Document:

Exhibit 10.9

 

ENGINEERING, PROCUREMENT AND CONSTRUCTION SERVICES

 

FIXED PRICE CONTRACT

 

BETWEEN

 

HARRIS MECHANICAL CONTRACTING COMPANY

 

AND

 

OTTER TAIL AG ENTERPRISES, LLC

 

DATED:  OCTOBER
24, 2006

 

*PORTIONS
OF THIS ENGINEERING, PROCUREMENT AND CONSTRUCTION SERVICES FIXED PRICE CONTRACT
HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

INDEX

 

	
  SECTION

  	
   

  	
  PAGE

  NUMBER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Defined
  Terms and Order of Precedence

  	
   

  	
  2

  
	
  2.

  	
   

  	
  Harris
  Mechanical’s Scope of Work

  	
   

  	
  5

  
	
  3.

  	
   

  	
  Information,
  Goods and Services to Be Provided by Owner

  	
   

  	
  9

  
	
  4.

  	
   

  	
  Interface
  and Site Conditions

  	
   

  	
  10

  
	
  5.

  	
   

  	
  Schedule

  	
   

  	
  11

  
	
  6.

  	
   

  	
  Changes

  	
   

  	
  13

  
	
  7.

  	
   

  	
  Commissioning,
  Startup, Training of Owner’s Personnel, and Final Acceptance

  	
   

  	
  15

  
	
  8.

  	
   

  	
  Payment

  	
   

  	
  18

  
	
  9.

  	
   

  	
  Stop Work
  and Termination for Cause.

  	
   

  	
  22

  
	
  10.

  	
   

  	
  Safety and
  Security

  	
   

  	
  27

  
	
  11.

  	
   

  	
  Project
  Execution

  	
   

  	
  29

  
	
  12.

  	
   

  	
  Warranty

  	
   

  	
  32

  
	
  13.

  	
   

  	
  Transfer
  of Title and Risk of Loss

  	
   

  	
  36

  
	
  14.

  	
   

  	
  Insurance;
  Bonds

  	
   

  	
  36

  
	
  15.

  	
   

  	
  Indemnity

  	
   

  	
  42

  
	
  16.

  	
   

  	
  Limitation
  of Liability

  	
   

  	
  44

  
	
  17.

  	
   

  	
  Dispute
  Resolution

  	
   

  	
  45

  
	
  18.

  	
   

  	
  Force
  Majeure

  	
   

  	
  46

  
	
  19.

  	
   

  	
  General
  Provisions

  	
   

  	
  46

  

 

List of Exhibits

 

	
   

  	
   

  	
  A.

  	
  Scope
  of Work

  
	
   

  	
   

  	
  B.

  	
  Commercial
  Terms

  
	
   

  	
   

  	
  C.

  	
  Performance
  Test Protocol

  
	
   

  	
   

  	
  D.

  	
  Performance
  Guarantees

  
	
   

  	
   

  	
  E.

  	
  Mechanical
  Completion, Commissioning, Startup

  
	
   

  	
   

  	
  F.

  	
  Project
  Schedule

  

 

i

 

EPC Fixed Price Contract

Otter Tail
Ag Enterprises, LLC

 

Engineering, Procurement and Construction Services

FIXED PRICE CONTRACT

 

GENERAL CONDITIONS

 

THIS
CONTRACT, Is made this 24th day of October, 2006, by and between Otter
Tail Ag Enterprises, LLC, a Minnesota limited liability company organized and
acting under and pursuant to the laws of Minnesota and having its main place of
business at 1220 North Tower Road, Suite 201, Fergus Falls, Minnesota
56537 (hereinafter called the “Owner”) and Harris Mechanical Contracting
Company, a corporation organized and acting under and pursuant to the laws of
the State of Minnesota and having its main place of business at 909 Montreal
Circle, St.  Paul, MN 55102 (hereinafter
called “Harris Mechanical”).  Owner and
Harris Mechanical may sometimes be referred to herein individually as a “Party”
or jointly as the “Parties.”

 

WITNESSETH:

 

WHEREAS,
Harris Mechanical is engaged in the performance of engineering, procurement and
construction services; and,

 

WHEREAS,
Owner desires Harris Mechanical to furnish and perform all design, engineering,
procurement, and construction services, and provide all material, equipment,
tools, and labor, necessary to complete the Work described and reasonably
inferable from this Contract;

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
conditions herein contained, it is agreed as follows:

 

1.     Defined Terms and Order of Precedence

 

1.1     Defined Terms:  The
following words, when capitalized, shall have the meanings set forth below:

 

1.1.1       Commissioning:  “Commissioning”
means checking and preparation of the Plant for operation, functional control
loop checking, interlock testing, system purging and utility system startups to
confirm that the Plant is ready for Startup, as further described in Exhibit E.

 

2

 

1.1.3       Contract:  “Contract”
means these General Conditions, the attached Exhibits A through F, any attached
Schedules, and all additions or modifications thereto made in accordance with Section 19.2
below.

 

1.1.4       Contract Sum:  “Contract
Sum” means the sum set forth in Section 8.1 below, or such greater or
lesser amount as may be determined in accordance with Section 6 below.

 

1.1.5       Harris Mechanical’s Project
Manager:  “Harris Mechanical’s Project Manager” means
the individual designated from time to time by Harris Mechanical in writing as
having the responsibilities described at Section 11.1 below.

 

1.1.6       Date of Commencement:  “Date
of Commencement” means October 24, 2006, the date of commencement of this
Contract.

 

1.1.7       Day:  “Day”
means calendar day.

 

1.1.8       [INTENTIONALLY OMITTED]

 

1.1.9       Equipment:  “Equipment”
means the equipment to be procured by Harris Mechanical described in Exhibit A
and the schedule attached to Exhibit A.

 

1.1.10     Final Completion:  “Final
Completion” means that (i) obligations under the Performance Test protocol
described at Exhibit C and D and any right to cure that Delta-T may choose
to exercise under Exhibit D have been met, or that completion of such
obligations has been waived by Owner in writing or by passage of time as
provided at Section 7.5 below, (ii) all Work has been completed as required
by the Contract and all of the items on the Punch List signed by both Owner and
Harris Mechanical have been corrected and completed and (iii) all lien
waivers, or affidavits, required under Section 8.5 have been delivered and
(iv) all drawings and other documents identified on Exhibit A as
documents to be delivered by Harris Mechanical to Owner have been delivered,
and (v) a general release executed by Harris Mechanical waiving, upon
receipt of final payment by Harris Mechanical, all claims, except those claims
previously made in writing to Owner and remaining unsettled at the time of
final payment.

 

1.1.11     General Conditions:  “General
Conditions” means all portions of this Contract other than the attached
Exhibits.

 

3

 

1.1.12     Legal Requirements: “Legal Requirements” means all applicable
federal, state, and local laws, codes, ordinances, rules, regulations, orders
and decrees of any government or quasi-government entity having jurisdiction
over the Plant or the Site, the practices involved in the Plant or the Site, or
any Work.

 

1.1.13     Mechanical Completion:  “Mechanical
Completion” means that the Plant has satisfied all of the conditions to
Mechanical Completion set forth at Exhibit E.

 

1.1.14     Owner’s Representative:  “Owner’s
Representative” means the individual designated from time to time by Owner in
writing as having the responsibilities described at Section 11.2 below.

 

1.1.15     Performance Test:  “Performance
Test” means the test defined in Exhibits C and D.

 

1.1.16     Plant:  “Plant”
means the name-plate 55 MGPY undenatured ethanol plant to be constructed for
Owner under this Contract.

 

1.1.17     Project:  “Project”
means construction and equipping of the Plant.

 

1.1.18     Punch List:  “Punch
List” means a list of all portions of the Work, if any, which are incomplete or
do not conform to the Contract.

 

1.1.19     Schedule:  “Schedule”
means the schedule set forth in Exhibit F, as amended from time to time by
mutual agreement of the Parties in accordance with this Contract.

 

1.1.20     Site:  “Site”
means the land upon which the Plant is to be located.

 

1.1.21     Site Manager:  “Site
Manager” means the individual designated from time to time in writing by Harris
Mechanical under Section 11.1 below.

 

1.1.22     Startup:  “Startup”
means the commencement of operation of the Plant for the purposes of either
commencing the Performance Test or for commercial purposes, as described in Exhibit E.

 

1.1.23     Subcontractor:  “Subcontractor”
means any person or entity retained by Harris Mechanical as a contractor to
perform a portion of the Work and shall include materialmen and suppliers.

 

4

 

1.1.24     Sub-Subcontractor:  “Sub-subcontractor”
means any person or entity retained by a Subcontractor as a contractor to
perform any portion of a Subcontractor’s Work which shall include materialmen
and suppliers.

 

1.1.25     Substantial Completion:  “Substantial
Completion” means the date on which the Plant has successfully completed
performance testing and performs, with permanent equipment, at 90% of the
performance guarantees as prescribed by Exhibit D for the periods required
by Exhibit D.

 

1.1.26     Work:  “Work”
means all of Harris Mechanical’s design, engineering, procurement,
construction, and other services required by the Contract, and the furnishing
of all materials, equipment, tools, and labor required by the Contract, and
reasonably inferable from’ the Contract.

 

1.1.27     Delta-T:  “Delta-T”
means Delta-T Corporation, a corporation organized and acting under and
pursuant to the laws of the Commonwealth of Virginia and having its main place
of business at 323 Alexander Lee Parkway, Williamsburg, VA 23185.

 

1.2     Order of Precedence:  In
the event of any conflict between these General Conditions and the Exhibits
hereto, these General Conditions shall be controlling.

 

2.     Harris Mechanical’s Scope of Work

 

2.1     Description of Work: 
Harris Mechanical shall, in addition to its obligations under these
General Conditions, provide the Equipment and services described at Exhibit A,
all in accordance with these General Conditions and the specifications set out
in Exhibit A. Harris Mechanical shall furnish and perform all design,
engineering, procurement and construction services, and provide all material,
equipment, tools, and labor necessary to complete the Work described and
reasonably inferable from this Contract.

 

2.2     Permits: 
Harris Mechanical shall, at its expense, secure all permits identified
as permits to be procured by it in Exhibit A. All other permits required
by applicable law or regulation, including without limitation, permits related
to environmental protection, to operation of the plant at which the Equipment
is installed, or activities of Owner or any of its contractors, if any, other
than Harris Mechanical, shall be secured by Owner at Owner’s expense.

 

5

 

2.3     Drawings: 
Harris Mechanical shall, upon completion of the Work, deliver to Owner a
complete set of appropriately stamped or sealed ready for construction plans,
specifications or drawings (“Ready for Construction Design Drawings”) required
to perform the Work, as set forth under the applicable rules and
regulations related to the practice of professional engineering.  Harris Mechanical shall have no
responsibility to provide Owner with any other plans, specifications or
drawings for work performed by Owner or its contractors or subcontractors.  In the event that Harris Mechanical is
required, pursuant to Exhibit A, to provide Owner or any of Owner’s
contractors or subcontractors with electronic copies of plans, specifications
or drawings (“Electronic Drawings”), during execution of the Work, Harris
Mechanical expressly disclaims any and all liability associated with any
changes made to such Electronic Drawings. 
Owner acknowledges and agrees that should a dispute arise with respect
to the accuracy of the Electronic Drawings and the Ready for Construction
Design Drawings to be submitted under this Section 2.3, the Ready for
Construction Design Drawings shall be considered prima fade evidence in any
dispute resolution proceedings as set forth in Article 17 below.

 

2.4     License of Certain Documents
and Drawings:  Except as provided in the License Agreement
dated October 24, 2006 between Delta-T and Owner (the “License” or “License
Agreement”), Delta-T shall retain ownership of the copyright in, and any and
all inventions and trade secrets embodied in, the documents and drawings
delivered to Owner under this Contract and in all of the Delta-T Technology.

 

2.5     Or Equal: 
Whenever in any of the Contract, any Section, materials, or equipment is
defined by describing a proprietary product or by using the name of a
manufacturer or vendor, the term, “or equal” if not inserted, will be
implied.  The specific Section, material
or equipment mentioned will be understood as indicating the type, function,
minimum standard of design, efficiency, and quality desired and will not be
construed in such a manner as to exclude manufacturer’s products of comparable
quality, design, and efficiency.  Where a
product is mentioned by the name of a manufacturer or vendor in the Contract,
Harris Mechanical will identify to Owner the names of any products to be used
in lieu of the ones named in the documents prior to awarding a purchase
order.  Owner shall have the right to
reject any substituted product upon five (5) days written notice to Harris
Mechanical, unless

 

6

 

such product is critical to the successful completion of the Work, or is
the only product available that is suitable for the purpose for which it is
intended.

 

2.6     Design Professional
Services.  Harris Mechanical shall, consistent with
applicable state licensing laws, provide through qualified, licensed engineers,
and other design professionals employed by Harris Mechanical or procured from
qualified, independent license design professionals who are not employees of
Harris Mechanical but are retained by Harris Mechanical (the “Design
Consultants”), the necessary design services, including engineering, and other
design professional services, for the preparation of the required drawings,
specifications, and other design submittals to permit Harris Mechanical to
complete the Work consistent with the Contract. 
Harris Mechanical shall provide in its contracts with any retained
consultants that Owner is an intended third party beneficiary of the contracts
with the right to enforce them.

 

2.7     Standard of Care for Design
Professional Services.  The standard of care for all design professional
services performed to execute the Work shall be the care and skill ordinarily
used by members of the design profession practicing under similar conditions at
the same time and locality of the Plant. 
Notwithstanding the preceding sentence, if the parties agree upon
specific performance standards for any aspect of the Work, which standards are
as set forth in the Contract, the design professional services shall be
performed to achieve such standards.

 

2.8     Design Development Services. 
Harris Mechanical shall submit to Owner construction plans and
specifications setting forth in detail drawings and specifications described in
the requirements for construction of the Plant and completion of the Work.  The construction documents shall meet the
requirements of the Contract and be consistent with the scope of the Work.  Harris Mechanical and Owner shall meet and
confer about the submissions, with Owner’s review of the design submissions and
construction documents being for the purpose of mutually establishing a
conformed set of construction documents compatible with the requirements of the
Work.  Neither Owner’s review nor
approval of any design submissions or construction documents shall be deemed to
transfer any design liability from Harris Mechanical to Owner.

 

7

 

2.9     Legal Requirements. 
Harris Mechanical shall perform the Work in accordance with all Legal
Requirements and prudent industry practices and shall provide all notices
applicable to the Work as required by all applicable federal, state, and local
laws, codes, ordinances, rules, regulations, orders, and decrees of any
government or quasi-government entity having jurisdiction over the Plant or the
Site, the practices involving the Plant or the Site, or any Work.

 

2.10   Government Approvals and Permits.  Exhibit A
sets forth all necessary permits, approvals, and licenses required to be in
Harris Mechanical’s name and Harris Mechanical’s position as a construction
contractor for the prosecution of the Work by any government or
quasi-government entity having jurisdiction over the Plant.  Harris Mechanical shall provide reasonable
assistance to Owner in obtaining those permits, approvals, and licenses that
are Owner’s responsibility.

 

2.11   Harris Mechanical’s Construction Phase Services.

 

2.11.1     Unless
otherwise clearly provided in the Contract to be the responsibility of Owner or
a separate contractor, Harris Mechanical shall provide through itself or
Subcontractors the necessary supervision, labor, inspection, testing, start-up,
material, equipment, .machinery, and other temporary facilities to permit
Harris Mechanical to complete the Work consistent with the Contract.

 

2.11.2     Harris
Mechanical shall perform all construction activities efficiently and with the
requisite expertise, skill and competence to satisfy the requirements of the
Contract.  Harris Mechanical shall at all
times exercise complete and exclusive control over the means, methods,
sequences and techniques of the Work.

 

2.11.3     Harris
Mechanical shall employ only Subcontractors who are duly licensed and qualified
to perform the Work consistent with the Contract.

 

2.11.4     Harris
Mechanical assumes responsibility to Owner for the proper performance of the
Work of Subcontractors and Design Consultants and any acts and omissions in
connection with such performance.

 

8

 

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

 

3.     Information, Goods and Services to Be Provided by Owner

 

3.1     Specific Goods and Services:  Owner
shall provide the following prior to commencement of any Work by Harris
Mechanical:  (a) a Plant site
suitable for construction of the Plant, complete with adequate space for office
and storage needs of Harris Mechanical during construction, (b) suitable
access of the Plant site, (c) utilities necessary for Harris Mechanical’s
performance of the Work, (d) all permits and licenses necessary for
construction and operation of the Plant other than those to be provided by
Harris Mechanical as listed on Exhibit A, and (e) evidence reasonably
satisfactory to Harris Mechanical that it has secured financing sufficient to
permit Owner to pay all its financial obligations in connection with building
of the Plant, including payment of all amounts due to Harris Mechanical.  Owner shall provide the following prior to
commencement of the Performance Test:  (i) personnel
required to be trained by Harris Mechanical, at the time(s) needed to meet
the training plan described at Exhibit A and (ii) supplies and
utilities required to perform Owner’s obligations under Exhibits C and D.

 

3.2     Other Goods and Services:  Owner
shall also furnish to Harris Mechanical, at Owner’s expense, all documents,
drawings, specifications, information and services showing all existing
structures, foundations and undergrounds in or adjacent to the Plant site that
may be relevant to performance of the Work, if any; coordinates, bench marks
and base lines for the land area and locations where all associated items of
equipment, if any, are to be installed; the existence and location of
subsurface obstructions and conditions; soil data and specific criteria for
foundation design relevant to the Work; adequate arrangement drawings, utility
requirements and process connections of all those existing items of machinery
and equipment of existing facilities, if any, with which the Work must
interconnect or accommodate, sufficient for Harris Mechanical’s performance of
the Work; and the specific emission, effluent and environmental criteria and
requirements for the Work; and all other documents, drawings, specifications,
information and services, if any, identified as

 

9

 

within
the Owner’s Scope of Services in Exhibit A.  Harris Mechanical shall be entitled to rely
upon such data and design criteria in the performance of the Work.  Owner shall provide all such items within the
times prescribed in the Schedule, or if no time is prescribed, within the time
reasonably required to allow Harris Mechanical to perform its obligations under
this contract.  Furthermore, Harris
Mechanical shall have the right to receive from Owner reasonable written
assurance, and evidence reasonably acceptable to Harris Mechanical, that Owner
is not aware of any physical, financial or legal matters that would prevent
Owner from fulfilling its obligations hereunder or impede performance of the
Parties obligations under this Contract in accordance with the Schedule.  If Harris Mechanical becomes aware of any
error in a document, drawing, specification or other information supplied by
Owner it will promptly notify Owner of the same.  Harris Mechanical shall, however, have no
liability of any kind with respect to any en-or of which it is not actually
aware.  In addition, Owner shall be fully
responsible for providing all goods and services, if any, that become necessary
as a result of the discovery of hazardous materials or materials with
archeological significance, provided that Harris Mechanical shall be
responsible for any hazardous materials or hazardous substances released on the
Site by Harris Mechanical or its Subcontractors.

 

4.     Interface and Site Conditions

 

4.1     Site Conditions: 
Harris Mechanical has visited the Site and has had the opportunity to
become familiar with the condition of the Site as it applies to performance of
the Work.  If conditions are encountered
at the Site which (1) were not readily observable by visual inspection of
the Site, or (2) are unknown physical conditions of an unusual nature,
which differ materially from those ordinarily found to exist and generally
recognized as inherent in construction activities of the character provided for
in this Contract, or (3) differ from conditions shown in any drawing,
document or other information, if any, that Owner is required to deliver to
Harris Mechanical under Section 3 above, then notice by the observing
Party shall be given to the other Party promptly before such conditions are
further disturbed and in no event later than 14 days after first observance of
the conditions.  If any such condition
causes any increase or decrease in Harris Mechanical’s cost of, or time
required for, performance of any part of the Work, or any increase or decrease
in any other obligation of Harris Mechanical, Owner shall within 14 days of
issuance or receipt of notice, as the case may be, under this Section 4.1,
issue a change or in accordance with Section 6 below, covering only such
costs incurred and time lost for properly documented cost and time.

 

10

 

4.2 Cooperation with Others: 
Harris Mechanical will cooperate with Owner’s other contractors, if any,
to facilitate coordination of the Work with the work of others.  Harris Mechanical shall not be required to
check the quality or quantity of work performed by Owner or Owner’s contractors
or subcontractors.  Harris Mechanical
shall not have control over or responsibility for the construction, methods,
techniques, sequences or procedures or for safety precautions and programs used
by Owner or Owner’s contractors or subcontractors in connection with the Owner’s
work or work of others and shall have no liability thereon.

 

5.     Schedule

 

5.1 Schedule:  The Work shall commence within
five (5) days of Harris Mechanical’s receipt of a Notice to Proceed from
Owner, which shall in no event be earlier than October 24, 2006, unless
the parties mutually agree otherwise in writing.  Harris Mechanical agrees that it will
commence performance of the Work and achieve the Contract Times in accordance
with the Schedule and this Article 5.

 

5.1.1       Substantial
Completion and Final Completion:  So long
as Harris Mechanical receives a Notice to Proceed not later than ten (10) days
after November 1, 2006, Substantial Completion shall be achieved not later
than April 1, 2008.  Final
Completion of the Work shall be achieved as expeditiously as reasonably
practicable, but in no event, will Final Completion of the Work be completed
later than June 1, 2008.

 

5.1.2       Time is of the Essence:  Owner
and Hams Mechanical mutually agree that time is of the essence with regard to
completion of the Work.

 

5.1.3       Delays to Work:  If
Harris Mechanical is delayed in the performance of the Work due to acts,
omissions, conditions, events, or circumstances beyond its control and due to
no fault of its own, its.  Design
Consultants, Subcontractors, or others of those for whom Harris Mechanical is
responsible, the Contract Time(s) for performance shall be reasonably
extended by Change Order.  By way of
example, events  that will entitle Harris
Mechanical to an extension of the Contract Time(s) include acts or
omissions of Owner or anyone under Owner s control (including separate
contractors),

 

11

 

changes in the Work, Differing Site Conditions, Hazardous Conditions,
wars, floods, labor disputes not directed at Harris Mechanical or its
Subcontractors or Sub-subcontractors, epidemics abroad, earthquakes, adverse
weather conditions not reasonably anticipated, and other acts of God.

 

5.2     Compensation to Harris
Mechanical for Delay:  In the event any delay in the Work of Harris
Mechanical caused by Owner, its employees, its contractor’s or vendors for reasons
other than force majeure or events beyond the control of Owner or such others,
exceeds, individually or in the aggregate, twenty-one (21) days, Harris
Mechanical shall be entitled to an appropriate adjustment of the Contract Sum
for its direct costs for delays.

 

5.3     Early Completion Bonus.  If
Substantial Completion of the Plant is attained before * (the “Bonus Date”),
Owner shall pay Harris Mechanical at the time of Final Payment an early
completion bonus based on the number of days Substantial Completion is attained
prior to the Bonus date.  Harris
Mechanical will be paid a sum equal to $* per day, for each day that
Substantial Completion is attained between * and the Bonus Date, $* per day for
each day that Substantial Completion is attained between * and *, and $* for
each day that Substantial Completion is attained prior to * (it being
understood that the per-day early completion bonus escalates and is payable on
a $*, $*, or $* per-day basis and not in the aggregate per day).  By way of example, if Substantial Completion
is attained on *, the bonus will be paid for * days at $* per day and * days of
bonus at $*, for a total bonus of $*. 
Owner’s obligation to pay the bonus is subordinate to its debt service
obligations, but shall not be delayed for more than * months from when the
bonus payment is earned.

 

5.4     Substantial Completion Delay
Liquidated Damages.  Harris Mechanical understands that if
Substantial Completion is not attained by the earlier of * or the date that is *
days from the date Mechanical Completion is attained (the first date to occur
being the “Scheduled Substantial Completion Date”), Owner will suffer damages
which are difficult to specify-accurately and ascertain.  Harris Mechanical agrees that if Substantial
Completion is not attained by the Scheduled Substantial Completion Date, Harris
Mechanical shall pay to Owner a sum equal to $* per day for each day that
Substantial Completion is attained after *, $* per day for each day that
Substantial Completion is attained after *, and $* for each day that
Substantial Completion is attained after * (it being understood that the
per-day 

 

* PORTIONS OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

12

 

liquidated damages amount escalates and is payable on a $*, $*, or $*
per-day basis and not in the aggregate per day).  By way of example, if Substantial Completion
is attained on *, the liquidated damages will be paid for * days at $* per day
and * days at $*, for a total liquidated damages amount of $*.  Harris Mechanical’s total collective
liability to Owner for Delay Liquidated Damages as provided in this Section 5.4,
shall not exceed $*.

 

6.     Changes

 

6.1     Change Orders

 

6.1.1       A Change
Order is a written instrument issued after execution of the Agreement signed by
Owner and Harris Mechanical, stating their agreement upon all of the
following:  (1) The scope of the
change in the Work; (2) the amount of the adjustment to the Contract Price
(If the Change Order is silent as to the amount of the adjustment to the
Contract Price, then the Contract Price shall be deemed to be unchanged by the
Change Order.); and (3) the extent of the adjustment to the Contract
Time(s).  If the Change Order is silent
as to the adjustments to the Contract Time(s), then the Contract Time(s) shall
be deemed to be unchanged by the Change Order.

 

6.1.2       All
changes in the Work authorized by applicable Change Order shall be performed
under the applicable conditions of the Contract.  Owner and Harris Mechanical shall negotiate
in good faith and as expeditiously as . 
possible the appropriate adjustments for such changes.

 

6.1.3       If Owner
requests a proposal for a change in the Work from Harris Mechanical and
subsequently elects not to proceed with the change, a Change Order shall be
issued to reimburse Harris Mechanical for reasonable costs incurred for
estimating services, design services and services involved in the preparation
of proposed revisions to the Contract, but not to exceed $2,000 per request
unless authorized by Owner in writing to exceed this limit.

 

* PORTIONS OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

13

 

6.2     Work Change Directives

 

6.2.1       Owner
has the right to order changes in the Work at any time within the general scope
of the Contract.  A Work Change Directive
is a written order prepared and signed by Owner, directing a change in the Work
prior to agreement on an adjustment in the Contract Price and/or the Contract
Time(s).

 

6.2.2       Owner
and Harris Mechanical shall negotiate in good faith and as expeditiously as
possible the appropriate adjustments for the Work Change Directive.  Upon reaching an agreement, the parties shall
prepare and execute an appropriate Change Order reflecting the terms of the
agreement.

 

6.2.3       If the
change, in Harris Mechanical’s judgment, would have a detrimental impact on
performance of the Plant, or if the amount of the cost of the change order in
dispute exceeds 1% of the Contract Sum, then Harris Mechanical shall have no
obligation to proceed with any change until such agreement is reached.  Furthermore, Harris Mechanical shall in no
case be required to agree to any change requiring the handling of PCBs,
asbestos or any other hazardous material.

 

6.3     Minor Changes in the Work

 

6.3.1       Minor
changes in the Work do not involve an adjustment in the Contract Price and/or
Contract Time(s) and do not materially and adversely affect the Work,
including the design, quality, performance and workmanship required by the
Contract.  Harris Mechanical may make
minor changes in the Work consistent with the intent and requirements of the
Contract, but only if approved by Owner in writing, Harris Mechanical shall
promptly inform Owner, in writing, of any such changes and record such changes
on the documents maintained by Harris Mechanical.

 

6.4     Contract Price Adjustments

 

6.4.1       The increase
or decrease in Contract Price resulting from a change in the Work shall be
determined by one or more of the following methods:  (1) unit prices set forth in the
Agreement or as subsequently agreed to between the parties; (2) a mutually
accepted, lump sum, properly itemized and supported by sufficient
substantiating data to permit evaluation by Owner; (3) costs, fees and any
other markups set forth in the

 

14

 

Agreement; and (4) if an increase or decrease cannot be agreed to
as set forth in items 1 through 3 above and Owner issues a Work Change
Directive, the cost of the change of the Work shall be determined by the
reasonable expense and savings in the performance of the Work resulting from
the change, including a reasonable overhead and profit, as may be set forth in
the Agreement.  Harris Mechanical shall
maintain a documented, itemized accounting evidencing the expenses and savings
associated with such changes.

 

6.4.2       If unit
prices are set forth in the Contract or are subsequently agreed to by the
parties, but application of such unit prices will cause substantial inequity to
Owner or Harris Mechanical because of differences in the character or quantity
of such unit items as originally contemplated, such unit prices shall be
equitably adjusted.

 

6.4.3       If Owner
and Harris Mechanical disagree upon whether Harris Mechanical is entitled to be
paid for any services required by Owner, or if there are any other
disagreements over the scope of Work or proposed changes to the Work, Owner and
Harris Mechanical shall resolve the disagreement pursuant to Article 17
hereof.  As part of the negotiation
process, Harris Mechanical shall furnish Owner with a good faith estimate of
the costs to perform the disputed services in accordance with Owner s
interpretations.

 

6.5     Emergencies

 

6.5.1       In any
emergency affecting the safety of persons and/or property, Harris Mechanical
shall act, at its discretion, to prevent threatened damage, injury or
loss.  Any change in the Contract Price
and/or Contract Time(s) to which Harris Mechanical is entitled under other
provisions of the Contract on account of emergency work shall be determined as
provided in this Article 6.

 

7.     Commissioning, Startup, Training of Owner’s Personnel, and
Final Acceptance

 

7.1     Mechanical Completion and
Commissioning:  Harris Mechanical shall carry out the
Commissioning and Startup of the Plant according to the Schedule and as
specified in Exhibit E. Harris Mechanical shall give Owner at least three (3) .calendar
day notice when Harris Mechanical-believes that the Work has reached Mechanical
Completion and with or before such notice, shall provide Owner a draft list of
items of Work that have to be

 

15

 

completed before final payment. 
Within five (5) days of Owner’s receipt of Harris Mechanical’s
notice, Owner and Harris Mechanical will jointly inspect such Work to verify
Mechanical Completion to verify the Plant has achieved Mechanical Completion
and verify the additional Work necessary to complete before Final Completion
and to develop a mutually-agreeable Punch List. 
Owner shall, within seven calendar days thereafter deliver to Harris
Mechanical its proposed Punch List signed by Owner’s Representative.  Such Punch List shall clearly designate which
items, if any, need to be completed in order to reach Mechanical
Completion.  Harris Mechanical shall
within six (6) calendar days of receipt of the Punch List mark the list to
show Harris Mechanical’s disagreement, if any, with any of the items listed by
Owner, and return a copy of the list so marked and signed by Harris Mechanical
to Owner.  In the event that Parties do
not agree on the items that should be included on the Punch List within eight (8) calendar
days thereafter, then either Party may submit the matter to disputes resolution
under Section ‘17 below.  Harris
Mechanical, with Owner’s assistance, shall commence Commissioning upon
achievement of Mechanical Completion. 
Commencement of Commissioning shall conclusively be deemed to indicate
that Mechanical Completion has been achieved.

 

7.2     Performance Test: 
Harris Mechanical, with Owner’s assistance, shall Startup the Plant and
begin the Performance Test as soon as the conditions to Startup described in Exhibit E
have been completed to achieve and sustain the Performance Guaranties described
in Exhibit D in accordance with the Performance Test Protocols described
in Exhibit C.

 

7.3     Substantial Completion:

 

7.3.1       Harris
Mechanical shall notify Owner when it believes the Plant has achieved
Substantial Completion and, with or before such notice.  Harris Mechanical shall prepare and issue a
Certificate of Substantial Completion that will set forth (i) the date of
Substantial Completion of the Work, (ii) the remaining items of Work that
have to be completed before Final Completion (omissions of an item from the
list shall not be a waiver of the right to have such items of Work done or an
admission that it was done), (iii) provisions (to the extent not already
provided in the Contract) establishing Owner’s and Harris Mechanical’s
responsibility for the Plant’s security, maintenance, utilities and insurance
pending final payment and (iv) an acknowledgment that warranties commence
to run on the date of  Substantial
Completion, except as may otherwise be 

 

16

 

noted in the Certificate of Substantial Completion.  Within five (5) days of Owner’s receipt
of Harris Mechanical’s notice, Owner and Harris Mechanical will jointly inspect
the Plant Work to verify the Plant has achieved Substantial Completion with
permanent equipment installed in operating condition and order required under
the Contract, and verify the additional Work necessary to complete before Final
Completion and to develop a mutually-agreeable Punch List.  Owner shall give notice of objection to the
claim of Substantial Completion within seven (7) days of the joint
inspection date.  Owner shall, within
seven calendar days after the inspection deliver to Harris Mechanical its
proposed Punch List signed by Owner’s Representative.  Such Punch List shall clearly designate which
items, if any, need to be completed in order to reach Final Completion.  Harris Mechanical shall within six (6) calendar
days of receipt of the Punch List mark the list to show Harris Mechanical’s
disagreement, if any, with any of the items listed by Owner, and return a copy
of the list so marked and signed by Harris Mechanical to Owner.  In the event that Parties do not agree on the
items that should be included on the Punch List within eight (8) calendar
days thereafter, then either Party may submit the matter to disputes resolution
under Section 17 below.

 

7.3.2       Upon
achieving Substantial Completion, Hams Mechanical shall proceed to complete the
Work and Delta-T with assistance from Harris Mechanical and Owner will continue
the Performance Test protocol described at Exhibit C in effort to attain
100% of the performance guarantees as prescribed by Exhibit D for the
periods required by Exhibit D. Upon achieving Substantial Completion,
Owner shall release to Harris Mechanical 90% of the Retainage, and the
remaining 10% of the Retainage shall be retained until Final Completion or, if
earlier, until the Plant achieves 100% of the performance guarantees as
prescribed by Exhibit D for the periods required by Exhibit D. If
earlier than Final Completion the Plant achieves 100% of the performance
guarantees, the then remaining Retainage shall be released, less an amount
equal to 150% of the reasonable value of all remaining or incomplete items of
Work as noted in the Certificate of Substantial Completion or as previously
documented in writing.

 

7.3.3       At
Substantial Completion, care, custody and control of the Plant, shall pass to
Owner.  Subsequent to Substantial
Completion, Owner will permit Harris Mechanical access to the Plant, subject
only to restrictions as necessary for security and safety, so that Harris
Mechanical may conduct Corrective Action and additional Performance 

 

17

 

Tests as provided in this Article 7.  After Substantial Completion, Owner shall be
solely-responsible for providing property insurance coverage of the Plant,
provided, however, that (i) a Certificate of Substantial Completion has
been issued for the portion of Work addressing the items set forth in Section 7.3.1
above, (ii) Harris Mechanical and Owner have obtained the consent of their
sureties and insurers, and to the extent applicable, the appropriate government
authorities having jurisdiction over the Plant, and (iii) Owner’s use or
occupancy will not significantly interfere with Harris Mechanical’s completion
of the remaining Work.

 

7.4     Training of Owner’s Personnel: 
Harris Mechanical shall provide the training described in Exhibit A.
Except as provided otherwise in Exhibit A, Owner shall provide appropriate
personnel, and Harris Mechanical shall provide such training, at times mutually
agreed by them.

 

7.5     Failure to Reach Final Completion for Reasons Beyond Harris
Mechanical’s Control:  If for any reason Owner fails to permit
Harris Mechanical access to the Plant after the date of Mechanical Completion
in order to permit Harris Mechanical to do all things necessary to achieve
Final Completion, and such failure to permit access continues for an aggregate
of thirty (30) days, then Final Completion shall be deemed to occur on the
thirtieth day (in the aggregate) that such access is denied.

 

8.     Payment

 

8.1     Contract Sum:  Owner
will pay Harris Mechanical for the full and satisfactory completion of the Work
the Contract Sum of $86,786,045.00, or such other sum as may be determined in
accordance with Section 6 or Section 5.  The Contract Sum does not include any sales
or other tax.  If Harris Mechanical is;
now or in the future, required to collect from Owner or pay any federal, state,
local or other tax with respect to all or any part of the Work, then that
amount shall be paid by Owner at Harris Mechanical’s request, in addition to
the Contract sum.

 

8.2     Payment Terms; Retainage:  Owner
shall make payment in accordance with this Section 8 and Exhibit B.
Harris Mechanical shall submit Applications for Payment in the form to be
mutually agreed upon by the Parties and set forth at Exhibit B requesting
payment for all Work performed as of the dale of the Application for
Payment.  The Application for Payment
shall be accompanied by all supporting documentation required by the Contract
in 

 

18

 

the form of pay request, and shall include such other documentation as
may be reasonably required by Owner’s lender(s).  Five percent (5%) will be retained from all
payments made hereunder and retained by Owner as “Retainage.”  The 5% Retainage will be held on all payments
made by the Owner to Harris Mechanical until Final Completion.  The Retainage is held in part by Owner as
security for Harris Mechanical’s performance of the Work.  The entire Retainage amount is owed to Harris
Mechanical as the Final Payment once the Work has achieved Final Completion,
less any liquidated damages.

 

The Application for Payment may request payment for equipment and
materials not yet incorporated into the Plant, provided that (i) Owner is
satisfied that the equipment and materials are suitably stored at either the
Site (or another acceptable location if approved in writing in advance by
Owner), (ii) the equipment and materials are protected by suitable
insurance and (iii) upon payment, Owner will receive the equipment and
materials free and clear of all liens and encumbrances.  Applications for payment may also include the
value of incremental progress payments owed by Harris Mechanical to vendors of
major items of equipment.

 

The Application for Payment shall constitute Harris Mechanical’s
representation that the Work has been performed consistent with the Contract,
has progressed to the point indicated in the Application for Payment, and that
title to all Work will pass to Owner free and clear of all claims, liens,
encumbrances, and security interests upon the incorporation of the Work into
the Plant, or upon Harris Mechanical’s receipt of payment, whichever occurs
earlier.

 

If required by Owner, the Application for Payment shall be verified as
accurate and notarized and supported by such data substantiating Harris
Mechanical’s right to payment as Owner may reasonably require.  If requested by Owner, Harris Mechanical
shall provide lien waivers for itself for the current Application for Payment
and for Subcontractors, Sub-subcontractors, and Design Consultants for the
previous Application for Payments before Harris Mechanical has earned or has
the right to receive any payment.  All
lien waivers shall be provided on a mutually agreed upon form.  With the Final Application for Payment,
Harris Mechanical shall furnish final lien waivers to Owner for all Work
furnished by Harris Mechanical, Subcontractors, Sub-subcontractors, Design
Consultants, and other persons furnishing labor or materials for the Work, as a
precondition to Final Payment.  This Section

 

19

 

shall not limit other obligations of Harris Mechanical contained
elsewhere to provide lien waivers.

 

Application for Payment shall not include requests for payment for
portions of the Work for which Harris Mechanical does not intend to pay a
Design Consultant or Subcontractor within thirty (30) days, unless such Work
has been performed by others whom Harris Mechanical intends to pay within
thirty (30) days.

 

Owner shall, through Owner’s Representative, sign the Certificate for
Payment set forth on the Application for Payment for the full payment applied
for, unless it believes that all or any part of such amount is not then
due.  If Owner believes all or part of
the amount requested in the Application for Payment is not then due, Owner
shall amend the Certificate for Payment contained therein by indicating the
amount, if any, that it believes to be due, and shall sign the certificate as
amended and deliver the certificate, together with written notice of Owner’s
reasons for certifying less than the whole amount of applied for.  If for any reason Owner’s Representative
fails to deliver to Harris Mechanical a signed Certificate for Payment within
five (5) days prior to the date payment is due, then Owner shall be deemed
to have waived any right it may have had to withhold all or any part of the
payment applied for.

 

Provided Harris Mechanical has properly submitted the Application for
Payment with required documentation, and subject to Owner’s rights to withhold,
Owner shall wire transfer, in immediately available funds, all amounts for
which it has issued certificates, or failed to issue timely certificates, and
if no time is indicated thereon, within thirty (30) days of the date of its
receipt of the Application for Payment, to a bank account to be selected by Harris
Mechanical, at its sole discretion. 
Owner’s payment shall constitute a Certificate for Payment if the
Certificate for Payment form is not executed by Owner.  If Owner does not certify payment in the
amount of the Application, and Harris Mechanical and Owner cannot agree on a
revised amount within five (5) days of the date of the Certificate for
Payment for less than the full amount, then either Party may request a demand
for arbitration in accordance with Section 17.  In any case, when the reasons stated by Owner
for withholding payment of any amount for which an application has been made
are removed, in whole or in part, Owner shall immediately issue a Certificate
for Payment for the amount withheld and make payment, via wire transfer as
described in this Section 8.2, of the amount so certified on or before the
date that the next payment is due, but in no case more than thirty (30) days
after the date that such Certificate for Payment was due.  Harris Mechanical 

 

20

 

shall pay Design Consultants and Subcontractors, in accordance with its
contractual obligations to such parties, all the amounts Harris Mechanical has
received from Owner on account of such parties’ work.  Harris Mechanical will impose similar
requirements on Design Consultants and Subcontractors to pay those parties with
whom they have contracted.

 

8.3     Late
Payment:  Owner shall
pay interest at the rate of Wall Street Prime on all sums past due, not to
include those amounts contested in good faith by Owner, which interest shall
commence thirty (30) days after payment is due.

 

8.4     Mechanic’s
Lien Waivers and Indemnity:  Harris Mechanical shall pay promptly for all
valid amounts due for all materials, labor and equipment used in or in connection
with the performance of this Contract, including those of its subcontractor’s
and vendors, when bills or claims become due, and shall indemnify and hold
harmless Owner from and against all claims of its subcontractors and vendors
for amounts due arising from Harris Mechanical’s failure to make any such
payments, provided that Owner gives Harris Mechanical prompt notice of such
claim and cooperates with Harris Mechanical in defense of such claim.

 

8.5     Mechanic’s
Liens:  Harris Mechanical shall keep the
real property upon which the Plant is to be located free and clear of laborer’s,
materialmen’s and mechanic’s liens arising out of the performance of the Work
for which Owner has made payment.  Owner
shall promptly notify Harris Mechanical in writing of any lien so arising of
which it has notice or knowledge.  Harris
Mechanical shall obtain and timely provide to Owner a partial release of lien
with respect to any partial or progress payment made to relevant subcontractors
and shall also obtain and timely provide a complete release of lien and general
release with respect to any subcontract for which full and final payment is
made.  In each case, the release of lien
may be for an amount less amounts that will be paid from the payment for which
such release of lien is requested. 
Harris Mechanical shall promptly pay each subcontractor upon receipt of
payment from Owner of the amount invoiced that is due to such subcontractor.

 

8.6     Final
Payment:  Harris
Mechanical shall invoice Owner for the final amount due to it under this
Contract upon reaching Final Completion. 
Payment of all of the Contract Sum remaining unpaid, arid any and all
other amounts owing to Harris Mechanical under the Contract, shall, unless
provided otherwise in Exhibit B, be made within 30 days after Final
Completion, subject to adjustment for any liquidated damages.

 

21

 

9.     Stop Work and Termination for
Cause.

 

9.1     Owners
Right to Stop Work

 

9.1.1       Owner may, without cause and for its convenience,
order Harris Mechanical in writing to stop and suspend the Work.  Such suspension shall not exceed ninety (90)
consecutive days or aggregate more than one hundred fifty (150) days during the
duration of the Project.

 

9.1.2       Harris Mechanical is entitled to seek an adjustment
of the Contract Price and/or Contract Time(s) if its cost or time to
perform the Work has been adversely impacted by any suspension of stoppage of
work by Owner not resulting from the fault of Harris Mechanical or its.  Design Consultants, Subcontractors, or others
of those for whom Harris Mechanical is responsible.

 

9.2     Owner s
Right to Perform and Terminate for Cause

 

9.2.1       If Harris Mechanical (i) persistently fails to
provide a sufficient number of skilled workers, (ii) fails to supply the
materials required by the Contract, (iii) fails to comply with applicable
Legal Requirements, (iv) fails to timely pay, without cause, Design
Consultants or Subcontractors, (v) fails to prosecute the Work with
promptness and diligence to ensure that the Work is completed by the Contract
Time(s), as such times may be adjusted, or (vi) fails to perform other
material obligations under the Contract, then Owner, in addition to any other
rights and remedies provided in the Contract or by law, shall have the rights
set forth in Sections 9.2.2 and 9.2.3 below.

 

9.2.2       Upon the occurrence of an event set forth in Section 9.2.1
above, Owner may provide written notice to Harris Mechanical that it intends to
terminate the Agreement unless the problem cited is cured, or commenced to be
cured, within seven (7) days of Harris Mechanical’s receipt of such
notice.  If Harris Mechanical fails to
cure, or reasonably commence to cure, such problem then Owner may give a second
written notice to Harris Mechanical declaring the Agreement terminated for
default.

 

9.2.3       Upon declaring the Agreement terminated pursuant to Section 9.2.2
above, Owner may enter upon the premises and take possession, for the purpose
of completing the Work, of all materials, equipment, scaffolds, tools,
appliances and other

 

22

 

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

 

9.3     Owner’s
Right to Terminate for Convenience.  Upon written notice to Harris Mechanical,
Owner may, for its convenience and without cause, elect to terminate this
Agreement.  In such event, Owner shall
pay Harris Mechanical for the following:

 

1.     all Work executed;

 

2.     the reasonable and
documented costs and expenses attributable to such termination, including
demobilization costs and amounts due in settlement of terminated contracts with
Subcontractors and Design Consultants; and

 

3.     overhead and profit in the
amount of * on the sum of items 1 and 2 above.  In no event shall Owner be liable to Harris
Mechanical for profit or overhead on Work not executed.

 

*   PORTIONS OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH         HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

23

 

9.3.1       If Owner improperly terminates the Agreement for
cause, the termination for cause will be converted to a termination for
convenience in accordance with the provisions of Section 9.3 of the
Contract.

 

9.4     Harris Mechanical
s Right to Stop Work

 

9.4.1       Harris Mechanical may, in addition to any other
rights afforded under the Contract or at law, stop work for the following
reasons:  (1) Owner’s failure to
provide financial assurances as required under this Contract; or (2) Owner’s
failure to pay amounts properly due, under Harris Mechanical’s Application for
Payment.

 

9.4.2       Should any of the events set forth in Section 9.4.1
above occur, Harris Mechanical has the right to provide Owner with written
notice that Harris Mechanical will stop work unless said event is cured within
seven (7) days from Owner’s receipt of Harris Mechanical s notice.  If Owner does not cure the problem within
such seven (7) day period, Harris Mechanical may stop work.  In such case, Harris Mechanical shall be
entitled to make a claim for adjustment to the Contract Price and Contract Time(s) to
the extent it has been adversely impacted by such stoppage.

 

9.5     Assignments
Upon Termination

 

9.5.1       Upon any termination by either party, to the extent
Owner elects to take legal assignment of contracts and purchase orders
(including rental agreements) (and Harris Mechanical hereby grants to Owner the
right to do so), Harris Mechanical shall execute and deliver all such documents
and take all such actions as Owner may require for the purpose of fully vesting
Owner with the rights and benefits of Harris Mechanical under such contracts
and purchase orders.  Harris Mechanical,
and not Owner, shall remain liable for all obligations under those contracts
and purchase orders preceding the later of the date of termination or the
effective date of the assignment.  The effective
date of the assignment shall be the date designated by Owner as the effective
date of the assignment.

 

9.6     Harris
Mechanical s Right to Terminate for Cause

 

9.6.1       Harris Mechanical, in addition to any other rights
and remedies provided in the Contract or by law, may terminate the Agreement
for cause for the following reasons:  (1) the
Work has been stopped for ninety (90) consecutive days, or more than one 

 

24

 

hundred fifty (150) days during the duration of the Plant, because of
court order, any government authority having jurisdiction over the Work, or
orders by Owner under Section 9.1.1 hereof, provided that such stoppages are
not due to the acts or omissions

 

25

 

of Harris Mechanical or anyone for whose acts Harris Mechanical may be
responsible; (2) Owner’s failure to provide Harris Mechanical with any
information, permits or approvals that are Owner s responsibility under the
Contract which result in the Work being stopped for ninety (90) consecutive
days, or more than one hundred fifty (150) days during the duration of the
Plant, even though Owner has not ordered Harris Mechanical in writing to stop
and suspend the Work pursuant to Section 9.1.1 hereof; (3) Owner’s
failure to cure the problems set forth in Section 9.4.1 above after Harris
Mechanical has stopped the Work.

 

9.6.2       Upon the occurrence of an event set forth in Section 9.6.1
above, Harris Mechanical may provide written notice to Owner that it intends to
terminate the Agreement unless the problem cited is cured, or commenced to be
cured, within seven (7) days of Owner’s receipt of such notice.  If Owner fails to cure, or reasonably
commence to cure, such problem, then Harris Mechanical may give a second
written notice to Owner of its intent to terminate within an additional seven (7) day
period.  If Owner, within such second
seven (7) day period, fails to cure, or reasonably commence to cure, such
problem, then Harris Mechanical may declare the Agreement terminated for
default by providing written notice to Owner of such declaration.  In such case, Harris Mechanical shall be
entitled to recover in the same manner as if Owner had terminated the Agreement
for its convenience under Section 9.3.

 

9.7     Bankruptcy
of Owner or Harris Mechanical

 

9.7.1       If either Owner or Harris Mechanical institutes or
has instituted against it a case under the United States Bankruptcy Code (such
party being referred to as the Bankrupt Party), such event may impair or
frustrate the Bankrupt Party’s ability to perform its obligations under the
Contract.  Accordingly, should such event
occur:  (1) the Bankrupt Party, its
trustee or other successor, shall furnish, upon request of the non-Bankrupt
Party, adequate assurance of the ability of the Bankrupt Party to perform all
future material obligations under the Contract, which assurances shall be
provided within ten (10) days after receiving notice of the request; and (2) the
Bankrupt Party shall file an appropriate action within the bankruptcy court to
seek assumption or rejection of the Agreement within sixty (60)days of the
institution of the bankruptcy filing and shall diligently prosecute such
action.  If the Bankrupt Party ails to
comply with its foregoing obligations, the non-Bankrupt Party shall be entitled
to request the bankruptcy court to 

 

26

 

reject the Agreement, declare the Agreement terminated and pursue any
other recourse available to the non-Bankrupt Party under this Article 9.

 

9.7.2       The rights and remedies under Section 9.7.1
above shall not be deemed to limit the ability of the non-Bankrupt Party to
seek any other rights and remedies provided by the Contract or by law,
including its ability to seek relief from any automatic stays under the United
States Bankruptcy Code or the right of Harris Mechanical to stop Work under any
applicable provision of these General Conditions of Contract.

 

10.  Safety and Security

 

10.1     Premises:  Harris Mechanical will keep the premises
clean and free from rubbish caused by performance of the Work and will insure
that its subcontractors do likewise.  At
completion of the Work, Harris Mechanical shall leave the premises clean of all
debris resulting from performance of the Work. 
Harris Mechanical shall provide dumpsters for disposal of material and
Harris Mechanical shall be responsible to insure that the proper material is
placed in the appropriate dumpster. 
Harris Mechanical shall provide the Plant in a clean condition upon the
completion of the Work.

 

10.2     Security:  During construction and installation of the
Work, Harris Mechanical will use reasonable means to protect the Work and all
Equipment and materials to be used in connection with the Work and located on
the Work site safe from injury or defacement, within the defined battery
limits, and all equipment owned or leased by Harris Mechanical or any of its
subcontractors, and all other equipment and goods of any kind located at the
Plant site for the purpose of performing the Work.

 

10.3     Harris
Mechanical’s Responsibility for Plant Safety.

 

10.3.1       Harris Mechanical recognizes the importance of
performing the Work in a safe manner so as to prevent damage, injury or loss to
(i) all individuals at the Site, whether working or visiting, (ii) the
Work, including materials and equipment incorporated into the Work or stored
on-Site or off-Site, and (iii) all other property at the Site or adjacent thereto.  Harris Mechanical assumes responsibility for implementing
and monitoring all safety precautions and programs related to the performance
of the Work.  Harris Mechanical shall,
prior to commencing construction, designate a Safety Representative with the
necessary qualifications and experience to supervise the implementation and
monitoring of all safety precautions and programs related to the Work.  Unless 

 

27

 

otherwise required by the Contract, Harris Mechanical’s Safety
Representative shall be an individual stationed at the Site who may have
responsibilities on the Plant in addition to’ safety.  The Safety Representative shall make routine
daily inspections of the Site and shall hold weekly safety meetings with Harris
Mechanical’s personnel, Subcontractors and others as applicable.

 

10.3.2       Harris Mechanical and Subcontractors shall comply
with all Legal Requirements relating to safety, as well as any Owner-specific
safety requirements set forth in the Contract, provided that such
Owner-specific requirements do not violate any applicable Legal
Requirement.  Harris Mechanical will
immediately report in writing any safety-related injury, loss, damage or
accident arising from the Work to Owners Representative and, to the extent
mandated by Legal Requirements, to all government or quasi-government
authorities having jurisdiction over safety-related matters involving the Plant
or the Work.

 

10.3.3       Harris Mechanical’s responsibility for safety under
this Section 10.3 is not intended in any way to relieve Subcontractors and
Sub-Subcontractors, or Owner and its contractors, of their own contractual and
legal obligations and responsibility for (i) complying with all Legal
Requirements, including those related to health and safety matters, and (ii) taking
all necessary measures to implement and monitor all safety precautions and
programs to guard against injury, losses, damages or accidents resulting from
their performance of the Work.

 

10.3.4       Subsequent to Start-up of the Plant, Harris
Mechanical shall comply with Owner’s Safety Policy, Harris Mechanical’s safety
policy or applicable Legal Requirements, whichever shall be the more stringent.

 

10.4     Compliance
with OSHA and Similar Laws and Regulations:  Owner shall at all times be solely responsible
for compliance with the Occupational Safety and Health Act (“OSHA”), and any
similar state laws or regulations.  with
respect to its own employees.  In
particular, but without limitation, Owner shall be responsible for claims made
by any of its

 

28

 

employees, whether against Owner or Harris Mechanical, by reason of any
personal injury or death which results from a violation of any such law or
regulation.  Harris Mechanical shall be
solely responsible for compliance with OSHA, and any similar state laws or
regulations, with respect to its own employees and will require the same of its
subcontractors.  In particular, but without
limitation, Harris Mechanical shall be responsible for claims made by any of
its employees, whether against Owner or Harris Mechanical by reason of any
personal injury or death which results from a violation of any such law or
regulation.  The Schedule shall be
extended as necessary to allow for cure of any unsafe condition, which results
in a suspension of the Work, which is caused by anyone other than Harris
Mechanical, its agents, employees or sub-subcontractors.

 

11.  Project Execution

 

11.1     Harris
Mechanical’s Representative:  Harris Mechanical’s Project Manager and
Harris Mechanical’s Site Manager shall be reasonably available to Owner and
shall have the necessary expertise and experience required to supervise the
Work.  Harris Mechanical’s Project
Manager and Harris Mechanical’s Site Manager shall communicate regularly with
Owner.  Harris Mechanical’s Project
Manager shall represent Harris Mechanical, and written communications given to
Harris Mechanical’s Project Manager shall be as binding as if given to Harris
Mechanical itself.  All communications to
Harris Mechanical’s Project Manager or Site Manager by Owner shall be confirmed
in writing upon request by Harris Mechanical. 
The name, title, address, telephone numbers, and e-mail addresses of
Harris Mechanical’s Project Manager and Harris Mechanical’s Site Manager are
set forth below:

 

Project Manager/Site Manager

 

Rich Greenland

 

909 Montreal Circle

St. Paul, MN 55102

651-602-6679 direct

651-602-6699 fax

rqreenlandahmcc.com

651-602-6500 general office

 

11.2     Owner
Representative:  Owner will
have at all times during the progress of the Work, a competent  representative  (“Owner’s Representative”)  assigned to the Work.  Owner’s Representative shall represent Owner,
and written communications given to- Owner’s Representative shall be as binding
as if given to Owner itself.  Owner shall
have its Owner’s

 

29

 

Representative on site, or available within 24 hours, at all times
during the progress of the Work.  Set
forth below is the name, title, address, telephone numbers and e-mail address
of Owner’s Representative:

 

Owners Representative

 

Kelly Longtin, CEO

Otter Tail Ag Enterprises, LLC

1220 North Tower Road, Suite 201

Fergus Falls, MN 56537

(218) 998-4301 office (218) 998-4302 fax Kellvionotinavahoo.com

(320) 760-0505

 

11.3     Project
Reviews and Approvals:

 

11.3.1       Reviews:  Harris Mechanical will, as appropriate, and
additionally upon Owner’s request, issue a Project progress schedule to
Owner.  Harris Mechanical shall
participate in reviews of the progress of the Work at the Work site at Owner’s
request as set forth in Exhibit A, and if no provision for progress
reviews is made in such exhibit, at Owner’s request up to once each month.  Owner may review and comment on any plan,
drawing or specification, that Harris Mechanical delivers to Owner.  No review or comment made by Owner shall
result in Owner’s being deemed to have assumed any responsibility for any of
the Work.  Harris Mechanical shall
attempt to incorporate Owner’s comments where it can do so without increasing
Harris Mechanical’s cost, the time required for performance, or any of its
other obligations, but Harris Mechanical shall have no obligation to suspend
work to allow time for review and comment except as provided in the Schedule, or
to incorporate any of Owner’s comments except as required in order to comply
with Harris Mechanical’s obligations under the Contract, or as agreed under Section 6
above.

 

Harris Mechanical shall provide Owner with monthly status reports
detailing the progress of the Work, including whether (i) the Work is
proceeding according to schedule, (ii) discrepancies, conflicts, or
ambiguities exist in the Contract that require resolution, (iii) health
and safety issues exist in connection with the Work or the Site, and (iv) other
items require resolution so as to not jeopardize Harris Mechanical’s ability to
complete the Work for the Contract Sum and within the Schedule.

 

30

 

11.3.2       Approval
Process:  If Exhibit A
or the Schedule provides for approval by Owner of any portion of the Work or
any document, then Owner shall be deemed to have given its approval unless it
delivers written notice of its disapproval, and the specific reasons for its
disapproval within the time allowed according to the Exhibit or Schedule,
or in the absence of statement of the time allowed, within ten (10) business
days of receipt of the document or written request for approval.  In the event that the reason for disapproval
by the reviewing Party results from failure of the other Party (“submitting
Party”) to fulfill any of its obligations under this Contract, then the
submitting Party shall correct the work or document requiring correction and
resubmit it for review.  The reviewing
Party shall have five (5) business days, or one-half the time allowed
according to the applicable Exhibit or Schedule if such time is
prescribed, for the initial review to approve or disapprove the resubmitted
work or document, and it shall be deemed to have given its approval unless it
delivers written notice of its disapproval, and the specific reasons for its
disapproval, within that time.  The
review and resubmittal process shall continue in like manner until the
submitted Work is approved.  In the event
that any disapproval results from a cause other than failure of the submitting
Party to fulfill any of its obligations under this Contract, the Schedule shall
automatically be extended as provided at Section 5.1 above.

 

11.4   Subcontractors
and Vendors:

 

11.4.1       Notice of
Subcontractor Selection: 
Harris Mechanical shall, as soon as practicable after award of the
Contract, furnish in writing to Owner the names of Subcontractors or
Sub-subcontractors (including those who are to furnish materials or equipment fabricated
to a special design) proposed to complete any portion of the Work (in excess of
$50,000.00) not to be directly completed by Harris Mechanical.  Owner acknowledges that Harris Mechanical,
particularly on large or fast-track projects, may not make final selection of
some subcontractor or vendors until later in the project, and that Harris
Mechanical has the right to select subcontractors and vendors as long as the
selection would not result in failure to satisfy the requirements of this
Contract.  The subcontracting, or
sub-subcontracting, of any portion of the Work, as described in Exhibit A,
shall not relieve Harris Mechanical of responsibility for performance of the
Work as provided therein. 
Notwithstanding the foregoing, Harris Mechanical shall have the right to
subcontract such portions of the Work as it shall determine to be necessary 

 

31

 

to others which, in turn, shall have the right to subcontract such
portions of the Work assigned to them, if any, as they shall deem necessary.

 

11.5     Cooperation.  Harris Mechanical agrees to cooperate at all
times as reasonably requested by Owner and any lender or assignee of Owner and
their respective agents and representatives in performance of this Contract.  Harris Mechanical shall sign any document
reasonably required by Owner in order to satisfy all lenders or investors
providing sources of funds for construction of the Plant.  Owner may assign its interest to one or more
lenders or financial institutions or investors, providing sources of funds for
construction of the Plant, at any time, provided that the party taking the
assignment can supply payment assurances acceptable to Harris Mechanical.

 

12.  Warranty

 

12.1     Equipment
Warranties:  For a period
of one (1) year following Substantial Completion, Harris Mechanical
warrants to Owner that the construction, including all materials and equipment
furnished as part of the construction, shall be new unless otherwise specified
in Contract, of good quality, in conformance with the Contract, fit for their
intended purpose, and free of defects in materials and workmanship.  Harris Mechanical’s warranty obligation
excludes defects caused by abuse, alterations, or failure to maintain Work by
persons other than Harris Mechanical or anyone for whose acts Harris Mechanical
may be liable.  Harris Mechanical shall,
for the protection of Owner, assign to Owner all warranties and guarantees
supplied by all vendors and subcontractors from who it procured goods or
services incorporated into the Project. 
In addition, Harris Mechanical warrants to Owner that the Equipment will
be free from mechanical defects, structural defects and defects in material and
workmanship until the earlier of twelve (12) months from completion of the
Performance Test, eighteen (18) months from Mechanical Completion, or
twenty-four (24) months from delivery at the Plant site of that component.  OWNER’S SOLE AND EXLCUSIVE REMEDY IN CASE OF
BREACH OF THIS WARRANTY SHALL BE REPAIR OR REPLACEMENT AS PROVIDED IN THIS SECTION 12.1.  If any defect covered by the above warranties
is discovered within the warranty period, Harris Mechanical shall, subject to
the provisions set forth below, repair or replace the defective material or
Equipment.  The decision to repair or
replace shall be made by Owner.  If Owner
and Harris Mechanical do  not agree on
whether repair or replacement is the most appropriate remedy, and if the remedy
recommended by Harris Mechanical would not impair the performance of the Work 

 

32

 

or otherwise materially diminish the value of the Work, then Harris
Mechanical shall not be required to perform the remedy elected by Owner unless
Owner pays Harris Mechanical the excess cost of performing such remedy over and
above the cost of performing the remedy recommended by Harris Mechanical.  Harris Mechanical shall in no case have any
liability, under this warranty or otherwise, for any defect or deterioration
which results from failure of Owner to provide any feedstock, utilities, or
other supplies, services or conditions specified in Exhibit C, force
majeure, improper operation or maintenance including damage caused by freezing,
foreign substance or impurity introduced into the equipment, or any other
matter not within Harris Mechanical’s control or the control of its Design
Consultants, Subcontractors, or others of those for whom Harris Mechanical is
responsible.  Nothing in this warranty is
intended to limit any manufacturer’s warranty which provides Owner with greater
warranty rights than set forth in this Section 12.1 or the Contract.  Harris Mechanical will provide Owner with all
manufacturer’s warranties upon Substantial Completion.

 

12.2     Desiccant
Material:  Harris
Mechanical warrants that the molecular sieve desiccant will not deteriorate due
to mechanical abrasion to such an extent as to reduce the dehydration capacity
of the molecular sieve below the level specified in the Performance Guarantee
set forth at Exhibit D for a period of five years from the earlier of
twelve (12) months from the completion of the Performance Test or eighteen (18)
months from the date of Mechanical Completion. 
OWNER’S SOLE AND EXCLUSIVE REMEDY UNDER THIS WARRANTY SHALL BE
REPLACEMENT OF THE DESICCANT MATERIAL AS PROVIDED IN THIS SECTION 12.2.  Replacement shall be made at no cost to Owner
in the event of a claim under this warranty within one year after Final
Acceptance.  With respect to any claim
made thereafter, the desiccant replacement cost to Owner shall be pro rated, on
a daily basis, on the basis of the number of days remaining in the last four (4) years
of the warranty period.  As an example,
Owner would pay 50% of the cost of replacement desiccant if the original
desiccant had to be replaced exactly three .(3) years from the
commencement of the warranty period (100% x 730th day/ 1460 total Days).

 

12.3     Services:  Harris Mechanical warrants, for a period
ending one year after Substantial Completion, or the last date on which Harris
Mechanical performed work under this Contract if this Contract is terminated
for any reason prior to Final Acceptance, that the services provided by it
hereunder will be provided with reasonable skill and care of the type normally
exercised by other design professionals under similar circumstances.  Harris Mechanical 

 

33

 

shall not have any obligation or liability for failures or defects due
to ordinary wear and tear, corrosion or erosion, or as a result of improper
operation, improper maintenance or operating conditions more severe than, or
different from, those contemplated in the original design of the Work.  EXCEPT AS PROVIDED OTHERWISE IN THIS CONTRACT
OR OTHER AGREEMENT, OWNER’S SOLE AND EXCLUSIVE REMEDY IN CASE OF BREACH OF THIS
WARRANTY SHALL BE TO HAVE HARRIS MECHANICAL REPERFORM THE SERVICES FOUND
NOT TO SATISFY THIS WARRANTY.

 

12.4     Notice of
Warranty Claim:  Owner shall
notify Harris Mechanical of any defect covered by the warranty set forth in Section 12
and Exhibit D as provided at Exhibit D, and shall notify Harris
Mechanical in writing of any defect covered by any other warranty within thirty
(30) Days after discovering such defect, and in no case later than thirty (30)
Days after expiration of the applicable warranty period.  Any claim for breach of warranty not made in
writing within the time prescribed in this Section 12 shall be deemed
waived.  In the event that the Owner has
a claim based solely on the acts or omissions of Delta-T or the performance of
Delta-T specified/furnished equipment, then the Owner agrees to pursue a claim
directly against Delta-T and/or the supplier of the equipment and accept
whatever, if anything, that it recovers with regard to such claim in total
satisfaction of the claim.  To the extent
necessary, Harris Mechanical will provide the Owner with an assignment of any
of Harris Mechanical’s rights necessary for the Owner to pursue such
claims.  This limitation on Harris
Mechanical’s liability shall not relieve Harris Mechanical from the obligation
to construct the Work as required by the Project plans and specifications.  Notwithstanding anything to the contrary in
this Section 12.6, in no event shall Delta-T’s cumulative liability to
Owner and Harris Mechanical exceed the sum of $*.

 

12.5     Correction
of Defective Work:

 

12.5.1       Harris Mechanical agrees to correct any Work that is
found not to be in conformance with the Contract, including that part of the
Work subject to Section 12.1 hereof, within a period of one year from the
date of Substantial Completion of the Work or any portion of the Work, or
within such longer period to the extent required by the Contract.

 

12.5.2       Harris Mechanical shall, within two (2) days of
receipt of written notice from Owner that the Work is not in
conformance-with-the-Contract take meaningful steps to commence correction of
such nonconforming Work, including the correction, removal or 

 

34

 

replacement of the nonconforming Work and any damage caused to other
parts of the Work affected by the nonconforming Work.  If Harris Mechanical fails to commence the
necessary steps within such two (2) day period or to complete the
necessary steps as soon as possible, Owner, in addition to any other remedies
provided under the Contract, may provide Harris Mechanical with written notice
that Owner will commence correction of such nonconforming Work with its own
forces.  If Owner does perform such
corrective Work, Harris Mechanical shall be responsible for all reasonable
costs incurred by Owner in performing such correction.  If the nonconforming Work creates an
emergency requiring an immediate response, the two (2) day periods
identified herein shall be deemed inapplicable and Harris Mechanical shall
commence correction immediately.

 

12.5.3       The one year period referenced in Section 12.1
above and 12.7.1 above applies only to Harris Mechanical’s obligation to
correct nonconforming Work and is not intended to constitute a period of
limitations for any other rights or remedies Owner may have regarding Harris Mechanical’s
other obligations under the Contract.

 

12.5.4       Prior to Final Completion, and as a condition to its
approval by Owner, Harris Mechanical shall deliver the as-built drawings and
specifications with four (4) additional paper copies, arranged in proper
order, indexed, and certified as accurate to Owner.  Prior to the application for Final Payment,
Harris Mechanical shall provide any updated as-built drawings or specifications
as may be required in the same manner and with the same number of copies.  No review or receipt of such records by Owner
shall be considered a waiver of any deviation from the Contract nor in any way
relieve Harris Mechanical from its responsibility to perform the Work in
accordance with the Contract.

 

12.5.5       Harris Mechanical shall be responsible for
collecting, identifying and collating the following materials, and shall
deliver four (4) copies to Owner at least sixty (60) days prior to the
date Harris Mechanical is required to achieve Substantial Completion:  (1) complete equipment diagrams,
operating instructions, maintenance manuals, parts lists, tests and balance
reports, inspection reports, guarantees and warranties, as applicable, for each
piece of fixed equipment furnished under this Agreement, together with specific
information regarding manufacturer’s name and address, nearest distributor,
service representative s name, address, office phone number, make and model
numbers, operating designs and characteristics, and the like.  These materials 

 

35

 

shall be supplied in a ring binder, hard-cover books, properly indexed
for easy reference (organized according to Construction Specifications
Institute Masterformat); (2) name and address of all Subcontractors and
Sub-Subcontractors (including equipment and material suppliers), together with
their respective areas of work, materials, or equipment furnished; (3) complete
operating instructions for each equipment system; (4) complete parts
lists, together with recommended spare parts for each type and model of
equipment installed; (5) complete list of all materials and equipment
utilized, together with the respective location in the Work; (6) a
complete list of ingredients and supplies, including quantities and
specifications, required for plant Start-up; and (7) a complete set of
record drawings, in both electronic format (.dwg files) and black-lined
drawings (D-size).

 

12.5.6 Harris Mechanical shall
perform the following as part of the commissioning process:  (a) provide a team of workers as
necessary to make corrections, modifications, and adjustments as needed in the
commissioning process; and (b) cooperate with Owner and provide
information and technical support as requested by Owner.

 

13.  Transfer of Title and Risk of Loss

 

Title
to, and risk of loss of, the Equipment or any part thereof and all materials
and components used, or to be used in the Plant, shall pass to Owner upon ‘delivery
to the Work site.  This provision,
however, shall in no case be deemed to alter any of the rights or obligations
of any party under any insurance policy provided under this Contract, or any
waiver of subrogation set forth in Section 14 below.

 

14.  Insurance; Bonds

 

14.1     Required
Insurance:  Each Party
shall carry the insurance coverage described- in this Article 14 as
insurance to be carried by it.

 

14.2     Adjustment
of Loss:  Any loss
insured under property or builders risk insurance required under this Section 14
shall be adjusted by the insurance carrier with the insured as fiduciary for
the other party or parties whose interests are insured thereunder as their
interests may appear, and the insured shall pay the proceeds due to them
promptly.  The insured shall bear the costs
of the deductible, if any, under such policy.

 

36

 

14.3     Waiver of
Subrogation:  Owner and
Harris Mechanical intend that all builder’s risk policies purchased, or
required to be purchased, in accordance with this Contract Will protect Owner,
Harris Mechanical and all subcontractors at any tier, and will provide primary
coverage for all losses and damages caused by the perils or causes of loss
covered thereby.  Owner and Harris
Mechanical waive all rights against each other and their respective subcontractors,
officers, directors, agents and employees of the other arising out of or
resulting from any of the perils or causes of loss covered by such policies and
any other property insurance during the period prior to Final Completion and
payment of all amounts due to Harris Mechanical under this Contact.  None of the above waivers shall extend to the
rights that any Party making such waiver may have to the proceeds of insurance
held by Owner as trustee or otherwise payable under any policy so issued.  In addition, Owner waives all rights against
Harris Mechanical, its subcontractors at any tier and the officers, directors
and employees and agents of any of them for business interruption and any other
consequential damages caused by, arising out of or resulting from any such
insured perils or causes of loss.  All
policies required under the Contract shall be endorsed to include such waivers
of subrogation, or confirmation of such waivers shall appear on the
certificates of insurance required to be delivered under Section 14.4
below.  Owner and the Harris Mechanical
shall require from each of their contractors and subcontractors who do work on
the Project similar waivers, each in favor of the other parties enumerated in
this Section.

 

14.4     Certificates
of Insurance:  Before
commencing the Work, Harris Mechanical and Owner shall each furnish the other
with certificates evidencing the coverage required under this Article 14
from the insurance company or companies carrying the aforesaid coverage.  These certificates will provide that the
policies may not be amended or terminated unless at least thirty (30) days
prior written notice is given to Owner and Harris Mechanical.  Failure of either Party to demand any such
certificate prior to commencement of the Work shall not, however, be deemed to
relieve any Party of its obligation to carry such insurance.

 

14.5 Insurance — Miscellaneous:

 

14.5.1       Harris Mechanical at its sole cost and expense is
responsible for procuring and maintaining from insurance companies authorized
to do business in the state in which the Plant is located, and with a minimum
rating set forth below, the following insurance coverages:

 

37

 

Workers Compensation - State Statutory (Policy
to include a waiver of subrogation in favor of Owner and its lender) Employer s
Liability - Bodily injury by accident -. 
$1,000,000 each accident; bodily injury by disease - $1,000,000 contract
limit; bodily injury by disease -$1,000,000 each employee.

 

Commercial General Liability - (including,
a waiver of subrogation in favor of Owner and its lender and naming Owner and
its lender as Additional Insured and without limitation, Premises Operations;
Independent Contractors (let or sublet work); Contractual Liability; Products
and Completed Operations; Explosion, Collapse and Underground (“XCU”); Broad Form Property
Personal Injury and Advertising Liability (employment exclusion deleted);
Incidental Medical Malpractice; Amendment of Pollution Exclusion-hostile fire;
Cross-liability and severability of interests) Coverage of $1,000,000 per
Occurrence, $2,000,000 Aggregate with separate Products and Completed
Operations limits of $1,000,000 per Occurrence $2,000,000 Aggregate.

 

Commercial Auto Coverage - $1,000,000
C.S.L.  (This policy shall cover all
Harris Mechanical furnished, owned, hired, and non-owned vehicles, including
the loading or unloading thereof, name Own3er and its lender as Additional
Insureds and include a waiver of subrogation in favor of Owner and its lender.)

 

Umbrella Excess Liability - (following
form on all terms and conditions as indicated above with respect to Employer s
Liability, Commercial General Liability and Automobile Coverages).  With limits of liability $10,000,000 per
Occurrence and $10,000,000 Aggregate. 
Professional Liability Insurance with a minimum single limit of
$2,000,000 per claim insuring Harris Mechanical and all other persons for whose
acts Harris Mechanical may be liable against any and all liabilities arising
out of or relating to the negligent acts, errors, or omissions in connection
with the carrying out of professional responsibilities relating to the Work.

 

Harris Mechanical shall or shall cause all applicable Subcontractors to
obtain Inland Marine insurance covering shipments of equipment and materials
transported via land and shall provide evidence of such insurance to Owner
prior to the shipment of any such equipment or materials.  Minimum Limits of Liability should be equal
to the largest value shipment.  If Harris
Mechanical or any of Harris Mechanical’s Subcontractors intends to ship any
equipment or materials by ocean marine, Harris Mechanical shall

 

38

 

notify Owner thirty (30) days prior to shipping.  At such time, Owner shall have the right and
option to purchase Ocean Marine Insurance Coverage for such equipment and/or
materials.  In the event Owner exercises
such right and option, Harris Mechanical or the applicable Subcontractor shall
be relieved from its obligation to purchase the insurance coverage specified in
the first sentence of this Section. 
Further, the Contract Price shall thereupon be reduced to reflect the
savings realized by Harris Mechanical, or by the applicable insurer, or
Subcontractor, as a result of the cost savings which accrued to the Subcontractor
by reason of release from the obligation to purchase ocean marine insurance
coverage.  Harris Mechanical shall
exercise its best efforts in obtaining the best possible cost savings from such
Subcontractors in the event Owner exercises the preceding right and option.

 

14.5.2       Harris Mechanical’s liability insurance required by
this Article 14 shall be written for the coverage amounts set forth in the
Agreement and shall include completed operations insurance for the period of
time set forth in the Agreement.  Harris
Mechanical shall provide its insurance from insurance companies with (i) a
Best Insurance Reports rating of A or better and a financial size category of
IX or higher, or (ii) if not rated by Best, a Standard & Poor
financial strength rating of A or higher, or (iii) other companies
approved by Owner in writing signed by Owner and acknowledging that such
insurance companies do not have the foregoing ratings.

 

14.5.3       Harris Mechanical’s liability insurance shall
specifically provide coverage for design-build delivery of the Plant.

 

14.5.4       Such policies shall be provided to Owner prior to
the commencement of any design services hereunder.

 

14.5.5       Prior to commencing any Work hereunder, Harris
Mechanical shall provide Owner with certificates evidencing that (i) all
insurance obligations required by the Contract are in full force and in effect
and will remain in effect for at least two years past Plant completion and (ii) no
insurance coverage will be canceled, allowed to expire, renewal refused, or
materially changed unless at least thirty (30)days prior written notice is
given to Owner.

 

The insurance required by the Agreement shall be written for not
less-than limits of liability specified in the Agreement or required by law,
whichever coverage is greater.

 

39

 

Coverage, whether written on an occurrence or claims-made basis, shall
be maintained without interruption from date of commencement of the Work until
at least two years past Plant completion for Products and Completed Operations
under the general liability and umbrella coverage.  Coverage shall be on an “occurrence” basis
(except professional liability insurance coverage may be on a “claims made”
basis if that insurance is not reasonably available on an “occurrence”
basis).  Harris Mechanical is responsible
for providing any additional insurance it deems necessary to protect its
interest from other hazards or claims in excess of the minimum coverage.

 

14.5.6       Harris Mechanical shall include Owner and its lenders as
additional insureds under Harris Mechanical’s insurance, except Worker’s
Compensation and Professional Liability Insurance.  With respect to all insureds, including all
additional insureds, Harris Mechanical’s insurance shall be primary and
non-contributing with respect to any insurance carried by or otherwise
available to Owner or its lender(s). 
Harris Mechanical’s insurance shall provide that for all insureds,
including all additional Insureds, cross-liability and severability of
interests shall exist for all coverages provided thereunder.  Harris Mechanical’s insurance policies must
all provide a waiver of subrogation endorsement in favor of Owner and its
lender(s).

 

14.5.7       Approval of the insurance by Owner shall not relieve or
decrease the liability of Harris Mechanical. 
Owner does not in any way represent that the insurance or the limits of
insurance specified in these articles are sufficient or adequate to protect
Harris Mechanical’s interests or liabilities, but are minimums.

 

14.5.8       Harris Mechanical’s Contractual Liability Insurance shall cover
Harris Mechanical’s obligations under this Agreement.

 

14.5.9       In the event Harris Mechanical fails to procure or maintain
any insurance coverage required under this Agreement, Owner may purchase such
coverage and deduct the cost thereof from the Contract Price.  Harris Mechanical shall require all
Subcontractors and design consultants, to purchase and maintain insurance of
types and in amounts consistent with the Harris Mechanical s risk management
program.  All policies provided by
Subcontractors shall name Owner as an additional insured.  Harris Mechanical shall obtain insurance coverage
certificates from Subcontractors and shall provide copies to Owner.  The insurance obtained by Harris Mechanical
shall, subject 

 

40

 

to the terms and extent of such insurance, provide coverage to Owner
with respect to claims arising from the acts or omissions of Harris Mechanical’s
Subcontractors.

 

14.6 Performance Bond and Payment Bond:  Harris Mechanical shall provide the following
performance bond and labor and material payment bond or other performance
security:  A Performance Bond and Labor
and Material Payment Bond in the amount of the Contract Sum.

 

14.6.1       At its sole cost and expense, Harris Mechanical shall furnish
a Performance Bond and Labor and Material Payment Bond on standard AIA forms,
complying with the following specific requirements:

 

14.6.1.1       Bond shall be executed by a surety, licensed in the State of
Minnesota, with a rating of no less than A/XII in the Best s Insurance Guide,
and shall remain in effect for a period of not less than one (1) years
following the date of Substantial Completion or the time required to resolve
any items of incomplete Work and the payment of any disputed amounts, whichever
time period is longer.

 

14.6.1.2       The Performance Bond and the Labor and Material Payment Bond
shall each be in amount equal to the Contract Sum and all subsequent increases.

 

14.6.1.3       Harris Mechanical shall require the attorney in fact who
executes the required bonds on behalf of the Surety to affix thereto a
certified and current copy of his power of attorney indicating the monetary
limit of such power.

 

14.6.1.4       Every Bond must display the surety’s bond number.  A rider including the following provisions
shall be attached to each bond:  (i) The
Surety hereby agrees that it consents to and waives notice of any addition,
alteration, omission, change, or other modifications of the Contract.  Any addition, alteration, change, extension
of time, or other modification of the Contract, or a forbearance on the part of
either Owner or Harris Mechanical to the other, shall not release the Surety of
its obligations hereunder, and notice to the Surety of such matters is hereby
waived; and (ii) The Surety agrees that it is obligated under the bonds to
any successor, grantee, or assignee of Owner.

 

41

 

14.6.2       Upon the request of any person or entity appearing to be a
potential beneficiary of bonds covering payment of obligations arising under
the Agreement, Harris Mechanical shall promptly furnish a copy of the bonds or
shall permit a copy to be made.

 

14.6.3       Harris Mechanical shall keep the surety informed of the
progress of the Work and, where necessary, obtain the surety s consent to, or
waiver of, (i) notice of changes in the Work; (ii) request for
reduction or release of retention; (iii) request for final payment; and (iv) any
other item required by the surety.  Owner
shall be notified by Harris Mechanical, in writing, of all communications with
the surety.  Owner may, in Owner s sole
discretion, inform the surety of the progress of the Work and obtain consents
as necessary to protect Owner’s rights, interests, privileges, and benefits
under and pursuant to any bond issued in connection with the Work.

 

15.  Indemnity

 

15.1   Indemnity by Harris Mechanical
for Personal Injury and Property Damage:  Harris Mechanical shall indemnify and hold
harmless Owner and its agents and employees from and against all claims made by
a third party for any, damages, losses and expenses, including, but not limited
to attorney’s fees, arising out of or resulting from Harris Mechanical’s
performance of the Work, provided that any such damage, loss or expense:  (1) is attributable to bodily injury,
sickness, disease or death, or to injury to or destruction of tangible property
(other than the Plant, Equipment or the Work itself) and (2) is caused in
whole or in part by any negligent act or omission of Harris Mechanical, its
subcontractors, or anyone for whose acts any of them may be liable.  In the event that any such damage, loss or
expense was caused in part by Owner or by any other person or entity, however,
then Harris Mechanical shall be obliged to pay only the portion of the damage,
loss or expense, including reasonable attorney’s fees as is attributable to its
relative share of the negligence or omission which caused such damage, loss or
expense.

 

Harris Mechanical’s indemnity obligations set forth in this Section 15.1
shall not be limited by any limitation in the amount of damages, compensation,
or benefits payable by or for Harris Mechanical, its design consultants,
Subcontractors or other entity under any employee benefit acts, including Worker’s
Compensation and disability acts in instances where an employee of any of them,
or anyone for whose acts may be liable, has a claim against Owner, its lenders,
officers, directors, employees, or agents.

 

42

 

15.2   To the fullest extent permitted by law and without limiting any
other indemnification obligations of Harris Mechanical, Harris Mechanical shall
indemnify and defend Owner, its officers, directors, assigns, lenders, agents,
and employees from any claims, liens, charges (including attorneys fees) or
encumbrances (including but not limited to mechanic’s and materialmen’s liens
or bond claims) arising out of or in connection with the performance of the
Work except to the extent caused by the uncured failure of Owner to make
payment when required by the Contract or Owner’s misconduct or breach of
contract.  Owner shall be entitled to
recover from Harris Mechanical all costs and expenses incurred in enforcing
this provision, including attorneys fees. 
In the event that any such damage, loss or expense was caused in part by
Owner or by any other person or entity, however, then Harris Mechanical shall
be obliged to pay only the portion of the damage, loss or expense, including
reasonable attorney’s fees as is attributable to its relative share of the negligence
or omission which caused such damage, loss or expense.

 

Upon request of Owner (provided that Harris Mechanical does not have an
uncured breach), Harris Mechanical shall within 60 days remove any liens filed
against Owner or its property.  If Mechanical
fails to do so, Owner is authorized by Harris Mechanical to remove or satisfy
any such liens, and Harris Mechanical shall pay to Owner all costs and damages
incurred by Owner to do so, including attorneys fees.

 

15.3   Conditions
to Indemnity:  The indemnities
set forth in Sections 15.1 and 15.2 above all shall not apply to any design,
process or product of a particular manufacturer or manufacturers, which is
specified by Owner.  These indemnities
are valid only if (a) Owner gives notice of any claim or lawsuit for which
it claims indemnity within time sufficient for Harris Mechanical to contest
such claim, (b) Owner cooperates fully and promptly with Harris Mechanical
in the defense thereof at Owner’s expense for all items related to such defense
for time of witnesses who are employees of Owner, costs related to travel,
production of documents, fees for any counsel it elects to assist it in
addition to counsel appointed by Harris Mechanical for defense of the claim,
and (c) Harris Mechanical has full authority in defense of such lawsuit or
claim and to settle such claim, provided that, it pays to Owner the cost, if
any, of any change in operations resulting from such settlement.  In no

 

43

 

case shall Harris Mechanical be liable under Sections 15.1 or 15.2 for
any amount, including costs and attorney’s fees, in excess of the limit set
forth at Section 16 below.

 

15.4   Indemnity
by Owner:  Owner shall
indemnify and hold harmless Harris Mechanical and its agents and employees from
and against all damages, losses and expenses, including but not limited to
attorney’s fees, and arising or resulting from a claim, order, requirement or
charge made or brought by a third party or by the federal, state or local
government, or any department, agency or subdivision thereof, based, in whole
or in part, on:  (a) defects in
title; (b) negligence; (c) hazardous materials (excepting hazardous
materials introduced on the Site by Harris Mechanical or its subcontractors or
vendors); (d) the existence of any substance located on or under the Work
site (excepting substances introduced on the Site by Harris Mechanical or its
subcontractors or vendors); (e) a condition of the Work site subject to
any law or regulation related to protection of the environment; or (f) any
other matters for which Owner shall have responsibility pursuant to this
Contract.  This indemnification is valid
only if (a) Harris Mechanical gives notice of any claim or lawsuit for
which it claims indemnity within time sufficient for Owner to contest such
claim, (b) Harris Mechanical cooperates fully and promptly with Owner in
the defense thereof at its expense for all items related to such defense for
time of witnesses who are employees of Harris Mechanical, costs related to
travel, production of documents, fees for any counsel it elects to assist it in
addition to counsel appointed by Owner for defense of the claim, and (c) Owner
has full authority in defense of such lawsuit or claim and to settle such
claim, provided that such settlement requires payment of monetary damages only
and that Owner can, and does, pay the full cost of any such settlement.  In the event that any such damage, loss or
expense was caused in part by Harris Mechanical or by any other person or entity,
however, then Owner shall be obliged to pay only the portion of the damage,
loss or expense, including reasonable attorney’s fees as is attributable to its
relative share of the negligence or omission which caused such damage, loss or
expense.

 

16.  Limitation of
Liability

 

In
no case shall Harris Mechanical or Owner have any liability to the other under
or arising from any performance, delay in performance, or breach of this
Contract for any indirect, incidental, reliance, punitive, exemplary, or consequential
damages (including, without limitation, lost profits, increase in costs of
goods or services resulting from delay, cost of capital or losses due

 

44

 

to
business interruption) whether based on contract, tort or other legal theory,
whether or not Harris Mechanical had knowledge of the damages that might
result, except as expressly provided otherwise under this Agreement.  Furthermore, Harris Mechanical’s cumulative
liability for any and all direct damages under this Contract shall be reduced
by the amount of Harris Mechanical’s actual costs and expenses incurred in
making any changes, corrections, repairs or replacements contemplated in this
Contract and shall in no case exceed (i) prior to Substantial Completion,
an amount equal to * of the Contract Sum, and (ii) subsequent to
Substantial Completion, an amount equal to * of the Contract Sum.

 

17.  Dispute Resolution

 

17.1   Executive
Conference or Mediation:  In
the event of any controversy or claim arising out of or related to this
Contract, or the interpretation, termination or breach hereof, other than
default in payment due under Section 8 above which shall be subject to the
provisions of this Section at Harris Mechanical’s option, the Parties
shall, upon the written request of either of them, attempt to resolve the
matter by agreement of the representatives of the Parties.  Such representatives shall be at least one
management level above the individuals who have had direct responsibility for
performance of the Contract, or the highest level of management of any Party
whose highest level of management has had direct responsibility for such
performance.  Such representatives shall
meet in person or by telephone or teleconference at least once, and shall attempt
to resolve any matter raised by either of them by the written notice requesting
such resolution for a period of at least thirty (30) Days.  In the event that the Parties are unable to
resolve the dispute by agreement of such representatives within such thirty
(30) Day period, then at the written request of either Party, the Parties shall
submit the matter to mediation under the then current rules of mediation
and conciliation of the American Arbitration Association.  The mediation shall occur using a mediator
qualified under the laws of the State of Minnesota to be held at St.  Cloud, Minnesota, or such other place as may
be mutually agreed to by the Parties. 
The Parties shall attempt to resolve any matter submitted to mediation
under this Section 17.1 within thirty (30) Days after the date of delivery
of the written request for mediation. 
Except where clearly prevented by the matter in dispute, the Parties
agree to continue performing their respective-obligations-under this-Contract
while the dispute is being-resolved.

 

45

 

17.2 Arbitration:  Any controversy or claim arising out of or
related to this Contract, or the interpretation, termination or breach hereof,
which cannot be resolved by mutual agreement of the parties or by mediation
within the time periods provided at Section 17.1 above, other than default
in payment due under Section 8 above which shall be subject to the
provisions of this Section at Harris Mechanical’s option, may be submitted
to binding arbitration in accordance with the applicable rules of the
American Arbitration Association.  The
place of arbitration shall be St.  Cloud,
Minnesota, or such other location as mutually agreed to by the Parties.  Neither Party shall submit any such matter to
arbitration unless the parties have been unable to resolve it by mediation for
a period of at least thirty (30) days after the date of request for
mediation.  Any party who files a notice
of demand for arbitration must assert in the demand all claims then known to
that party against the other.  Judgment
upon any award rendered by an arbitrator or arbitrators under this Contract may
be entered upon it in accordance with applicable law in any court having jurisdiction
thereof, but either party hereto shall have the right to contest such award on
the grounds that it is contrary to applicable law.  Except where clearly prevented by the matter
in dispute, the Parties agree to continue performing their respective obligations
under this Contract while the dispute is being resolved.

 

17.3   Attorney’s
Fees and Costs:  All
reasonable costs, expenses and attorney’s fees resulting from the litigation or
arbitration of any claim under this Contract shall be paid by the losing party
to the prevailing party.

 

18.  Force Majeure

 

No
delay in, or failure of, performance by either Party under this Contract will
constitute default hereunder or give rise to any claim for damages if and to
the extent caused by an occurrence beyond the control of the party affected, to
include but not limited to, acts of governmental authority, acts of God,
strikes or other concerted acts of workmen, fire, flood, explosions, riots,
war, rebellion or sabotage.

 

19.  General
Provisions

 

19.1   Assignment:  Neither Harris Mechanical nor Owner shall
assign or transfer its duties or obligations hereunder without the prior
written consent of the other.  Harris
Mechanical hereby consents-to Owner collaterally assigning this Contract and
its rights hereunder to one or more lenders or other sources of financing as
necessary for Owner to obtain and 

 

46

 

secure financing to
construct and operate the Plant.  This
Contract shall be binding upon and shall inure to the benefit of the Parties
and the successors and permitted assigns of Owner and Harris Mechanical.

 

19.2   Entire Contract; Waiver; Amendment:  These General Conditions and the attached
Exhibits constitute the full and complete contract between the parties hereto
with respect to the subject matter hereof. 
There are no statements, agreements, understandings, representations or
trade customs of any kind, express or implied, concerning the subject matter
which are not merged herein or superseded hereby.  A waiver of any of the terms of this Contract
shall not bind either party unless signed by one of its duly authorized
representatives.  Waiver by either Party
of any default by the other party hereunder shall not be deemed a waiver by
such Party of any default by the other which may occur thereafter.  This Contract may only be modified or amended
by an agreement in writing executed by both Parties hereto.

 

19.3   Governing Law; Jurisdiction; Venue:  The validity, performance, construction and
effect of this Contract shall be governed by the laws of the state of
Minnesota, without regard to choice of law or conflict of law provisions.  Each Party consents to the state courts of
Minnesota, Otter Tail County, as the exclusive jurisdiction and venue to
determine any non-arbitral disputes.  The
parties waive any argument or objection to such jurisdiction and venue and
hereby agree that such jurisdiction and venue are mutually convenient.

 

19.4   Notices:  All notices provided for herein will be
considered as properly given if in writing and delivered personally or, by fax
or sent properly addressed, postage pre-paid:

 

	
  If
  to Harris Mechanical, to:

  	
   

  	
  909
  Montreal Circle

  	
   

  
	
   

  	
   

  	
  St.
  Paul, MN 55102

  	
   

  
	
   

  	
   

  	
  Attn:
  Richard Greenland

  	
   

  
	
   

  	
   

  	
  Its
  Senior Project Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If
  to Owner, to:

  	
   

  	
  Otter
  Tail Ag Enterprises, LLC

  	
   

  
	
   

  	
   

  	
  1220
  North Tower Road, Suite 201

  	
   

  
	
   

  	
   

  	
  Fergus
  Falls, MN 56537

  	
   

  
	
   

  	
   

  	
  Attn:
  Jerry Larson, President

  	
   

  

 

Notices shall be deemed effective upon actual receipt, or in the case
of posting in the U. S.  mail, on the
fourth Day after mailing.

 

47

 

19.5   Survival:  Sections 16, 17, and 19 shall survive
termination of this Contract.

 

19.6   Third
Parties:  The Parties
agree that this Contract is not intended by either Party to give any benefits,
rights, privileges, actions or remedies to any person, partnership, firm or
corporation (other than a Party or its permitted assignee) as a third party
beneficiary under any theory of law.

 

19.7   Equal
Bargain and Representation:  The Parties have participated jointly in the
negotiations and drafting of this Contract. 
In the event that an ambiguity or question of intent or interpretation
arises, this Contract shall be construed as if drafted jointly by the Parties
hereto, and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.  Each of the Parties
acknowledges that it has been represented by legal counsel of its own choice
throughout all negotiations, preparation, review and execution of this
Contract, and that each Party has executed this Contract voluntarily and with
the consent and on the advice of any such legal counsel.  In entering into this Contract, each Party
has undertaken such factual inquiry as it has deemed necessary and has relied
solely on that inquiry and not on statements or representations of the other
Party.

 

19.8   Time Bar
to Legal Action:  All legal
actions by Owner or by Harris Mechanical arising out of or in any way connected
with this Contract or the services to be performed hereunder shall be barred
and under no circumstances shall any such legal action be initiated by Owner or
by Harris Mechanical three (3) years after the date of Mechanical
Completion unless this Contract shall be terminated earlier, as provided
herein, in which case the date of termination of this Contract shall be the
date on which such period shall commence.

 

48

 

[SIGNATURE
PAGE TO OTTER TAIL AG ENTERPRISES, LLC EPC FIXED PRICE CONTRACT]

 

IN
WITNESS WHEREOF, the parties hereto have executed this Contract on the 24 day
of October 2006.

 

	
   

  	
  Owner:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OTTER
  IL AG ENTERPRISES, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jerry
  Larson

  	
   

  	
   

  
	
   

  	
   

  	
  Its
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HARRIS
  MECHANICAL CONTRACTING

  COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Rob
  Latta

  	
   

  
	
   

  	
   

  	
  Its
  Vice-President

  	
   

  

 

49

 

	
   

  	
  Exhibit A Scope of Work

  
	
   

  	
  EPC Fixed Price Contract

  
	
   

  	
  Otter Tail Ag Enterprises, LLC

  
	
   

  	
  A.3 Owner’s Scope

  

 

EXHIBIT A

SCOPE OF WORK

 

*  
EXHIBIT A HAS BEEN OMITTED IN ITS ENTIRETY PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

	
   

  	
  Exhibit B Commercial
  Terms

  
	
   

  	
  EPC Fixed Price Contract

  
	
   

  	
  Otter
  Tail Ag Enterprises, LLC

  
	
   

  	
  B.3 Payment Schedule

  

 

EXHIBIT B

COMMERCIAL TERMS

 

(No Schedule B.3 was attached at the time of signing)

 

*  
EXHIBIT B HAS BEEN OMITTED IN ITS ENTIRETY PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

	
   

  	
  Exhibit C Performance
  Test Protocols

  
	
   

  	
  EPC Fixed Price Contract

  
	
   

  	
  Otter
  Tail Ag Enterprises, LLC

  
	
   

  	
  Exhibit C-1
  Performance Test Data Sheet

  

 

EXHIBIT C

PERFORMANCE TEST PROTOCOLS

 

*   EXHIBIT C HAS BEEN OMITTED IN ITS ENTIRETY
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

	
   

  	
  Exhibit D Performance
  Guarantees

  
	
   

  	
  EPC Fixed Price Contract

  
	
   

  	
  Otter
  Tail Ag Enterprises, LLC

  

 

EXHIBIT D

PERFORMANCE GUARANTEES

 

*   EXHIBIT D HAS BEEN OMITTED IN ITS ENTIRETY
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

	
   

  	
  Exhibit E Mechanical
  Completion, Commissioning, Startup

  
	
   

  	
  EPC Fixed Price Contract

  
	
   

  	
  Otter
  Tail Ag Enterprises, LLC

  

 

EXHIBIT E

MECHANICAL COMPLETION, COMMISSIONING, STARTUP

 

*  EXHIBIT E HAS BEEN OMITTED IN ITS ENTIRETY
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WHICH HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

EXHIBIT F

PROJECT SCHEDULE

 

* EXHIBIT
F HAS BEEN OMITTED IN ITS ENTIRETY PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT WHICH HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.Exhibit 10.10

 

LICENSE OF TECHNOLOGY

BETWEEN

DELTA-T CORPORATION

AND

 

OTTER TAIL AG ENTERPRISES, LLC

 

 

THIS AGREEMENT (hereinafter called LICENSE OF TECHNOLOGY or this “License”) made this
24th day of October, 2006 by and between Delta-T Corporation, a Virginia
corporation, (“Delta-T”), and Otter Tail Ag Enterprises, LLC, a Minnesota limited liability company, ( “Owner”),
each of which may be referred to individually as a “Party,” or jointly as the
“Parties.”

 

WITNESSETH:

 

WHEREAS, Owner is building a 55 million gallon per year undenatured fuel
ethanol plant using corn feedstock to be located in the State of Minnesota,
County of Otter Tail, near the City of Fergus Falls, (the “Plant”), and

 

WHEREAS, Owner and Harris Mechanical Contracting Company, (“Prime Contractor”),
have entered into an equipment, procurement and construction contract for
construction of the Plant (the “Prime Contract”), and

 

WHEREAS, Delta-T has agreed to provide engineering and services related to
construction of the Plant based on Delta-T’s proprietary technology under a
subcontract with Prime Contractor (the “Subcontract”), but only on the
condition that Owner enter into a license agreement with Delta-T for the use of
the technology embodied therein, on the terms and conditions set forth herein,

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions contained
herein, the Parties agree as follows:

 

1.  DELTA-T TECHNOLOGY

 

As
used in this License, “Delta-T Technology” shall mean all data,
technical information, trade secrets, inventions (whether patented or not and
whether issued before or after the date of this License), know-how, procedures,
processes, drawings, designs, methodology, models, inventions, specifications,
Plant or equipment test and/or operating data, or other technical information
and copyrights  embodied in the Plant,
used in the operation of the Plant, in equipment or in drawings, or included in
any documents, drawings or other materials delivered electronically or
otherwise by Delta-T to Prime Contractor or Owner under this License Agreement
or the Subcontract.  Delta-T Technology
also includes, specifically but without limitation, the items listed on Exhibit A.

 

Confidential Information

 

1

 

2.  GRANT OF LICENSE

 

2.1  License Grant:  Owner
acknowledges that Delta-T is and shall remain the sole owner of the Delta-T
Technology.  Delta-T hereby grants to
Owner, subject to the conditions of this License, a non-exclusive, paid-up,
non-transferable right to use in perpetuity the Delta-T Technology, without
right to grant such rights to others except as otherwise set forth herein,
solely for the purposes of:

 

A.            construction and operation of the Plant, and

 

B.            maintenance and optimization or enhancement
of the Plant.

 

Owner
agrees that it shall not use the Delta-T Technology for any other purpose.
Optimization and enhancement (“Modification”), for this purpose, shall
include de-bottlenecking, but shall not include expanding the physical
dimensions of the distillation columns or molsieve vessels included in the
Delta-T Technology, or adding to the original number of distillation columns or
molsieve vessels specified in such design. Owner may not disclose any of the
Delta-T Technology to (i) any third party that is listed on Exhibit B,
or (ii) to any individual, group or company that is in the business
of designing alcohol plants or parts thereof and that is not listed on Exhibit B
(“Designers”), for the purpose of making any Modification, except that Owner may make such disclosure
to any Designer to the extent, and only to the extent, necessary to permit such
Designer to enable a Modification that was created without the disclosure
of any Delta-T Technology by or on behalf of Owner, to interface with portions
of the Plant designed by Delta-T.

 

2.2     Restriction on Assignment: This License is not assignable or otherwise
transferable in any way, and any attempt to assign it in violation of this
provision shall be null and void, except that (i) Owner may assign this
License to a purchaser of substantially all of the assets of the Plant, or a
sale of Owner as an entity, or of Owner’s membership interest in connection
with the sale of such Plant as a going business, provided that Owner gives
Delta-T written notice of such transfer at least thirty (30) days prior to the
date on which it becomes effective, and (ii) Owner may pledge or grant a
security interest in its interest in this License to its lender or lenders
provided that no lender shall have a right to sell or otherwise transfer this
License or any rights under it except in connection with the sale of the Plant
as a going business, and provided further that any such lender must give
Delta-T prior notice of such sale or transfer.

 

2.3  Payment:  At such time as

 

(i)            Owner
has paid Prime Contractor all amounts due to it under the Prime Contract in
accordance with its terms;

 

(ii)           the
Prime Contract is terminated (A) due to breach by the Prime Contractor or
bankruptcy of the Prime Contractor, or (B) due to a Force Majeure Event
(as defined in the Prime Contract) affecting Prime Contractor; or

 

Confidential Information

 

2

 

(iii)          the Prime Contract remains in effect, has not been completed for
reasons other than the fault of the Owner so that all amounts have not yet
become due under such contract, but the Plant is capable of operating for
commercial purposes; or

 

(iv)          Owner has paid Delta-T’s License Fee in full;

 

the
license rights granted Owner under Section 2.1 above shall become
irrevocable and shall continue in full force and effect notwithstanding any
breach or default hereunder by Owner, provided that such continuation shall not
limit or preclude any remedy Delta-T may have for damages. In no case, however,
may Owner use the Delta-T Technology for any purpose unless it has first paid
Delta-T Corporation a license fee of $2,100,000.00 for the Plant, less the
amounts, if any, specifically enumerated and paid to Delta-T under the Prime
Contract for the license fee.  Furthermore, in the event of Termination of
the Prime Contract, Owner and Delta-T will cooperate reasonably to facilitate
Owner’s transition to a new prime contractor having a relationship with Delta-T
as a subcontractor similar to the Delta-T relationship with the Prime
Contractor.

 

Owner
shall pay 70% of the Technology License Fee to Delta-T within 60 days of
execution of this Agreement.  The
remaining 30% shall be paid upon the Plant successfully passing the Performance
Test in compliance with the Performance Guarantees.

 

3.  RESTRICTIONS ON
ACCESS AND CONFIDENTIALITY

 

3.1  Confidential
Information: “Confidential
Information” as used herein means (a) the Delta-T Technology; (b) either
Party’s product plans, business plans and projections; and (c) any other information
that is clearly marked as confidential or proprietary. However, Confidential
Information does not include information that the receiving Party can
demonstrate by documentary evidence falls under one of the following
exceptions:

 

a.  Was known to it prior to its receipt from the
other Party or from Prime the Contractor, without breach of an obligation of
confidentiality and was not subject to any obligation of confidentiality;

 

b.  Is, or after the date of this License
becomes, without fault of Owner, part of the public domain; or

 

c.  Is disclosed to Owner by someone other than
Delta-T who is under no obligation not to disclose it.

 

3.2          Restrictions on Disclosure:  Owner shall not disclose any
Delta-T Technology, by Inspection or otherwise, 
to any person or entity other than (i) its employees to the extent
that such employees have a need to have access to such information to perform
their obligations, and only if they have first been advised of the
confidentiality of the information and agree to keep it confidential and not to
use or disclose it for any purpose other than fulfilling their obligations to
Owner, and (ii) third parties as needed to 

 

Confidential Information

 

3

 

maintain
or operate the Plant as permitted under Section 2 above, to the extent
that such third parties have a need to have access to such information to
perform their obligations, and only if they have first been advised of the
confidentiality of the information and agreed to keep it confidential and not
to use or disclose it for any purpose other than fulfilling their obligations
to Owner by signing the non-disclosure agreement attached hereto as Exhibit C,
or such other form as Delta-T may reasonably agree.  Owner shall in no event, however, disclose
any Delta-T Technology, in Inspection or otherwise, to any third party listed
on Exhibit B or to any Designer except (with respect to Designers) as
expressly permitted under Section 2 above. “Inspection” for
the purposes of this Section 3 shall mean any visual or other inspection
of any portion of the Plant containing Delta-T Technology in sufficient detail
to reveal measurements of the components, configuration of piping and
components, operating parameters, or access to software used to control such
components.  Furthermore, in no case
shall Owner permit any employee or third party to view the internal portion of
a molsieve installed at the Plant and based on the Delta-T Technology unless it
needs to do so due to malfunction of the molsieve and such third party is not
an entity listed on Exhibit B and
Owner has first used good faith efforts to notify and allow Delta-T to arrive
at the Plant and correct the problem within 72 hours.

 

3.3  Disclosure to
Prime Contractor:   The
Parties acknowledge that Prime Contractor has independent access to the Delta-T
Technology under the Subcontract. The Parties agree that (i) Prime
Contractor shall have full access to any Confidential Information in connection
with its work under the Prime Contract and (ii) neither Delta-T nor Owner
shall have any liability or obligations to the other for Prime Contractor’s
misuse of any Confidential Information disclosed as permitted under this
Agreement unless such Party directed or otherwise participated in such misuse
in such a manner that it would otherwise be liable for such misuse under law or at equity.

 

3.4  Protection;
Copies:  Owner shall take all reasonable means to
protect the confidentiality of the Delta-T Technology.  In particular, but without limitation, Owner
shall not (i) make copies of any document containing any of the Delta-T
Technology except to the extent reasonably necessary to use such technology as
permitted under this License or the Prime Contract, (ii) deliver any such
documents to any government agency for any purpose without complying with any
applicable law or regulation necessary to protect the confidentiality of the
same, or (iii) remove, obliterate or fail to reproduce on any copy of any
such document any and all copyright and confidentiality notices printed
thereon.

 

3.5  Use:  Owner
shall not use any of the Delta-T Technology except as expressly permitted under
this License or the Prime Contract.

 

3.6  Court Order or
Other Legal Process:   In the event that any subpoena, request or demand
(“Demand”) shall be served upon Owner under any court action, administrative or
dispute resolution proceeding, for delivery or disclosure of any of the Delta-T
Technology, then Owner will promptly advise Delta-T of such Demand and deliver
to Delta-T a copy of such Demand and all documentation relating to such Demand
and the proceeding in which it is made which is in the possession of Owner and
is reasonably requested by Delta-T.  The
Parties shall consult with each other concerning any such 

 

Confidential Information

 

4

 

Demand
and Owner shall cooperate with Delta-T, as is reasonably necessary, to minimize
the disclosure of such technology by agreed protective order prepared and
negotiated by Delta-T and the party making the Demand, or by other means not
requiring Owner to contest or oppose the Demand.  If Delta-T is not a party to the action or
proceeding in which the Demand is served, and wishes to have the Demand opposed,
then Delta-T may intervene in such action or proceeding for the purpose of
opposing the Demand or minimizing the disclosure of the Delta-T Technology, and
such intervention shall not be objected to by Owner.  If Owner makes a disclosure of Delta-T
Technology pursuant to a Demand after complying in all respects with the
provisions of this Section 3.5, then such disclosure shall not be deemed a
breach of this License.

 

3.7  Injunctive
Relief:  Owner agrees that any breach of this License
Agreement shall cause Delta-T irreparable harm. 
Accordingly, and in addition to any other remedies that Delta-T may have
at law or in equity, Delta-T shall be entitled to obtain injunctive relief
against Owner to prevent any continuing breach, and without posting or filing
any bond or other security.  All costs,
expenses and attorney’s fees incurred by the prevailing Party as a result of
the litigation of any claim under this License Agreement shall be paid to it by
the losing party.

 

4.  PERFORMANCE
GUARANTEES, LIMITATION OF WARRANTY AND LIABILITY

 

4.1          Delta-T
guarantees that the Plant, when built according to Delta-T’s plans and
specifications, shall perform in accordance with the performance guarantees set
forth in Exhibit E.  Exhibit D
shall govern conducting the performance test.

 

4.2  Limitation of Warranty:  The  DELTA-T TECHNOLOGY IS
PROVIDED UNDER THIS LICENSE WITH THE WARRANTIES EXPRESSED IN THIS LICENSE.  The
only warranties made by Delta-T with respect to the Delta-T Technology are
those made in this License.

 

4.3  Limitation
of Liability:  Except for the remedies set forth in this
License, in no case shall Delta-T have any liability to Owner under this
License whether based on contract, negligence or other tort, or any other legal
theory, whether or not it had knowledge of the damages that might result.  Owner agrees that any and all right to
damages or remedies of any and every kind that Owner may have, now or in the
future, with respect to the Delta-T Technology, including, without limitation,
damages or remedies resulting from performance of the Delta-T Technology,
express or implied warranties against infringement or other warranties, are
those available to it under or by virtue of the Prime Contract and in this
License. Notwithstanding anything to the contrary in this Section 4.3, in
no event shall Delta-T’s cumulative liability under this License exceed
$*.  OWNER HEREBY ACKNOWLEDGES THAT THE
REMEDIES CONTAINED IN THIS LICENSE ARE OWNER’S EXCLUSIVE REMEDIES AND ARE IN
LIEU OF ANY AND ALL OTHER REMEDIES AVAILABLE AT LAW, OR IN EQUITY.

 

5.  TERMINATION

 

5.1  Reasons for
Termination: Unless
and until this License becomes irrevocable, as provided at Section 2.3
above, at the option of Delta-T, this License shall terminate (i) 

 

Confidential Information

 

5

 

upon
termination of the Prime Contract by Owner for convenience, (ii) upon
termination of the Prime Contract by Owner for any reason other than a breach
by Prime Contractor resulting from a breach by Delta-T of the Subcontract, or (iii) upon
termination of the Subcontract for any reason other than breach by
Delta-T.  In the case of termination of
the Prime Contract by Owner, however, Delta-T shall negotiate in good faith
with Owner to enter into a contract to complete the services remaining to be
performed by Delta-T under the Subcontract, provided that all breaches by the
Prime Contractor are first cured, and upon entering into such a contract this
License shall continue in full force and effect.

 

5.2  Consequences of
Termination:  Upon termination of this License Agreement,
Owner shall immediately return to Delta-T all documents embodying any Delta-T
Technology and shall cease all use of the Delta-T Technology.  To the extent Delta-T Technology is embodied
in equipment delivered to Owner prior to termination, Owner may sell the same,
and display the same for sale, only upon consent of Delta-T, which consent
shall not be withheld except to the extent reasonably necessary to assure that
the Delta-T Technology is not disclosed or transferred to an entity listed on Exhibit B
and that it is not otherwise used or disclosed in a manner prohibited by this
License.

 

6.  GENERAL PROVISIONS

 

6.1          Assignment:  No Party shall assign or transfer its rights,
duties or obligations hereunder, except as expressly provided herein, without
the prior written consent of the other. This License shall be binding upon and
shall inure to the benefit of the Parties hereto and to their successors and
permitted assigns.

 

6.2          Merger; Waiver; Amendment:  This
License constitutes the full and complete agreement among the Parties with
respect to the subject matter hereof. 
There are no statements, agreements, understandings, representations or
trade customs of any kind, express or implied, concerning the subject matter
hereof which are not merged herein or superseded hereby.  A waiver of any of the terms of this License
shall not bind any Party unless signed by one of its duly authorized
representatives.  Waiver by any Party of
any default by the other hereunder shall not be deemed a waiver by such party
of any default by the other which may occur thereafter.  This License may only be modified or amended
by an agreement in writing executed by all Parties hereto.

 

6.3          Governing Law; Venue:  The
validity, performance, construction and effect of this License shall be
governed by the laws of the State of Minnesota without regard to the choice of
laws provisions thereof.

 

6.4          Notice:  All
notices provided for herein will be considered as properly given if in writing
and delivered personally or by courier properly addressed:

 

	
  If
  to Owner, to:

  	
   

  	
  1220
  North Tower Road,

  
	
   

  	
   

  	
  Suite 201

  
	
   

  	
   

  	
  Fergus Falls, Minnesota 56537

  
	
   

  	
   

  	
  Attention: President

  

 

Confidential Information

 

6

 

	
  If
  to Delta-T, to:

  	
   

  	
  Delta-T
  Corporation

  
	
   

  	
   

  	
  323 Alexander Lee Parkway

  
	
   

  	
   

  	
  Williamsburg, VA 23185

  
	
   

  	
   

  	
  Attn: Mr. Robert L. Swain, Vice President

  

 

6.5          Survival:  Owner’ obligations under the provisions of
Sections 3, 4, 5.2 and 6  shall
survive the termination or expiration of this License.

 

6.6          Severability:  In
the event any section, or any part or portion of any section of this License
shall be held to be invalid, void or otherwise unenforceable, such holding
shall not affect the remaining part or portions of that section, or any other
section hereof.

 

IN WITNESS WHEREOF, the Parties have executed this License to be effective on as of the date first set forth above.

 

 

	
  DELTA-T CORPORATION

  	
   

  	
  OTTER TAIL AG ENTERPRISES, LLC

  
	
   

  By:

  	
   

  	
   

  	
   

  By:

  	
   

  	
   

  
	
  Printed

  Name:

  	
   

  	
   

  	
  Printed

  Name:

  	
   

  	
   

  
	
   

  Title:

  	
   

  	
   

  	
   

  Title:

  	
   

  	
   

  
	
   

  Date:

  	
   

  	
   

  	
   

  Date:

  	
   

  	
   

  
							

 

Confidential Information

 

7

 

Exhibit A

Specific
Items Included in Delta-T Technology

 

·      Information
related to the sequence of processing steps used to convert cornmeal to mash;

·      the design of the mix tank system,
including, without limitation, the mash recirculation, jet-mixing,
classifier/strainer and process condensate superheater components;

·      the heat recovery system in the mash
preparation section, including, without limitation, the piping configuration;

·      the fermentation recirculation, transfer
and cooling systems, including, without limitation, the surrounding piping

·      the entire distillation, dehydration,
evaporation system, and de-acid system, including, without limitation, the
molsieve design and operating parameters and configuration, the multi-column
distillation configuration and the way the evaporator and molsieve are
thermally integrated for maximum energy efficiency

 

Confidential Information

 

8

 

EXHIBIT B

LIST OF COMPETITORS

 

	
  4B Components 

  East Peoria, Illinois

  	
   

  	
  Magnin-Interis 

  Charmes, France

  
	
   

  	
   

  	
   

  
	
  Abengoa BioEnergy 

  Sevilla, Spain

  	
   

  	
  Katzen
  International, Inc. 

  Cincinnati, Ohio

  
	
   

  	
   

  	
   

  
	
  Agrol Biotechnologies
  Ltd. 

  Guildford, Surrey Canada

  	
   

  	
  Lurgi PSI Inc. 

  Memphis, TN

  
	
   

  	
   

  	
   

  
	
  Ambitech Engineering
  Corporation 

  Downers Grove, Illinois

  	
   

  	
  Merrick &
  Company 

  Aurora, Colorado

  
	
   

  	
   

  	
   

  
	
  AMG Engineering 

  Cincinnati, Ohio

  	
   

  	
  Praj Industries 

  Pune, India

  
	
   

  	
   

  	
   

  
	
  Bio-Process Innovation 

  West Lafayette, Indiana

  	
   

  	
  Process Plus, LLC 

  Cincinnati, Ohio

  
	
   

  	
   

  	
   

  
	
  Bio-Renewable Group 

  Omaha, Nebraska

  	
   

  	
  Raphael Katzen
  Associates International 

  Cincinnati, Ohio

  
	
   

  	
   

  	
   

  
	
  Broin &
  Associates, Inc. 

  Aberdeen, South Dakota

  	
   

  	
  Ro-Tech Incorporated 

  Louisville, Kentucky

  
	
   

  	
   

  	
   

  
	
  Burns &
  McDonnell 

  Kansas City, Missouri

  	
   

  	
  SNC-Lavalin Group 

  Toronto, Canada

  
	
   

  	
   

  	
   

  
	
  Chematur
  Engineering & Weatherly 

  Engineering 

  Atlanta, Georgia

  	
   

  	
  Southeastern Energy
  Development, Inc. 

  Brooklyn, NY 

  (Alliance with Pure Vision Technology)

  
	
   

  	
   

  	
   

  
	
  Dick Engineering Inc. 

  Toronto, Ontario, Canada

  	
   

  	
  Technip 

  Cedex, France

  
	
   

  	
   

  	
   

  
	
  MECS, Inc. 

  St. Louis, Missouri

  	
   

  	
  Vogelbusch
  USA, Inc. 

  Houston, TX 

  (and its parent Vogelbusch-Austria)

  
	
   

  	
   

  	
   

  
	
  Fagen, Inc.

  Granite Falls, Nebraska

  	
   

  	
  Wave Zeal Ltd. 

  Winnepeg, Manitoba CANADA

  
	
   

  	
   

  	
   

  
	
   Harris Group Inc. 

  Seattle, WA

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ICM, Inc. 

  Colwich, KS

  	
   

  	
  Washington Group
  International 

  Boise, Idaho

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Any individual, group
  or company that performs, on the date of the License or during its term,
  (a) consulting or engineering related to the design of alcohol process
  technology and/or (b) design/build services for existing and prospective
  alcohol plants

  

 

Confidential Information

 

9

 

EXHIBIT C

 

NON-DISCLOSURE AGREEMENT

 

This Agreement is entered into this
       day of
              ,
200   by and between
                                    ,
a corporation organized under the laws of
                          
(“Owner”), and
                                                                      
a corporation organized under the laws of
                                  (“Recipient”),
each of which may be referred to herein individually as a “Party” and
collectively as “Parties.”

 

WHEREAS, Owner owns and operates an ethanol plant which is based on technology
that is confidential to Delta-T Corporation, a Virginia corporation (“Delta-T”),
or Owner is in the process of planning and building such an ethanol plant, and
Owner has, or plans to, enter into an agreement for license of such technology from
Delta-T and it has agreed not to disclose such technology to any third party
except under an agreement containing the terms set forth in this Agreement, and

 

WHEREAS, Recipient is in the business of supplying goods and/or services useful
in the construction or maintenance of ethanol plants, and

 

WHEREAS, in order to supply, and/or bid on the supply of, goods or services
Recipient will need to receive confidential information of Delta-T,

 

IN CONSIDERATION of the mutual terms and conditions of this Agreement, and other good
and valuable consideration receipt of which is hereby acknowledged, Owner and
Recipient agree as follows:

 

1.   Confidential Information:

 

1.1 Definition of Confidential Information:  “Confidential
Information” shall mean (a) all information about the business of Delta-T,
including without limitation, plans, customers or customer lists, operating
costs, prices it has offered or obtained for its products or technology, and (b) all
forms and types of financial, business, scientific, technical, economic, or
engineering information, including patterns, plans, compilations, program
devices, formulas, designs, prototypes, methods, techniques, processes,
procedures, programs or codes, whether tangible or intangible and whether or
how stored, compiled or memorialized physically, electronically, graphically,
photographically, or in writing , which is disclosed to Recipient by Owner or
by Delta-T, whether disclosed orally, visually or in written or other tangible
form.

 

1.2 Exclusions:  “Confidential
Information” shall not, however, include information, which Recipient can
demonstrate by documentary evidence:

 

a.   was in
its possession prior to receipt by Recipient under this Agreement;

b.  appears in issued patents or
printed publications in integrated form 
or is in general use in the trade without violation by Recipient of this
Agreement, or violation by any other party of an obligation not to disclose it;
or

 

Confidential Information

 

10

 

c.     is disclosed to Recipient by someone by a
party other than Delta-T or Delta-T’s Customer who is under no obligation not
to disclose it.

 

2.   No Use or
Disclosure:

 

2.1  General  Restrictions:  Recipient shall not, without Delta-T’s
express written permission (a) make copies of any Confidential Information
or (b) divulge, disclose or communicate any Confidential Information to
anyone other than its employees who need to have access to such information in
order to fulfill the purpose set forth above and who have been advised of the
terms of this Agreement and agreed to comply with it, or (c) use any
Confidential Information for any purpose other than the purposes set forth
above.  Recipient shall take all
reasonable steps to protect the Confidential Information from improper use or
disclosure, and shall in no case use less care to protect Confidential
Information than it uses to protect its own proprietary or confidential
information.

 

2.2 Disclosures Required by Court Order:  If Recipient is required to disclose any Confidential Information by
applicable law, regulation or legal process, Recipient shall provide Owner and
Delta-T notice of such request or requirement and copies of all documents
relevant to the request or requirement. 
Recipient shall give such notice promptly, and in sufficient time to
allow Delta-T to seek a protective order or other remedy.  Recipient shall not disclose any Confidential
Information due to a requirement of law, regulation or legal process unless:  (a) it has first given the notice required
by this Section 2.2 and Delta-T has either given Recipient written
permission to disclose it, or Delta-T has failed to respond to Recipient’s
notice at least 24 hours prior to the time that Recipient is required to make
such disclosure, (b) it is advised by written opinion of its counsel that
it is legally required to disclose such information, and (c) it has used
its best efforts to obtain all reasonable assurances from the party or parties
to whom the information is to be disclosed that the information will not be
used or disclosed for any purpose other than the purpose for which the
applicable law, regulation or legal process requires its disclosure.

 

2.3 Delta-T Is Third Party Beneficiary: Recipient agrees that Delta-T is a third
party beneficiary of this Agreement and that Delta-T may enforce this Agreement
against Recipient in Delta-T’s own name, with or without the participation of
Owner as a party.

 

3.   Designation of Person with Administrative
Responsibility:  Recipient shall designate one of its
employees to be responsible for administration of Recipient’s compliance with
its obligations under this Agreement and shall advise Owner in writing of such
employee’s name, title and personal address within four business days of any
change of such designation.  Until
further notice, the individual so designated is:

 

	
  Name:

  	
   

  
	
  Title:

  	
   

  

 

4.   Term and Termination:  The
term of this Agreement shall commence on the date first written above and shall
continue until terminated by notice in writing by either Party to the other,
but Recipient’s obligations under Section 2 of this Agreement shall
survive with respect to all Confidential Information disclosed hereunder until
such time, if ever, that such information falls 

 

Confidential Information

 

11

 

into
one or more of the exclusions set forth at Section 1.2 above.  Within thirty (30) days of termination of
this Agreement Recipient shall, without request by Owner, deliver to Owner all
of the Confidential Information that it received under this Agreement in
tangible form, and all copies thereof, shall destroy all documents, whether in
electronic or any other form, and other tangible items containing any of such
Confidential Information and shall, upon request, certify to Owner and Delta-T
in writing that it has done so.

 

5.   No License or Other Rights: 
Nothing in this Agreement shall constitute or otherwise be construed as
granting to Recipient any interest or license in any Confidential Information,
or creating any obligation on the part of any of the parties hereto to enter
into any further agreement or business arrangement.

 

6.   Remedies for Breach: 
Recipient agrees that any breach by it of this Agreement shall cause
Delta-T irreparable harm.  Accordingly,
and in addition to any other remedies that Delta-T may have at law or in
equity, Delta-T shall be entitled to obtain injunctive relief against Recipient
to prevent any continuing breach, and without posting or filing any bond or
other security.  All costs, expenses and
attorney’s fees resulting from the litigation or arbitration of any claim under
this Agreement shall be paid by the losing party to the prevailing party.  Recipient further agrees that the rights of
Owner and Delta-T under this Agreement are in addition to any and all other
rights that either of them may have as a matter of law.

 

7.   This Section intentionally
left blank.

 

8.   Export Control:  Recipient hereby assures Delta-T that it does not intend to, and that
it will not, transmit, directly or indirectly, any Confidential Information,
any product produced directly by the use of such information, or any product
produced by a plant constructed using such information, to any country other
than the United States without Delta-T’s prior written consent.

 

9.   General Provisions:

 

9.1  Assignment:  This
Agreement may not be assigned by Recipient to any other party.

 

9.2  Choice of
Law: This Agreement
shall be governed by and construed under the laws of the Staate of Minnesota,
United States of America.

 

9.3 
Notices:  Any notice required or permitted to be given
under this Agreement shall be given in writing and shall be addressed:

 

	
  If
  to Delta-T, to:

  	
   

  	
  Delta-T
  Corporation

  
	
   

  	
   

  	
  323
  Alexander Lee Parkway

  
	
   

  	
   

  	
  Williamsburg,
  VA 23185 USA

  
	
   

  	
   

  	
  Attn:
  Vice President, Operations

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If
  to Recipient, to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:

  

 

Confidential Information

 

12

 

9.4 Survival of Terms:  Recipient’s obligations under Section 2
of this Agreement shall survive as provided in Section 4, and the Parties
obligations under Section 6 and 7 of this Agreement shall survive
termination of this Agreement.

 

9.5 Severability:  If
for any reason a court of competent jurisdiction or an award in arbitration
finds any provision of this Agreement to unenforceable, the Parties agree that
they shall amend this Agreement to allow for enforcement to the maximum extent
enforceable and the remainder of this Agreement shall continue in full force
and effect.

 

9.6 Language:  The language of this Agreement shall be
English, and all communications and notices required to permitted to be made
hereunder, and any dispute resolution proceeding related to a dispute resolved
under Section 7 above, shall be conducted in English.

 

9.7 Headings and Captions:  The
headings and captions in this Agreement are for convenience only and are not to
be considered in construing this Agreement. 
All references to any article, section or paragraph numbers shall be
deemed to be references to an article, section or paragraph of this Agreement
unless otherwise expressly stated.

 

9.8 Complete Agreement:  This Agreement and sets forth the entire Agreement between the Parties
with respect to the subject matter hereof and supersedes any prior Agreement
related to thereto.  No addition or amendment
may be made to this Agreement except by a writing signed by both Parties.

 

9.9 No Waiver:  Failure by any Party to enforce any provision
of this Agreement with respect to any breach thereof, shall not be deemed a
waiver of any right to enforce any other breach of this Agreement.

 

In Witness Whereof, the Parties have executed this Agreement by their authorized
representatives.

 

 

	
  Owner:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Recipient:

  	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
								

 

Confidential Information

 

13

 

EXHIBIT D

PERFORMANCE
TEST PROTOCOLS

 

1.             Performance Test
Protocols

 

1.1          PRE-TEST PREPARATION

 

1.1.1Prior to the
PERFORMANCE TESTS, the PLANT must have reached Mechanical Completion.  In addition, 
DELTA-T must have run the PLANT or near design rate consistently for a
period of seven (7) days, as evidenced by plant operational data provided
to Delta-T by OWNER, before the PERFORMANCE TEST is initiated. Before
commencement of PERFORMANCE TEST, DELTA-T shall notify OWNER
in writing at least seven (7) Days
prior to planned commencement of the PERFORMANCE TEST that all pre-test
conditions have been satisfied, including the following:

 

·      Adequate
and competent supervision, personnel and resources for effective operation,
maintenance and performance analysis of the PLANT, including laboratory
analysis, temporary meters or other measuring devices and instrumentation
specified as to accuracy and reproducibility by DELTA-T in advance of the
PERFORMANCE TEST required to conduct and evaluate the PERFORMANCE TEST shall
have been furnished.  The PLANT shall be
operated and maintained in accordance with the technical advice and instruction
from the DELTA-T Operations Manual and on-site directives from DELTA-T, and
otherwise within generally accepted practices within the fuel ethanol industry.

 

·      The
PLANT, its machinery, equipment, instrumentation and piping, shall all be clean
lubricated where appropriate, leak tight, and ready to operate according to
design specifications.  All systems and
appropriate checkouts and calibrations shall have been completed and documented
by responsible PLANT technicians, contractors, and/or vendors.  Analytical and any special test equipment and
reagents will have been calibrated and made accurate.

 

·      Cleaning
(CIP) of the process equipment has been accomplished seven (7) days or
less before the PERFORMANCE TEST per DELTA-T direction and standard procedures
set out in the DELTA-T Operations Manual. 
All ingredients and supplies required to complete the test are on
hand.  This includes, but is not limited
to, feedstock of corn (meeting specifications listed in Exhibit D Section 1.2)
supplied in stable quantities sufficient to support PLANT operation at a rate
up to 120% of the guaranteed fuel ethanol production rate, as well as
sufficient steam and other utilities, enzymes, chemicals, and other ingredients
of the type specified by DELTA-T in the Operations Manual and supplies to
support PLANT operation at a rate up to 120% of the guaranteed fuel ethanol
production rate.

 

·      Adequate
operation, analytical, and maintenance support shall be scheduled for the test
period.

 

Confidential Information

 

14

 

1.2          COORDINATION

 

1.2.1 DELTA-T
shall coordinate the PERFORMANCE
TEST with OWNER and Prime Contractor during the 24
hour/day around the clock PERFORMANCE
TEST period.  This
coordination of the PERFORMANCE
TEST activities will be handled by a DELTA-T
representative designated to serve as DELTA-T’s Test Coordinator (“Test
Coordinator”).  The Test Coordinator will
work with an individual designated by the OWNER to be its representative for
the PERFORMANCE TEST to
set the test schedule and to coordinate operations during the test period.
DELTA-T will also assign DELTA-T Shift Coordinators to support the operation
during the test period.

 

1.2.2 OWNER shall
supply, or cause to be supplied, all feedstock, utilities and other supplies
and services required to conduct the PERFORMANCE TEST, as specified under Section 1.1.1
above, throughout the entire PLANT during all PERFORMANCE TESTS.

 

1.2.3 DELTA-T
shall direct its and Owner’s personnel in the operation of the PLANT in a
manner consistent with the operating parameters provided in the Operations
Manual.

 

1.3          CONDUCTING THE TEST

 

1.3.1        The DELTA-T Test
Coordinator shall be provided with operating data by the OWNER sufficient to
verify that the PLANT is operating at a condition suitable for initiation of
the PERFORMANCE TEST.  At the scheduled
start time of the PERFORMANCE
TEST, the DELTA-T Test Coordinator will signal that the
test has formally begun and will direct operators to take the initial test
measurements. The test will be conducted over a three-day (72 hour) period of
operation.  During the Test period, the
PLANT shall be operated by the OWNER in compliance with the instructions of
DELTA-T and the Delta-T Operations Manual and instructions provided by DELTA-T,
including, without limitation, adjustments in temperatures, pressures,
feedstock rates, steam flow, and other process control inputs, provided these
adjustments do not result in unsafe operating conditions.  PLANT operators will monitor and record
operating data according to standard procedures and in addition will record the
supplemental data specified in this protocol on data sheets in the form to be
provided by DELTA-T.  Records will be
developed from permanent plant equipment that is calibrated immediately prior
to test.  All test measurements will be
reviewed by the Test Coordinator (or a designated representative).  If the Test Coordinator believes that there
might be a problem with the measurement method or reading, the reading will be
retaken and verified by the Test Coordinator and OWNER’S Representative.
Immediately upon the conclusion of the PERFORMANCE
TEST, the Test Coordinator will meet with representatives
of OWNER to review the test results. 
DELTA-T and OWNER shall each be given a copy of the test results.  If the Performance Guarantees have been met,
then OWNER shall promptly issue a notice to DELTA-T to such effect.  If the PERFORMANCE TESTS have not been met,
then OWNER shall issue a written notice to DELTA-T within one (1) day of
completion of the PERFORMANCE TESTS indicating in what manner such Performance
Guarantees have not been successfully completed.

 

1.3.2        If the 72-hour test period
is interrupted for any reason within DELTA-T’s control or OWNER’S control, a
new three-day test period will resume after the cause for the interruption has
been corrected and the PLANT has achieved an acceptable operating capacity at substantially
the same rate immediately prior to the interruption.  DELTA-T and OWNER shall stop the PERFORMANCE
TEST if it becomes obvious 

 

Confidential Information

 

15

 

that it cannot be
carried to a satisfactory conclusion in the current attempt.  If the PERFORMANCE TEST has been interrupted
for reasons not attributable to   DELTA-T
or other persons or factors within its control, and continues to be interrupted
such that DELTA-T has spent a cumulative period of ten (10) calendar days
on site since the commencement of the test, then OWNER shall compensate DELTA-T
for the personnel that DELTA-T has on site. 
This compensation period shall begin on the cumulative 11th
day on site, and will continue until the completion of the PERFORMANCE
TEST.  This compensation will cease
should the inability to complete the PERFORMANCE TEST be the fault of DELTA-T
or other persons or factors within its control. 
Compensation rates are provided in Exhibit B.1.

 

2.             Analytical/Calculation
Protocols

 

2.1          UNDENATURED FUEL ETHANOL QUALITY

 

	
  METHOD:

  	
  Analyze samples
  according to DELTA-T provided procedures. 
  The last test result before emptying day tank into main storage tank
  shall determine the quality for the batch. 
  The average of all batch test results over the test period shall be
  used in determining the quality for the PEFORMANCE TEST.

   

  If the fuel
  ethanol in the day tank does not meet the quality specifications of Exhibit D,
  section 1.2.1, DELTA-T has the discretion to send it on to the main storage
  tank (on the theory that the blended product in the main storage tank will
  meet the quality specifications) the average of all batch test results shall
  be used to establish the blended quality. 
  If the blended fuel ethanol does not meet quality specifications as a
  result of below quality product measured in one or more day tank batches the
  volume of the batch(s) shall not be included in ethanol production “rate”
  quantities used in calculating liquidated damages.

   

  
	
  SAMPLE POINT:

  	
  Undenatured Fuel
  Ethanol Day Tank Storage

   

  
	
  SAMPLE SIZE:

  	
  250 mls.

   

  
	
  SAMPLE CONTAINER:

  	
  Nalgene

   

  
	
  FREQUENCY:

  	
  Once per two (2) hours

   

  
	
  SAMPLES RETAINED:

  	
  All

   

  
	
  PREPARATION:

  	
  Standardize test
  reagents.  Clean glassware and sample
  containers. Assure that reagents are of sufficient quality.

   

  
	
  DOCUMENTATION:

  	
  Log results on a
  PERFORMANCE TEST Data Sheet.

  

 

Confidential Information

 

16

 

	
  2.2     Undenatured Fuel Ethanol
  Production Rate

  
	
   

  	
   

  	
   

  
	
  METHOD:

  	
   

  	
  The day tank will be
  manually measured every eight (8) hours to serve as the principal method
  of measurement of production volume, along with a final measurement of the
  day tank before the contents are sent to the main storage tank(s). In
  addition, flow totalizer readings will be taken from product meter or other
  measuring device mutually agreed upon between OWNER and DELTA-T at regular
  intervals as backup verification of the manual measurements. The total volume
  from the test meters will be adjusted to a volume equivalent 99.50wt% ethanol
  at 60(o)F. Divide by the total number of test hours to determine the average
  rate over the test period. Multiply result by 1.05 to calculate Denatured
  Fuel Ethanol Rate.

  
	
   

  	
   

  	
   

  
	
  SAMPLE POINT:

  	
   

  	
  Product volumetric
  totalizing meter (with computer monitoring) after Product Receiver.

  
	
   

  	
   

  	
   

  
	
  SAMPLE SIZE:

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  
	
  SAMPLE CONTAINER:

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  
	
  FREQUENCY:

  	
   

  	
  Once per two
  (2) hours and at the end of each Day Tank batch.

  
	
   

  	
   

  	
   

  
	
  SAMPLES RETAINED:

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  
	
  PREPARATION:

  	
   

  	
  Certify that the flow
  meter is properly calibrated.

  
	
   

  	
   

  	
   

  
	
  DOCUMENTATION:

  	
   

  	
  Log results on a
  PERFORMANCE TEST Data Sheet and sign off by the OWNER and DELTA-T.

  

 

	
  2.3     Undenatured Fuel Ethanol
  Yield

  
	
   

  	
   

  	
   

  
	
  BASIS:

  	
   

  	
  56 lb. per bushel corn
  containing 14.5% moisture and 72% dry starch and of 1% foreign material (by
  weight).

   

  
	
  METHOD:

  	
   

  	
  Record corn weigh belt
  totalizer readings to measure the accumulated meal weight.  Measure the sample moisture and starch
  content.  Convert total undenatured
  ethanol volume from the Rate Test to weight at 60(o)F.  Divide the calculated mass quantity of
  undenatured ethanol by the calculated corn mass quantity of total starch fed
  over the time period to determine yield. 
  In addition, this weigh belt total should be cross checked by totaling
  all corn receipts, 

  

 

Confidential Information

 

17

 

	
   

  	
   

  	
  subtracting all foreign
  material content, and taking into account the current corn bin volumes.

  
	
   

  	
   

  	
   

  
	
  TEST POINT:

  	
   

  	
  Corn weigh belt

   

  
	
  FREQUENCY:

  	
   

  	
  Once per two hours

   

  
	
  PREPARATION:

  	
   

  	
  Certify that the weigh
  belt is properly calibrated

   

  
	
  DOCUMENTATION:

  	
   

  	
  Log results on
  “PERFORMANCE TEST Data Sheet”

  

 

	
  2.4     Process Electrical
  Consumption

  
	
   

  	
   

  	
   

  
	
  METHOD:

  	
   

  	
  Record electric meter
  readings at beginning of test and at the required frequency thereafter.  Divide total Kwh for test period by total
  volume of undenatured ethanol produced to determine average Kwh per
  gallon.  Average results of all
  calculations for test periods to determine the process electrical power
  consumption value for PERFORMANCE TEST.

   

  
	
  TEST POINT:

  	
   

  	
  Electric power meter
  types and locations as established by Delta-T, and as necessary to isolate
  process consumption.

   

  
	
  FREQUENCY:

  	
   

  	
  Once per 24 hours

   

  
	
  PREPARATION:

  	
   

  	
  Isolate process
  electrical consumption activities during test period.

   

  
	
  DOCUMENTATION:

  	
   

  	
  Log results on a PERFORMANCE
  TEST Data Sheet

   

  

 

2.5 NATURAL GAS CONSUMPTION

	
   

  	
   

  	
   

  
	
  METHOD:

  	
   

  	
  Record plant
  natural gas meter totalizer readings in MCF over test period.  Obtain higher heating value specification
  for gas over the test period and calculate the BTU over the test period.  Divide this value by the amount of
  undenatured ethanol produced during the test period to determine BTU per
  gallon of undenatured ethanol produced during the test period.  Quantities of natural gas will be adjusted
  to 1,000 btu/ft(3) (70° F, 1 atm) and 10% DDGS moisture respectively
  before the calculation is made. 
  Average results of all calculations for test period to determine
  natural gas consumption value for Acceptance Test.

   

  
	
  TEST POINT:

  	
   

  	
  Plant gas meter

   

  
	
  FREQUENCY:

  	
   

  	
  Once per two (2) hours

  

 

Confidential Information

 

18

 

	
  PREPARATION:

  	
   

  	
  Certify gas
  meter is properly calibrated and suspend all non-process use of natural gas.

   

  
	
  DOCUMENTATION:

  	
   

  	
  Log results on
  an “Acceptance Test Data Sheet.”

   

  

 

2.6          CALCULATION PROTOCOL

 

All calculations will be based on actual measured
data taken during the test period.  For
any given sample period, the average value during that period will be
determined by the average of the measured data points for that sample
period.  The liquidated damages, if any,
will be determined using the data collected for each individual sample period
and averaged over the PERFORMANCE TEST period. All samples shall be taken in
duplicate and OWNER and DELTA-T shall each retain one sample.  OWNER shall analyze one of the duplicates;
the second shall be reserved for use in case of a disagreement.  OWNER shall cause such analyses to be
conducted at the Plant during the PERFORMANCE TEST period and in the presence
of the Test Coordinator or such coordinator’s designee, and Owner and Lender’s
Independent Engineer if they are present. 
In case of disagreement, a referee laboratory shall be selected by
agreement between OWNER and DELTA-T, and the cost of such referee laboratory
shall be paid by the party or parties not substantiated by the referee.  The findings of this referee laboratory shall
be accepted as final.

 

Confidential Information

 

19

 

EXHIBIT E

PERFORMANCE
GUARANTEES

 

1.     Performance Guarantee Figures

 

Performance guarantees are subject to the PERFORMANCE TEST PROTOCOL set
forth in Exhibit C being adhered to, raw material, chemicals, and
utilities being provided in conformance with quality and quantity requirements
established by Delta-T; and equipment being operated and maintained in
accordance with manufacturers’ recommendations and the DELTA-T Operations
Manual.

 

1.1
Definitions

The term “guarantee”
as used herein shall have the same meaning as “warranty.”

 

1.2
Process Guarantees

All quantities set
forth below are based on average quantities over the period of the applicable
PERFORMANCE TEST.

 

	
  1.2.1       Anhydrous Undenatured
  Ethanol Production Guarantee

  
	
   

  	
   

  	
   

  
	
  Anhydrous Fuel 

  Ethanol Production 

  Rate:

  	
   

  	
  Minimum
  6548 US un-denatured gallons per hour (average) based on a minimum feedstock
  specification of 56 lb/bushel test weight corn containing a maximum of 14.5%
  moisture (by weight), a minimum of 72% dry fermentable starch (by weight) and
  a maximum of 1% foreign material (by weight).  

   

  Un-denatured
  ethanol will meet specifications for fuel ethanol per ASTM D4806-04.

  
	
   

  	
   

  	
   

  
	
  Anhydrous  

  Fuel Ethanol Yield:

  	
   

  	
  Minimum 0.515 pounds
  un-denatured fuel ethanol per pound of fermentable starch (average) in corn
  feed based on a minimum feedstock specification of 56 lb/bushel test weight
  No. 2 Yellow Dent corn containing a maximum of 14.5% moisture (wgt),
  minimum 72% dry, trash-free starch, maximum 1% (wgt) foreign material.

  

 

	
  1.2.2       Utility Consumption
  Guarantees

  
	
   

  	
   

  	
   

  
	
  Natural Gas 

  Consumption:

  	
   

  	
  Maximum 36,000 BTU per
  gallon (average) of un-denatured fuel ethanol produced for gas-fired boiler
  and gas fired rotary drum dryer   based on natural gas provided at
  a minimum gas quality of 939 BTU per standard cubic foot (1atm, 70° F), 10%
  maximum (weight) DDGS moisture content, and minimum boiler thermal efficiency
  of 84%. This guarantee is only in effect if the
  plant design DOES include a DDGS dryer

  
	
   

  	
   

  	
   

  
	
  Process Electrical 

  Consumption:

  	
   

  	
  Maximum 1.000 kWh per gallon  (average) of un-denatured fuel
  ethanol produced when operating at the nameplate capacity based on electric
  service with 0.85 power factor.  This
  number includes 

  

 

Confidential Information

 

20

 

	
   

  	
   

  	
  process equipment components in mash preparation,
  liquefaction, yeast mix and propagation, fermentation, distillation,
  dehydration and acid reduction, evaporation, separation and stillage, process
  condensate, chemical storage, CO2 scrubbing, compressed air, WDGS
  transfer and handling, ethanol storage and load-out, cooling tower including
  cooling water circulation, condensate return, process sumps, and heat
  tracing.  The indicated consumption
  does not include grain receiving and storage, milling, boiler, chiller, RTO, water
  supply or treatment,  and CO2
  transmission or recovery. 

  
	
   

  	
   

  	
   

  
	
  Process Steam 

  Consumption:

  	
   

  	
  Maximum 24,000 actual
  steam BTUs per gallon (average) (without dryer) of un-denatured fuel ethanol
  produced (as calculated in Section 2.5 of Exhibit B).  This number includes the steam to all
  process components. This guarantee is only
  in effect if the plant design does NOT include a DDGS dryer

  

 

2.     Right to Cure; Limitation on
Liquidated Damage Claim

 

In the event that one or more of the performance criteria set forth in Section 1.2
above are not satisfied, DELTA-T shall have the right at its expense to require
a test of the degree of accuracy of the testing equipment and testing methods
and procedures.  If the variation from
the guaranteed rates is less than or equal to the demonstrated margin of error
of the relevant PERFORMANCE TEST, then OWNER shall have the right (but not the
obligation) to make improvements in the testing equipment, at OWNER’S cost
provided the variations are not attributable to DELTA-T, and require that
DELTA-T repeat the relevant PERFORMANCE TEST. 
If OWNER does not make such improvements, then   DELTA-T shall have the right to do so and
OWNER shall reimburse DELTA-T for the cost of making the required
improvements.  If the performance criteria
set forth in Exhibit D, Section 1.1 are not satisfied for reasons not
attributable to DELTA-T or other persons or factors within DELTA-T’s control,
then OWNER may, at its option, remedy the defect or deficiency and have the
PERFORMANCE TESTS re-run at any time within three (3) months of the date
of commencement of the first ACCEPTANCE TEST, or pay to DELTA-T the remaining
unpaid portion of the Fee.

 

Within
said three (3) month period, DELTA-T shall take whatever action is
reasonably necessary and consistent with sound engineering and construction
practices to cause the PLANT to satisfy the performance guarantees in Section 1.2.  Within said three (3) month period,
DELTA-T may re-run the PERFORMANCE TEST one or more times before paying
liquidated damages as set forth in Section 3.1 below as a result of
failing to meet the guarantees set forth in Section 1.2 above.  Any claims for liquidated damages must be in
writing and shall be submitted to Delta-T no later than thirty (30) days from
the date of completion of the last PERFORMANCE TEST, which requires the payment
of liquidated damages.

 

The
Parties acknowledge and agree that the terms of this Contract with respect to
liquidated damages, including those payable under this Exhibit D, are fair
and reasonable considering the damage Owner would sustain in the event of
DELTA-T’s failure to perform as required under this Contract, that such damages
have been agreed upon and fixed as liquidated damages because of the difficulty
of ascertaining as of the date hereof the exact damages that would be sustained
by Owner, and that such liquidated damages provisions shall be applicable
regardless of the actual amount of damages sustained.  All amounts shall be paid as liquidated damages
and not as penalty.

 

Confidential Information

 

21

 

3.     Liquidated Damages and Maximum
Damages for Process Guarantees

 

3.1  Amount
of Damages:

 

If
a defect in the BASIC PROCESS DESIGN or the Delta-T Technology causes the PLANT
to fail one or more of the process performance guarantees set forth in
Section1.2 above during a PERFORMANCE TEST as provided herein, and DELTA-T has
not been able to correct the defect and pass all components of the PERFORMANCE
TESTS within the time set forth at Section 2 above, then OWNER shall be
entitled to liquidated damages based on the net amount due as allocated below
up to a maximum cumulative amount of *

 

The sum of the countervailing factors, determined as set forth under Section 3.2
below, shall be deducted from the sum of the damages determined
thereunder.  In no case, however, shall
OWNER have any obligation to pay DELTA-T as a result of such calculation.  If the countervailing factors are greater
than the damages the calculation the liquidated damages shall be deemed to be
zero and neither Party shall have any obligation to the other as a result of
the PERFORMANCE TEST.

 

3.2
Amount of Damages and Countervailing Factors

 

	
  Fuel Ethanol Yield:

  	
   

  	
  * per 0.01 lb
  of anhydrous un-denatured ethanol per lb of convertible starch that the
  PERFORMANCE TEST results show lower or higher than the guaranteed ethanol
  yield listed in Paragraph 1.2 above. To the extent the yield is lower the
  resulting number shall constitute damages. To the extent that it is higher
  the resulting amount shall be a countervailing factor.

   

  For
  example, if the PERFORMANCE TEST average ethanol yield is 0.505 pounds of
  un-denatured anhydrous ethanol per pound of starch, the amount included in
  the liquidated damages calculation for this component would be ((0.510 –
  0.515) = -.005/.01 = -.05 < |1| = 0 x $*) = $0

   

  This
  example illustrates the fact that only full increments of positive or
  negative variances count towards the liquidated damages financial
  calculation. Anything less than this numerical increment is considered to be
  too close to the tolerance of measurement to be meaningful. An increment of
  .005 is less than .01, so it is rounded down to zero. As another example, an
  increment of .015 would be rounded down to .01.

  
	
   

  	
   

  	
   

  
	
  Fuel Ethanol Production Rate:

  	
   

  	
  $*
  per 10 US gallons per hour of un-denatured ethanol that the PERFORMANCE TEST
  results show lower or higher than the guarantee ethanol production rate
  listed in Paragraph 1.2 above. To the extent the rate is lower the resulting
  number shall constitute damages. To the extent that it is higher the
  resulting amount shall be a countervailing factor.

   

  For
  example, if the PERFORMANCE TEST average ethanol production rate is 10 US
  gallons per hour over the guarantee rate, the amount included in the
  liquidated damages calculation for this component would be (10gph) = 10/10 =
  1.0 x $* =*

  

 

Confidential Information

 

22

 

	
  NATURAL GAS CONSUMPTION:

   

   

  	
   

  	
  * per each 100
  BTU per US gallon of un-denatured ethanol that the PERFORMANCE TEST results
  show higher or lower than guaranteed natural gas consumed for the boiler and
  DDGS dryer listed in Paragraph 1.2 above. To the extent the consumption is
  higher the resulting number shall constitute damages. To the extent that it
  is lower the resulting amount shall be a countervailing factor.  

   

  For
  example, if the PERFORMANCE TEST average natural gas consumption is 37,000
  BTU per gallon of un-denatured ethanol, then the amount included in the
  liquidated damages calculation for this component would be (36,000 – 37,000)
  = -1,000/100 = (-10 x $*=*. a penalty.

  
	
   

  	
   

  	
   

  
	
  Process Electrical Consumption:

  	
   

  	
  * per each
  0.01 kWh per US gallon of un-denatured ethanol that the PERFORMANCE TEST
  results show higher or lower than the guaranteed power consumption production
  rate listed in Paragraph 1.2 above. To the extent the consumption is higher
  the resulting number shall constitute damages. To the extent that it is lower
  the resulting amount shall be a countervailing factor.

   

  For example, if the PERFORMANCE TEST average
  electric process power consumption excluding utilities is 0.98 kwh per gallon
  of un-denatured ethanol produced, then the amount included in the liquidated
  damages calculation for this component would be (1.0 – 0.98) = 0.02/0.01 = 2
  x $*=*, a countervailing factor.

  

 

If we assume the example performance numbers set forth above to
illustrate a theoretical liquidated damage calculation, there would be no
liquidated damages paid because the cumulative sum of all the performance
calculations is positive, as shown below:

 

	
  Production Rate Deviation

  	
   

  	
  $*

  	
   

  	
  Countervailing Factor

  
	
  Ethanol Yield Deviation

  	
   

  	
  $

  	
   

  	
  0

  
	
  Natural Gas
  Consumption Deviation

  	
   

  	
  (*)

  	
   

  	
  Damages

  
	
  Electric Power
  Consumption Deviation

  	
   

  	
  $*

  	
   

  	
  Countervailing
  Factor

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Subtotal

  	
   

  	
  $*

  	
   

  	
  Net Positive Sum

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Liquidated Damages

  	
   

  	
  -0-

  	
   

  	
   

  

 

3.3
Damages Reasonable

 

The Parties
acknowledge and agree that the terms of this Agreement with respect to
liquidated damages, including those payable under this Exhibit D, are fair
and reasonable considering the damage OWNER would sustain in the event of the
failure of the Plant to meet the performance guarantees set forth above, that
such damages have been agreed upon and fixed as liquidated damages because of
the difficulty of ascertaining as of the date hereof the exact damages that
would be sustained by OWNER, and that such liquidated damages provisions shall
be applicable regardless of the actual amount of damages sustained.  All amounts shall be paid as liquidated
damages and not as a penalty.

 

Confidential Information

 

23

 

4.     Conditions to Process
Guarantees

 

4.1   DELTA-T shall have no
obligation or liability for any claimed breach of warranty or guarantee under
this Exhibit D to the extent DELTA-T has been relieved from its full
warranty as provided at Article 12 of the Prime Contract.  In addition, to the extent such warranty or
guarantee may be directly and causally affected, DELTA-T shall be relieved of
its warranty or guarantee obligations arising from:

 

4.1.1        The feedstock provided by OWNER to be
provided by Owner, does not comply with the conditions described herein.

4.1.2        Contamination of feedstock or other
materials to which the Equipment is exposed.

4.1.3        Abuse, or poor maintenance, of the
Equipment.

4.1.4        OWNER’S failure to supply utilities
required to meet the guaranteed production rates as set forth at Section 1.2.2
of Exhibit C.

4.1.5        OWNER’S failure to fulfill any of its
obligations, which individually or in the aggregate are material, under the
PERFORMANCE TEST protocols set forth at Exhibit C above.

4.1.6        OWNER’S failure, in any material way, to
operate the PLANT in accordance with the operating manuals and instructions
provided by DELTA-T.

4.1.7        If OWNER designs or procures equipment
and systems that fail to meet DELTA-T’S BASIC PROCESS DESIGN specifications for
energy efficiency.

4.1.8        Owner fails to provide electrical service
with a 0.85 power factor

 

5.             Performance Bonus

 

Upon Final Completion and
Delta-T successfully passing the Second Performance Test in compliance with the
guarantees set forth in Section 1.2 above, Delta-T and Owner shall
cooperate during a bonus period of operation.  Owner agrees to pay to
Delta-T a bonus of $* for each 1% above nameplate plus 10%, capped at 20% above
nameplate or $*.  Delta-T has three (3) months from Final Completion
to achieve this bonus.  The bonus nameplate plus 10% to 20% capacities
must be achieved over a consecutive two (2) week period without
interruption to normal production, with permanent equipment operating within
design parameters and with no undue wear and tear or increased fouling or
maintenance.  Bonus shall be payable thirty (30) days after achieving
these bonus criteria.

 

Confidential Information

 

24

 

MECHANICAL COMPLETION, COMMISSIONING, STARTUP

 

Definitions:

 

Mechanical
Completion:  The
completion of construction activities essential to the safe and proper
operation of the plant, as more fully listed below.

 

Commissioning:  The checking and preparation of the plant for
operation, functional control loop checking, interlock testing, system purging
and utility system startups, as more fully listed below.  In general, the tasks required taking the
plant from mechanical completion and making it ready for start-up.

 

Ready for Startup:  When the activities listed for Mechanical
Completion and Commissioning have occurred and the Plant is ready to mill corn
at the hammer mills.  At that time,
DELTA-T will notify OWNER that the Plant is Ready for Startup.

 

Startup:  Startup begins with the initial feed of raw
material to the plant, filling of Equipment with operating material, startup
and operation of individual process stages, adjustment and optimization of
operating conditions, optimization of control loops, verification of startup,
shutdown and partial load operations. 
Utility system startups (unless integrated with the processing portions
of the plant) are a part of the Commissioning Phase.

 

These events may not
occur at the same point in time for all parts of the plant.  Utility systems needed for operation of the
rest of the plant may reach Mechanical Completion, Commissioning and Startup
before the main process parts of the plant. 
Some processing areas of the plant or sub-systems of operating areas may
reach Mechanical Completion and be Commissioned and Started up before other
parts of the plant, for example, grain receiving and storage may be completed
and into operation, i.e., filled with grain, prior to other parts of the
facility.

 

The following lists indicate the
activities or events, which take place in each of the phases described.

 

Mechanical Completion

 

·      Inspection of
all equipment to check that erected facilities conform to construction drawings
and Contract specifications.

·      Non-operating
field leak tests or field pressure tests on piping and field-fabricated
equipment as required by the Contract specifications, disposing of test media
on site at a location specified by Owner, and removal of test blinds and
restoring systems to “ready for operation” condition.

·      Removal of all temporary
supports, bracing or other foreign objects.

·      Inspection of all columns to
ensure proper installation of all internals.

·      Field inspection of all shop fabricated
equipment.

·      Line flushing as part of hydrotesting.

·      Check to ensure that all
baseplates and soleplates are level and properly grouted.

 

Confidential Information

 

25

 

·      Check pipe hangers,
supports, guides and pipe specialties, and remove all shipping and erection
bracing.

·      Check alignment of all
piping fit-up with equipment to avoid excessive nozzle loading and pipe
stresses.

·      Insulation for process purposes.

·      Install Lubricants.

·      Check rotating machinery for
correct direction of rotation and for freedom of moving parts.

·      Check cold alignments on
rotating equipment.

·      Schedule the services of
factory representatives for equipment or other items as required.

·      Electrical and
Instrumentation installed.

·      Irrespective of the
foregoing,  Mechanical Completion shall
be deem achieved once feedstock is introduced into the process and ethanol has
been produced

 

Commissioning

 

·      Test burners.

·      Dry out
castables, refractory and brickwork according to the manufacturer’s
instructions (if not yet completed).

·      Regenerate media as required.

·      Test refrigeration systems
and low-temperature units in cold condition.

·      Check thermal expansions.

·      Check safety valves;
re-adjust if required.

·      Check supports, suspensions
and flexibility for thermal expansion.

·      Verify start-up strainers
removed, or in place as required.

·      Check flange connections for
tightness.

·      Clean y-strainers and
condensate drains.

·      Start-up measuring and
control loops, check interaction of indicators and control loops.

·      Start-up analyzers.

·      Report and adjust limit
values for alarm and control systems.

·      Coordinate punch list work.

·      Check calibration.

·      Check fuse size.

 

Startup

 

·      Observe all safety
procedures including personnel protective gear, work permits and entry permits.

·      Start-up in accordance with
operating manuals and manufacturer’s instructions

·      Verify sealing fluid flow.

·      Observe operation to be sure
lubrication is maintained.

·      Observe operation to be sure
alignment is maintained.

·      Make operating noise
measurements.

·      Verify operating capacities.

·      Check supports, stops,
spring hangers and expansion joints for hot operation.

·      Check flanges for tightness
and make hot pull-ups, as required.

·      Blow down y-strainers and
condensate drains regularly.

·      Verify amperage on critical
units.

 

Confidential Information

 

26

 

·      Optimize control loop
parameters.

·      Adjust and calibrate on-line
analyzers such as conductivity and pH.

 

Confidential Information

 

27

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