Document:

Exhibit 10.13

 

This Agreement made this 21$`
day of October, 2003, by and between Shawver Well Company, Inc., 2700 Stanley
Ave, Fredericksburg, Iowa 50630, 563-237-5341 (hereinafter called CONTRACTOR)
and Golden Grain Energy, LLC, 851 N Linn Ave. P.O. Box 435, New Hampton, IA
50659, (hereinafter called OWNER).

 

Witnesseth

 

CONTRACTOR agrees  to perform the
work described herein for and upon the premises of OWNER at 14542 - 240th
Street, Mason City, Iowa, which work is described as follows:

 

1.  DESCRIPTION
OF WORK:

CONTRACTOR to
supply all tools, material, equipment, labor and supervision for the work
described in Exhibit “A”
and Exhibit “B”  attached and made part hereof.

 

2.  WORK SCHEDULE

CONTRACTOR agrees
to perform the work described in Section 1. above with diligence, to furnish a
sufficient number of skilled workmen and ample materials, supplies and
equipment and, except for any extensions of time granted by OWNER, to perform
the work in compliance with a work schedule agreed to be both parties.  In the event CONTRACTOR shall be delayed  at any time in the progress of the work by any act or omission of OWNER or
any agent or employee of OWNER or by any separate contractor employed by OWNER
or by changes ordered in the work. 
CONTRACTOR shall give OWNER written notice of claim for additional time
(an extension) within ten (10) days after the occurrence of such act or
omission or for any such changes unless such extension shall be provided in
OWNER’S written change order.

 

3.  RESPONSIBILITY FOR THE WORK

CONTRACTOR shall
be responsible for the care and protection of all work and materials and upon
completion of the contract and final acceptance shall deliver the work to OWNER
complete and undamaged.  CONTRACTOR
assumes the risk of damage or loss and OWNER shall not be responsible until the
final acceptance for any damage to or loss of any part of the work covered by
this contract or to any materials, supplies or equipment used or to be used in
or about the said work caused by fire, water, wind, theft, vandalism, malicious
mischief, negligence, acts or providence, or any other cause except errors in the Contract Documents or a wrongful act or
omission by OWNER, its agents or
employees.  CONTRACTOR shall not use in the performance of this
contract any materials (except such as are to be furnished by OWNER) to which
he does not have absolute title.

 

4.  CONTRACTOR’S DUTY TO REPLACE

CONTRACTOR agrees
to correct or replace, free of charge or expense to OWNER, any defective labor,
workmanship or materials performed or furnished under this agreement.  Such obligation of CONTRACTOR shall be
binding for a period of one (1) year after the work is completed and accepted
by OWNER.

 

 

5.  CONTRACTOR’S RIGHT TO SUSPEND OR TERMINATE WORK

CONTRACTOR may
suspend or terminate work under this agreement if an order of any court or
other public authority causes work to be stopped or suspended for a period of
sixty (60) days through no act or fault of the CONTRACTOR or his/her employees.

 

6.  REMOVAL
OF EQUIPMENT, TOOLS AND SUPPLIES

Upon completion of the work described herein, CONTRACTOR shall remove all
equipment, tools and supplies from OWNER’S property.

 

7.  OWNER ACCEPTANCE
OF WORK

CONTRACTOR shall notify
OWNER promptly upon completion of all work, including approved additions.  OWNER shall make an acceptance inspection as soon as possible, but in no
event later than ten (10) days, after notification of completion by CONTRACTOR.

 

8.  PAYMENT

OWNER agrees to pay
CONTRACTOR, within 15 days of submittals for payment.  Submittals shall be every 30 days from start of project (mobilization of equipment).  Conditions of payment for specific items are further outlined in “Exhibit
B” of this document and they shall be in accordance with those
provisions.

 

9.  INDEMNITY

CONTRACTOR
agrees to indemnify OWNER for any and all loss of
or damage to the property of OWNER and to
indemnify, defend and save harmless OWNER from and against any and  all suits, actions, claims, damages or
costs (including attorney’s fees) arising out of loss of or damage to the
property of any other person or persons whomsoever (including but without
limitation all materials, supplies, equipment or other property of CONTRACTOR
or any subcontractor or any separate contractor) or arising out of injury to or
death of any person or persons whomsoever (including but not limited to
CONTRACTOR, any subcontractor, any separate contractor or the employees or
agents of any of them), only in the event that any such loss, damage,
injury or death shall result directly from gross negligence on the part of the CONTRACTOR.

 

10. 
CHANGES AND EXTRAS

OWNER may order extra
work or make changes by altering, adding to, or deducting from the work; but,
except in emergencies endangering life or property, no extra work or changes
shall be done or made and no charge therefor shall be allowed except upon
OWNER’S written change order setting forth the agreement of the parties as to
extra costs, and/or extension of time, if any. 
Such extra work and changes shall be executed in full compliance with
all terms and conditions of this Agreement except as modified by said change
order.

 

11.  PERMITS AND REGULATIONS

CONTRACTOR shall obtain
all necessary permits and licenses, give all notices and

 

 

comply with all laws,
ordinances, rules, regulations or orders affecting the work described in the
agreement, and shall pay all fees and charges in connection therewith.  CONTRACTOR agrees to bear all costs,
expenses, damages and fines arising out of violations of such laws, ordinances,
rules, regulations or orders by CONTRACTOR or any subcontractor including all
costs and expenses of conforming the work to the requirements thereof.

 

12.  SEPARATE CONTRACTS

OWNER may
award other contracts in connection with the work and CONTRACTOR agrees to
cooperate fully with any other contractors and to coordinate his work with
theirs so that all work shall be done in proper sequence and in accordance with
the work schedule.  CONTRACTOR shall not
commit or permit any act or omission which will interfere with the performance
of work by any other contractor. 
CONTRACTOR shall be liable for and hold OWNER harmless from any damage
that it, it agent or employees may cause to any other contractor.

 

13.  SAFETY

CONTRACTOR shall provide adequate signs, barricades, fencing and lights
and take all necessary precautions for the protection of the work and the
safety of the public.

 

14.  SATISFACTORY WORKMAN

CONTRACTOR
shall at all times be responsible for the conduct and discipline of his/her
workers, including subcontractors, if any. 
All workers shall have sufficient knowledge, skill and experience to
properly perform the work assigned to them.

 

15.  ASSIGNMENTS

CONTRACTOR
shall not assign or transfer this contract or any interest hereunder nor
subcontract any  work hereunder
without the written consent of
OWNER. 
CONTRACTOR may  subcontract
portions of the work pursuant to the terms and conditions of this
Agreement.  OWNER may at any time assign
or transfer this contract or any interest hereunder to any of its affiliates,
subsidiaries, successors, assigns, agents or any third party.  In the event that OWNER so assigns said
contract, OWNER shall provide written notice to CONTRACTOR after said
assignment.

 

16.  EQUAL
EMPLOYMENT OPPORTUNITY CONTRACTOR shall comply with all applicable
Equal Employment opportunity requirements, including those set forth in Section
202 of Executive Order 11246, as amended.

 

17.  SUCCESSORS This agreement
shall bind the respective parties and their heirs, executors, administrators,
successors and assigns.

 

18.  NOTICE
Written notice shall be considered served when sent by mail to the
individual and at the address shown below

 

	
  OWNER:

  	
   

  	
  Golden
  Grain

  
	
   

  	
   

  	
  Energy,
  LLC

  
	
   

  	
   

  	
  951
  N. Linn

  
	
   

  	
   

  	
   

  

 

 

	
   

  	
   

  	
  Avenue

  
	
   

  	
   

  	
  P.O. Box 435

  
	
   

  	
   

  	
  New
  Hampton, IA 50659

  
	
   

  	
   

  	
  Attn:
  Walter Wendland, President

  
	
   

  	
   

  	
   

  
	
  CONTRACTOR:

  	
   

  	
  Shawver Well

  Company, Inc.

  2700 Stanley

  Avenue

  
	
   

  	
   

  	
  Fredericksburg,
  IA 50630

  
	
   

  	
   

  	
  Attn:
  Gary R. Shawver, President

  

 

19.  TERMINATION FOR CONVENIENCE

OWNER may, without cause,
terminate this Agreement at any time upon written notice to CONTRACTOR.  In the event OWNER gives CONTRACTOR such
notice, CONTRACTOR shall withdraw its employees and equipment, and cause its
subcontractors to withdraw their employees and equipment from the work site on
the effective date of the termination as specified in the notice.

 

CONTRACTOR’S
failure to do so shall entitle OWNER to bring an action for damages, including
attorney’s fees, and/or to bring an  action
for injunctive relief.  In the event of
such termination for convenience, CONTRACTOR shall be entitled to all costs
incurred to the effective date of such termination, plus a reasonable profit
thereon.

 

20. 
ARBITRATION

Any controversy or claim arising out of or relating to this
agreement or the breach thereof shall be settled by arbitration in accordance
with the rules then obtaining of the American Arbitration Association, and
judgment upon the award rendered may be entered and enforced in any court
having jurisdiction thereof.

 

21.  NO VIOLATION OR
BREACH

PARTIES represent
each to the other that the performance of this agreement does not violate any
laws, statutes, local ordinances, state or federal regulations, regarding
controlled substances, or otherwise, or any court order or administrative order
or ruling, nor is such performance in violation of any loan document’s
conditions or restrictions in effect for financing, whether secured or
unsecured.

 

22.  BENEFIT

This agreement
shall be binding upon and inure to the benefit of the parties hereto and their
legal representatives, successors and assigns.

 

23.  CAPTIONS

Captions are used
in this agreement for convenience only and are not intended to be used in the construction or in the interpretation of this agreement.

 

 

24.  INVALID PROVISION

In the event any
provision of this agreement is held to be void, invalid or unenforceable in any
respect,  then the same shall not affect the remaining provisions hereof,
which shall
continue in full force and
effect.

 

25.  ENTIRE AGREEMENT

This
agreement contains  the entire
understanding of the parties.  It may not be changed orally.  This agreement may be amended or modified
only in writing that has been executed by both parties hereto.

 

26.  INTERPRETATION:

This agreement
shall be interpreted under the laws of the State of Iowa.

 

	
  GOLDEN
  GRAIN ENERGY, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Walter Wendland

  	
   

  	
  10/23/03

  	
   

  
	
  OWNER

  	
   Date

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Gary R. Shawver, Shawver Wells, Inc.

  	
   

  	
  10/23/03

  	
   

  
	
  CONTRACTOR

  	
   Date

  	
   

  

 

 

BID SCHEDIII.F.

 

Production Well

 

Gulden Grain Energy

Ethanol Plant

October 8, 2003

 

EXHIBIT “A”

 

	
  Item

  No.

  	
   

  	
  Item

  	
   

  	
  Quantity

  	
   

  	
  Unit

  	
   

  	
  Unit

  Price

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mobilization

  	
   

  	
  1

  	
   

  	
  LS

  	
   

  	
  $

  	
  67,500.00

  	
   

  	
  67,500

  	
   

  
	
   

  	
   

  	
  Drill 23-inch Open Hole

  	
   

  	
  150

  	
   

  	
  LF

  	
   

  	
  $

  	
  160.00

  	
   

  	
  24,000

  	
   

  
	
   

  	
   

  	
  Furnish and Install 18.625-inch OD Steel Casing

  	
   

  	
  151

  	
   

  	
  LF

  	
   

  	
  $

  	
  66.00

  	
   

  	
  9,966

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Furnish and Install Grout

  	
   

  	
  750

  	
   

  	
  sack

  	
   

  	
  $

  	
  40.00

  	
   

  	
  30,000

  	
   

  
	
  S

  	
   

  	
  Drill
  173-inch Open Hole

  	
   

  	
  840

  	
   

  	
  LF

  	
   

  	
  145.00

  	
   

  	
  121,800

  	
   

  
	
   

  	
   

  	
  Furnish and Install 14-inch OD Steel Casing

  	
   

  	
  991

  	
   

  	
  LF

  	
   

  	
  50.00

  	
   

  	
  49,550

  	
   

  
	
   

  	
   

  	
  ‘Drill 12.25-inch Open Hole

  	
   

  	
  380

  	
   

  	
  LF

  	
   

  	
  85.00

  	
   

  	
  $

  	
  32,300

  	
   

  
	
  8

  	
   

  	
  Furnish
  and Install Test Pump

  	
   

  	
  1

  	
   

  	
  LS

  	
   

  	
  $

  	
  13,280.00

  	
   

  	
  13,200

  	
   

  
	
   

  	
   

  	
  7’eee pump will

  	
   

  	
  24

  	
   

  	
  hr

  	
   

  	
  120.00

  	
   

  	
  $

  	
  2,880

  	
   

  
	
  10

  	
   

  	
  Plumbness
  and Alignment Test

  	
   

  	
  1

  	
   

  	
  LS

  	
   

  	
  $

  	
  1,500.00

  	
   

  	
  $

  	
  1,500

  	
   

  
	
  11

  	
   

  	
  Well
  Finishing Activities

  	
   

  	
  1

  	
   

  	
  1

  	
   

  	
  1,745.00

  	
   

  	
  1,745

  	
   

  
	
  2

  	
   

  	
  St. Peter
  Sandstone Poor Cementation

  	
   

  	
  1

  	
   

  	
  LS

  	
   

  	
  $

  	
  5,250.00

  	
   

  	
  $

  	
  5,250

  	
   

  
	
  13

  	
   

  	
  Site
  Clean-up and Restoration

  	
   

  	
  1

  	
   

  	
  LS

  	
   

  	
  3,500.00

  	
   

  	
  $

  	
  3,500

  	
   

  
	
  14

  	
   

  	
  Drives and
  Staging Area

  	
   

  	
  1

  	
   

  	
  LS

  	
   

  	
  5,700.00

  	
   

  	
  5,700

  	
   

  
	
  15

  	
   

  	
  Discharge
  Control Structures

  	
   

  	
  1

  	
   

  	
  LS

  	
   

  	
  52,500.00

  	
   

  	
  2,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  TOTAL

  	
   

  	
  $

  	
  371,391

  	
   

  

 

 

EXHIBIT “B”

 

SECTION 01010

 

SUMMARY OF WORK

 

	
  PART 1

  	
   

  	
  GENERAL

  
	
   

  
	
  1.01

  	
   

  	
  SECTION INCLUDES

  
	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Work by OWNER.

  
	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Work by CONTRACTOR.

  
	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  OWNER furnished products.

  
	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  CONTRACTOR use of site.

  
	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Future work.

  
	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Work Planning and Scheduling
  Constraints.

  
	
   

  	
   

  	
   

  
	
  1.02

  	
   

  	
  WORK BY OWNER

  
	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  None

  
	
   

  	
   

  	
   

  
	
  1.03

  	
   

  	
  OWNER FURNISHED PRODUCTS

  
	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  None

  
	
   

  	
   

  	
   

  
	
  1.04

  	
   

  	
  CONTRACTOR USE OF SITE

  
	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Limit use of
  site to allow:

  
	
   

  	
   

  	
  1.

  	
  Work by
  Others.

  
	
   

  	
   

  	
  2.

  	
  Access by
  emergency vehicles.

  
	
   

  	
   

  	
   

  
	
  1.05

  	
   

  	
  FUTURE WORK

  
	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  Project is
  designed for future ethanol plant.

  
	
   

  	
   

  	
   

  
	
  1.06

  	
   

  	
  WORK PLANNING AND SCHEDULING CONSTRAINTS

  
	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  CONTRACTOR
  shall plan and construct in coordination with other contractors, OWNER work
  forces, and utility companies adjacent to or in the vicinity of the project
  site.

  
						

 

 

1.07        GENERAL PROJECT SCOPE

 

A.            This project is
comprised of construction of one production well at the site including gravel
site access drive, staging area, construction of drilling mud pits, and
discharge control structures.  Further,
the project includes restoring the site by disposing of drilling mud and
filling pits, removing rock check dams from discharge control structures and
general grading to maintain site drainage. 
The well shall be constructed to such vertial tolerances to allow
installation of future vertical lineshaft pumping equipment capable of
delivering approximately 1000 gpm from the well.

 

	
  PART 2

  	
   

  	
  PRODUCTS

  
	
   

  	
   

  	
   

  
	
  Not Used

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PART 3

  	
   

  	
  EXECUTION

  
	
   

  	
   

  	
   

  
	
  Not Used

  	
   

  	
   

  

 

END OF SECTION

 

 

SECTION 01025

 

MEASUREMENT AND PAYMENT

 

PART 1 GENERAL

 

1.01
       SECTION
INCLUDES

 

A.            General:

1.             Measurement and payment criteria
applicable to the Work performed under a unit price payment method.

2.             Defect
assessment and non-payment for rejected work.

 

1.02
       AUTHORITY

 

A.            Measurement methods delineated in the
individual specification sections are intended to complement  the criteria of this section.

 

B.            The ENGINEER will take
all measurements and compute  quantities
accordingly.

 

C.            Assist by providing
necessary equipment, workers, and survey personnel
as required.

 

1.03
       UNIT
QUANTITIES SPECIFIED

 

A.            Quantities and measurements indicated in
the Bid Schedule are for bidding and contract purposes only.  Quantities and measurements supplied or
placed in the Work and verified by the ENGINEER shall determine payment.

 

B.            If the actual Work requires more or fewer
quantities than those quantities indicated, provide the required quantities at
the unit sum/prices contracted.

 

C.            No other items of Work required by Contract
Documents shall be measured or paid for as separate Items, but shall be
included as part of listed unit price items to which Work pertains.  Failure to list all such related Work in the
following descriptions of unit price items shall not invalidate this
stipulation.

1.             Items indicated on the plans,
specifications, contract documents or project manual, but not listed separately
on the bid form shall be included in the construction as part of the

CONTRACTOR’S
responsibility at no additional cost to the OWNER.

 

1.04
       MEASUREMENT
OF QUANTITIES

 

A.             Measurement Devices:

1.           Inspected, tested and certified by the
applicable state Weights and Measures department within the past year.

 

B.              Measurement by Weight: Concrete
reinforcing steel, rolled or formed steel or other metal shapes will be
measured by

 

 

handbook weights.  Welded
assemblies will be measured by handbook  or
scale weight.

 

C.            Measurement by Volume: Measured by cubic
dimension using mean length, width and height or thickness, or measured by
gallons.

 

D.            Measurement by Area:
Measured by square dimension using mean length and width or radius.

 

E.             Linear Measurement:
Measured by linear dimension, at the item centerline or mean chord.

 

F.             Stipulated Sum/Price Measurement: Items
measured by weight, volume, area, or linear means or combination, as
appropriate, as a completed item or unit of the Work.

 

G.            Material Record: The CONTRACTOR shall
furnish the ENGINEER with supplier weight tickets indicating date, project
name, net weight and/or cubic yards, material per day, item number from  proposal and disposal location of each of
the items on this project that are paid by the cubic yard or ton.

1.             The
field copy of each ticket shall be given to the Project Inspector or ENGINEER
no later than one working day following delivery of materials.  Tickets delivered after this period will be
accepted only at the Project ENGINEER’s discretion.

 

1.05        PAYMENT

 

A.            Payment Includes: Full compensation for all
required labor, Products, tools, equipment, plant, transportation, services and
incidentals; erection, application or installation of an item of the Work;
overhead and profit.

 

B.            Final payment for Work governed by unit
prices will be made on the basis of the actual measurements and quantities
accepted by the ENGINEER multiplied by the unit sum/price for Work which is
incorporated in or made necessary by the Work.

 

1.06        DEFECT ASSESSMENT

 

A.            Replace the Work, or
portions of the Work, not conforming to specified requirements.

 

B.            If, in the opinion of the ENGINEER, it is
not practical to remove and replace the Work, the ENGINEER will direct one of
the following remedies:

1.             The defective Work may remain, but the
unit sum/price will be adjusted to a new sum/price at the discretion of the
ENGINEER and/or OWNER

2.             The defective Work will be partially
repaired to the instructions of the ENGINEER and OWNER, and the price will be
adjusted to a new price at the discretion of the ENGINEER and OWNER.

 

C.            The individual specification sections may
modify these options or may identify a specific formula or percentage sum/price
reduction.

 

D.             The authority of the
ENGINEER to assess the defect and identify payment adjustment is final.

 

 

1.07        DESCRIPTION OF UNIT PRICE
ITEMS

 

1.             Mobilization: lump sum (LS): Unit price includes all cost of mobilizing
equipment and workers to the project site. 
Price includes but is not limited to bonding, facilities, transportation  charges, etc...  Payment will be made
in two equal parts in each
of the first two monthly payment requests.

 

2.             Drill 23-inch Open  Hole: linear foot (LF): Unit price  includes all labor, equipment, and materials to drill the proper size hole to allow further construction
as detailed.  Measurement will be from
ground surface to the bottom of the hole.

 

3.             Furnish and Install
18.625-inch OD Steel Casing: linear foot (LF): Unit price includes all labor, equipment, and materials to furnish and
install the proper sized using
pipe in the drill hole. 
Price includes all spacers, guides, plumbness checks, alignments,
etc...  to allow further construction as
detailed.  Measurement will be the
actual length of
casing installed.

 

4.             Furnish and Install Grout: sack (SACK): Unit price includes all labor, equipment, and
materials to furnish and install grout between casings and/or open hole and casing. 
Installation shall be  by methods
specified.  Measurement will be by count
of 94 pound sacks (or equivalent weight) of dry cement grout.

 

5.             Drill 17.5-inch Open Hole: linear foot (LF): Unit price includes all labor, equipment, and
materials to drill the proper size hole to allow further construction as
detailed Measurement will be from the bottom of the 23” hole to the  bottom of the 17.5’ hole.

 

6.             Furnish and Install  l4-inch OD Steel Casing:
linear foot (LF); Unit price
includes all labor, equipment, and materials to furnish and install the proper sized casing pipe in the drill hole.  Price includes all spacers, guides, plumbness checks, alignments,
etc... to allow further construction as detailed.  Measurement will be the actual length of casing installed.

 

7.             Drill 12.25-inch Open Hole: linear foot (LF): Unit price includes all labor, equipment,  and materials to drill the proper size
hole to allow further construction as detailed Measurement will be from the
bottom of the 17.5” hole to the bottom of the 12.25” hole.

 

8.             Furnish and Install Test
Pump:
lump sum (LS): Unit price
includes all labor, equipment, and materials to furnish and install all test
pumping equipment required for the project. 
Price shall include portable electrical generation facilities and fuel
to power the test pump.

 

9.             Test Pump Well:  hour (HR): Unit price includes all labor, equipment, and materials to perform test pumping as
required by the specifications. 
Price shall include proper management of discharge water.  Measurement will be by actual hours the pump operates.

 

10.           Plumbness & Alignment
Test: lump sum (LS): Unit price includes all labor, equipment, and materials to perform
required plumbness and alignment testing and provide documentation of
same.  Plumbness and alignment testing
by the CONTRACTOR to ensure construction adequacy during the construction
process should be included as part of  this item.

 

11.           Well Finishing Activities: lump sum (LS): Unit price includes all labor, equipment, and  materials to collect samples, analyze
samples, disinfect well, cap well, and prepare/submit reporting on the
well.  Payment will be made at project
completion.

 

12.           St.  Peter
Sandstone Poor Cementation: lump slam (LS): Unit prig includes all labor, equipment, and materials
needed should the St. Peter Sandstone formation not be well cemented and
require additional efforts beyond what would be normally anticipated for a well
cemented sandstone formation.  This item
will only be paid upon determination and justification that such  a poor cemented condition  occurred during construction.

 

 

13.           Site Clean-up and
Restoration: lump Sum (LS): Unit price includes all labor,  equipment,
and materials required to restore the construction site to it’s former
condition.  This item include pickup and
removal of all trash and rubbish, proper disposal or burrying of drilling mud
residue, removal of rock check dams and filling of settling pond areas, removal
of all piping, and general grading of area impacted
by construction to remove tire ruts, holes, etc....

 

14.           Drives and Staging Area:  lump sum
(LS): Unit price includes all labor, equipment, and materials
required to construct the rocked access drive and staging area required to
facilitate  construction.  Materials of construction and dimensions are
to be determined by the CONTRACTOR for his convenience of area access and
mobility.  Price also includes removal
of drive and staging area materials following completion of construction.  Payment will be made 90% upon completion of
construction of the drive improvement, and theremaining 10% upon satisfactory removal and restoration of the
affected areas.

 

15.           Discharge Control Structure: lump sum (LS): Unit price includes all
labor, equipment, and materials required to construct the discharge control
structures and drilling mud pits required for the project.  Price further includes all costs for removal
of same following completion of construction. 
Payment will be made 80% upon completion of construction, and the
remaining 20% upon satisfactory removal and restoration of the affected areas.

 

1.08
       NON-PAYMENT
FOR REJECTED PRODUCTS

 

A.            Payment will not be
made for any of the following:

1.             Products wasted or
disposed of in a manner that is not acceptable.

2.             Products determined
as unacceptable before or after placement.

3.             Products not
completely unloaded from the transporting vehicle.

4.             Products placed
beyond the lines and levels of the required Work.

5.             Products remaining on
hand after completion of the Work.

6.             Loading, hauling and
disposing of rejected Products.

 

PART
2                 PRODUCTS

Not applicable

 

PART
3                 EXECUTION

Not applicable

 

END OF SECTION

 

 

WELL CONSTRUCTION

 

PART 1                  GENERAL

 

1.01        DESCRIPTION

 

A.            Intent of this
construction is to provide one (1) deep  well
for non-potable purposes.  The well
shall provide sand free water when pumped at 900 gallons per minute on a
continuous basis.  The well shall be
constructed to required tolerances to allow future installation of vertical
lineshaft pumping equipment to deliver a flow of 1000 gpm from the well.

 

1.02        REFERENCES

 

A.            Construction methods and materials shall
comply with American Water Works Associates (AWWA) A100 and Iowa Department of
Natural Resources (IDNR) Design Standard Chapter 3.  Other testing and material standards referenced shall be as
follows:

1.               ASTM - American
Society of Testing and Materials.

2.               IDOT - Iowa
Department of Transportation.

3.               Standard Methods -
Standard Methods for Examination of Water and Waste Water, APHA, AWWA, WEF.

4.               AWS - American
Welding Society Standards referenced shall be current editions.

 

PART 2                  PRODUCTS

 

2.01        STEEL
WELL CASING PIPE

 

A.            Steel well casing
pipe shall be straight, new, black steel pipe, provided with beveled ends
suitable for continuous welding.  Steel
casing for project shall be of a type manufactured by a reputable pipe
manufacturer and shall be delivered to job free from burrs, abrasions, defects,
and other objectionable items. 
Welded-type casing joints shall be used.

 

B.            Each length of
casing pipe shall be plainly marked in accordance with ASTM and API marking
specifications.  Each mark shall show
manufacturer’s name or trademark, size in inches, weight in pounds per foot,
whether seamless or welded (type of weld) and ASTM and API specifications and
grade monogram.  Casing shall be provided
with sufficient guides to permit uniform thickness of grout

 

C.            Temporary casing
pipes shall be of thickness and strength sufficient to withstand loadings
during installation and removal. 
Temporary casing pipes must be removed during grouting or meet all
requirements of permanent casing pipe.

 

D.            All casing pipes
shall have nominal diameters and minimum weight and thickness designated in the
following table:

 

 

TABLE
1 - CASING PIPE

 

	
  SIZE (in)

  	
   

  	
   

  	
   

  	
  WEIGHT (Ib/ft)

  	
   

  	
  WALL

  THICKNESS

  	
   

  	
  DIAMETER (in)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Threaded

  	
   

  	
  Plain End

  	
   

  	
  (in)

  	
   

  	
  External

  	
   

  	
  Internal

  	
   

  
	
  4

  	
   

  	
  ID

  	
   

  	
  11.00

  	
   

  	
  10.79

  	
   

  	
  .237

  	
   

  	
  4.500

  	
   

  	
  4.026

  	
   

  
	
  5

  	
   

  	
  ID

  	
   

  	
  15.00

  	
   

  	
  14.62

  	
   

  	
  .258

  	
   

  	
  5.563

  	
   

  	
  5.047

  	
   

  
	
  6

  	
   

  	
  ID

  	
   

  	
  19.18

  	
   

  	
  18.97

  	
   

  	
  .280

  	
   

  	
  6.625

  	
   

  	
  6.065

  	
   

  
	
  6-5/8

  	
   

  	
  OD

  	
   

  	
  20.00

  	
   

  	
  19.49

  	
   

  	
  .288

  	
   

  	
  6.625

  	
   

  	
  6.049

  	
   

  
	
  7

  	
   

  	
  OD

  	
   

  	
  23.00

  	
   

  	
  22.63

  	
   

  	
  .317

  	
   

  	
  7.000

  	
   

  	
  6.366

  	
   

  
	
  8

  	
   

  	
  ID

  	
   

  	
  29.35

  	
   

  	
  28.55

  	
   

  	
  .322

  	
   

  	
  8.625

  	
   

  	
  7.981

  	
   

  
	
  10

  	
   

  	
  ID

  	
   

  	
  41.85

  	
   

  	
  40.48

  	
   

  	
  .365

  	
   

  	
  10.750

  	
   

  	
  10.020

  	
   

  
	
  12

  	
   

  	
  ID

  	
   

  	
  51.15

  	
   

  	
  49.56

  	
   

  	
  .375

  	
   

  	
  12.750

  	
   

  	
  12.000

  	
   

  
	
  14

  	
   

  	
  OD

  	
   

  	
  54.57

  	
   

  	
   

  	
   

  	
  .375

  	
   

  	
  14.000

  	
   

  	
  13.250

  	
   

  
	
  16

  	
   

  	
  OD

  	
   

  	
  62.58

  	
   

  	
   

  	
   

  	
  .375

  	
   

  	
  16.000

  	
   

  	
  15.250

  	
   

  
	
  18

  	
   

  	
  OD

  	
   

  	
  70.59

  	
   

  	
   

  	
   

  	
  .375

  	
   

  	
  18.000

  	
   

  	
  17.250

  	
   

  
	
  20

  	
   

  	
  OD

  	
   

  	
  78.60

  	
   

  	
   

  	
   

  	
  .375

  	
   

  	
  20.000

  	
   

  	
  19.250

  	
   

  
	
  22

  	
   

  	
  OD

  	
   

  	
  114.81

  	
   

  	
   

  	
   

  	
  .500

  	
   

  	
  22.000

  	
   

  	
  21.000

  	
   

  
	
  24

  	
   

  	
  OD

  	
   

  	
  125.49

  	
   

  	
   

  	
   

  	
  .500

  	
   

  	
  24.000

  	
   

  	
  23.000

  	
   

  
	
  30

  	
   

  	
  OD

  	
   

  	
  157.53

  	
   

  	
   

  	
   

  	
  .500

  	
   

  	
  30.000

  	
   

  	
  29.000

  	
   

  

 

E.             Casing pipe for
18.625” diameter surface casing shall be 0.435inch thickness, grade 36 structural grade steel.

 

2.02         PLASTIC
CASING PIPE - NOT USED

 

2.03        GROUT

 

A.            Neat cement grout
shall consist of Portland Cement and water. 
Mixture shall contain no more than 6 gallons of water per 94-lb bag of  Portland Cement.

 

2.04        PORTLAND
CEMENT

 

A.    Portland Cement shall be Type l or Type III meeting requirement of IDOT
Specification Section 4101.  No
accelerators or other admixtures are allowed. 
Rapid setting cement will not be allowed.

 

2.05        WATER

 

A.            Water for cement
grout shall meet requirements  of
IDOT Specification Section 4102.

 

PART 3                   EXECUTION

 

3.01        PREPARATION

 

A.            Mud pits shall be
constructed to prevent damage to structures or piping.  Pumping mud shall not be discharged into
sanitary sewers or onto private property.

 

B.            Store material in
a  safe manner on project site.

 

3.02        DRILLING

 

 

A.            Well drilling
shall be by rotary, reverse-rotary, or cable tool method.  Drilling equipment shall be designed for
well drilling and provide positive assurance of a straight, plumb well, Well
drilling debris shall be removed from site on a weekly basis and disposed of on
an approved site.

 

3.03        SETTING
CASING PIPE

 

A             Steel Casing Pipe.

1.               Steel casing pipe
shall be welded together as it is installed. 
Welds shall be continuous and water tight and conform to the
requirements of AWWA C206.  Casing pipes
shall be installed plumb and aligned. 
Well casing guides shall hold casing in true position during
installation and grouting.

2.               Well installer
shall make all field welds in accordance with AWS Standard D5.2.  Joints shall be single V-butt type,
continuous around pipe.

 

3.04        GROUTING

 

A.            Grout space
between casing pipes  and outside
of drilled hole in accordance with AWWA A100.

 

B.            Allow grout to
cure at least 72 hours for Type I portland cement or 36 hours for Type Ill
portland cement before further work is performed on well.

 

C.            Grout shall be
placed in one continuous operation.  All
grout shall be pumped through a grouting shoe at bottom of casing or by use of
a tremie pipe and may only be discontinued when grout completely fills void
between casing pipe and drilled hole at top of pipe.  Grout shall be a minimum thickness of 2-inches on all sides of
the casing pipe.

 

D.            Temporary casing
pipe not meeting specifications for permanent casing shall be pulled during
grouting.

 

3.05        PROTECT
WELL

 

A.            Well hole shall be
protected at all times from intrusion of foreign material or surface water.

 

3.06        WELL
DEVELOPMENT

 

A.            The well shall be
developed by high-pressure air to develop a sand free well when pumped at
design rate stipulated herein.

 

B.            If sand free water
(less than 5 mg/I sand content) at the design pumping rate is not obtained
following development, the contractor shall redevelop the well until the design
flow, and sand free condition are obtained.

 

3.07        TEST
PUMPING

 

A.            After well has
been developed, cleaned out, and depth accurately measured, well shall be test
pumped for an estimated 24 hours.

 

B.            Test pump shall be
capable of pumping to discharge at the ground surface at a rate of at least
1000 gpm with pumping level 400 feet below ground, but with satisfactory
throttling devices so that discharge may be reduced to 750 gpm.  Pumping unit shall have ample power,
controls and appurtenances and shall be capable of operating for 24 hours
without interruption.

 

 

C.            Flow of water and
depth of water in well shall be measured during test pumping

 

D.            Yield and draw
down tests (in accordance with Iowa Design Standards) shall be conducted during
a continuous test pumping period of at least 24 hours or until stabilized draw
down has been maintained for at least 6 hours when pumping at maximum constant
rate.

 

E.             Records of the
following shall be maintained.  Test
pump capacity and head characteristics, static water level, depth of test pump
setting, and time of starting and ending each test cycle.

 

F.             Recordings and
graphic evaluation of pumping rate, pumping water level and draw down at
intervals of 15 minutes or less for first 2 hours, then at intervals of 1 hour
or less until 3 hours after conclusion of test pumping shall be taken_
Recordings of well water recovery rates and levels shall be taken at sufficient
intervals to allow graphing of recovery curve.

 

G.            Water pumped shall
be disposed in a manner preventing damage to private and public property.

 

3.08        DRILLING
LOG

 

A.            An accurate log of
drilling operations including top and bottom depths of each stratum penetrated
shall be maintained.  Samples of
materials from each 5’ of drilling and change in formation shall be delivered
to Iowa Geological Survey.  At
conclusion of drilling, a copy of log showing thickness and classification of
each formation shall be provided to the Iowa Geological Survey and to the Iowa
Department of Natural Resources.

 

3.09        PLUMBNESS
AND ALIGNMENT TESTS

 

A.            After casings have
been set to their final location and  before
grouting, alignment and plumbness tests shall be performed as required in AWWA
Standard No.  A100-84, Section 8
supplemented and amended as follows:

1.             Additional
plumbness and alignment tests may be required at such intermediate depths or on
final completion of well as required.

2.             Plumbness and
alignment of well shall be tested for total length of casing.  Plumb or dummy shall move freely throughout
length of casing.

3.             Well variance from
vertical shall not exceed 213 inside diameter of casing tested per 100’ of
depth.

 

B.            If casing meets
requirements for plumbness and alignment, well shall be completed.

 

C.            If casing does not
meet these requirements, the deficiencies will be corrected.

 

3.10          DISINFECTION

 

A.      Shall be in
accordance with Chapter 49 of the Iowa Administrative code that governs non
public wells.

 

3.11        WATER
SAMPLES

 

A.          Physical and Chemical Quality:

1.             Water samples shall
be  collected and examined for the
following constituents by analytical methodologies acceptable to the State of
Iowa by a certified laboratory:

 

alkalinity

 

 

ammonium

barium

calcium,
chloride

copper,
hardness

filterable
solids

fluoride

iron
(total)

magnesium

manganese

nitrate

nitrite

nonfilterable solids

pH

phosphate

potassium

silica

sodium

specific
conductance

sulfate

total dissolved solids

total organic carbon

zinc

 

2.             Samples shall be
collected at conclusion of yield draw down pumping procedure and examined by a
certified laboratory as soon as possible.

3.             Water samples
shall be analyzed at time of collection for pH and temperature.  Field determinations shall be made for
carbon dioxide, hydrogen sulfide, and methane where these gases are suspected.

4.             A copy of the
report of analysis for this non-potable well shall be submitted to Iowa
Department of Natural Resources Geological Survey Bureau when available.

 

3.12        ABANDONMENT
OF THE WELL

 

A.            If the well is
abandoned due to loss of tools or any other cause, the abandoned hole shall be
sealed in accordance with AWWA A100.

 

3.13        WELL
ABANDONMENT

A.            Abandonment of
existing wells shall be performed in accordance with 3.14           WELL
DATA SUBMITTALS

 

A.            Well construction
log, yield and draw down test results, and water quality sample results shall
be submitted to the ENGINEER and to the IDNR. 
Plumbness and alignment test results shall be submitted to the ENGINEER  but need not be submitted to the IDNR.

 

3.15        CLEAN-UP

 

A.            Final site clean
up shall return site to as near its original conditions as possible.  All debris and excess materials shall be
removed from site.Exhibit 10.14

 

 

Standard
Form of Agreement Between

Owner and Design-Builder Lump Sum*

 

This document has important legal consequences.  Consultation with

an attorney is recommended with respect to its completion or
modification.

 

This AGREEMENT is made as of the 24th day of
October in the year of 2003, by and between the following parties,
for services in connection with the Project identified below.

 

OWNER:

(Name and address)

 

Golden Grain Energy, LLC

951 N. Linn Avenue

PO Box 435

New Hampton, IA  50659

 

 

DESIGN-BUILDER:

(Name and address)

 

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN 56241

 

 

PROJECT:

(Include Project
name and location as it will appear in the Contract Documents)

 

40 MGY Dry Grind Ethanol Plant

 

 

In consideration of the mutual covenants and obligations contained
herein, Owner and Design-Builder agree as set forth herein.

 

DBIA Document No. 525 • 
Standard Form of Agreement

Between Owner and Design Builder — Lump Sum

ã 1998 Design-Build Institute of America

 

*Portion omitted pursuant to a
request for confidential treatment and filed seperately with the Securities and
Exchange Commission.

 

1

 

Article 1

 

Scope
of Work

 

1.1                               Design-Builder
shall perform all design and construction services, and provide all material,
equipment, tools and labor, necessary to complete the Work described in and
reasonably inferable from the Contract Documents.

 

Article 2

 

Contract
Documents

 

2.1                               The
Contract Documents are comprised of the following:

 

.1                                      All
written modifications, amendments and change orders to this Agreement issued in
accordance with DBIA Document No. 535, Standard Form of General Conditions of Contract
Between Owner and Design-Builder (1998 Edition) (“General Conditions
of Contract”);

 

.2                                      This
Agreement, including all exhibits and attachments, executed by Owner and
Design-Builder, said Exhibits being:

 

Exhibit A – [*]

Exhibit B – [*]

Exhibit C –Owner’s Responsibilities - (6) Pages;

Exhibit D – [*]

Exhibit E – [*]

 

*Portion omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.

 

.3                                      Written
Supplementary Conditions, consisting of two pages, to the General Conditions of
Contract;

 

.4                                      The
General Conditions of Contract;

 

.5                                      Construction
Documents prepared and approved in accordance with Section 2.4 of the
General Conditions of Contract;

 

.6                                      Design-Builder’s
Deviation List, if any, contained in Design-Builder’s Proposal, which shall
specifically identify any and all deviations from Owner’s Project Criteria;

 

.7                                      Owner’s
Project Criteria;

 

.8                                      Design-Builder’s
Proposal, except for the Deviation List, 
submitted in response to Owner’s Project Criteria; and

 

.9                                      The
following other documents, if any:  N/A

 

2

 

Article 3

 

Interpretation and Intent

 

3.1                               The
Contract Documents are intended to permit the parties to complete the Work and
all obligations required by the Contract Documents within the Contract Time(s)
for the Contract Price. The Contract Documents are intended to be complementary
and interpreted in harmony so as to avoid conflict, with words and phrases
interpreted in a manner consistent with construction and design industry
standards.  In the event of any
inconsistency, conflict, or ambiguity between or among the Contract Documents,
the Contract Documents shall take precedence in the order in which they are
listed in Section 2.1 hereof.

 

3.2                               Terms,
words and phrases used in the Contract Documents, including this Agreement,
shall have the meanings given them in the General Conditions of Contract.

 

3.3                               The
Contract Documents form the entire agreement between Owner and Design-Builder
and by incorporation herein are as fully binding on the parties as if repeated
herein.  The Contract Documents
supercede any prior letters of intent between the parties, and such letters of
intent are now null and void.   No oral
representations or other agreements have been made by the parties except as specifically
stated in the Contract Documents.

 

Article 4

 

Ownership
of Work Product

 

4.1                               Work
Product.  All drawings,
specifications and other documents and electronic data furnished by
Design-Builder to Owner under this Agreement (“Work Product”) are deemed to be
instruments of service and Design-Builder shall retain the ownership and
property interests therein, including the copyrights thereto.

 

4.2                               Owner’s
Limited License Upon Payment in Full. 
Upon Owner’s payment in full for all Work performed under the Contract
Documents, Design-Builder shall vest in Owner a limited license to use the Work
Product in connection with Owner’s occupancy, repair, remodeling or enlargement
of the Project and Design-Builder shall provide Owner with a copy of the “as
built” plans, conditioned on Owner’s express understanding that its use of the
Work Product and its acceptance of the “as built” plans is at Owner’s sole risk
and without liability or legal exposure to Design-Builder or anyone working by
or through Design-Builder, including Design Consultants of any tier
(collectively the “Indemnified Parties”), provided, however, that any
performance guarantees and warranties (of equipment or otherwise) shall remain
in effect according to the terms of this Agreement.  The limited license to use the work product shall be limited by
and construed according to the terms contained in the License Agreement between
Owner and ICM, Inc., attached hereto and made a part hereof as Exhibit D.

 

4.3                               Owner’s
Limited License Upon Owner’s Termination for Convenience or Design-Builder’s Election
to Terminate.  If Owner
terminates the Project for its convenience as set forth in Article 8
hereof, or if Design-Builder elects to terminate this Agreement in accordance
with Section 11.4 of the General Conditions of Contract, Design-Builder
shall, then upon Owner’s payment in full of the amounts due Design-Builder
under the Contract Documents, vest in Owner a limited license to use the Work
Product to complete the Project and subsequently occupy, repair, remodel or
enlarge the Project, subject to the following:

 

.1                                      Use
of the Work Product is at Owner’s sole risk without liability or legal exposure
to any Indemnified Party; provided, however, that any “pass through” warranties
regarding equipment or express warranties regarding equipment provided by this
Agreement shall remain in effect according to their terms; and

 

3

 

.2                                      If
the termination for convenience is by Owner or if Design-Builder elects to
terminate this Agreement in accordance with Section 11.4 of the General
Conditions of Contract, then Owner agrees to pay Design-Builder the additional
sum of One Million Dollars ($1,000,000.00) as compensation for the limited
right to use the Work Product in accordance with this Article 4 if Owner
proceeds to complete the Project through its employees, agents, or third
parties.

 

The limited license to use the work product shall be limited by and
construed according to the terms contained in the License Agreement between
Owner and ICM, Inc., attached hereto and made a part hereof as Exhibit D.

 

4.4                               Owner’s
Limited License Upon Design-Builder’s Default.  If this Agreement is terminated due to
Design-Builder’s default pursuant to Section 11.2 of the General
Conditions of Contract and (i) it is determined that Design-Builder was in
default and (ii) Owner has fully satisfied all of its obligations under the
Contract Documents through the time of Design-Builder’s default, then
Design-Builder shall grant Owner a limited license to use the Work Product in
connection with Owner’s completion and occupancy, repair, remodeling, or
enlargement of the Project.  This
limited license is conditioned on Owner’s express understanding that its use of
the Work Product is at Owner’s sole risk and without liability or legal
exposure to any Indemnified Party; provided, however, that any “pass through”
warranties regarding equipment or express warranties regarding equipment
provided by this Agreement shall remain in effect according to their
terms.  This limited license would grant
Owner the ability to repair, remodel or expand the Project at Owner’s
discretion. The limited license to use the work product shall be limited by and
construed according to the terms contained in the License Agreement between
Owner and ICM, Inc., attached hereto and made a part hereof as Exhibit D.

 

4.5                               Owner’s
Indemnification for Use of Work Product.  If Owner uses the Work Product under any of the circumstances
identified in this Article 4, Owner shall defend, indemnify and hold
harmless the Indemnified Parties from and against any and all claims, damages,
liabilities, losses and expenses, including attorneys’ fees, arising out of or
resulting from the use of the Work Product; provided, however, that any “pass
through” warranties regarding equipment or express warranties regarding
equipment provided by this Agreement shall remain in effect according to their
terms.

 

Article 5

 

Contract
Time

 

5.1                               Date of
Commencement.  The Work shall
commence on November 1, 2003, (“Date of Commencement”) provided that it
appears reasonable that financial close on the Letter of Commitment will occur
within sixty (60) days of the date of this Agreement or that the parties
mutually agree otherwise in writing.

 

5.2                               Substantial
Completion and Final Completion

 

5.2.1                     Substantial
Completion of the entire Work shall be achieved no later than Four hundred
eighty-five (485) calendar days after the Date of Commencement.

 

5.2.2                     Interim
milestones and/or Substantial Completion of identified portions of the Work
shall be achieved as follows:  N/A

 

5.2.3                     Final
Completion of the Work or identified portions of the Work shall be achieved as
expeditiously as reasonably practicable. 
Final Completion of the Work shall occur within sixty (60) days of
Substantial Completion.

 

5.2.4                     All of the
dates set forth in this Article 5 (“Contract Time(s)”) shall be subject to
adjustment in accordance with the General Conditions of Contract.

 

4

 

5.3                               Time
is of the Essence.  Owner and
Design-Builder mutually agree that time is of the essence with respect to the
dates and times set forth in the Contract Documents.

 

5.4                               Early
Completion Bonus.

 

5.4.1                     a)                                      If
Substantial Completion is attained within 395 days after the Date of
Commencement, Owner shall pay Design-Builder 
at  the  time  of  Final 
Payment under  Section 
7.3  hereof  an  early completion bonus
of:

 

1)              $8,000.00 per day,
for each day that Substantial Completion occurred in advance of said 395 days;
and

 

2)              $6,000.00 per day, for each day that
Substantial Completion occurred in advance of 425 days, less the days for which
bonus was paid pursuant to provision (a)(1) above; and

 

3)              $4,000.00 per day, for each day that
Substantial Completion occurred in advance of 455 days, less the days for which
bonus was paid pursuant to provisions (a)(1) and (a)(2) above.

 

b)             If
Substantial Completion is attained after 395 days after the Date of
Commencement, but within 425 days after the Date of Commencement, Owner shall
pay Design-Builder at the time of Final Payment under Section 7.3 hereof
an early completion bonus of:

 

1)              $6,000.00 per day, for each day that
Substantial Completion occurred in advance of 425 days; and

 

2)              $4,000.00 per day, for each day that
Substantial Completion occurred in advance of 455 days, less the days for which
bonus was paid pursuant to provision (b)(1) above.

 

c)              If
Substantial Completion is attained after 425 days after the Date of
Commencement, but within 455 days after the Date of Commencement, Owner shall
pay Design-Builder at the time of Final Payment under Section 7.3 hereof
an early completion bonus of $4,000.00 per day, for each day that Substantial
Completion occurred in advance of said 455 days.

 

d)                                     Owner
and Design-Builder agree that no early completion bonus will be paid to
Design-Builder if Substantial Completion occurred after 455 days after the Date
of Commencement.

 

e)                                      Owner
and Design-Builder agree that the maximum liability of early completion bonus
of Owner shall be limited to $540,000.

 

5.4.2                     In
all events, payment of said bonus, if applicable, at the time of Final Payment
is subject to release of funds by senior lender.  If senior lender does not allow release of funds at the time of
Final Payment to pay said early completion bonus in full, any unpaid balance
shall be converted to an unsecured Promissory Note payable by Owner to
Design-Builder, accruing interest at the same rate being charged by senior
lender to Owner, as such rate may change from time to time.  On each anniversary of the Note, any unpaid
accrued interest shall be converted to principal and shall accrue interest as
principal thereafter.  Owner shall pay
said Promissory Note as soon as allowed by senior lender; in any event, the
Note, plus accrued interest, shall be paid in full before Owner pays or makes
any distributions to or for the benefit of its owners (shareholders, members,
partners, etc.).  All payments shall be
applied first to accrued interest and then to principal.

 

5.5                               Liquidated
Damages.  Design-Builder understands
that if Substantial Completion is not attained by the Scheduled Completion
Date, Owner will suffer damages which are difficult to determine and accurately
specify.

 

5

 

5.5.1                     If
Substantial Completion has not been attained within 515 days after the Date of
Commencement, Design-Builder shall pay Owner as liquidated damages:

 

1)  $4,000.00 per day, for each
day that Substantial Completion occurred beyond 515 days; and

 

2)  $6,000.00 per day, for each
day that Substantial Completion occurred beyond 545 days, less the days for
which liquidated damages was paid pursuant to (1) above; and

 

3) $8,000.00 per day, for each day that Substantial Completion occurred
beyond 575 days, less the days for which liquidated damages was paid pursuant
to (1) and (2) above;

 

4)  Owner and Design-Builder
agree that no liquidated damages will be paid to Owner if Substantial
Completion has been attained within 515 days after the Date of Commencement.

 

5) Owner and Design-Builder agree that the maximum liability of
liquidated damages of Design-Builder shall be limited to $540,000.

 

5.5.2                     Owner, at its
discretion, may elect to offset any such liquidated damages from any retainage
or any amounts owed by Owner to Design-Builder.  Liquidated damages shall be paid by Design-Builder by the 15th
day of the month following the month in which the liquidated damages were
incurred.  The liquidated damages
provided herein shall be in lieu of all liability for any and all extra costs,
losses, loss of profits, expenses, claims, penalties and any other damages,
whether special or consequential, and of whatsoever nature incurred by Owner
which are occasioned solely by any delay in achieving Substantial Completion.

 

5.6                               Limited
Liability.  In consideration
of Design-Builder agreeing to proceed at risk, Owner agrees and hereby releases
Design-Builder from any and all liability, for any and all liability, for any
and all extra costs, losses, expenses, claims, penalties and any other damages,
whether special or consequential, and of whatsoever nature incurred by Owner
which are occasioned solely by any delay in achieving the Substantial
Completion Date.

 

Article 6

 

Contract
Price

 

6.1                               Contract
Price.  Owner shall pay
Design-Builder in accordance with Article 6 of the General Conditions of
Contract the sum of Forty-five Million Seven Hundred Forty-four Thousand
Dollars ($45,744,000) (“Contract Price”), subject to adjustments made in
accordance with the General Conditions of Contract.  Unless otherwise provided in the Contract Documents, the Contract
Price is deemed to include all sales, use, consumer and other taxes mandated by
applicable Legal Requirements.

 

6.2                               Markups
for Changes.  If the Contract Price
requires an adjustment due to changes in the Work, and the cost of such changes
is determined under Sections 9.4.1.3 or 9.4.1.4 of the General Conditions of
Contract, the following markups shall be allowed on such changes: The parties
agree that changes shall not occur pursuant to Sections 9.4.1.3 or 9.4.1.4 of
the General Conditions of Contract, but may occur pursuant to the other
provisions therein.

 

Article 7

 

Procedure
for Payment

 

7.0                               Payment
at Financial Close.  As part of the
Contract Price, Owner shall pay Design-Builder Three Million Dollars
($3,000,000) as soon as allowed by its organizational documents, the Escrow
Agreement and any other relevant agreements or laws (such payment to possibly
occur prior to Financial Close) as a mobilization fee. Provided, however, that
said payment, if not made earlier, shall be paid at Financial Close. Financial
Close is defined as Owner executing final loan documents obtaining all
necessary financing to construct the project and funds are available to pay
disbursements. Said Three Million ($3,000,000) dollar payment shall be subject
to the retainage as provided by Article 7.2.1.

 

6

 

7.1                               Progress
Payments

 

7.1.1                     Design-Builder
shall submit to Owner on the twenty-fifth 
( 25th ) day of each month, beginning with the first month
after the Date of Commencement, Design-Builder’s Application for Payment in
accordance with Article 6 of the General Conditions of Contract.

 

7.1.2                     Owner
shall make payment within ten (10) days after Owner’s receipt of each properly
submitted and accurate Application for Payment in accordance with
Article 6 of the General Conditions of Contract, but in each case less the
total of payments previously made, and less amounts properly withheld under
Section 6.3 of the General Conditions of Contract.

 

7.2                               Retainage on
Progress Payments

 

7.2.1                     Owner will
retain ten percent ( 10%) of each payment provided, however, that when fifty
percent (50%) of the Work ($22,872,000 aggregate payment) has been completed by
Design-Builder, Owner will not retain any additional amounts from
Design-Builder’s subsequent payments, unless there is less than $2,287,200
total retainage.  Owner will also
reasonably consider reducing retainage for Subcontractors completing their work
early in the Project.

 

7.2.2                     Upon
Substantial Completion of the entire Work or, if applicable, any portion of the
Work, pursuant to Section 6.6 of the General Conditions of Contract, Owner
shall release to Design-Builder all retained amounts relating, as applicable,
to the entire Work or completed portion of the Work, less an amount equal to the
reasonable value of all remaining or incomplete items of Work as noted in the
Certificate of Substantial Completion, provided that such payment shall only be
made if Design-Builder has met the Performance Guarantee Criteria listed in
Exhibit A.

 

7.3                               Final
Payment.  Design-Builder shall
submit its Final Application for Payment to Owner in accordance with
Section 6.7 of the General Conditions of Contract.  Owner shall make payment on Design-Builder’s
properly submitted and accurate Final Application for Payment within thirty
(30) days after Owner’s receipt of the Final Application for Payment, provided
that Design-Builder has satisfied the requirements for final payment set forth
in Section 6.7.2 of the General Conditions of Contract and Design-Builder
has met the Performance Guarantee Criteria listed in Exhibit A.

 

7.4                               Interest.  Payments which are due and unpaid by Owner
to Design-Builder, whether progress payments or final payment, shall bear
interest commencing five (5) days after payment is due at the rate of twelve
percent (12%) per annum.

 

7.5                               Record
Keeping and Finance Controls.  With
respect to changes in the Work performed on a cost basis by Design-Builder
pursuant to the Contract Documents, Design-Builder shall keep full and detailed
accounts and exercise such controls as may be necessary for proper financial
management, using accounting and control systems in accordance with generally
accepted accounting principles and as may be provided in the Contract
Documents.  During the performance of
the Work and for a period of three (3) years after Final Payment, Owner and
Owner’s accountants shall be afforded access from time to time, upon reasonable
notice, to Design-Builder’s records, books, correspondence, receipts,
subcontracts, purchase orders, vouchers, memoranda and other data relating to
changes in the Work performed on a cost basis in accordance with the Contract
Documents, all of which Design-Builder shall preserve for a period of three (3)
years after Final Payment.

 

Article 8

 

Termination
for Convenience

 

8.1                               Upon
ten (10) days’ written notice to Design-Builder, Owner may, for its convenience
and without cause, elect to terminate this Agreement.  In such event, Owner shall pay Design-Builder for the following:

 

7

 

.1                                      All
Work executed and for proven loss, cost or expense in connection with the Work;

 

.2                                      The
reasonable 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 margin in the amount of fifteen percent ( 15 %) on the sum of items
..1 and .2 above, except that overhead and profit shall not be due regarding
amounts due in settlement of terminated contracts with subcontractors and
design consultants.

 

8.2                               In
addition to the amounts set forth in Section 8.1 above, Design-Builder
shall be entitled to receive one of the following as applicable:  NA

 

8

 

8.3                               If
Owner terminates this Agreement pursuant to Section 8.1 above and proceeds
to design and construct the Project through its employees, agents or third
parties, Owner’s rights to use the Work Product shall be as set forth in
Section 4.3 hereof.

 

Article 9

 

Representatives
of the Parties

 

9.1                               Owner’s
Representatives

 

9.1.1                     Owner
designates the individual listed below as its Senior Representative (“Owner’s
Senior Representative”), which individual has the authority and responsibility
for avoiding and resolving disputes under Section 10.2.3 of the General
Conditions of Contract:  (Identify
individual’s name, title, address and telephone numbers)

 

TBD

 

9.1.2                     Owner
designates the individual listed below as its Owner’s Representative, which
individual has the authority and responsibility set forth in Section 3.4
of the General Conditions of Contract:  (Identify
individual’s name, title, address and telephone numbers)

 

TBD

 

9.2                               Design-Builder’s
Representatives

 

9.2.1                     Design-Builder
designates the individual listed below as its Senior Representative
(“Design-Builder’s Senior Representative”), which individual has the authority
and responsibility for avoiding and resolving disputes under
Section 10.2.3 of the General Conditions of Contract:  (Identify individual’s name, title, address and
telephone numbers)

 

Roland “Ron”
Fagen, CEO and President

 

501
W. Highway 212

P.O.
Box 159

Granite
Falls, MN 56241

Telephone:  (320) 564-3324

 

9.2.2                     Design-Builder
designates the individual listed below as its Design-Builder’s Representative,
which individual has the authority and responsibility set forth in
Section 2.1.1 of the General Conditions of Contract:  (Identify individual’s name, title, address and
telephone numbers)

 

TBD

 

DBIA Document No. 535 • 
Standard Form of General Conditions

of Contract Between Owner and Design Builder

ã 1998 Design-Build Institute of America

 

 

Article 10

 

Bonds
and Insurance

 

10.1                        Insurance.  Design-Builder shall procure in accordance
with Article 5 of the General Conditions of Contract the following
insurance coverage: A certificate of insurance will be provided prior to
starting construction.  Policy limits
shall be as follows:

 

	
  Commercial General Liability:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  General
  Aggregate

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Products-Comp/Op AGG

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Personal & Adv Injury

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Each Occurrence

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Fire Damage (Any one fire)

  	
   

  	
  $

  	
  50,000

  	
   

  
	
  Med Exp (Any one person)

  	
   

  	
  $

  	
  5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Automobile Liability:

  	
   

  	
   

  	
   

  
	
  Combined Single Limit

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Excess Liability – Umbrella Form

  	
   

  	
   

  	
   

  
	
  Each Occurrence

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  Aggregate

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Workers Compensation and

  	
   

  	
   

  	
   

  
	
  Employers’ Liability:

  	
   

  	
   

  	
   

  
	
  Statutory Limits:

  	
   

  	
   

  	
   

  
	
  Each Accident

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Disease-Policy Limit

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Disease-Each Employee

  	
   

  	
  $

  	
  1,000,000

  	
   

  

 

Owner shall obtain a builder’s risk policy naming Owner as the insured,
with Design-Builder as additional insured, in an amount not less than the
Contract Price.  Owner shall also obtain
Boiler and Machinery Insurance protecting Owner, Design-Builder, Design Consultants,
Subcontracts and Subcontractors.

 

Article 11

 

Other
Provisions

 

11.1                        Other
provisions, if any, are as follows:

 

•                  Performance
Guarantee:  The Design-Builder
guarantees the Criteria listed in Exhibit A. 
If there is a performance shortfall, Design-Builder will pay all design
and construction costs associated with making the necessary corrections.  Design-Builder retains the right to use its
sole discretion in determining the method to remedy any performance related
issues.

 

•                  Price
Guarantee:  The Design-Builder
guarantees the Contract Price for the Work delineated by the Contract
Documents.  Any and all price increases
would require, in addition to Owner’s approval, the approval of Owner’s senior
lender.

 

•                  Winter
Construction:  Owner shall have no
responsibility for any winter construction related activities including, but
not limited to, special material costs, sheltering, heating, and equipment
rental, except that Owner shall pay all the reasonable costs incurred for frost
removal including, but not limited to, equipment costs, equipment rental costs,
and associated labor costs so that winter construction can proceed.

 

•                  Design-Builder
shall obtain or cooperate in obtaining a performance bond if such a bond is
requested by Owner.  If the bond is obtained
by Design-Builder, Owner shall pay Design-Builder for the cost of the bond,
plus pay Design-Builder a fee of 7.5%, said fee calculated by multiplying 7.5%
on the cost of the bond.  If purchased
by Owner, Owner shall pay all costs of obtaining the bond.

 

 

•                  Design-Builder
warrants that within six (6) months following the date of Substantial
Completion, the atmospheric emissions of the ethanol plant shall meet the
requirements as currently prescribed, as of the date hereof, by the State of
Iowa Department of Natural Resources Air Quality.  Verification shall be provided by a written report from
Design-Builder.

 

•                  From
the Date of Commencement to the date of Substantial Completion,
Design-Builder  shall pay for all
utilities, including electricity, natural gas, water and sewer, used or
consumed by Design-Builder in the course of its Work.

 

In executing this Agreement, Design-Builder represents that it has the
necessary financial resources to fulfill its obligations under this Agreement
and has the necessary corporate approvals to execute this Agreement and perform
the services described herein.  Owner
represents that it has the necessary organizational approvals to execute this
Agreement; that Owner is seeking financing for the project and that Owner agrees
to keep Design-Builder informed of Owner’s progress in obtaining commitments
for and closing on such financing.

 

	
  OWNER:

  	
   

  	
  DESIGN-BUILDER:

  
	
   

  	
   

  	
   

  
	
  Golden Grain Energy, LLC

  	
   

  	
  Fagen, Inc.

  
	
  (Name of Owner)

  	
   

  	
  (Name of
  Design-Builder)

  
	
   

  	
   

  	
   

  
	
  /s/ Walter Wendland

  	
   

  	
  /s/ Ron Fagen

  
	
  (Signature)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
  Walter Wendland

  	
   

  	
  Roland “Ron” Fagen

  
	
  (Printed Name)

  	
   

  	
  (Printed Name)

  
	
   

  	
   

  	
   

  
	
  President

  	
   

  	
  CEO and President

  
	
  (Title)

  	
   

  	
  (Title)

  
	
   

  	
   

  	
   

  
	
  Date: 

  	
  10/14/03

  	
   

  	
  Date:

  	
  10/24/03

  
					

 

 

 

Standard
Form of General Conditions

of Contract Between Owner and Design-Builder

 

This document has important legal consequences.  Consultation with

an attorney is recommended with respect to its completion or modification.

 

Table
of Contents

 

	
  Article 1:

  	
   

  	
  General

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 2:

  	
   

  	
  Design-Builder’s Services and Responsibilities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 3:

  	
   

  	
  Owner’s Services and Responsibilities

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 4:

  	
   

  	
  Hazardous Conditions and Differing Site Conditions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 5:

  	
   

  	
  Insurance
  and Bonds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 6:

  	
   

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 7:

  	
   

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 8:

  	
   

  	
  Time

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 9:

  	
   

  	
  Changes to the Contract Price and Time

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 10:

  	
   

  	
  Contract Adjustments and Disputes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 11:

  	
   

  	
  Stop
  Work and Termination for Cause

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 12:

  	
   

  	
  Miscellaneous

  	
   

  

 

 

Article 1

 

General

 

1.1                               Mutual
Obligations

 

1.1.1                     Owner
and Design-Builder commit at all times to cooperate fully with each other, and
proceed on the basis of trust and good faith, to permit each party to realize
the benefits afforded under the Contract Documents.

 

1.2                               Basic
Definitions

 

1.2.1                     Agreement
refers to the executed contract between Owner and Design-Builder under either
DBIA Document No. 525, Standard Form of Agreement Between Owner and
Design-Builder — Lump Sum (1998 Edition) or DBIA Document
No. 530, Standard Form of Agreement Between Owner and Design-Builder — Cost Plus
Fee with an Option for a Guaranteed Maximum Price (1998 Edition).

 

1.2.2                     Day
or Days
shall mean calendar days unless otherwise specifically noted in the Contract
Documents.

 

1.2.3                     Design
Consultant is a qualified, licensed design professional who is not
an employee of Design-Builder, but is retained by Design-Builder, or employed
or retained by anyone under contract with Design-Builder or Subcontractor, to
furnish design services required under the Contract Documents.

 

1.2.4                     Hazardous
Conditions are any materials, wastes, substances and chemicals
deemed to be hazardous under applicable Legal Requirements, or the handling,
storage, remediation, or disposal of which are regulated by applicable Legal
Requirements.

 

1.2.5                     General
Conditions of Contract refer to this DBIA Document No. 535, Standard
Form of General Conditions of Contract Between Owner and Design-Builder
(1998 Edition).

 

1.2.6                     Legal
Requirements are 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 Project or Site, the
practices involved in the Project or Site, or any Work.

 

1.2.7                     Owner’s
Project Criteria are developed by or for Owner to describe Owner’s
program requirements and objectives for the Project, including use, space,
price, time, site and expandability requirements, as well as submittal
requirements and other requirements governing Design-Builder’s performance of
the Work.  Owner’s Project Criteria may
include conceptual documents, design criteria, performance requirements and
other Project-specific technical materials and requirements.

 

1.2.8                     Site
is the land or premises on which the Project is located.

 

1.2.9                     Subcontractor
is any person or entity retained by Design-Builder as an independent contractor
to perform a portion of the Work and shall include materialmen and suppliers.

 

1.2.10              Sub-Subcontractor is any
person or entity retained by a Subcontractor as an independent contractor to
perform any portion of a Subcontractor’s Work and shall include materialmen and
suppliers.

 

1.2.11              Substantial Completion is
the date on which the Work, or an agreed upon portion of the Work, is
sufficiently complete so that Owner can occupy and use the Project or a portion
thereof for its intended purposes.

 

1.2.12              Work is comprised of all
Design-Builder’s design, construction and other services required by the
Contract Documents, including procuring and furnishing all materials,
equipment, services and labor reasonably inferable from the Contract Documents.

 

Article 2

 

Design-Builder’s
Services and
Responsibilities

 

2.1                               General
Services

 

2.1.1                     Design-Builder’s
Representative shall be reasonably available to Owner and shall have the
necessary expertise and experience required to supervise the Work.  Design-Builder’s Representative shall
communicate regularly with Owner and shall be vested with the authority to act
on behalf of Design-Builder. 
Design-Builder’s Representative may be replaced only with the mutual
agreement of Owner and Design-Builder.

 

2.1.2                     Design-Builder
shall provide Owner with a monthly status report 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 Documents that

 

 

require resolution, (iii) health and safety issues exist in connection
with the Work, and (iv) other items require resolution so as not to jeopardize
Design-Builder’s ability to complete the Work for the Contract Price and within
the Contract Time(s).

 

2.1.3                     Design-Builder
shall prepare and submit, at least three (3) days prior to the meeting
contemplated by Section 2.1.4 hereof, a schedule for the execution of
the Work for Owner’s review and response. 
The schedule shall indicate the dates for the start and completion
of the various stages of Work, including the dates when Owner information and approvals
are required to enable Design-Builder to achieve the Contract Time(s).  The schedule shall be revised as
required by conditions and progress of the Work, but such revisions shall not
relieve Design-Builder of its obligations to complete the Work within the
Contract Time(s), as such dates may be adjusted in accordance with the Contract
Documents.  Owner’s review of and
response to the schedule shall not be construed as relieving
Design-Builder of its complete and exclusive control over the means, methods,
sequences and techniques for executing the Work.

 

2.1.4                     The parties
will meet within seven (7) days after execution of the Agreement to discuss
issues affecting the administration of the Work and to implement the necessary
procedures, including those relating to submittals and payment, to facilitate
the ability of the parties to perform their obligations under the Contract
Documents.

 

2.2                               Design
Professional Services

 

2.2.1                     Design-Builder
shall, consistent with applicable state licensing laws, provide through
qualified, licensed design professionals employed by Design-Builder, or
procured from qualified, independent licensed Design Consultants, the necessary
design services, including architectural, engineering and other design
professional services, for the preparation of the required drawings, specifications
and other design submittals to permit Design-Builder to complete the Work
consistent with the Contract Documents. 
Nothing in the Contract Documents is intended or deemed to create any
legal or contractual relationship between Owner and any Design Consultant.

 

2.3                               Standard of
Care for Design Professional Services

 

2.3.1                     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
Project.  Notwithstanding the preceding
sentence, if the parties agree upon specific performance standards for any
aspect of the Work, which standards are to be set forth in an exhibit to the
Agreement entitled “Performance Standard Requirements,” the design professional
services shall be performed to achieve such standards.

 

2.4                               Design
Development Services

 

2.4.1                     Design-Builder
and Owner shall, consistent with any applicable provision of the Contract
Documents, agree upon any interim design submissions that Owner may wish to
review, which interim design submissions may include design criteria, drawings,
diagrams and specifications setting forth the Project requirements.   On or about the time of the scheduled
submissions, Design-Builder and Owner shall meet and confer about the
submissions, with Design-Builder identifying during such meetings, among other
things, the evolution of the design and any significant changes or deviations
from the Contract Documents, or, if applicable, previously submitted design
submissions.  Minutes of the meetings
will be maintained by Design-Builder and provided to all attendees for
review.  Following the design review
meeting, Owner shall review and approve the interim design submissions in a
time that is consistent with the turnaround times set forth in Design-Builder’s
schedule.

 

2.4.2                     Design-Builder
shall submit to Owner Construction Documents setting forth in detail drawings
and specifications describing the requirements for construction of the
Work.  The Construction Documents shall
be consistent with the latest set of interim design submissions, as such
submissions may have been modified in a design review meeting.  The parties shall have a design review meeting
to discuss, and Owner shall review and approve, the Construction Documents in
accordance with the procedures set forth Section 2.4.1 above.  Design-Builder shall proceed with
construction in accordance with the approved Construction Documents and shall
submit one set of approved Construction Documents to Owner prior to
commencement of construction.

 

2.4.3                     Owner’s
review and approval of interim design submissions and the Construction
Documents is for the purpose of mutually establishing a conformed

 

14

 

set of Contract Documents compatible with the requirements of the
Work.  Neither Owner’s review nor
approval of any interim design submissions and Construction Documents shall be
deemed to transfer any design liability from Design-Builder to Owner.

 

2.4.4                     To the extent
not prohibited by the Contract Documents or Legal Requirements, Design-Builder
may prepare interim design submissions and Construction Documents for a portion
of the Work to permit construction to proceed on that portion of the Work prior
to completion of the Construction Documents for the entire Work.

 

2.5                               Legal
Requirements

 

2.5.1                     Design-Builder
shall perform the Work in accordance with all Legal Requirements and shall
provide all notices applicable to the Work as required by the Legal
Requirements.

 

2.5.2                     The Contract
Price and/or Contract Time(s) shall be adjusted to compensate Design-Builder
for the effects of any changes in the Legal Requirements enacted after the date
of the Agreement affecting the performance of the Work, or if a Guaranteed
Maximum Price is established after the date of the Agreement, the date the
parties agree upon the Guaranteed Maximum Price.  Such effects may include, without limitation, revisions
Design-Builder is required to make to the Construction Documents because of
changes in Legal Requirements.

 

2.6                               Government
Approvals and Permits

 

2.6.1                     Except as
identified in an Owner’s Permit List attached as an exhibit to the Agreement,
Design-Builder shall obtain and pay for all necessary permits, approvals,
licenses, government charges and inspection fees required for the prosecution
of the Work by any government or  quasi-government entity having
jurisdiction over the Project.

 

2.6.2                     Design-Builder
shall provide reasonable assistance to Owner in obtaining those permits,
approvals and licenses that are Owner’s responsibility.

 

2.7                               Design-Builder’s
Construction Phase Services

 

2.7.1                     Unless
otherwise provided in the Contract Documents to be the responsibility of Owner
or a separate contractor, Design-Builder shall provide through itself or
Subcontractors the necessary supervision, labor, inspection, testing, start-up,
material, equipment, machinery, temporary utilities and other temporary
facilities to permit Design-Builder to complete construction of the Project
consistent with the Contract Documents.

 

2.7.2                     Design-Builder
shall perform all construction activities efficiently and with the requisite
expertise, skill and competence to satisfy the requirements of the Contract Documents.  Design-Builder shall at all times exercise
complete and exclusive control over the means, methods, sequences and
techniques of construction.

 

2.7.3                     Design-Builder
shall employ only Subcontractors who are duly licensed and qualified to perform
the Work consistent with the Contract Documents.  Owner may reasonably object to Design-Builder’s selection of any
Subcontractor, provided that the Contract Price and/or Contract Time(s) shall
be adjusted to the extent that Owner’s decision impacts Design-Builder’s cost
and/or time of performance.

 

2.7.4                     Design-Builder
assumes responsibility to Owner for the proper performance of the Work of
Subcontractors and any acts and omissions in connection with such
performance.  Nothing in the Contract
Documents is intended or deemed to create any legal or contractual relationship
between Owner and any Subcontractor or Sub-Subcontractor, including but not
limited to any third-party beneficiary rights.

 

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

 

2.7.6                     Design-Builder
shall keep the Site reasonably free from debris, trash and construction wastes
to permit Design-Builder to perform its construction services efficiently,
safely and without interfering with the use of adjacent land areas.  Upon Substantial Completion of the Work, or
a portion of the Work, Design-Builder shall remove all debris, trash,
construction wastes, materials, equipment, machinery and tools arising from the
Work or applicable portions thereof to permit Owner to occupy the Project or a
portion of the Project for its intended use.

 

15

 

2.8                               Design-Builder’s
Responsibility for Project Safety

 

2.8.1                     Design-Builder
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. 
Design-Builder assumes responsibility for implementing and monitoring
all safety precautions and programs related to the performance of the
Work.  Design-Builder 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 otherwise required by the Contract
Documents, Design-Builder’s Safety Representative shall be an individual
stationed at the Site who may have responsibilities on the Project in addition
to safety.  The Safety Representative
shall make routine daily inspections of the Site and shall hold weekly safety
meetings with Design-Builder’s personnel, Subcontractors and others as
applicable.

 

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

 

2.8.3                     Design-Builder’s
responsibility for safety under this Section 2.8  is not intended in any way
to relieve Subcontractors and Sub-Subcontractors of their own contractual and
legal obligations and responsibility for (i) complying with all Legal
Requirements, including those related to health and safety matters, and (ii)
taking all necessary measures to implement and monitor all safety precautions
and programs to guard against injury, losses, damages or accidents resulting
from their performance of the Work.

 

2.9                               Design-Builder’s
Warranty

 

2.9.1                     Design-Builder
warrants to Owner that the construction, including all materials and equipment
furnished as part of the construction, shall be new unless otherwise specified
in the Contract Documents, of good quality, in conformance with the Contract
Documents and free of defects in materials and workmanship.  Design-Builder’s warranty obligation
excludes defects caused by abuse, alterations, or failure to maintain the Work
by persons other than Design-Builder or anyone for whose acts Design-Builder
may be liable. 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 2.9 or the Contract Documents.  Design-Builder will provide Owner with all manufacturers’
warranties upon Substantial Completion.

 

2.10                        Correction
of Defective Work

 

2.10.1              Design-Builder
agrees to correct any Work that is found to not be in conformance with the
Contract Documents, including that part of the Work subject to Section 2.9
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 Documents.

 

2.10.2              Design-Builder
shall, within seven (7) days of receipt of written notice from Owner that the
Work is not in conformance with the Contract Documents, take meaningful steps
to commence correction of such nonconforming Work, including the correction,
removal or replacement of the nonconforming Work and any damage caused to other
parts of the Work affected by the nonconforming Work.  If Design-Builder fails to commence the necessary steps within
such seven (7) day period, Owner, in addition to any other remedies provided
under the Contract Documents, may provide Design-Builder with written notice
that Owner will commence correction of such nonconforming Work with its own
forces.  If Owner does perform such
corrective Work, Design-Builder 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 seven (7) day periods identified herein shall be deemed
inapplicable.

 

2.10.3              The one year period
referenced in Section 2.10.1 above applies only to Design-Builder’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

 

16

 

Design-Builder’s other obligations under the Contract Documents.

 

Article 3

 

Owner’s
Services and Responsibilities

 

3.1                               Duty to
Cooperate

 

3.1.1                     Owner shall,
throughout the performance of the Work, cooperate with Design-Builder and
perform its responsibilities, obligations and services in a timely manner to
facilitate Design-Builder’s timely and efficient performance of the Work and so
as not to delay or interfere with Design-Builder’s performance of its
obligations under the Contract Documents.

 

3.1.2                     Owner shall
provide timely reviews and approvals of interim design submissions and
Construction Documents consistent with the turnaround times set forth in
Design-Builder’s schedule.

 

3.2                               Furnishing
of Services and Information

 

3.2.1                     Unless
expressly stated to the contrary in the Contract Documents, Owner shall
provide, at its own cost and expense, for Design-Builder’s information and use
the following, all of which Design-Builder is entitled to rely upon in
performing the Work:

 

.1                  Surveys
describing the property, boundaries, topography and reference points for use
during construction, including existing service and utility lines;

 

.2                  Geotechnical
studies describing subsurface conditions, and other surveys describing other
latent or concealed physical conditions at the Site;

 

.3                  Temporary and permanent
easements, zoning and other requirements and encumbrances affecting land use,
or necessary to permit the proper design and construction of the Project and
enable Design-Builder to perform the Work;

 

.4                  A legal
description of the Site;

 

.5                  To the extent
available, as-built and record drawings of any existing structures at the Site;
and

 

.6                  To the extent
available, environmental studies, reports and impact statements describing the
environmental conditions, including Hazardous Conditions, in existence at the
Site.

 

3.2.2                     Owner is
responsible for securing and executing all necessary agreements with adjacent
land or property owners that are necessary to enable Design-Builder to perform
the Work.  Owner is further responsible
for all costs, including attorneys’ fees, incurred in securing these necessary
agreements.

 

3.3                               Financial
Information

 

3.3.1                     At
Design-Builder’s request, Owner shall promptly furnish reasonable evidence
satisfactory to Design-Builder that Owner has adequate funds available and
committed to fulfill all of Owner’s contractual obligations under the Contract
Documents.  If Owner fails to furnish
such financial information in a timely manner, Design-Builder may stop Work
under Section 11.3 hereof or exercise any other right permitted under the
Contract Documents.

 

3.3.2                     Design-Builder
shall cooperate with the reasonable requirements of Owner’s lenders or other
financial sources.  Notwithstanding the
preceding sentence, after execution of the Agreement Design-Builder shall have
no obligation to execute for Owner or Owner’s lenders or other financial
sources any documents or agreements that require Design-Builder to assume
obligations or responsibilities greater than those existing obligations
Design-Builder has under the Contract Documents.

 

3.4                               Owner’s
Representative

 

3.4.1                     Owner’s
Representative shall be responsible for providing Owner-supplied information
and approvals in a timely manner to permit Design-Builder to fulfill its
obligations under the Contract Documents. 
Owner’s Representative shall also provide Design-Builder with prompt
notice if it observes any failure on the part of Design-Builder to fulfill its
contractual obligations, including any errors, omissions or defects in the
performance of the Work.

 

17

 

3.5                               Government
Approvals and Permits

 

3.5.1                     Owner shall
obtain and pay for all necessary permits, approvals, licenses, government
charges and inspection fees set forth in the Owner’s Permit List attached as an
exhibit to the Agreement.

 

3.5.2                     Owner shall
provide reasonable assistance to Design-Builder in obtaining those permits,
approvals and licenses that are Design-Builder’s responsibility.

 

3.6                               Owner’s
Separate Contractors

 

3.6.1                     Owner
is responsible for all work performed on the Project or at the Site by separate
contractors under Owner’s control. 
Owner shall contractually require its separate contractors to cooperate
with, and coordinate their activities so as not to interfere with, Design-Builder
in order to enable Design-Builder to timely complete the Work consistent with
the Contract Documents.

 

Article 4

 

Hazardous
Conditions and Differing Site Conditions

 

4.1                               Hazardous
Conditions

 

4.1.1                     Unless
otherwise expressly provided in the Contract Documents to be part of the Work,
Design-Builder is not responsible for any Hazardous Conditions encountered at
the Site.  Upon encountering any
Hazardous Conditions, Design-Builder will stop Work immediately in the affected
area and duly notify Owner and, if required by Legal Requirements, all
government or quasi-government entities with jurisdiction over the Project or
Site.

 

4.1.2                     Upon
receiving notice of the presence of suspected Hazardous Conditions, Owner shall
take the necessary measures required to ensure that the Hazardous Conditions
are remediated or rendered harmless. 
Such necessary measures shall include Owner retaining qualified
independent experts to (i) ascertain whether Hazardous Conditions have actually
been encountered, and, if they have been encountered, (ii) prescribe the remedial
measures that Owner must take either to remove the Hazardous Conditions or
render the Hazardous Conditions harmless.

 

4.1.3                     Design-Builder
shall be obligated to resume Work at the affected area of the Project only
after Owner’s expert provides it with written certification that (i) the
Hazardous Conditions have been removed or rendered harmless and (ii) all
necessary approvals have been obtained from all government and quasi-government
entities having jurisdiction over the Project or Site.

 

4.1.4                     Design-Builder
will be entitled, in accordance with these General Conditions of Contract, to
an adjustment in its Contract Price and/or Contract Time(s) to the extent
Design-Builder’s cost and/or time of performance have been adversely impacted
by the presence of Hazardous Conditions.

 

4.1.5                     To the
fullest extent permitted by law, Owner shall indemnify, defend and hold
harmless Design-Builder, Design Consultants, Subcontractors, anyone employed
directly or indirectly for any of them, and their officers, directors,
employees and agents, from and against any and all claims, losses, damages,
liabilities and expenses, including attorneys’ fees and expenses, arising out
of or resulting from the presence, removal or remediation of Hazardous
Conditions at the Site.

 

4.1.6                     Notwithstanding
the preceding provisions of this Section 4.1, Owner is not responsible for
Hazardous Conditions introduced to the Site by Design-Builder, Subcontractors
or anyone for whose acts they may be liable. 
Design-Builder shall indemnify, defend and hold harmless Owner and
Owner’s officers, directors, employees and agents from and against all claims,
losses, damages, liabilities and expenses, including attorneys’ fees and
expenses, arising out of or resulting from those Hazardous Conditions introduced
to the Site by Design-Builder, Subcontractors or anyone for whose acts they may
be liable.

 

18

 

4.2                               Differing
Site Conditions

 

4.2.1                     Concealed or
latent physical conditions or subsurface conditions at the Site that (i)
materially differ from the conditions indicated in the Contract Documents or
(ii) are of an unusual nature, differing materially from the conditions
ordinarily encountered and generally recognized as inherent in the Work are
collectively referred to herein as “Differing Site Conditions.”  If Design-Builder encounters a Differing
Site Condition, Design-Builder will be entitled to an adjustment in the
Contract Price and/or Contract Time(s) to the extent Design-Builder’s cost
and/or time of performance are adversely impacted by the Differing Site
Condition.

 

4.2.2                     Upon
encountering a Differing Site Condition, Design-Builder shall provide prompt
written notice to Owner of such condition, which notice shall not be later than
fourteen (14) days after such condition has been encountered.  Design-Builder shall, to the extent
reasonably possible, provide such notice before the Differing Site Condition
has been substantially disturbed or altered.

 

Article 5

 

Insurance and Bonds

 

5.1                               Design-Builder’s
Insurance Requirements

 

5.1.1                     Design-Builder
is responsible for procuring and maintaining from insurance companies
authorized to do business in the state in which the Project is located, and
with a minimum rating set forth in the Agreement, the following insurance
coverages for certain claims which may arise from or out of the performance of
the Work and obligations under the Contract Documents:

 

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

 

.2                  Coverage for
claims by Design-Builder’s employees for bodily injury, sickness, disease, or
death;

 

.3                  Coverage for
claims by any person other than Design-Builder’s employees for bodily injury,
sickness, disease, or death;

 

.4                  Coverage for
usual personal injury liability claims for damages sustained by a person as a
direct or indirect result of Design-Builder’s employment of the person, or
sustained by any other person;

 

.5                  Coverage for
claims for damages  (other than to the
Work) because of injury to or destruction of tangible property, including loss
of use;

 

.6                  Coverage for
claims of damages because of personal injury or death, or property damage
resulting from ownership, use and maintenance of any motor vehicle; and

 

.7                  Coverage for
contractual liability claims arising out of Design-Builder’s obligations under
Section 7.4.1 hereof.

 

5.1.2                     Design-Builder’s
liability insurance required by Section 5.1.1 above 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.

 

5.1.3                     Design-Builder’s
liability insurance set forth in Sections 5.1.1.1 through 5.1.1.7 above shall
specifically delete any design-build or similar exclusions that could
compromise coverages because of the design-build delivery of the Project.

 

5.1.4                     To the extent
Owner requires Design-Builder or any Design Consultant to provide professional
liability insurance for claims arising from the negligent performance of design
services by Design-Builder or the Design Consultant, the coverage limits,
duration and other specifics of such insurance shall be as set forth in the
Agreement.  Any professional liability
shall specifically delete any design-build or similar exclusions that could
compromise coverages because of the design-build delivery of the Project.  Such policies shall be provided prior to the
commencement of any design services hereunder.

 

5.1.5                     Prior to
commencing any construction services hereunder, Design-Builder shall provide
Owner with certificates evidencing that (i) all insurance obligations required
by the Contract Documents are in full force and in effect and will remain in
effect for the

 

19

 

duration required by the Contract Documents and (ii) no insurance
coverage will be canceled, renewal refused, or materially changed unless at
least thirty (30) days prior written notice is given to Owner.

 

5.2                               Owner’s
Liability Insurance

 

5.2.1                     Owner shall
procure and maintain from insurance companies authorized to do business in the
state in which the Project is located such liability insurance to protect Owner
from claims which may arise from the performance of Owner’s obligations under
the Contract Documents or Owner’s conduct during the course of the Project.

 

5.3                               Owner’s
Property Insurance

 

5.3.1                     Unless
otherwise provided in the Contract Documents, Owner shall procure and maintain
from insurance companies authorized to do business in the state in which the Project
is located property insurance upon the entire Project to the full insurable
value of the Project, including professional fees, overtime premiums and all
other expenses incurred to replace or repair the insured property.  The property insurance obtained by Owner
shall include as additional insureds the interests of Owner, Design-Builder,
Design Consultants, Subcontractors and Sub-Subcontractors, and shall insure
against the perils of fire and extended coverage, theft, vandalism, malicious
mischief, collapse, flood, earthquake, debris removal and other perils or
causes of loss as called for in the Contract Documents.  The property insurance shall include
physical loss or damage to the Work, including materials and equipment in
transit, at the Site or at another location as may be indicated in
Design-Builder’s Application for Payment and approved by Owner.

 

5.3.2                     Unless the
Contract Documents provide otherwise, Owner shall procure and maintain boiler
and machinery insurance that will include the interests of Owner,
Design-Builder, Design Consultants, Subcontractors and Sub-Subcontractors.

 

5.3.3                     Prior to
Design-Builder commencing any Work, Owner shall provide Design-Builder with
certificates evidencing that (i) all Owner’s insurance obligations required by the
Contract Documents are in full force and in effect and will remain in effect
until Design-Builder has completed all of the Work and has received final
payment from Owner and (ii) no insurance coverage will be canceled, renewal
refused, or materially changed unless at least thirty (30) days prior written
notice is given to Design-Builder. 
Owner’s property insurance shall not lapse or be canceled if Owner
occupies a portion of the Work pursuant to Section 6.6.3 hereof.  Owner shall provide Design-Builder with the
necessary endorsements from the insurance company prior to occupying a portion
of the Work.

 

5.3.4                     Any loss
covered under Owner’s property insurance shall be adjusted with Owner and
Design-Builder and made payable to both of them as trustees for the insureds as
their interests may appear, subject to any applicable mortgage clause.  All insurance proceeds received as a result
of any loss will be placed in a separate account and distributed in accordance
with such agreement as the interested parties may reach.  Any disagreement concerning the distribution
of any proceeds will be resolved in accordance with Article 10 hereof.

 

5.3.5                     Owner and
Design-Builder waive against each other and Owner’s separate contractors,
Design Consultants, Subcontractors, agents and employees of each and all of
them, all damages covered by property insurance provided herein, except such
rights as they may have to the proceeds of such insurance.  Design-Builder and Owner shall, where appropriate,
require similar waivers of subrogation from Owner’s separate contractors,
Design Consultants and Subcontractors and shall require each of them to include
similar waivers in their contracts.

 

5.4                               Bonds
and Other Performance Security

 

5.4.1                     If Owner
requires Design-Builder to obtain performance and labor and material payment
bonds, or other forms of performance security, the amount, form and other
conditions of such security shall be as set forth in the Agreement.

 

Article 6

 

Payment

 

6.1                               Schedule of
Values

 

6.1.1                     Within ten
(10) days of execution of the Agreement, Design-Builder shall submit for
Owner’s

 

20

 

review and approval a schedule of values for all of the Work.  The Schedule of Values will (i)
subdivide the Work into its respective parts, (ii) include values for all items
comprising the Work and (iii) serve as the basis for monthly progress payments
made to Design-Builder throughout the Work.

 

6.2                               Monthly
Progress Payments

 

6.2.1                     On
or before the date established in the Agreement, Design-Builder shall submit
for Owner’s review and approval its Application for Payment requesting payment
for all Work performed as of the date of the Application for Payment.  The Application for Payment shall be accompanied
by all supporting documentation required by the Contract Documents and/or
established at the meeting required by Section 2.1.4 hereof.

 

6.2.2                     The
Application for Payment may request payment for equipment and materials not yet
incorporated into the Project, provided that (i) Owner is satisfied that the
equipment and materials are suitably stored at either the Site or another
acceptable location, (ii) the equipment and materials are protected by suitable
insurance and (iii) upon payment, Owner will receive the equipment and
materials free and clear of all liens and encumbrances.

 

6.2.3                     The
Application for Payment shall constitute Design-Builder’s representation that
the Work has been performed consistent with the Contract Documents, 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 Project, or upon Design-Builder’s receipt of payment, whichever occurs
earlier.

 

6.3                               Withholding
of Payments

 

6.3.1                     On or before
the date established in the Agreement, Owner shall pay Design-Builder all
amounts properly due. If Owner determines that Design-Builder is not entitled
to all or part of an Application for Payment, it will notify Design-Builder in
writing at least five (5) days prior to the date payment is due.  The notice shall indicate the specific
amounts Owner intends to withhold, the reasons and contractual basis for the
withholding, and the specific measures Design-Builder must take to rectify
Owner’s concerns.  Design-Builder and
Owner will attempt to resolve Owner’s concerns prior to the date payment is
due.   If the parties cannot resolve
such concerns, Design-Builder may pursue its rights under the Contract Documents,
including those under Article 10 hereof.

 

6.3.2                     Notwithstanding
anything to the contrary in the Contract Documents, Owner shall pay
Design-Builder all undisputed amounts in an Application for Payment within the
times required by the Agreement.

 

6.4                               Right
to Stop Work and Interest

 

6.4.1                     If Owner
fails to pay Design-Builder any amount that becomes due, Design-Builder, in
addition to all other remedies provided in the Contract Documents, may stop
Work pursuant to Section 11.3 hereof. 
All payments due and unpaid shall bear interest at the rate set forth in
the Agreement.

 

6.5                               Design-Builder’s
Payment Obligations

 

6.5.1                     Design-Builder
will pay Design Consultants and Subcontractors, in accordance with its
contractual obligations to such parties, all the amounts Design-Builder has
received from Owner on account of their work. 
Design-Builder will impose similar requirements on Design Consultants
and Subcontractors to pay those parties with whom they have contracted.  Design-Builder will indemnify and defend Owner
against any claims for payment and mechanic’s liens as set forth in
Section 7.3 hereof.

 

21

 

6.6                               Substantial
Completion

 

6.6.1                     Design-Builder
shall notify Owner when it believes the Work, or to the extent permitted in the
Contract Documents, a portion of the Work, is substantially complete.  Within five (5) days of Owner’s receipt of
Design-Builder’s notice, Owner and Design-Builder will jointly inspect such
Work to verify that it is substantially complete in accordance with the
requirements of the Contract Documents. 
If such Work is substantially complete, Owner shall prepare and issue a
Certificate of Substantial Completion that will set forth (i) the date of Substantial
Completion of the Work or portion thereof, (ii) the remaining items of Work
that have to be completed before final payment, (iii) provisions (to the extent
not already provided in the Contract Documents) establishing Owner’s and
Design-Builder’s responsibility for the Project’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 noted in the Certificate of Substantial Completion.

 

6.6.2                     Upon Substantial
Completion of the entire Work or, if applicable, any portion of the Work, Owner
shall release to Design-Builder all retained amounts relating, as applicable,
to the entire Work or completed portion of the Work, less an amount equal to
the reasonable value of all remaining or incomplete items of Work as noted in
the Certificate of Substantial Completion.

 

6.6.3                     Owner, at its
option, may use a portion of the Work which has been determined to be
substantially complete, provided, however, that (i) a Certificate of
Substantial Completion has been issued for the portion of Work addressing the
items set forth in Section 6.6.1 above, (ii) Design-Builder and Owner have
obtained the consent of their sureties and insurers, and to the extent
applicable, the appropriate government authorities having jurisdiction over the
Project, and (iii) Owner and Design-Builder agree that Owner’s use or occupancy
will not interfere with Design-Builder’s completion of the remaining Work.

 

6.7                               Final
Payment

 

6.7.1                     After receipt
of a Final Application for Payment from Design-Builder, Owner shall make final
payment by the time required in the Agreement, provided that Design-Builder has
completed all of the Work in conformance with the Contract Documents.

 

6.7.2                     At the time
of submission of its Final Application for Payment, Design-Builder shall
provide the following information:

 

.1                  an affidavit
that there are no claims, obligations or liens outstanding or unsatisfied for
labor, services, material, equipment, taxes or other items performed, furnished
or incurred for or in connection with the Work which will in any way affect
Owner’s interests;

 

.2                  a general
release executed by Design-Builder waiving, upon receipt of final payment by
Design-Builder, all claims, except those claims previously made in writing to
Owner and remaining unsettled at the time of final payment;

 

.3                  consent of
Design-Builder’s surety, if any, to final payment;

 

.4                  all operating
manuals, warranties and other deliverables required by the Contract Documents;
and

 

.5                  certificates of
insurance confirming that required coverages will remain in effect consistent
with the requirements of the Contract Documents.

 

6.7.3                     Upon making
final payment, Owner waives all claims against Design-Builder except claims
relating to (i) Design-Builder’s failure to satisfy its payment obligations, if
such failure affects Owner’s interests, (ii) Design-Builder’s failure to
complete the Work consistent with the Contract Documents, including defects
appearing after Substantial Completion and (iii) the terms of any special
warranties required by the Contract Documents.

 

22

 

Article 7

 

Indemnification

 

7.1                               Patent
and Copyright Infringement

 

7.1.1                     Design-Builder
shall defend any action or proceeding brought against Owner based on any claim
that the Work, or any part thereof, or the operation or use of the Work or any
part thereof, constitutes infringement of any United States patent or
copyright, now or hereafter issued. 
Owner shall give prompt written notice to Design-Builder of any such
action or proceeding and will reasonably provide authority, information and
assistance in the defense of same. 
Design-Builder shall indemnify and hold harmless Owner from and against
all damages and costs, including but not limited to attorneys’ fees and
expenses awarded against Owner or Design-Builder in any such action or
proceeding.  Design-Builder agrees to
keep Owner informed of all developments in the defense of such actions.

 

7.1.2                     If Owner is
enjoined from the operation or use of the Work, or any part thereof, as the
result of any patent or copyright suit, claim, or proceeding, Design-Builder
shall at its sole expense take reasonable steps to procure the right to operate
or use the Work.  If Design-Builder
cannot so procure such right within a reasonable time, Design-Builder shall
promptly, at Design-Builder’s option and at Design-Builder’s expense, (i)
modify the Work so as to avoid infringement of any such patent or copyright or
(ii) replace said Work with Work that does not infringe or violate any such
patent or copyright.

 

7.1.3                     Sections
7.1.1 and 7.1.2 above shall not be applicable to any suit, claim or proceeding
based on infringement or violation of a patent or copyright (i) relating solely
to a particular process or product of a particular manufacturer specified by
Owner and not offered or recommended by Design-Builder to Owner or (ii) arising
from modifications to the Work by Owner or its agents after acceptance of the
Work.  If the suit, claim or proceeding
is based upon events set forth in the preceding sentence, Owner shall defend,
indemnify and hold harmless Design-Builder to the same extent Design-Builder is
obligated to defend, indemnify and hold harmless Owner in Section 7.1.1
above.

 

7.1.4                     The obligations
set forth in this Section 7.1 shall constitute the sole agreement between
the parties relating to liability for infringement of violation of any patent
or copyright.

 

7.2                               Tax Claim
Indemnification

 

7.2.1                     If, in
accordance with Owner’s direction, an exemption for all or part of the Work is
claimed for taxes, Owner shall indemnify, defend and hold harmless
Design-Builder from and against any liability, penalty, interest, fine, tax
assessment, attorneys’ fees or other expenses or costs incurred by Design-Builder
as a result of any action taken by Design-Builder in accordance with Owner’s
directive.

 

7.3                               Payment
Claim Indemnification

 

7.3.1                     Providing
that Owner is not in breach of its contractual obligation to make payments to
Design-Builder for the Work, Design-Builder shall indemnify, defend and hold
harmless Owner from any claims or mechanic’s liens brought against Owner or
against the Project as a result of the failure of Design-Builder, or those for
whose acts it is responsible, to pay for any services, materials, labor,
equipment, taxes or other items or obligations furnished or incurred for or in
connection with the Work.  Within three
(3) days of receiving written notice from Owner that such a claim or mechanic’s
lien has been filed, Design-Builder shall commence to take the steps necessary
to discharge said claim or lien, including, if necessary, the furnishing of a
mechanic’s lien bond.  If Design-Builder
fails to do so, Owner will have the right to discharge the claim or lien and
hold Design-Builder liable for costs and expenses incurred, including
attorneys’ fees.

 

7.4                               Design-Builder’s
General Indemnification

 

7.4.1                     Design-Builder,
to the fullest extent permitted by law, shall indemnify, hold harmless and
defend Owner, its officers, directors, employees and agents from and against
claims, losses, damages, liabilities, including attorneys’ fees and expenses,
for bodily injury, sickness or death, and property damage or destruction (other
than to the Work itself) to the extent resulting from the negligent acts or
omissions of Design-Builder, Design Consultants, Subcontractors, anyone
employed directly or indirectly by any of them or anyone for whose acts any of
them may be liable.

 

23

 

7.4.2                     If an employee
of Design-Builder, Design Consultants, Subcontractors, anyone employed directly
or indirectly by any of them or anyone for whose acts any of them may be liable
has a claim against Owner, its officers, directors, employees, or agents,
Design-Builder’s indemnity obligation set forth in Section 7.4.1 above
shall not be limited by any limitation on the amount of damages, compensation
or benefits payable by or for Design-Builder, Design Consultants,
Subcontractors, or other entity under any employee benefit acts, including
workers’ compensation or disability acts.

 

7.5                               Owner’s
General Indemnification

 

7.5.1                     Owner, to the
fullest extent permitted by law, shall indemnify, hold harmless and defend
Design-Builder and any of Design-Builder’s officers, directors, employees, or
agents from and against claims, losses, damages, liabilities, including
attorneys’ fees and expenses, for bodily injury, sickness or death, and
property damage or destruction (other than to the Work itself) to the extent
resulting from the negligent acts or omissions of Owner, it’s officers,
directors, employees, agents, and Owner’s separate contractors or anyone for
whose acts any of them may be liable.

 

Article 8

 

Time

 

8.1                               Obligation
to Achieve the Contract Times

 

8.1.1                     Design-Builder
agrees that it will commence performance of the Work and achieve the Contract
Time(s) in accordance with Article 5 of the Agreement.

 

8.2                               Delays
to the Work

 

8.2.1                     If
Design-Builder 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 or those for whom Design-Builder is responsible, the
Contract Time(s) for performance shall be reasonably extended by Change
Order.  By way of example, events that
will entitle Design-Builder to an extension of the Contract Time(s) include
acts or omissions of Owner or anyone under Owner’s control (including separate
contractors), changes in the Work, Differing Site Conditions, Hazardous
Conditions, wars, floods, labor disputes, unusual delay in transportation,
epidemics abroad, earthquakes, adverse weather conditions not reasonably
anticipated, and other acts of God.

 

8.2.2                     In addition
to Design-Builder’s right to a time extension for those events set forth in
Section 8.2.1 above, Design-Builder shall also be entitled to an
appropriate adjustment of the Contract Price provided, however, that the
Contract Price shall not be adjusted for those events set forth in
Section 8.2.1 above that are beyond the control of both Design-Builder and
Owner, including the events of war, floods, labor disputes, earthquakes,
epidemics, adverse weather conditions not reasonably anticipated, and other
acts of God.

 

Article 9

 

Changes
to the Contract
Price and Time

 

9.1                               Change
Orders

 

9.1.1                     A Change
Order is a written instrument issued after execution of the Agreement signed by
Owner and Design-Builder, 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; and

 

.3                  The extent of
the adjustment to the Contract Time(s).

 

9.1.2                     All
changes in the Work authorized by applicable Change Order shall be performed
under the applicable conditions of the Contract Documents.  Owner and Design-Builder shall negotiate in
good faith and as expeditiously as possible the appropriate adjustments for
such changes.

 

9.1.3                     If Owner
requests a proposal for a change in the Work from Design-Builder and
subsequently elects not to proceed with the change, a Change Order shall be
issued to reimburse Design-Builder for reasonable costs incurred for estimating
services, design services and services involved in the preparation of proposed
revisions to the Contract Documents.

 

24

 

9.2                               Work
Change Directives

 

9.2.1                     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).

 

9.2.2                     Owner and
Design-Builder 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.

 

9.3                               Minor
Changes in the Work

 

9.3.1                     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 Documents.  Design-Builder may make minor changes in the
Work consistent with the intent of the Contract Documents, provided, however
that Design-Builder shall promptly inform Owner, in writing, of any such
changes and record such changes on the documents maintained by Design-Builder.

 

9.4                               Contract
Price Adjustments

 

9.4.1                     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 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.  If
the net result of both additions and deletions to the Work is an increase in
the Contract Price, overhead and profit shall be calculated on the basis of the
net increase to the Contract Price.  If
the net result of both additions and deletions to the Work is a decrease in the
Contract Price, there shall be no overhead or profit adjustment to the Contract
Price.  Design-Builder shall maintain a
documented, itemized accounting evidencing the expenses and savings associated
with such changes.

 

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

 

9.4.3                     If Owner and
Design-Builder disagree upon whether Design-Builder 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 Design-Builder
shall resolve the disagreement pursuant to Article 10 hereof.  As part of the negotiation process,
Design-Builder shall furnish Owner with a good faith estimate of the costs to
perform the disputed services in accordance with Owner’s interpretations.  If the parties are unable to agree and Owner
expects Design-Builder to perform the services in accordance with Owner’s
interpretations, Design-Builder shall proceed to perform the disputed services,
conditioned upon Owner issuing a written order to Design-Builder (i) directing
Design-Builder to proceed and (ii) specifying Owner’s interpretation of the
services that are to be performed.  If
this occurs, Design-Builder shall be entitled to submit in its Applications for
Payment an amount equal to fifty percent (50%) of its reasonable estimated direct
cost to perform the services, and Owner agrees to pay such amounts, with the
express understanding that (i) such payment by Owner does not prejudice
Owner’s right to argue that it has no responsibility to pay for such services
and (ii) receipt of such payment by Design-Builder does not prejudice
Design-Builder’s right to seek full payment of the disputed services if Owner’s
order is deemed to be a change to the Work.

 

25

 

9.5                               Emergencies

 

9.5.1                     In any
emergency affecting the safety of persons and/or property, Design-Builder shall
act, at its discretion, to prevent threatened damage, injury or loss.  Any change in the Contract Price and/or
Contract Time(s) on account of emergency work shall be determined as provided
in this Article 9.

 

Article 10

 

Contract
Adjustments and
Disputes

 

10.1                        Requests for
Contract Adjustments and Relief

 

10.1.1              If either
Design-Builder or Owner believes that it is entitled to relief against the
other for any event arising out of or related to the Work or Project, such party
shall provide written notice to the other party of the basis for its claim for
relief.  Such notice shall, if possible,
be made prior to incurring any cost or expense and in accordance with any
specific notice requirements contained in applicable sections of these General
Conditions of Contract.  In the absence
of any specific notice requirement, written notice shall be given within a
reasonable time, not to exceed twenty-one (21) days, after the occurrence
giving rise to the claim for relief or after the claiming party reasonably
should have recognized the event or condition giving rise to the request,
whichever is later.  Such notice shall
include sufficient information to advise the other party of the circumstances
giving rise to the claim for relief, the specific contractual adjustment or
relief requested and the basis of such request.

 

10.2                        Dispute
Avoidance and Resolution

 

10.2.1              The
parties are fully committed to working with each other throughout the Project
and agree to communicate regularly with each other at all times so as to avoid
or minimize disputes or disagreements. 
If disputes or disagreements do arise, Design-Builder and Owner each
commit to resolving such disputes or disagreements in an amicable, professional
and expeditious manner so as to avoid unnecessary losses, delays and
disruptions to the Work.

 

10.2.2              Design-Builder and
Owner will first attempt to resolve disputes or disagreements at the field
level through discussions between Design-Builder’s Representative and Owner’s
Representative.

 

10.2.3              If
a dispute or disagreement cannot be resolved through Design-Builder’s
Representative and Owner’s Representative, Design-Builder’s Senior
Representative and Owner’s Senior Representative, upon the request of either
party, shall meet as soon as conveniently possible, but in no case later than
thirty (30) days after such a request is made, to attempt to resolve such
dispute or disagreement.  Prior to any
meetings between the Senior Representatives, the parties will exchange relevant
information that will assist the parties in resolving their dispute or
disagreement.

 

10.2.4              If after meeting the
Senior Representatives determine that the dispute or disagreement cannot be
resolved on terms satisfactory to both parties, the parties shall submit the
dispute or disagreement to non-binding mediation.  The mediation shall be conducted by a mutually agreeable
impartial mediator, or if the parties cannot so agree, a mediator designated by
the American Arbitration Association (“AAA”) pursuant to its Construction
Industry Mediation Rules.  The mediation
will be governed by and conducted pursuant to a mediation agreement negotiated
by the parties or, if the parties cannot so agree, by procedures established by
the mediator.

 

10.3                        Arbitration

 

10.3.1              Any
claims, disputes or controversies between the parties arising out of or
relating to the Agreement, or the breach thereof, which have not been resolved
in accordance with the procedures set forth in Section 10.2 above shall be
decided by arbitration in accordance with the Construction Industry Arbitration
Rules of the AAA then in effect, unless the parties mutually agree otherwise.

 

10.3.2              The
award of the arbitrator(s) shall be final and binding upon the parties without
the right of appeal to the courts. 
Judgment may be entered upon it in accordance with applicable law by any
court having jurisdiction thereof.

 

10.3.3              Design-Builder and
Owner expressly agree that any arbitration pursuant to this Section 10.3
may be joined or consolidated with any arbitration involving any other person
or entity (i) necessary to resolve the claim, dispute or controversy, or (ii)
substantially involved in or affected by such claim, dispute or
controversy.  Both Design-Builder and
Owner will include appropriate provisions in all contracts they execute with
other parties in connection with the Project to require such joinder or
consolidation.

 

26

 

10.3.4              The prevailing party
in any arbitration, or any other final, binding dispute proceeding upon which
the parties may agree, shall be entitled to recover from the other party
reasonable attorneys’ fees and expenses incurred by the prevailing party.

 

10.4                        Duty
to Continue Performance

 

10.4.1              Unless
provided to the contrary in the Contract Documents, Design-Builder shall
continue to perform the Work and Owner shall continue to satisfy its payment
obligations to Design-Builder, pending the final resolution of any dispute or
disagreement between Design-Builder and Owner.

 

10.5                        CONSEQUENTIAL
DAMAGES

 

10.5.1              NOTWITHSTANDING
ANYTHING HEREIN TO THE CONTRARY (EXCEPT AS SET FORTH IN SECTION 10.5.2
BELOW), NEITHER DESIGN-BUILDER NOR OWNER SHALL BE LIABLE TO THE OTHER FOR ANY
CONSEQUENTIAL LOSSES OR DAMAGES, WHETHER ARISING IN CONTRACT, WARRANTY, TORT (INCLUDING
NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, INCLUDING BUT NOT LIMITED TO LOSSES
OF USE, PROFITS, BUSINESS, REPUTATION OR FINANCING.

 

10.5.2              The consequential
damages limitation set forth in Section 10.5.1 above is not intended to
affect the payment of liquidated damages, if any, set forth in Article 5
of the Agreement, which both parties recognize has been established, in part,
to reimburse Owner for some damages that might otherwise be deemed to be
consequential.

 

Article 11

 

Stop Work and Termination for Cause

 

11.1                        Owner’s
Right to Stop Work

 

11.1.1              Owner may, without
cause and for its convenience, order Design-Builder in writing to stop and
suspend the Work.  Such suspension shall
not exceed sixty (60) consecutive days or aggregate more than ninety (90) days
during the duration of the Project.

 

11.1.2              Design-Builder 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.

 

11.2                        Owner’s
Right to Perform and Terminate for Cause

 

11.2.1              If Design-Builder
persistently fails to (i) provide a sufficient number of skilled workers, (ii)
supply the materials required by the Contract Documents, (iii) comply with
applicable Legal Requirements, (iv) timely pay, without cause,  Design Consultants or Subcontractors, (v)
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)
perform material obligations under the Contract Documents, then Owner, in
addition to any other rights and remedies provided in the Contract Documents or
by law, shall have the rights set forth in Sections 11.2.2 and 11.2.3 below.

 

11.2.2              Upon the occurrence
of an event set forth in Section 11.2.1 above, Owner may provide written
notice to Design-Builder that it intends to terminate the Agreement unless the
problem cited is cured, or commenced to be cured, within seven (7) days of
Design-Builder’s receipt of such notice. 
If Design-Builder fails to cure, or reasonably commence to cure, such
problem, then Owner may give a second written notice to Design-Builder of its
intent to terminate within an additional seven (7) day period.  If Design-Builder, within such second seven
(7) day period, fails to cure, or reasonably commence to cure, such problem,
then Owner may declare the Agreement terminated for default by providing
written notice to Design-Builder of such declaration.

 

11.2.3              Upon declaring the
Agreement terminated pursuant to Section 11.2.2 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 items
thereon, which have been purchased or provided for the performance of the Work,
all of which Design-Builder 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, Design-Builder shall not be entitled to receive any further
payments under the Contract Documents until the Work shall be finally completed
in accordance with the Contract Documents. 
At such time, if the unpaid balance of the Contract Price exceeds the
cost and expense incurred by Owner in completing the Work, such excess shall be
paid by

 

27

 

Owner to Design-Builder. 
Notwithstanding the preceding sentence, if the Agreement establishes a
Guaranteed Maximum Price, Design-Builder 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 Design-Builder 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 Design-Builder’s default, subject to the waiver of consequential
damages set forth in Section 10.5 hereof.

 

11.2.4              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
Article 8 of the Agreement.

 

11.3                        Design-Builder’s
Right to Stop Work

 

11.3.1              Design-Builder may,
in addition to any other rights afforded under the Contract Documents or at
law, stop work for the following reasons:

 

.1                  Owner’s failure
to provide financial assurances as required under Section 3.3 hereof; or

 

.2                  Owner’s failure
to pay amounts properly due under Design-Builder’s Application for Payment.

 

11.3.2              Should any of the
events set forth in Section 11.3.1 above occur, Design-Builder has the
right to provide Owner with written notice that Design-Builder will stop work
unless said event is cured within seven (7) days from Owner’s receipt of
Design-Builder’s notice.  If Owner does
not cure the problem within such seven (7) day period, Design-Builder may stop
work.  In such case, Design-Builder
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.

 

11.4                        Design-Builder’s
Right to Terminate for Cause

 

11.4.1              Design-Builder, in
addition to any other rights and remedies provided in the Contract Documents or
by law, may terminate the Agreement for cause for the following reasons:

 

.1                  The Work has
been stopped for sixty (60) consecutive days, or more than ninety (90) days
during the duration of the Project, because of court order, any government
authority having jurisdiction over the Work, or orders by Owner under
Section 11.1.1 hereof, provided that such stoppages are not due to the
acts or omissions of Design-Builder or anyone for whose acts Design-Builder may
be responsible.

 

.2                  Owner’s failure
to provide Design-Builder with any information, permits or approvals that are
Owner’s responsibility under the Contract Documents which result in the Work
being stopped for sixty (60) consecutive days, or more than ninety (90) days
during the duration of the Project, even though Owner has not ordered
Design-Builder in writing to stop and suspend the Work pursuant to
Section 11.1.1 hereof.

 

.3                  Owner’s failure
to cure the problems set forth in Section 11.3.1 above after
Design-Builder has stopped the Work.

 

11.4.2              Upon the occurrence
of an event set forth in Section 11.4.1 above, Design-Builder 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
Design-Builder 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 Design-Builder may declare
the Agreement terminated for default by providing written notice to Owner of
such declaration.  In such case,
Design-Builder shall be entitled to recover in the same manner as if Owner had
terminated the Agreement for its convenience under Article 8 of the
Agreement.

 

11.5                        Bankruptcy
of Owner or Design-Builder

 

11.5.1              If either Owner or
Design-Builder institutes or has instituted against it a case under the United
States Bankruptcy Code (such party being referred to as the

 

28

 

“Bankrupt Party”), such event may impair or frustrate the Bankrupt
Party’s ability to perform its obligations under the Contract Documents.  Accordingly, should such event occur:

 

.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 Documents, 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 fails to comply with its foregoing obligations,
the non-Bankrupt Party shall be entitled to request the bankruptcy court to
reject the Agreement, declare the Agreement terminated and pursue any other
recourse available to the non-Bankrupt Party under this Article 11.

 

11.5.2              The rights and
remedies under Section 11.5.1 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 Documents or by law, including its ability to seek relief from
any automatic stays under the United States Bankruptcy Code or the right of
Design-Builder to stop Work under any applicable provision of these General
Conditions of Contract.

 

Article 12

 

Miscellaneous

 

12.1                        Assignment

 

12.1.1              Neither
Design-Builder nor Owner shall, without the written consent of the other
assign, transfer or sublet any portion or part of the Work or the obligations
required by the Contract Documents.

 

12.2                        Successorship

 

12.2.1              Design-Builder and
Owner intend that the provisions of the Contract Documents are binding upon the
parties, their employees, agents, heirs, successors and assigns.

 

12.3                        Governing
Law

 

12.3.1              The Agreement and
all Contract Documents shall be governed by the laws of the place of the
Project, without giving effect to its conflict of law principles.

 

12.4                        Severability

 

12.4.1              If any provision or
any part of a provision of the Contract Documents shall be finally determined
to be superseded, invalid, illegal, or otherwise unenforceable pursuant to any
applicable Legal Requirements, such determination shall not impair or otherwise
affect the validity, legality, or enforceability of the remaining provision or
parts of the provision of the Contract Documents, which shall remain in full
force and effect as if the unenforceable provision or part were deleted.

 

12.5                        No
Waiver

 

12.5.1              The failure of
either Design-Builder or Owner to insist, in any one or more instances, on the
performance of any of the obligations required by the other under the Contract
Documents shall not be construed as a waiver or relinquishment of such
obligation or right with respect to future performance.

 

12.6                        Headings

 

12.6.1              The headings used in
these General Conditions of Contract, or any other Contract Document, are for
ease of reference only and shall not in any way be construed to limit or alter
the meaning of any provision.

 

12.7                        Notice

 

12.7.1              Whenever the
Contract Documents require that notice be provided to the other party, notice
will be deemed to have been validly given (i) if delivered in person to the
individual intended to receive such notice, (ii) four (4) days after being sent
by registered or certified mail, postage prepaid to the address indicated in
the Agreement or (iii) if transmitted by facsimile, by the time stated in a
machine generated

 

29

 

confirmation that notice was received at the facsimile number of the
intended recipient.

 

12.8                        Amendments

 

12.8.1              The Contract
Documents may not be changed, altered, or amended in any way except in writing
signed by a duly authorized representative of each party.

 

30

 

These Supplementary Conditions amend or supplement the Standard Form of
General Conditions of Contract between Owner and Design-Builder (DBIA Document
No. 535, 1998 Edition) and other provisions of the Contract Documents as
indicated below.  All provisions, which
are not so amended or supplemented, remain in full force and effect.

 

SC – 1.2 Basic
Definitions

 

The terms used in these Supplementary Conditions which are defined in
the Standard Form of General Conditions of Contract between Owner and
Design-Builder (DBIA Document No. 535, 1998 Edition) have the meanings assigned
to them in the General Conditions.

 

SC – 1.2.1
Agreement

 

Delete Section 1.2.1 of the General Conditions in its entirety and
insert the following in its place:

 

Agreement
refers to the executed Standard Form of Agreement between Owner and Design-Builder
– Lump Sum (DBIA Document No. 525, 1998 Edition).

 

SC – 1.2.11
Substantial Completion

 

Amend Section 1.2.11 of the General Conditions by striking out the
following words: or an agreed upon portion of the Work.

 

Add the following language at the end of Section 1.2.11 of the
General Conditions.  Substantial
Completion shall be attained at the point in time when the Facility is ready to
begin operation for its intended use (ethanol production).

 

As so amended, Section 1.2.11 reads as follows:

 

Substantial
Completion is the date on which the Work is
sufficiently complete so that Owner can occupy and use the Project for its
intended purposes.  Substantial
Completion shall be attained at the point in time when the Facility is ready to
begin operation for its intended use (ethanol production).

 

SC – 2.2.1

 

Amend Section 2.2.1 of the General Conditions by adding to the end
of 2.2.1:  – Except as provided by
Exhibit D – License of Proprietary Property of ICM, Inc. whereby ICM, Inc. has
joined for purposes only of that Exhibit.

 

SC – 2.3.1

 

Amend the second sentence of Section 2.3.1 of the General
Conditions by striking out the words: Performance Standard Requirements; and
inserting the following: Exhibit A: Performance Guarantee Criteria; and as so
amended, Section 2.3.1 reads as follows:

 

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 Project. 
Notwithstanding the preceding sentence, if the parties agree upon
specific performance standards for any aspect of the Work, which standards are
to be set forth in an exhibit to the Agreement entitled “Exhibit A: Performance
Guarantee Criteria,” the design professional services shall be performed to
achieve such standards.

 

31

 

SC – 2.6.1

 

Amend Section 2.6.1 of the General Conditions by striking out the
words: an Owner’s Permit List; and inserting the following: Exhibit C: Owner’s
Responsibilities; and as so amended, Section 2.6.1 reads as follows:

 

Except as identified in Exhibit C: Owner’s Responsibilities List
attached as an exhibit to the Agreement, Design-Builder shall obtain and pay
for all necessary permits, approvals, licenses, government charges and
inspection fees required for the prosecution of the Work by any government or
quasi-government entity having jurisdiction over the Project.

 

SC – 2.10.1

 

Amend Section 2.10.1 of the General Conditions by striking out the
words from the sixth line of that Section: “or any portion of the Work”; and as
so amended, Section 2.10.1 reads as follows:

 

Design-Builder agrees to correct any Work that is found to not be in
conformance with the Contract Documents, including that part of the Work
subject to Section 2.9 hereof, within a period of one year from the date
of Substantial Completion of the Work, or within such longer period to the
extent required by the Contract Documents.

 

SC – 3.5.1

 

Amend Section 3.5.1 of the General Conditions by striking out the
words: the Owner’s Permit List; and inserting the following: Exhibit C: Owner’s
Responsibilities; and as so amended, Section 3.5.1 reads as follows:

 

Owner shall obtain and pay for all necessary permits, approvals,
licenses, government charges and inspection fees set forth in Exhibit C:
Owner’s Responsibilities attached as an exhibit to the Agreement.

 

SC – 6.4.1

 

Amend the first sentence of Section 6.4.1 of the General
Conditions by inserting the phrase: in accordance with Section 6.3 above;
and as so amended, Section 6.4.1 reads as follows:

 

If Owner fails to pay Design-Builder any amount that becomes due, in
accordance with Section 6.3 above, Design-Builder, in addition to all
other remedies provided in the Contract Documents, may stop Work pursuant to
Section 11.3 hereof.  All payments
due and unpaid shall bear interest at the rate set forth in the Agreement.

 

SC – 6.6.1

 

Amend Section 6.6.1 of the General Conditions by striking out the
words from the second and third lines of that Section: “, or to the extent
permitted in the Contract Documents, a portion of the Work,”; and by striking
out the words from the twelfth and thirteenth lines of that Section: “or
portion thereof”; and as so amended, Section 6.6.1 reads as follows:

 

Design-Builder shall notify Owner when it believes the Work is
substantially complete.  Within five (5)
days of Owner’s receipt of Design-Builder’s notice, Owner and Design-Builder
will jointly inspect such Work to verify that it is substantially complete in
accordance with the requirements of the Contract Documents.  If such Work is substantially complete,
Owner 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 payment, (iii)
provisions (to the extent not

 

32

 

already provided in the Contract Documents) establishing Owner’s and
Design-Builder’s responsibility for the Project’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 noted in the Certificate of Substantial Completion.

 

SC – 6.6.2

 

Amend Section 6.6.2 of the General Conditions by striking out the
words from the second line of that Section: 
“or, if applicable, any portion of the Work”; and by striking out the
words from the fifth line of that Section: “or completed portion of the Work”;
and as so amended, Section 6.6.2 reads as follows:

 

Upon Substantial Completion of the entire Work, Owner shall release to
Design-Builder all retained amounts relating, as applicable, to the entire
Work, less an amount equal to the reasonable value of all remaining or
incomplete items of Work as noted in the Certificate of Substantial Completion.

 

SC – 11.3.2

 

Delete Section 11.3.2 of the General Conditions in its entirety
and insert the following in its place:

 

Should any of the events set forth in Section 11.3.1 above occur,
Design-Builder has the right to provide Owner with written notice that
Design-Builder will stop work unless said event is cured within seven (7) days
from Owner’s receipt of Design-Builder’s notice.  If Owner fails to cure, or reasonably commence to cure, such
problem, then Design-Builder may give a second written notice to Owner of its
intent to stop work 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
Design-Builder may stop work.  In such
case, Design-Builder 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.

 

33

 

EXHIBIT C

 

Owner’s
Responsibilities 

 

The Owner shall perform and provide the permits, authorizations,
services and construction as specifically described hereafter:

 

1)              Land and Grading – Owner shall provide a
site near or in Mason City, Iowa. Owner shall obtain all legal authority to use
the site for its intended purpose and perform technical due diligence to allow
Design-Builder to perform including, but not limited to, proper zoning
approvals, building permits, elevation restrictions, soil tests, and water
tests. The site shall be rough graded per Design-Builder specifications and be
within +/- three inches of final grade including the rough grading for Site
roadways.  The site soils shall be
modified as required to provide a minimum allowable soil bearing pressure as
described in Table 2.

 

Other items to be provided by the Owner include, but are not limited
to, the following: initial site survey (boundary and topographic) as required
by the design engineers, layout of the property corners including two
construction benchmarks, Soil Borings and subsequent Geotechnical Report
describing recommendation for Roads, foundations and if required, soil
stabilization/remediation, site engineering and detailed drawings, land
disturbance permit, erosion control permit, site grading as described above
with minimum soil standards, placement of erosion control measures, plant
access road from a county, state or federal road designed to meet local county
road standards, plant storm and sanitary sewers, fire water system with
hydrants and plant water main branches taken from the system to be within five
feet of the designated building locations, all tanks, motors and other
equipment associated with or necessary to operate the fire water loop and
associated systems, plant roads as specified and designed for the permanent
elevations and effective depth, “construction” grading plan as drawn (including
site retention pond), plant water well and associated permit(s).

 

Owner is encouraged to obtain preliminary designs/information and
estimates of the cost of performing all Owner required permits and services as
stated in this Exhibit C.  Specifically,
the cost of the fire water systems (including associated fire water pumps,
required tank, building (if required), sprinklers, and all other equipment and
materials associated with the fire water delivery systems) is estimated being
in excess of $400,000.  The requirements
of each state and the decisions of each Owner will increase or decrease the
actual cost.

 

The Owner’s required activities related to site preparation for
construction are to be divided into Phase I and Phase II activities as
described below:

 

Phase I Site Work
shall include:

 

Preliminary Phase (Site Development):

 

Initial Plant Layout (along with Owner)

Preliminary Rail Spur Layout

Preliminary Cut/Fill Quantity Calculations

 

Deliverables by Owner  prior
to start of Phase 1 Civil Design:

Procure Boundary & Topographic Survey

 

34

 

Procure Soil Borings (at Engineer’s requested
locations)

 

Phase 1
(Deliverable Site):

 

Final Plant Layout with FFE and Top of Road Elevations

Final Cut/Fill Quantity Calculations

Grading and Erosion Control Plan

Clear & Grubbing Plan - graded to +/- 3” of subgrade

Subgrade is defined as 1’ below proposed Building FFE and
Administration Building FFE and 20”  to
30” (based on rail designer input) below top of rail for the rail spurs.  Subgrade for the in-plant roads will be
determined upon recommendations from the geotechnical engineer (12” to 24”
below final top of road)

Plant Access Road and all in-plant roads
(which will act as base for final roadway system)

Soil Stabilization

Site Grading

Replacement Fill

 

Phase II Site Work
shall include:

 

Phase 2 (Final
Civil Design Plans):

 

Construction Layout (parking, laydown, access areas, temp. drainage)

Site Grading

Storm Water Drainage & Detention

Site Utilities (Within Property Line):

 

Sanitary Sewer Routing

Potable Water Supply

Process Water Supply

Gas Routing

Fire Loop

Site Electric

Site Gas

Tank Farm Design (Size holding area and spec liner and tank pads)

Phase II – Sitework, sewer, water, etc.

Utility Water Discharge Line

Wells and Well Pump

R.O. System

Natural Gas Line (Owner brings to site)

Minimum 3 Phase, 480 Volt, 1,000 KVA
Electrical Power Available for Construction (at Engineer’s requested location)

Fire Water Tank & Pumps

Blacktop Roads

Sitework (final grading, tank farm liner, seed)

Fire Protection/Sprinkler System

Landscaping (Final Seeding and Mulching)

Fencing

Specifications for Civil Portion of Work

 

35

 

Design/Builder shall be reimbursed on a “Time & Material” basis for
any management of these Owner requirements and any design engineering requested
by the Owner not otherwise required to be provided by Design-Builder pursuant
to this Agreement.

 

2)              Permits - Owner shall obtain all Operating
Permits including, but not limited to, air quality permits, in a timely manner
to allow startup of the plant as scheduled by Design-Builder.

 

3)              Storm Water Runoff Permit – Owner shall
obtain the construction storm – water runoff permit, permanent storm-water
runoff permit, and the erosion control/land disturbance permit.

 

4)              Iowa Pollutant Elimination Discharge Permit – Owner
shall obtain a permit to discharge cooling tower water and reverse osmosis
(“R.O.”) reject water and any other waste water directly to a designated
waterway or other location.

 

5)              Natural Gas Supply and Service Agreement –
Owner shall procure and supply a continuous supply of natural gas of at least
1.5 billion cubic feet per year, at a minimum rate of 180-200 MCF per hour and
at a pressure of 75 - 200 psig at the plant site. Pressure reducing stations
must be located so as to provide stable pressure at the point of use.  Owner shall provide all gas piping to the
use points and supply meters and regulators to provide burner tip pressures as
specified by Design-Builder.  Owner
shall also supply a digital flowmeter on-site with appropriate output for
monitoring by the plant’s computer control system.

 

6)              Electrical Service – (1) The Owner is
responsible to secure continuous service from an energy supplier to serve the
facility.  The service from the energy
supplier shall be of sufficient size to provide at a minimum 10 MW of
electrical capacity to the site.  (2)
The Owner is responsible for procurement, installation and maintenance of the
site distribution system, including but not limited to the required substation
and all associated distribution lines. 
An on-site digital meter is also to be supplied for monitoring of
electrical usage.  (3) The responsibility
of the Design-Builder starts at the secondary electrical terminals of the site
distribution system transformers that have been installed by Owner (i.e., the
480 volt terminals for the process building transformers; the 480 volt
terminals for the energy center transformers; the 480 volt terminals for the
grains transformer; the 480 volt terminals for the pumphouse transformer; and
the 4160 volt terminals for the chiller transformer; and the 4160 volt
terminals of the thermal oxidizer transformer).  (4) The site distribution system requirements, layout, and meters
are to be determined jointly by the Owner, the Design-Builder and the energy
supplier.

 

Design-Builder will be providing soft start motor controllers for all
motors greater than 150 horsepower and where demanded by process
requirements.  Owner is encouraged to
discuss with its electrical supplier whether additional soft start motor
controllers are advisable for this facility and such can be added, with any
increased cost being an Owner’s cost.

 

7)              Water Supply and Service Agreement – Owner
shall supply on-site process wells or other water source capable of providing a
quantity of water which includes process water, R.O. feed water, cooling tower
make-up water, of a quality which will allow discharges to comply with NPDES
limits.  Design-Builder shall provide
the standard zeolite water softener system.

 

36

 

Any increased costs incurred for another water treatment system if
water does not meet the quality requirements shall be the responsibility of the
Owner.  Owner will supply one process
fresh water supply line terminating within five (5) feet of the process
building at a point of entry designated by Design-Builder and one potable
supply line terminating within five (5) feet of the process building and to the
administration building at a point of entry designated by administration
building contractor.

 

Owner is advised that most projects require a reverse osmosis
system.  Such system is an Owner’s cost
and Owner is advised that the purchase and installation cost of such a reverse
osmosis system may exceed $400,000. 
Owner is also advised that such systems may be leased if Owner desires
to avoid the costs of owning such a system.

 

8)              Wastewater Discharge System, Permits and/or Service
Agreement – Owner shall provide the discharge piping, septic tank
and drainfield system or connect to municipal system as required for the
sanitary sewer requirements of the Plant. 
These provisions shall comply with all federal, state, and local
regulations, including any permitting issues.

 

9)              Roads and Utilities – Owner shall provide
and maintain the ditches and permanent roads, including the gravel, pavement or
concrete, with the roads passing standard compaction tests.  (Design-Builder will maintain aggregate
construction roads during construction of the Plant and will return to original
pre-construction condition prior to Owner completing final grade and
surfacing.)

 

Except as otherwise specifically stated herein the Owner shall install
all utilities so that they are within five (5) feet of the designated
building/structure locations.

 

10)        Administration Building – The
administration building – one story free standing, office computer system,
telephone system, office copier and fax machine and office furniture and any
other office equipment and personal property for the administration building
shall be the sole and absolute cost and responsibility of Owner and
Design-Builder shall have no responsibility in regards thereto.

 

11)        Maintenance and Power Equipment – The
maintenance and power equipment as described in Table 1 and any other
maintenance and power equipment as required by the plant or desired by Owner
shall be the sole and absolute cost and responsibility of Owner and
Design-Builder shall have no responsibility in regards thereto.

 

12)        Railroads – Owner is responsible for any
costs associated with the railroads including, but not limited to, all rail
design and engineering and construction and Design-Builder shall have no
responsibility in regards thereto.

 

13)        Drawings – Owner shall supply drawings to
Design-Builder of items supplied under items 10) and 12) and also supply Phase
II redline drawings.

 

37

 

Table 1 Maintenance and Power Equipment – Responsibility of Owner

 

	
  Description

  	
   

  	
  Additional
  Description

  	
   

  	
  Est. Amount

  
	
  Spare Parts

  	
   

  	
  Spare parts

  Parts bins

  Misc. materials, supplies and equipment

  	
   

  	
   

  
	
  Shop supplies and equipment

  	
   

  	
  One shop welder

  One portable gas welder

  One plasma torch

  One acetylene torch

  One set of power tools

  Two sets of hand tools with tool boxes

  Carts and dollies

  Hoists (except centrifuge overhead crane)

  Shop tables

  Maintenance office furnishings & supplies

  Fire Extinguishers

  Reference books

  Safety manuals

  Safety cabinets & supplies, etc.

  	
   

  	
   

  
	
  Rolling stock

  	
   

  	
  Used 1 1⁄2 yard front end loader

  New Skid loader

  Used Fork lift

  Used Scissors lift, 30 foot

  Used Pickup truck

  	
   

  	
   

  

 

 

Table 2 Minimum Soil
Bearing Pressure – Responsibility of Owner

 

	
  Description

  	
   

  	
  Size

  	
   

  	
  Required
  Allowable Soil Bearing

  Pressure (pounds per square foot)

  
	
  Grain Storage Silos

  	
   

  	
  50’dia x 140’

  	
   

  	
  5,000

  
	
  Cook Water Tank

  	
   

  	
  25’ dia x 40’

  	
   

  	
  3,500

  
	
  Methanator Feed Tank

  	
   

  	
  25’ dia x 40’

  	
   

  	
  3,500

  
	
  Liquifaction Tank #1

  	
   

  	
  16’ dia x 34’

  	
   

  	
  3,500

  
	
  Liquifaction Tank #2

  	
   

  	
  16’ dia x 34’

  	
   

  	
  3,500

  
	
  Fermentation Tank #1

  	
   

  	
  50’ dia x 50’

  	
   

  	
  4,000

  
	
  Fermentation Tank #2

  	
   

  	
  50’ dia x 50’

  	
   

  	
  4,000

  
	
  Fermentation Tank #3

  	
   

  	
  50’ dia x 50’

  	
   

  	
  4,000

  
	
  Beerwell

  	
   

  	
  58’ dia x 50’

  	
   

  	
  4,000

  
	
  Whole Stillage Tank

  	
   

  	
  16’ dia x 34’

  	
   

  	
  3,500

  
	
  Thin Stillage Tank

  	
   

  	
  25’ dia x 40’

  	
   

  	
  3,500

  
	
  Syrup Tank

  	
   

  	
  16’ dia x 34’

  	
   

  	
  3,500

  
	
  190 Proof Day Tank

  	
   

  	
  25’ dia x 30’

  	
   

  	
  3,000

  
	
  200 Proof Day Tank

  	
   

  	
  25’ dia x 30’

  	
   

  	
  3,000

  
	
  Denaturant Tank

  	
   

  	
  25’ dia x 30’

  	
   

  	
  3,000

  
	
  Fire Water Tank

  	
   

  	
  varies

  	
   

  	
  3,000

  
	
  Denatured Ethanol Tank #1

  	
   

  	
  50’ dia x 52’

  	
   

  	
  4,000

  
	
  Denatured Ethanol Tank #2

  	
   

  	
  50’ dia x 52’

  	
   

  	
  4,000

  
	
  All Other Areas

  	
   

  	
   

  	
   

  	
  3,000

  

 

38

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