, to be within five (5) feet of the designated building
locations, roads as specified and designed for the permanent elevations and
effective depth, paving, “construction” grading plan as drawn (including site
retention pond), all site seeding, landscaping, rock, plant water well and
associated permit(s), environmental monitoring, environmental monitoring
equipment, environmental testing for both air and water, chemicals, corn or
other feedstock, enzymes, a risk management plan, laboratory equipment
specified by DESIGN/BUILDER, and all start-up supplies, including, but not
limited to hoses, equipment labels, and other items specified by
DESIGN/BUILDER,

2)              Roads — OWNER shall provide or have provided
an access road of sufficient quality to withstand semi-truck traffic of 25,000+
annual loads with weight of 80,000 lbs each.

  
  
 

 
  

3)              Air Quality Permit   — A permit for construction shall be
obtained from the proper authorities prior to the issuance of the Notice to
Proceed.  OWNER shall obtain an Operating
Permit in timely manner to allow startup of the Plant as scheduled by
DESIGN/BUILDER.

4)              Storm Water Runoff Permit — OWNER shall
obtain the permanent industrial storm water runoff permit.  DESIGN/BUILDER shall obtain the construction
storm water runoff permit.

5)              Natural Gas Supply and Service Agreement —
Continuous supply of natural gas of at least 1.2 billion cubic feet per year,
at a rate of 135 MMBtu per hour and at a minimum pressure of 60 psig at a
location specified by DESIGN/BUILDER. OWNER shall provide supply meter and
regulators to provide burner tip pressures as specified by DESIGN/BUILDER.
OWNER will be responsible for the design, procurement, fabrication and
installation of any and all equipment necessary to deliver the gas to all
locations specified by DESIGN/BUILDER.

6)              Electrical Service — Continuous supply of
12,000 kVA, 12,400-volt electrical energy or more to a point immediately
adjacent to the site.  OWNER shall supply
a high voltage switch and, if required, a substation.  OWNER shall supply metering as specified by
the power company.  This electrical
capacity will be sufficient to support the operations of the Plant as specified
by DESIGN/BUILDER. OWNER will be responsible to design, provide, and install
electricity connections to all locations specified by DESIGN/BUILDER (including
the high-voltage permanent power loop, transformers and pads).

7)              Water Supply and Service Agreement — For
process (contact and non-contact) and sanitary purposes, OWNER shall design,
procure, fabricate and install all equipment for the supply of fresh water, and
supply such water to all locations specified by DESIGN/BUILDER.  The water augmentation plan and all
associated fees, forms, permits and incidental requirements is the
responsibility of OWNER. OWNER shall make such water supply available at the
Site, and shall provide DESIGN/BUILDER with a water sample from such supply, at
least two (2) months prior to the commencement of Construction.

8)              Wastewater Discharge Permit - For discharges
of cooling tower blowdown, water softening, and RO system blowdown under normal
operating procedures.  Process wastewater
discharges during emergency failure of wastewater treatment plant to treat all
process wastewater.

9)              Railroad — 
OWNER shall design, procure, fabricate and install any railroad track
siding to the Site, at grades specified by DESIGN/BUILDER, including all
necessary earth work to properly locate the track, preparation of the railroad
track bed, and track, ties and ballast to railroad company specifications and
all required permits.

10)        Regulatory Contingency — Until satisfactory
atmospheric emissions compliance, OWNER shall maintain a fund of no less than
Two Hundred Fifty Thousand Dollars ($250,000) to cover any unforeseen
governmental regulation changes implemented after the Effective Date of the
Agreement.  This contingency is not part
of the Contract Price, and its use may be authorized only by agreement of OWNER
and DESIGN/BUILDER.

  
  
 

 
  

11)        Water treatment — OWNER shall design, procure, fabricate and
install all water treatment equipment as deemed necessary by DESIGN/BUILDER.
This might include reverse osmosis, softening equipment, iron removal, sulfate
removal, or other items specified by DESIGN/BUILDER.  OWNER to contract with DESIGN/BUILDER to
complete water treatment work.  All costs
to complete work on water treatment are not included in base contract price,
and will be billed to the Owner at cost plus 15%.

12)        Road Paving — After Substantial Completion, OWNER will
be responsible for paving of all roads.

13)        BATF
Application/Misc Permits — OWNER
will be responsible for completing, submitting and obtaining Bureau of Alcohol
Tobacco and Firearms permitting to produce fuel grade alcohol, tank farm
permits, discharge permits required by hydro testing the Plant, and an SPCC
Plan.

14)        Office Equipment — With the exception of the DCS control
systems, OWNER will be responsible for office furnishings, computers and
software to run the day-to-day operations of the Plant.

15)        Construction Power —
OWNER will provide and pay for
all electricity needed during the Construction, including the permanent power
loop required by DESIGN/BUILDER, by contracting with DESIGN/BUILDER for the
installation of the same and which will be billed to OWNER as an additional
cost, and not part of, the Contract Price.

16)        Fire water system — OWNER shall be
responsible for the design, procurement, fabrication and installation of the
fire water system including, without limitation: fire water pump station, fire
water loop with hydrants, deluge systems, fire alarm panels, smoke and heat
detection in any building or MCC room, as required by Laws and Regulations and
the insurance company(ies) which provide insurance pursuant to the Contract
Documents.  OWNER to contract with
DESIGN/BUILDER to complete fire water system. 
All costs to complete work on fire water system are not included in base
contract price, and will be billed to the Owner at cost plus 15%.

17)        Prior to start-up of the Plant, OWNER shall
furnish to DESIGN/BUILDER  the following:

a)             Fully executed copies of all permits required to operate
the Plant;

b)            Fully executed Certificate of Substantial Completion; and

c)             Preliminary Punchlist pursuant to paragraph 13.05 of the
General Conditions.

In the event OWNER desires that DESIGN/BUILDER perform all or any part
of the foregoing obligations of OWNER, and DESIGN/BUILDER agrees to perform
such obligations, the Contract Price shall be increased by the amount
determined pursuant to paragraph 10.02 of the General Conditions unless
otherwise agreed by the parties.

  
  

 

Exhibit F

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 _____ day of _____________________, 200____ (“Effective
Date”) by and between Heartland Grain Fuels, LP a South Dakota limited partner
company (“OWNER”), and ICM, Inc., a Kansas corporation (“ICM”).

WHEREAS, OWNER and ICM have
entered into that certain AGREEMENT BETWEEN OWNER AND DESIGN/BUILDER ON THE
BASIS OF A STIPULATED PRICE dated ____________________, 200_____ (the “Contract”),
under which ICM is to design and construct forty (40) million gallons per year
ethanol plant for OWNER to be located in or near Aberdeen, South Dakota (the “Plant”);

WHEREAS, ICM will use proprietary technology and information of ICM in
the design and construction of the Plant; and

WHEREAS, OWNER desires from ICM, and ICM desires to grant to OWNER, a
license to use such proprietary technology and information in connection with
OWNER’s ownership and operation of the Plant, 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.             Upon
substantial completion of the Plant by ICM pursuant to the terms of the
Contract or, if later, payment by OWNER of all amounts due and owing to ICM
under the Contract, ICM agrees to grant to OWNER a limited license to use the
Proprietary Property (hereinafter defined) solely in connection with the
ownership, operation, maintenance and repair of the Plant, subject to the
limitations provided herein (the “Purpose”).

2.             The
“Proprietary Property” means, without limitation, documents, Operating
Procedures (hereinafter defined), materials and other information that are
furnished by ICM to OWNER in connection with the Purpose whether orally,
visually, in writing, or by any other means, whether tangible or intangible,
directly or indirectly and in whatever form or medium including, without
limitation, 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; 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” means, without limitation, the process equipment and specifications
manuals, standards of quality, 

 1
 

 

service protocols, data collection methods,
construction specifications, training methods, engineering standards and any
other information prescribed by ICM from time to time concerning the
Purpose.  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 members, directors, officers, employees, agents, 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.

3.             OWNER
shall not use the Proprietary Property for any purpose other than the
Purpose.  OWNER shall not use the
Proprietary Property in connection with any expansion or enlargement of the
Plant.  ICM and its Representatives shall
have the express right at any time to enter upon the premises of the Plant to
inspect the Plant and its operation to ensure that OWNER is complying with the
terms of this License Agreement.

4.             OWNER’s
failure to materially comply with the Operating Procedures shall void all
guarantees, representations and warranties, whether expressed or implied, if
any, that were given by ICM to OWNER in the Contract concerning the performance
of the Plant.  OWNER agrees to indemnify,
defend and hold harmless ICM and ICM’s Representatives from any and all losses,
damages and expenses including, without limitation, reasonable attorneys’ fees
resulting from, relating to or arising out of OWNER’s or its Representatives’
(i) failure to materially comply with the Operating Procedures or, (ii)
negligent use of the Proprietary Property.

5.             Any
and all modifications to the Proprietary Property by OWNER or its
Representatives shall be the property of ICM. 
OWNER shall promptly notify ICM of any such modification and OWNER
agrees to assign all of its right, title and interest in such modification to
ICM; provided, however, OWNER shall retain the right, at no cost, to use such
modification in connection with the Purpose.

6.             ICM
has the exclusive right and interest in and to the Proprietary Property and the
goodwill associated therewith.  OWNER
will not, directly or indirectly, contest ICM’s ownership of the Proprietary
Property.  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.

7.             OWNER
shall pay no license fee or royalty to ICM for OWNER’s use of the Proprietary
Property pursuant to the limited license granted to OWNER, the consideration
for this limited license is included in the amounts payable by OWNER to ICM for
the construction of the Plant under the Contract.

8.             OWNER
may not assign the limited license granted herein, in whole or in part, without
the prior written consent of ICM, 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 ICM, agreeing to be bound by all the terms and 

 2
 

 

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 ICM resulting from, or arising out of, a breach of such duties or
obligations by OWNER or its Representatives. 
ICM may assign its right, title and interest in the Proprietary
Property, in whole or part, subject to the limited license granted herein.

9.             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 for the Purpose.  OWNER
shall retain all Proprietary Property at its principal place of business and/or
the Plant.  OWNER shall not at any time
without ICM’s prior written consent, copy, duplicate, record, or otherwise
reproduce the Proprietary Property, in whole or in part, 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 Purpose, and even then only
to such extent as is necessary and essential for such Representative’s
involvement.  OWNER shall inform such
Representatives of the confidential and proprietary nature of such information
and, if requested by ICM, OWNER shall obtain from such Representative a written
instrument, in form and substance reasonably acceptable to ICM, agreeing to be
bound by all of the terms and provisions of this License Agreement.  OWNER shall make all reasonable efforts to
safeguard the Proprietary Property from disclosure by its Representatives to anyone
other than permitted hereby.  OWNER shall
notify ICM immediately upon discovery of any unauthorized use or disclosure of
the Proprietary Property, or any other breach of this License Agreement by
OWNER or its Representatives, and shall cooperate with ICM in every reasonable
way to help ICM regain possession of the Proprietary Property and prevent its
further unauthorized use or disclosure. 
In the event that OWNER or its Representatives are required by law to disclose
the Proprietary Property, OWNER shall provide ICM with prompt written notice of
same so that ICM 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 and will exercise its
reasonable efforts to obtain reliable assurance that the Proprietary Property
so disclosed will be accorded confidential treatment.

10.           OWNER
agrees to indemnify ICM 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 ICM would be irreparably
damaged by reason of a violation of the provisions contained herein and that
any remedy at law for a breach of such provisions would be inadequate.  OWNER agrees that ICM shall be entitled to
seek injunctive or other equitable relief in a court of competent jurisdiction
against OWNER or its Representatives for any unauthorized disclosure or use of
the Proprietary Property 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 ICM for any breach of such covenants, and ICM 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.

11.           The
duties and obligations of OWNER under this License Agreement, and all
provisions relating to the enforcement of such duties and obligations shall
survive and remain in full 

 3
 

 

force and effect notwithstanding any termination or
expiration of the Contract or this License Agreement.

12.           ICM
may terminate the limited license granted to OWNER herein upon written notice
to OWNER if OWNER willfully or wantonly uses the Proprietary Property for any
purpose, or discloses the Proprietary Property to anyone, other than permitted
herein.  Upon termination of the license,
OWNER shall cease using the Proprietary Property for any purpose (including the
Purpose) and, upon request by ICM, shall promptly return to ICM all documents
or other materials in OWNER’s or its Representatives’ possession that contain
Proprietary Property in whatever format, whether written or electronic,
including any and all copies or reproductions of the Proprietary Property.  OWNER shall permanently delete all such
Proprietary Property from its computer hard drives and any other electronic
storage medium (including any backup or archive system).  OWNER shall deliver to ICM a written
certificate which certifies that all electronic copies or reproductions of the
Proprietary Property have been permanently deleted.

13.           The
laws of the State of Kansas, 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 the federal or state 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. 
Notwithstanding the foregoing, nothing in this License Agreement will
affect any right ICM may otherwise have to bring any action or proceeding
relating to this Agreement against OWNER or its properties in the courts of any
jurisdiction.

14.           OWNER
hereby agrees to waive all claims against ICM and ICM’s Representatives for any
consequential damages that may arise out of or relate to this License
Agreement, the Contract or the Proprietary Property 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.  OWNER agrees that the
aggregate amount OWNER (and anyone claiming by or through OWNER) may
collectively recover from ICM (and its Representatives), for the Plant as a
whole under the Contract and this License Agreement shall be limited to One
Million Dollars ($1,000,000.00)

15.           The
terms and conditions of this License 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.  Any rule of
construction to the effect that any ambiguity is to be resolved against the
drafting party shall not be applicable in the interpretation of this License
Agreement.  This License Agreement may
not be modified or amended at any time without the written consent of the
parties.

16.           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 if transmitted by personal delivery or mailed by certified
mail, return receipt requested, postage prepaid, to the address of the party as
set forth below.  Any such Notice shall
be deemed to be delivered and received as of the date so delivered, if
delivered personally, or as of the third business day following the day sent,
if sent by certified mail.  Any party
may, at any time, designate a different address to which Notices shall be
directed by providing written notice in the manner 

 4
 

 

set forth in this paragraph.

17.           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.

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

19.           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.

20.           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:

  	
   

  	
  ICM:

  
	
   

  	
   

  	
   

  
	
   Heartland Grain Fuels, LP

  	
   

  	
  ICM, Inc.

  
	
   By:

  	
   

  	
  Dave
  VanderGriend By:

  
	
   

  	
   

  	
   

  
	
   Title:

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   Date Signed:

  	
   

  	
  Date Signed:

  
	
   

  	
   

  	
   

  
	
   Address for giving notices:

  	
   

  	
  Address for giving notices:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  301 N First Street

  Colwich, KS 67030

  

 

 5

 

Exhibit G

to

Agreement Between Owner and Design/Builder

On the Basis of a Stipulated Price

ICM Training:

The Contract Price includes a commitment by DESIGN/BUILDER to perform
certain training for certain personnel of OWNER at OWNER’s ethanol plant, which
is located in Aberdeen, South Dakota.

Employee training will be coordinated by operational personnel of
DESIGN/BUILDER with the support of personnel of OWNER on location at OWNER’s
ethanol plant. Vendor training will also occur in conjunction with this training.
The specific schedule, attendees and training detail will be provided as Plant
start up date is determined.

Such personnel of OWNER will have the opportunity to operate the
ethanol plant under the supervision of operators of DESIGN/BUILDER. It is anticipated
that personnel participating in such training will include the plant manager,
laboratory manager and shift supervisors who will work at the Plant for a
period of 1-3 weeks. DESIGN/BUILDER will not charge any fee to OWNER for this
startup training and DESIGN/BUILDER will provide all training materials.  Expenses for OWNER’s employees such as
travel, salaries, rooms and meals of the participants will be the
responsibility of OWNER.

 

Exhibit H

to

Agreement Between Owner and Design/Builder

On the Basis of a Stipulated Price

INSURANCE

DESIGN/BUILDER’S Employers’ Liability, Business Automobile Liability,
and Commercial General Liability policies, as required in General Conditions
paragraph 5.02 shall be written with at least the following limits of liability:

1.             Employers’ Liability Insurance

a.     $1,000,000 

Bodily Injury by Accident

Each Accident

b.              $1,000,000 

Bodily
Injury by Disease

Policy Limit

c.               $1,000,000 

Bodily Injury by Disease

Each Employee

2.             Business
Automobile Liability Insurance

a.               $1,000,000

Each
Accident

3.             Commercial
General Liability Insurance

       a.      $1,000,000

Each
Occurrence

b.              $2,000,000

General Aggregate

c.               $2,000,000

 Products/Completed

                Operations Aggregate

       d.      $1,000,000

                Personal and Advertising

                Injury
Limit

4.             Liability
Umbrella policy:  $10,000,000 (in
addition to the underlying limits).

5.             Professional
Errors & Omissions policy. 
$1,000,000 per policy year.

 

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

Exhibit I

to

Agreement Between Owner and
Design/Builder

On the Basis of a Stipulated
Price

Equipment
Warranty:

The warranty for Plant production rates, product quality, efficiencies
and emissions standards is covered in Exhibit A.  This Exhibit I specifically defines
DESIGN/BUILDER’s operating warranty for Plant equipment inside the battery
limit.

DESIGN/BUILDER reserves the right at its own discretion, to void any
and all warranty if the operation of the Plant and/or its subsystems, exceeds
nameplate capacity by [*] or more.

DESIGN/BUILDER is OWNER’s first point of contact for any claim of
warranty by OWNER against DESIGN/BUILDER concerning Plant equipment, during the
warranty period.

The cost of labor performed by vendors other than DESIGN/BUILDER to
settle a warranty claim situation, without written permission from
DESIGN/BUILDER, will not be covered under any warranty expressed or implied by
DESIGN/BUILDER.

What
is furnished under the warranty:

The warranty will furnish replacement consumables and parts covered
under the warranty.  Labor will only be
furnished by DESIGN/BUILDER to repair items warranted for workmanship and
originally designed and built by DESIGN/BUILDER.

What
is covered by the warranty:

Workmanship and materials on all plant equipment including pumps,
instruments, controls, DCS, switchgear, wiring, conveyors, gearboxes, auger
flighting, valves 2” size and above, valve actuators, tanks, vessels, air
compressors, boilers, cooling towers, motors, couplers, belts, sheaves, chains,
sprockets, heat exchangers, agitators, centrifuges, fans, blowers, Hvac units,
and other related equipment.

Warranty will cover failures of seals for lack of coolant flush during
the seven (7) day performance test described in Exhibit A.

Warranty will cover failure of seals and couplers caused by
misalignment during the seven (7) day performance test described in Exhibit A.

Warranty will cover failure of pump seals caused by product
misapplication.

Warranty will cover labor and parts to repair all leakage from pipes,
exchangers and valves during the seven (7) day performance test described in
Exhibit A.

 1
 

 

What
is not covered by the warranty:

Warranty
does not cover damage to process equipment of any kind, from, improper
maintenance, improper operation, operator negligence or abuse.

Warranty does not cover catastrophic failures of the critical path
equipment by chain reaction, from improper operation, abuse or neglect of other
equipment or procedures in the process equipment critical path and/or acts of
God, whether upstream or downstream.

Warranty does not cover damage caused by customer modification of
equipment included in the warranty list during the warranty period, without the
written consent of DESIGN/BUILDER.

Warranty does not cover pipe gaskets, sight glasses, valves under 2” in
size, door knobs, walk in doors and closers, pipe and border painting, man-way
gaskets, countertops and window glasses after the seven (7) day performance
test described in Exhibit A.

Warranty does not cover pump seals, pump motors and bearings that fail
for lack of coolant flush after the seven (7) day performance test described in
Exhibit A.

Warranty does not cover pump seals or couplers after the seven (7) day
performance test described in Exhibit A that fail from misalignment.

Warranty will not cover failure of any size valve when failure is
determined to be a result of owner welding on or near the valve.

Warranty will not cover failure of any equipment due to improper
grounding of welding equipment.

Warranty will not cover any equipment damaged by lightning strikes,
power surges, power outages or poor quality power from the electricity
supplier.

Warranty will not cover leaking plate and frame exchangers after the
seven (7) day performance test described in Exhibit A.

Procedure
for warranty claim:

DESIGN/BUILDER does not expect OWNER to remain out of service with
equipment that has failed during the warranty period while trying to settle the
warranty claim.  Whether covered by
warranty or not the plant must operate.

Consumable items such as motors, gearboxes, seals, switchgear and
similar equipment should be replaced and the damaged unit returned to
DESIGN/BUILDER or made available for inspection by DESIGN/BUILDER.
DESIGN/BUILDER reserves the right to return the item to the manufacturer for
evaluation before settling a warranty issue.

Failure
to return or produce for inspection the damaged parts or equipment will void
any warranty expressed or implied.

 2
 

 

1.               The first step by OWNER to satisfy a warranty
question is to call DESIGN/BUILDER’s project manager (or the delegated
alternate) and notify that person of the claim. 
Provide the following information:

A.            Item nomenclature

B.              Equipment or part number

C.              Description of failure

D.             Corrective action taken

E.               Location and disposition of failed item

2.               Fill out the electronic form provided by
DESIGN/BUILDER and send the form by mail or email to the Project manager or his
designate.

3.               Project manager or delegate will respond
within one (1) working day to acknowledge the claim and documentation, by phone
and follow up with email.

4.               Determination of settlement will be made in
forty-five (45) days or less by DESIGN/BUILDER. 
If conflict arises from the determination between OWNER and
DESIGN/BUILDER, such conflict will be resolved under the dispute resolution
procedure set forth in Article 15 of the General Conditions.

Warranty
Period:

The warranty period is  the twelve (12) month period commencing on the date of Substantial
Completion and ending on the date that is 12
months immediately thereafter.  In order
for OWNER to make a warranty claim the deficiency must be discovered, and OWNER
must notify DESIGN/BUILDER in writing of such deficiency within this warranty
period.

 

 3

 

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

Exhibit J

to

Agreement Between Owner
and Design/Builder

On the Basis of a
Stipulated Price

 

[*]

 

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

Exhibit K

to

Agreement Between Owner and Design/Builder

On the Basis of a Stipulated Price

 

[*]

 

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

Exhibit L

to

Agreement Between Owner and Design/Builder

On the Basis of a Stipulated Price

 

[*]

 

 

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 that is substantially similar to Exhibit J
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.      Bond—Performance
or payment bond or other instrument of security.

5.      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.

6.      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.

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

8.      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.

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

10.    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 in accordance with paragraph 13.08.

11.    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

 1
 

 

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.

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

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

14.    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.

15.    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.

16.    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.

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

18.    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.

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

20.    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.

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

22. Notice to Proceed—A written notice given
by OWNER to DESIGN/BUILDER fixing the date on which the Contract Times will
commence to run in accordance with paragraph 2.01.

23.  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.

24.    PCBs—Polychlorinated
biphenyls.

25.    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 

 2
 

 

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

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

27.    Punch List
Items— The
miscellaneous items in the scope of the Project that are not required for the
Project to be operational and that remain to be completed by DESIGN/BUILDER
after Substantial Completion and before Final Completion.

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 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.    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 corn can be ground and the ethanol
production process may begin, as reasonably determined by DESIGN/BUILDER.  The terms “substantially complete” and “substantially
completed” as applied to the Construction refer to Substantial Completion of
Construction.

34.   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.

35.    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.

36.    Written
Amendment—A written amendment of the Contract Documents, signed by
OWNER and DESIGN/BUILDER on or after the Effective Date of the Agreement.

 

 3

 

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; provided, however, in no case shall the Contract Times commence to run
before the later of the date (i) Notice to Proceed is delivered pursuant to
paragraph 8.07 of the Agreement, (ii) the entire amount of the down payment is
paid pursuant to paragraph 4.01A of the Agreement, (iii) all necessary
underground utilities have been installed at the Site, and (iv) all fill
material is placed and a level, buildable Site is delivered to
DESIGN/BUILDER.  A Notice to Proceed may
be given at any time within the period of time set forth in Section 8.07 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     Preliminary Schedules and
Proof of Insurance

A.  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 is
attached as Exhibit K.  A preliminary
Schedule of Values for all of the Work, which includes quantities and prices of
items aggregating the Contract Price, subdivides the Work into component parts
to serve as the basis for progress payments during performance of the Work
and  includes a pro rata amount of
overhead and profit applicable to each item of Work is attached hereto as
Exhibit L.

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.

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.

 4
 

 

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.

C.             Title headings contained in the Contract
Documents are for convenience and reference only and are not to be construed as
limiting or extending the meaning of any of its provisions.  All dollar figures shall mean the lawful currency
of the United States of America, unless expressly stated otherwise.  Words importing the singular, include the
plural, and vice versa.  Words importing
the masculine gender, include the feminine and neuter, and vice versa.  Words importing persons, include firms or
corporations, and vice versa, as the context or reference requires.  Any and all measurements including, but not
limited to, dimensions, calculations, volumes and weights shall be in U.S.
units of measurement.

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.

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.

 5
 

 

B.  All documents including
Drawings and Specifications prepared or furnished by DESIGN/BUILDER pursuant to
the Contract Documents are also subject to the use and disclosure restrictions
set forth in the License Agreement attached to the Agreement as Exhibit F.  The parties shall execute and deliver such
License Agreement in connection with the execution and delivery of 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 of DESIGN/BUILDER (as defined in Exhibit
F) except as provided in Exhibit F 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 the Site
upon which the Construction is to be performed, and rights-of-way and easements
for access thereto.

B.   Upon reasonable written
request, OWNER shall furnish DESIGN/BUILDER with a correct statement of record
legal title and legal description of the Site 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 the Site so furnished with which
DESIGN/BUILDER will have to comply in performing the Work.  Any and all easements necessary for the Work
will be obtained and paid for by OWNER.

C.   OWNER shall provide such
lands and access thereto that may be reasonably required by DESIGN/BUILDER 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 listed in Exhibit E, or (ii) unknown
physical conditions at the Site, of an 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 in the DESIGN/BUILDER’s cost of or time in performing any
part of the Work, an equitable adjustment shall be made under this clause and
the Contract Times and/or Contract Price modified in writing by Change Order in
accordance with Article 9.

C.   No request by DESIGN/BUILDER
for an equitable adjustment under this 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.

 6
 

 

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 disclosed in writing to DESIGN/BUILDER and that OWNER or OWNER’s
officers, directors, employees, agents, other consultants or subcontractors
shall not bring to the Site during the term of the Agreement any materials
creating a Hazardous Condition.  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 the Contract Times and/or 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 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.

 7
 

 

ARTICLE 5—BONDS AND INSURANCE

5.01       Performance, Payment or
Other Bond

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

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;

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;

 8
 

 

2.       Include at least the
specific coverages and be written for not less than the limits of liability set
forth in Exhibit H 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 6.10 and 6.18;

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
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
DESIGN/BUILDER’S sole expense with insurance companies (and policies) approved
by OWNER.  If 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 DESIGN/BUILDER, or
terminate this Agreement for cause in accordance with paragraph 14.02 below.

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 OWNER’s sole expense with insurance
companies (and policies) approved by DESIGN/BUILDER.  This insurance will:

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

 9
 

 

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;

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; and

6.       Have a deductible per
occurrence of not more than ____________________ Dollars ($_______________).

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 the deductible amounts.  The risk of loss within such deductible
amounts will be borne by the party at fault for such loss and if
DESIGN/BUILDER, Subcontractor or others wishes property insurance coverage
within the limits of such deductible amount, each may purchase and maintain it
at it’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

 10
 

 

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 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
this Article 5 on the basis of the other party 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 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.

 

 11

 

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.

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.

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

C.  Final Design
Phase:  During the final
design phase, DESIGN/BUILDER shall:

1.    Prepare final Drawings
showing the scope, extent, and character of the Construction to be performed
and furnished by DESIGN/BUILDER and Specifications.

2.    Provide technical criteria,
written descriptions and design data required for obtaining approvals of such
governmental authorities as have jurisdiction to review or approve the final
design of the Project, and assist OWNER in consultations with appropriate
authorities.

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 included in the Work.

2.    Assist OWNER in training
staff to operate and maintain the Project as provided in Exhibit G.

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.

 12
 

 

6.02     Supervision and
Superintendence 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.  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.

B.   DESIGN/BUILDER shall keep on
the Site at such times as DESIGN/BUILDER determines are reasonably necessary to
complete the Work a competent superintendent. 
The superintendent will be DESIGN/BUILDER’s representative at the Site
and shall have authority to act on behalf of DESIGN/BUILDER.

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, heat, telephone,
sanitary facilities, and all other facilities and incidentals necessary for the
furnishing, performance, testing, start-up and completion of the Work,
excluding, specifically, power, light, water, temporary facilities and all
other items designated as OWNER’s responsibility.  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.

6.04     Progress Schedule

A.  DESIGN/BUILDER shall adhere to
the progress schedule discussed in paragraph 2.03.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.

 13
 

 

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.

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 

 14
 

 

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. DESIGN/BUILDER shall, at its sole expense, have the
right to defend against any such claim. OWNER shall promptly notify
DESIGN/BUILDER upon becoming aware of any such claim. DESIGN/BUILDER, in order
to avoid such claim, shall have the right at its sole expense to substitute
non-infringing invention, design, process, product or device or to modify such
infringing invention, design, process, product or device so they become
non-infringing, or to obtain at its sole expense the necessary licenses to use
the infringing invention, design, process, product or device provided that such
substituted and modified invention, design, process, product or device shall
meet all the requirements of the Contract Documents.

6.07     Permits

A.  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.  OWNER shall pay all
charges of utility owners for connections that are necessary for the Work, and
OWNER shall pay all charges of such utility owners for capital costs related
thereto.

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.   If changes in Laws and
Regulations after the Effective Date of the Agreement cause an increase in the
DESIGN/BUILDER’s cost of or time in performing any part of the Work,
DESIGN/BUILDER may make a claim under Article 9 for a modification to the
Contract Times and/or Contract Price..

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.

 15
 

 

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.  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
in a safe place at the Site 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.  Upon completion of the Work, these record
documents and Submittals, including a reproducible set of record drawings, will
be delivered to OWNER.

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 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;

 16
 

 

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 the Construction.

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       Safety Representative

A.  DESIGN/BUILDER shall designate
a qualified and experienced safety representative whose duties and
responsibilities shall be the prevention of accidents and the maintaining and
supervising of safety precautions and programs in connection with the
performance of the Work.

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 Subcontractors at the Site in accordance with Laws
or Regulations.

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       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 

 17
 

 

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.

6.17                     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.

The warranty set forth in Exhibit I and not this paragraph 6.17 shall
apply to the items set forth in such Exhibit.

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 inspection, test or
approval by others; or

7.   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.

6.18      Indemnification

OWNER and DESIGN/BUILDER are and will be throughout
the term of this Agreement be 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 diligently defend said claim or action on its own behalf, and
will pay, settle, or otherwise promptly dispose of any demand or judgment
against it consistent with the provisions of the 

 18
 

 

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 6.18 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.  OWNER shall be responsible for such other
work including, without limitation, maintaining and supervising safety
precautions and programs in connection with 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 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 the Agreement.

 19
 

 

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.

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 DESIGN/BUILDER’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.   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.

8.   Perform all other items
designated as OWNER’s responsibilities in the Contract Documents.

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.

 20

 

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.

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:

 21
 

 

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:

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.

 22
 

 

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, engineers, architects, estimators, 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 then current 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.

 23
 

 

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, 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, acts of God, strikes, lockouts or other circumstances beyond the
control of DESIGN/BUILDER that give rise to a shortage of labor, materials,
equipment, transportation or utilities. 
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.

 24
 

 

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 reasonable notice to
DESIGN/BUILDER, 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.

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

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.

 25
 

 

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, 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 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 

 26
 

 

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 below.  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.  Defective
equipment or parts thereof shall be covered by the warranty set forth in
Exhibit I attached hereto and not the provisions of this paragraph 12.07.

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.

12.09              Identification of Punch List
Items

A.  OWNER shall identify in
writing to DESIGN/BUILDER, on or before the date that is thirty (30) days after
Substantial Completion, any and all Punch List Items to be completed or
corrected by DESIGN/BUILDER. 
DESIGN/BUILDER shall not be required to complete or correct any Punch
List Items identified by OWNER after such thirty (30) day period.

ARTICLE 13—PAYMENTS TO DESIGN/BUILDER AND COMPLETION

13.01   Schedule of Values

A.  The Schedule of Values
established as provided in paragraph 2.03 will serve as the basis for progress
payments and the form of Application for Payment will be substantially similar
to Exhibit J.

 27
 

 

13.02   Application for Progress
Payment

A.  By the tenth day of each month
during the Work 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.  If payment is requested on the basis of
materials and equipment not incorporated in the Work but delivered and suitably
stored at the Site or at another location agreed to in writing, the Application
for Payment shall also be accompanied by a bill of sale, invoice or other
documentation warranting that OWNER has received the materials and equipment
free and clear of all Liens and evidence that the materials and equipment are
covered by appropriate property insurance and other arrangements to protect
OWNER’s interest therein.  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 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 OWNER should fail to pay
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 OWNER, and after such seven (7) day period, stop the Work until payment of
the amount owing has been received, including interest thereon

3.    Payments due but unpaid
shall bear interest at the rate specified in the Agreement.  If OWNER pays to DESIGN/BUILDER any disputed
amount pursuant to paragraph 13.04.A.2 

 28
 

 

and it is determined pursuant to Article 15 that such amount was not
due and payable, then DESIGN/BUILDER shall refund such amount to OWNER with
interest thereon at the rate specified in the Agreement.

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.  Unless payment of such
disputed amount is requested by DESIGN/BUILDER as provided in paragraph
13.04.A.1., 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 12.07.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).  Within a reasonable time thereafter, OWNER
will prepare and deliver to DESIGN/BUILDER a certificate of Substantial
Completion.  There shall be attached to
the certificate a list of Punch List Items to be completed or corrected before
final payment.  At the time of delivery
of the certificate of Substantial Completion OWNER will deliver to
DESIGN/BUILDER (i) 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, and (ii) the payment required by section 4.01.B.2.
of the Agreement.

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 

 29
 

 

complete or correct items on the list of Punch List Items to be
completed and the seven-day performance test described in Exhibit A.

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 interim maintenance and operating
instructions and as-built drawings (with final copies of each document to be
delivered within ninety (90) days after final payment), schedules, guarantees,
certificates or other evidence of insurance required by paragraph 5.02.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 following the procedure for progress payments.  The 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,
and (ii) complete and legally effective releases or waivers 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 the Site 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 the 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 to OWNER of the acceptable Application and accompanying
documentation, in appropriate form and substance and with OWNER’s notice of
acceptability, the amount will become due and will be paid 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 fully completed and accepted.  Such payment shall be made under the terms
and conditions governing final payment, except that it shall not constitute a
waiver of claims.

 

 30

 

13.09   Waiver of Claims

A.  The making and acceptance of
final payment 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.

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.

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 2.03.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.

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 

 31
 

 

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 below.  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 to
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            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 pay DESIGN/BUILDER any amount due under the Contract Documents, 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 of all amounts due and owing from
OWNER to DESIGN/BUILDER under the Contract Documents for Work performed through
the date of such termination (including any profit thereon) and all cost and
expenses incurred by DESIGN/BUILDER due to such termination (including, without
limitation, any costs incurred to cancel contracts with Subcontractors and the
reasonable demobilization costs of DESIGN/BUILDER).  In lieu of terminating the Agreement and
without prejudice to any other right or remedy, DESIGN/BUILDER may upon seven
(7) days written notice to OWNER stop the Work until payment is made of all
amounts due DESIGN/BUILDER, including interest thereon.  The provisions of this paragraph 14.03.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 attributable to such suspension or failure.

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 

 32
 

 

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 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 any arbitration between OWNER and
DESIGN/BUILDER involving the Work of such Subcontractor.  Nothing in this paragraph 15.01.E or 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.

 33
 

 

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 provision of the
License Agreement attached as Exhibit F.

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.

 34
 

 

16.04   Cumulative Remedies

A.  Except as provided in
paragraph 16.06, 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.

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 Mutual Waiver of Consequential Damages

A.            Notwithstanding any other provision of the Contract
Documents, OWNER agrees that the aggregate amount OWNER (and anyone claiming by
or through OWNER) may recover collectively from DESIGN/BUILDER and its employee’s
and agents, for the Project as a whole under the Contract Documents (including
the License Agreement attached as Exhibit F), including, without limitation
damages from DESIGN/BUILDER for OWNER’s correction of defective
Construction under paragraph 12.07.A, acceptance of defective
Construction under paragraph 12.08, correction of any defective equipment
or part thereof under Exhibit I and/or termination for cause under paragraph
14.02, shall be limited to One Million Dollars ($1,000,000.00).

B.            OWNER hereby waives all claims against DESIGN/BUILDER and
DESIGN/BUILDER’s employees and agents for any consequential damages that may
arise out of or relate to a breach of the Contract Documents (including the
License Agreement attached as Exhibit F) 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.

 35Exhibit
10.1

AMENDMENT

THIS AMENDMENT is
made as of the 28th day of December 2006 to the Employment Agreement between
John Ferrari (“Executive”) and United Therapeutics Corporation dated August 2,
2006 (the “Agreement”).

WHEREAS, the
parties desire to amend the Agreement as provided below.

NOW THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby amend the Agreement as follows:

1.  Term of the Agreement.  Section 2
of the Agreement presently provides as follows:

The term
of this Agreement will commence on August 10, 2006 and end on the fifth
anniversary of such date (the “Initial Term”), and thereafter shall continue
from year to year for additional one-year terms (the “Additional Terms”),
unless and until either party shall give notice of such party’s intent to
terminate not less than 60 days prior to the end of the then-current Initial
Term or Additional Term, which termination shall be effective at the expiration
of said term, or until sooner terminated as hereinafter set forth.

The foregoing Section 2  provision
shall be replaced in its entirety with the following provision:

The employment of
the Executive by the Company will commence on August 10, 2006 for a term of
five (5) years continuing to and including August 9, 2011.  The term (as herein extended) shall
automatically be extended by one (1) additional year at the end of each year
unless at least six (6) months prior to the end of the term or any anniversary
thereof, the Company shall deliver to Executive or Executive shall deliver to
the Company written notice that the term shall not be so extended.

 

2.  Compensation Upon Termination Without
Cause.  Section 8(d) of the Agreement
presently provides as follows:

Subject to Section 8(e) below, if (i) the Company
terminates Executive’s employment without Cause or (ii) the Executive’s
employment is terminated as a result of the transfer of control of the Company
by acquisition, merger, hostile takeover or for any other reason whatsoever,
the Company shall pay to Executive an amount equal to Executive’s Base Salary
for the time remaining in the then-current Initial Term or Additional Term,
payable in semi-monthly installments and as is otherwise consistent with the
Company’s payroll procedures.

The foregoing Section 8(d)
provision shall be replaced in its entirety with the following provision:

If (i) the Company terminates Executive’s employment
without Cause, or (ii) the Executive’s employment is terminated as a result of
the transfer of control of the Company by acquisition, merger, hostile takeover
or for any other reason whatsoever, or (iii) Executive’s authority and
responsibilities are materially diminished without cause relating to the
performance of Executive’s services hereunder and Executive terminates this
Agreement as a result of such unjustified diminution of authority, then should
any of the foregoing events occur, the Company shall pay to Executive a
lump-sum amount equal to two times (i) Executive’s current annual rate of Base
Salary, plus (ii) the greater of the bonus and/or other incentive payments
awarded to executive for the immediately preceding year or the average bonus
and/or other inventive payments awarded to the Executive for the previous two
years.  Such payment shall be fully due
and payable to Executive in a lump sum upon Executive’s Date of
Termination.  Additionally, in the event
of termination contemplated in this Section 8(d), all unvested options granted
to Executive prior to Executive’s Date of Termination shall immediately vest in
Executive upon Executive’s Date of Termination, and the exercise period for
each such previously-granted option shall be the full remaining duration of the
term of each such option.

3.  Compensation Upon Termination Without
Cause.  A new Section 8(f) shall be added to the
Agreement as follows:

Notwithstanding any other provision of this Agreement
to the contrary, in the event that Executive chooses to resign for any reason
other than as result of a reason constituting termination for Cause then, in
such event, at the option of Executive, Executive may state in his letter of
resignation that he wishes to serve as a 

 

Senior Advisor to the Company, which continuing
service shall be on the following terms: (i) Executive shall be employed on a
full-time basis as a Senior Advisor to the Company for up to fifteen years from
the date of resignation, for so long as Executive is willing and able to
provide advisory services to the Company; (ii) Executive shall report to the
Company’s General Counsel and shall at all times be diligent in responding to
informational or discussion requests and project assignments from the General
Counsel or his/her designee; (iii) Executive shall receive compensation of
$50,000 per year without increase, bonus or other adjustment for each year of
service, payable semi-monthly or in such other installments as shall be
consistent with the Company’s payroll procedures, less all necessary
withholding; (iv) unless otherwise agreed to by the Company, Executive shall
provide such advisory services from Executive’s personal offices not located at
Company facilities; (v) Executive shall continue to abide by his obligations of
confidentiality and non-competition as provided in this Agreement; and (vi)
Executive shall receive termination compensation as if Executive’s employment
had been terminated without Cause.

4.  Effect.  No other provisions of the Agreement shall be
affected by this Amendment, and all other provisions of the Agreement shall
remain in full force and effect.

In witness
whereof, the parties have executed this Amendment effective as of the date
first written above.

	
  

  	
   

  	
  UNITED THERAPEUTICS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John Ferrari

  	
   

  	
  /s/ Martine A. Rothblatt

  
	
  John Ferrari 

  	
   

  	
  Martine A. Rothblatt

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