Document:

Exhibit
10.10

 

CONSTRUCTION AGREEMENT

 

BETWEEN

 

AVENTINE RENEWABLE ENERGY – MT VERNON, LLC (“Owner”)

 

AND

 

FAGEN, INC. (“Fagen”)

 

April 29, 2010

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  Article 1
  Definitions; Rules of Interpretation

  	
  1

  
	
   

  	
   

  
	
  1.1

  	
  Rules of Construction

  	
  1

  
	
  1.2

  	
  Defined Terms

  	
  2

  
	
   

  	
   

  	
   

  
	
  Article 2
  The Project

  	
  6

  
	
   

  	
   

  
	
  2.1

  	
  Services to be Performed

  	
  6

  
	
  2.2

  	
  Extent of Agreement

  	
  6

  
	
  2.3

  	
  Conflicting Provisions

  	
  6

  
	
   

  	
   

  	
   

  
	
  Article 3
  Fagen Responsibilities

  	
  7

  
	
   

  	
   

  
	
  3.1

  	
  Fagen’s Services in General

  	
  7

  
	
  3.2

  	
  Standard of Care

  	
  7

  
	
  3.3

  	
  Government Approvals and Permits

  	
  7

  
	
  3.4

  	
  Subcontractors

  	
  8

  
	
  3.5

  	
  Maintenance of Site

  	
  9

  
	
  3.6

  	
  Project Safety

  	
  9

  
	
  3.7

  	
  Submission of Reports

  	
  9

  
	
   

  	
   

  	
   

  
	
  Article 4
  Owner’s Responsibilities

  	
  10

  
	
   

  	
   

  
	
  4.1

  	
  Duty to Cooperate

  	
  10

  
	
  4.2

  	
  Furnishing of Services and Information

  	
  10

  
	
  4.3

  	
  Owner’s Representative

  	
  11

  
	
  4.4

  	
  Government Approvals and Permits

  	
  11

  
	
  4.5

  	
  Owner’s Separate Contractors

  	
  12

  
	
  4.6

  	
  Security

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 5
  Ownership of Work Product; Risk of Loss

  	
  12

  
	
   

  	
   

  
	
  5.1

  	
  Work Product

  	
  12

  
	
  5.2

  	
  Risk of Loss

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 6
  Commencement and Completion of the Project

  	
  13

  
	
   

  	
   

  
	
  6.1

  	
  Reserved

  	
  13

  
	
  6.2

  	
  Notice to Proceed; Commencement

  	
  13

  
	
  6.3

  	
  Project Start-Up

  	
  13

  
	
  6.4

  	
  Mechanical Completion

  	
  14

  
	
  6.5

  	
  Final Completion

  	
  14

  
	
  6.6

  	
  Post Completion Support

  	
  15

  
	
   

  	
   

  	
   

  
	
  Article 7
  Waiver of Damage Claims

  	
  15

  
	
   

  	
   

  
	
  7.1

  	
  Waiver of Damage Claims

  	
  15

  
	
   

  	
   

  	
   

  
	
  Article 8
  Warranties

  	
  15

  

 

i

 

Table of Contents

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  8.1

  	
  Fagen Warranty

  	
  15

  
	
  8.2

  	
  Correction of Defective Work

  	
  16

  
	
  8.3

  	
  Warranty Period Not Limitation to Owner’s Rights

  	
  16

  
	
  8.4

  	
  Disclaimer

  	
  16

  
	
   

  	
   

  	
   

  
	
  Article 9
  Contract Price

  	
  17

  
	
   

  	
   

  
	
  9.1

  	
  Payment Basis

  	
  17

  
	
  9.2

  	
  Fagen’s Fee

  	
  20

  
	
  9.3

  	
  Additional Costs

  	
  20

  
	
  9.4

  	
  Books and Records

  	
  20

  
	
   

  	
   

  	
   

  
	
  Article 10
  Payment Procedures

  	
  21

  
	
   

  	
   

  
	
  10.1

  	
  Payment Prior to Financial Closing

  	
  21

  
	
  10.2

  	
  Rework and Enhancements

  	
  21

  
	
  10.3

  	
  Progress Payments

  	
  21

  
	
  10.4

  	
  Final Payment

  	
  23

  
	
  10.5

  	
  Failure to Pay Amounts Due

  	
  23

  
	
  10.6

  	
  Fagen’s Payment Obligations

  	
  23

  
	
  10.7

  	
  Reconciliation of Fagen’s Fee

  	
  23

  
	
   

  	
   

  
	
  Article 11
  Hazardous Conditions and Differing Site Conditions

  	
  23

  
	
   

  	
   

  
	
  11.1

  	
  Hazardous Conditions

  	
  23

  
	
  11.2

  	
  Differing Site Conditions; Inspection

  	
  25

  
	
   

  	
   

  
	
  Article 12
  Force Majeure; Change in Legal Requirements

  	
  25

  
	
   

  	
   

  
	
  12.1

  	
  Force Majeure Event

  	
  25

  
	
  12.2

  	
  Effect of Force Majeure Event

  	
  25

  
	
  12.3

  	
  Change in Legal Requirements

  	
  26

  
	
   

  	
   

  
	
  Article 13
  Changes to the Contract Price and Scheduled Completion Dates

  	
  26

  
	
   

  	
   

  
	
  13.1

  	
  Change Orders

  	
  26

  
	
  13.2

  	
  Emergencies

  	
  27

  
	
  13.3

  	
  Failure to Complete Owner’s Milestones

  	
  27

  
	
   

  	
   

  
	
  Article 14
  Indemnity

  	
  27

  
	
   

  	
   

  
	
  14.1

  	
  Tax Claim Indemnification

  	
  27

  
	
  14.2

  	
  Payment Claim Indemnification

  	
  27

  
	
  14.3

  	
  Fagen’s General Indemnification

  	
  28

  
	
  14.4

  	
  Owner’s General Indemnification

  	
  29

  
	
  14.5

  	
  Indemnification

  	
  29

  
	
   

  	
   

  
	
  Article 15
  Stop Work; Termination for Cause

  	
  29

  
	
   

  	
   

  
	
  15.1

  	
  Owner’s Right to Stop Work

  	
  29

  
	
  15.2

  	
  Owner’s Right to Perform and Terminate for Cause

  	
  30

  
	
  15.3

  	
  Fagen’s Right to Stop Work

  	
  31

  
	
  15.4

  	
  Fagen’s Right to Terminate for Cause

  	
  31

  

 

ii

 

Table of Contents

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  15.5

  	
  Bankruptcy of Owner or Fagen

  	
  32

  
	
   

  	
   

  
	
  Article 16
  Representatives of the Parties

  	
  33

  
	
   

  	
   

  
	
  16.1

  	
  Designation of Owner’s Representatives

  	
  33

  
	
  16.2

  	
  Designation of Fagen’s Representatives

  	
  33

  
	
   

  	
   

  
	
  Article 17
  Insurance

  	
  34

  
	
   

  	
   

  
	
  17.1

  	
  Insurance

  	
  34

  
	
  17.2

  	
  Fagen’s Insurance Requirements

  	
  35

  
	
  17.3

  	
  Owner’s Liability Insurance

  	
  36

  
	
  17.4

  	
  Owner’s Property Insurance

  	
  37

  
	
   

  	
   

  
	
  Article 18
  Representations and Warranties

  	
  38

  
	
   

  	
   

  
	
  18.1

  	
  Fagen and Owner Representations and Warranties

  	
  38

  
	
  18.2

  	
  Fagen Representations and Warranties

  	
  38

  
	
   

  	
   

  
	
  Article 19
  Dispute Resolution

  	
  39

  
	
   

  	
   

  
	
  19.1

  	
  Dispute Avoidance and Mediation

  	
  39

  
	
  19.2

  	
  Arbitration

  	
  39

  
	
  19.3

  	
  Duty to Continue Performance

  	
  40

  
	
  19.4

  	
  No Consequential Damages

  	
  40

  
	
  19.5

  	
  Limitation of Liability

  	
  40

  
	
   

  	
   

  
	
  Article 20
  Confidentiality of Shared Information

  	
  40

  
	
   

  	
   

  
	
  20.1

  	
  Non-Disclosure Obligation

  	
  40

  
	
  20.2

  	
  Publicity and Advertising

  	
  42

  
	
  20.3

  	
  Term of Obligation

  	
  42

  
	
   

  	
   

  
	
  Article 21
  Miscellaneous

  	
  42

  
	
   

  	
   

  
	
  21.1

  	
  Assignment

  	
  42

  
	
  21.2

  	
  Successors

  	
  42

  
	
  21.3

  	
  Governing Law

  	
  42

  
	
  21.4

  	
  Severability

  	
  42

  
	
  21.5

  	
  No Waiver

  	
  42

  
	
  21.6

  	
  Headings

  	
  43

  
	
  21.7

  	
  Notice

  	
  43

  
	
  21.8

  	
  No Privity with Design Consultant/Subcontractors

  	
  44

  
	
  21.9

  	
  Amendments

  	
  44

  
	
  21.10

  	
  Entire Agreement

  	
  44

  
	
  21.11

  	
  Third-Party Beneficiaries

  	
  44

  
	
  21.12

  	
  Counterparts

  	
  44

  
	
  21.13

  	
  Survival

  	
  44

  
	
   

  	
   

  
	
  EXHIBIT A
  Owner’s Scope of Work

  	
  1

  
	
   

  	
   

  
	
  EXHIBIT B
  General Scope of Work for Fagen

  	
  1

  

 

iii

 

Table of Contents

(continued)

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  EXHIBIT C
  Owner’s Requirements

  	
  1

  
	
   

  	
   

  
	
  EXHIBIT D
  Fagen’s Standard Rates

  	
  1

  
	
   

  	
   

  
	
  EXHIBIT E
  Form of Informational Report

  	
  1

  
	
   

  	
   

  
	
  EXHIBIT F
  Required Permits

  	
  1

  
	
   

  	
   

  
	
  EXHIBIT G
  Fagen’s Time and Material Rates

  	
  1

  
	
   

  	
   

  
	
  EXHIBIT H
  Reserved

  	
  1

  
	
   

  	
   

  
	
  EXHIBIT I
  Reserved

  	
  1

  
	
   

  	
   

  
	
  EXHIBIT J
  Form of Summary of Payment

  	
  1

  
	
   

  	
   

  
	
  EXHIBIT K
  Form of Lien Waiver

  	
  1

  
	
   

  	
   

  
	
  [Intentionally
  left blank.]

  	
   

  
	
   

  	
   

  
	
  EXHIBIT L
  APTI License

  	
  1

  
	
   

  	
   

  
	
  [to be attached]

  	
   

  

 

iv

 

CONSTRUCTION AGREEMENT

 

This CONSTRUCTION AGREEMENT (the “Agreement”) is
made and entered into effective as of April 29, 2010, (the “Effective
Date”) by and between Aventine Renewable Energy-Mt Vernon, LLC, a Delaware
limited liability company (the “Owner”) and Fagen, Inc., a
Minnesota corporation (“Fagen”) (each a “Party” and collectively,
the “Parties”).

 

RECITALS

 

A.    The Owner
desires to complete construction of a dry grind ethanol production facility in
Mt. Vernon, Indiana (the “Plant”);

 

B.    Fagen desires
to provide construction services for the Plant; and

 

C.    The Parties
desire to enter into this Agreement to set forth their respective rights and
obligations with respect to the Plant.

 

NOW, THEREFORE, in consideration of the mutual covenants
and obligations contained herein and for other good and valuable consideration,
Owner and Fagen agree as follows.

 

AGREEMENT

 

Article 1

 

Definitions;
Rules of Interpretation

 

1.1          Rules of Construction.  The capitalized terms listed in this Article shall
have the meanings set forth herein whenever the terms appear in this Agreement,
whether in the singular or the plural or in the present or past tense.  Other terms used in this Agreement but not
listed in this Article shall have meanings as commonly used in the English
language and, where applicable, in generally accepted construction and
design-build standards of the ethanol industry. 
Words not otherwise defined herein that have well known and generally
accepted technical or trade meanings are used herein in accordance with such
recognized meanings.  In addition, the
following rules of interpretation shall apply:

 

(a)                                  The masculine shall include
the feminine and neuter.

 

(b)                                 References to “Articles,” “Sections,”
“Schedules,” or “Exhibits” shall be to Articles, Sections, Schedules or
Exhibits of this Agreement.

 

(c)                                  This Agreement
was negotiated and prepared by each of the Parties with the advice and
participation of counsel.  The Parties
have agreed to the wording of this Agreement and none of the provisions hereof
shall be construed against one Party on the ground that such Party is the
author of this Agreement or any part hereof.

 

1

 

1.2          Defined Terms.  In addition to definitions
appearing elsewhere in this Agreement, the following terms have the following
meanings:

 

AAA is defined in Section 19.1.

 

Agreement is defined in the Preamble.

 

Applicable Law means

 

(a)                                  any and all laws,
legislation, statutes, codes, acts, rules, regulations, ordinances, treaties or
other similar legal requirements enacted, issued or promulgated by a
Governmental Authority;

 

(b)                                 any and all orders,
judgments, writs, decrees, injunctions, Governmental Approvals or other
decisions of a Governmental Authority; and

 

(c)                                  any and all legally binding
announcements, directives or published practices or interpretations, regarding
any of the foregoing in (a) or (b) of this definition, enacted,
issued or promulgated by a Governmental Authority;

 

to
the extent, for each of the foregoing in (a), (b) and (c) of this
definition, applicable to or binding upon (i) a Party, its affiliates, its
shareholders, its members, its partners or their respective representatives, to
the extent any such person is engaged in activities related to the Project; or (ii) the
property of a Party, its affiliates, its shareholders, its members, its
partners or their respective representatives, to the extent such property is
used in connection with the Project or an activity related to the Project.

 

APTI is defined in Section 20.1.

 

Bankrupt Party is defined in
Section 15.6.1.

 

Certificate of Mechanical Completion is defined in Section 6.4.3.

 

Change Order is defined in Section 13.1.1.

 

Confidential Information
is defined in Section 20.1.

 

Contract Documents
is defined in Section 2.2.

 

Contract Time(s) means scheduled dates
provided for in the Contract Documents including Scheduled Mechanical
Completion Date and Final Completion Date.

 

Damages is defined in Section 14.3.1.

 

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

 

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

 

2

 

Differing Site Conditions is defined in Section 11.2.1.

 

Effective Date is defined in the Preamble.

 

Enhancements is defined in Section 10.2

 

Fagen is defined in the Preamble.

 

Fagen’s
Fee is defined in Section 9.2.

 

Fagen’s Representative is defined in
Section 16.2.

 

Fagen’s Senior Representative is defined in
Section 16.2.

 

Final Completion
is defined in Section 6.5.2.

 

Final Completion Date is
defined in Section 6.5.1.

 

Final
Payment is defined in Section 10.4.

 

Final Summary of Payment is defined in
Section 10.4.

 

Force Majeure Event is defined in
Section 12.1.

 

Governmental Approvals are any material
authorizations or permissions issued or granted by any Governmental Authority
to the Project, its Owner, Fagen, Subcontractors and their affiliates in
connection with any activity related to the Project.

 

Governmental Authority means any federal, state,
local or municipal governmental body; any governmental, quasi-governmental,
regulatory or administrative agency, commission, body or other authority
exercising or entitled to exercise any administrative, executive, judicial,
legislative, policy, regulatory or taxing authority or power; or any court or
governmental tribunal; in each case having jurisdiction over the Owner, Fagen,
the Project, or the Site.

 

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.

 

Informational Report is
defined in Section 3.7.

 

Lease shall mean that
certain Lease between Owner and the Ports of Indiana, dated October 31,
2006, and all amendments thereto, with respect to the Site.

 

Legal Requirements or Laws are all applicable federal, state and local statutes,
laws, codes, ordinances, rules, regulations, judicial decisions, orders,
decrees, plans, injunctions, permits, tariffs, governmental agreements and
governmental restrictions, whether now or hereafter in 

 

3

 

effect,
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,
including any consensus standards for materials, products, systems, and
services established by ASTM International, any successor organization thereto,
or any Governmental Authority.

 

License
is defined in Section 20.1.

 

Manufacturer’s Warranty
shall mean a warranty provided by the original manufacturer or vendor of
equipment used in the Plant.

 

Mechanical Completion is defined in
Section 6.4.2.

 

Notice to Proceed is defined in
Section 6.2.

 

Operating Procedures means, without
limitation, the process equipment and specifications manuals, standards of
quality, service protocols, data collection methods, construction
specifications, training methods, engineering standards and any other
information prescribed by Fagen, Subcontractors, or any other party who
provided, or will provide, equipment or other materials to the Project, from
time to time concerning the ownership, operation, maintenance and repair of the
Plant, subject to the limitations provided in the Agreement.

 

Owner is defined in the
Preamble.

 

Owner
Indemnified Parties is defined in Section 14.3.1.

 

Owner’s Milestones is defined in Section 13.3.

 

Owner’s Operator  means, if
applicable, the entity that Owner identifies, upon written notice to
Fagen, as operator of the Project or any other entity that Owner
chooses, upon notice to Fagen, to replace such entity as operator of
the Project.

 

Owner’s Representative is defined in
Section 16.1.

 

Owner’s Senior Representative is defined in
Section 16.1.

 

Party or Parties
is defined in the Preamble.

 

Pass Through Warranties mean any warranties provided
to Fagen by a Subcontractor, which will all be assigned to Owner.

 

Pay
Period means, with respect to a given Summary of Payment, the two (2) week
period following the last day of the previous Pay Period to which the
immediately prior Summary of Payment is applied; provided that the initial Pay
Period shall commence on the date of delivery of the Notice to Proceed and end
on the earlier of the ninth (9th) or twenty-fourth (24th) day of the calendar month
during which the Notice to Proceed is issued.

 

4

 

Payment
Basis is defined in Section 9.1.

 

Pay Period means, with respect to a
given Summary of Payment, the two (2) week period following the last day of
the previous Pay Period to which the immediately prior Summary of Payment is
applied; provided that the initial Pay Period shall commence on the date of
delivery of the Notice to Proceed and end on the earlier of the ninth (9th) or twenty-fourth (24th) day of the calendar month
during which the Notice to Proceed is issued.

 

Plant is defined in the
Recitals.

 

Port shall mean the
Ports of Indiana, a body corporate and politic, including the Port of
Indiana-Mount Vernon, in Posey County, Indiana.

 

Prior
Work is defined in Section 10.2.

 

Project
is defined in Section 2.1.

 

Punch List is defined in
Section 6.4.3.

 

Qualified Independent Expert means an expert retained by
Owner and approved by Fagen pursuant to Section 11.1.2.

 

Reimbursable
Costs is defined in Section 9.1.1.

 

Safety Representative is defined in
Section 3.6.1.

 

Scheduled Mechanical Completion Date is defined in
Section 6.4.1.

 

Site is the land or premises on which the Plant
is located.

 

Subcontractor is any person or entity
retained by Fagen, or by any person or entity retained directly or indirectly
by Fagen, in each case as an independent contractor to perform a portion of the
Work, and shall include materialmen and suppliers.

 

Summary of Payment is defined in
Section 10.3.1.

 

Target Price
as used herein shall refer to the sum of all estimated Reimbursable Costs,
which for purposes of this Agreement shall be $*****.  For clarity, the Target Price
does not include Fagen’s Fee.

 

Work is defined in Section 3.1.

 

Work Product is defined in
Section 5.1.

 

5

 

Article 2

 

The Project

 

2.1          Services to be Performed.  Pursuant to this Agreement, and except as
otherwise set forth herein, Fagen shall perform all work and services in
connection with the construction of the Plant, and provide all material,
equipment, tools and labor necessary to complete the Plant in accordance with
the terms of this Agreement.  Fagen will
assign a Field Representative who will represent Fagen and report Project
status to Owner periodically. The Plant, together with all equipment, labor,
services and materials to be furnished hereunder is defined as the “Project.”

 

2.1.1    Fagen acknowledges that Owner is leasing the premises on which the Work
will be performed.  Owner shall make
available to Fagen a copy of said Lease.

 

2.1.2    Fagen shall reasonably permit Owner’s assignment of this Agreement to the
Port in the event that Owner is in an uncured default of its Lease.

 

2.2          Extent of Agreement.  This Agreement consists of the following
documents, and all exhibits, schedules, appendices and attachments hereto and
thereto (collectively, the “Contract Documents”):

 

2.2.1    All written modifications, amendments and change orders to this
Agreement.

 

2.2.2    This Agreement, including all exhibits and attachments, executed by Owner
and Fagen, including those below:

 

	
  List
  of Exhibits

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Owner’s
  Scope of Work

  
	
  Exhibit B

  	
   

  	
  General
  Scope of Work for Fagen

  
	
  Exhibit C

  	
   

  	
  Owner’s
  Requirements

  
	
  Exhibit D

  	
   

  	
  Fagen’s
  Standard Rates

  
	
  Exhibit E

  	
   

  	
  Form of
  Informational Report

  
	
  Exhibit F

  	
   

  	
  Required
  Permits

  
	
  Exhibit G

  	
   

  	
  Fagen’s
  Time and Materials Rates

  
	
  Exhibit H

  	
   

  	
  [Reserved]

  
	
  Exhibit I

  	
   

  	
  [Reserved]

  
	
  Exhibit J

  	
   

  	
  Form of
  Summary of Payment

  
	
  Exhibit K

  	
   

  	
  Form of
  Lien Waiver

  
	
  Exhibit L

  	
   

  	
  APTI
  License

  

 

2.3          Conflicting Provisions.  In the event of any conflict or inconsistency
between the body of this Agreement and any Exhibit or Schedule hereto, the
terms and provisions of this Agreement, as amended from time to time, shall
prevail and be given priority.  Subject
to the foregoing, the several documents and instruments forming part of this
Agreement are to be taken as mutually explanatory of one another and in the
case of ambiguities or discrepancies within or

 

6

 

between such parts the same shall be explained and
interpreted, if possible, in a manner which gives effect to each part and which
avoids or minimizes conflicts among such parts. 
No oral representations or other agreements have been made by the
Parties except as specifically stated in the Contract Documents.

 

Article 3

 

Fagen
Responsibilities

 

3.1          Fagen’s Services in General.  Except for services and information to be
provided by Owner and specifically set forth in Article 4 and Exhibits A
and C, Fagen shall perform or cause to be performed, and shall provide or cause
to be provided, all construction services, supervision, labor, inspection,
material, and machinery to complete construction of the Project consistent with
the Contract Documents (the “Work”). 
All construction services and other Work of Fagen shall be performed in
accordance with (i) the general project scope guidelines set forth in
Exhibit B, (ii) all Legal Requirements, and (iii) generally
accepted construction and design-build standards of the ethanol industry in the
United States during the relevant time period. 
Any design and engineering or other professional service to be performed
pursuant to this Agreement, which under Applicable Law must be performed by
licensed personnel, shall be performed by licensed personnel as required by
Law.  The enumeration of specific duties
and obligations to be performed by Fagen under the Contract Documents shall not
be construed to limit in any way the general undertakings of Fagen as set forth
herein.  Fagen’s Representative shall be
reasonably available to Owner and shall have the necessary expertise and
experience required to supervise the Work. 
Fagen’s Representative shall communicate regularly with Owner and shall
be vested with the authority to act on behalf of Fagen.

 

3.2          Standard of Care.  All
services performed by Fagen and its Subcontractors shall be performed in
accordance with the standard of care and skill generally accepted in the
ethanol industry during the relevant time period and in accordance with any of the
practices, methods and acts that in the exercise of reasonable judgment in
light of the facts known at the time the decision was made, would have been
expected to accomplish the desired result at a reasonable cost consistent with
good business practices, safety and expedition. 
This standard of care is not intended to be limited to the optimum
practice, method or act to the exclusion of all others, but rather to be
acceptable practices, methods or acts generally accepted in the construction
and design-build standards of the ethanol industry.  Fagen and its Subcontractors shall perform
all construction activities efficiently and with the requisite expertise,
skill, competence, resources and care to satisfy the requirements of the
Contract Documents and all applicable Legal Requirements.  Subject to the other provisions of this
Agreement, Fagen shall at all times exercise complete and exclusive control
over the means, methods, sequences and techniques of construction.

 

3.3          Government Approvals and Permits.  Except as identified in Exhibits A and C and,
with respect to items identified as Owner’s responsibility, in Exhibit F
(which items shall be obtained by Owner pursuant to Section 4.4), Fagen
shall obtain all necessary permits, approvals and licenses required for the
prosecution of the Work from any government or quasi-government entity having
jurisdiction over the Project. Notwithstanding the foregoing, Owner shall pay
for all costs, fees, inspections, reviews, charges, and expenses of whatever
kind or nature necessary

 

7

 

for Fagen to obtain such permits, approvals, and
licenses.  Fagen shall provide reasonable
assistance to Owner in obtaining those permits, approvals and licenses that are
Owner’s responsibility.

 

3.4          Subcontractors.

 

3.4.1    Fagen may subcontract portions of the Work in accordance with the terms
hereof.  Fagen shall coordinate with
Owner its selection of any Subcontractors, and the scope of work for such
Subcontractors, for any portion of the Work for which Fagen subcontracts.  Fagen shall solicit Owner’s input to the
selection process for Subcontractors and their scope of work, however the
Parties agree that the ultimate selection of any Subcontractor, and its scope
of work, shall be determined solely by Fagen.

 

3.4.2    Fagen 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, including but not limited to any
third-party beneficiary rights.

 

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

 

3.4.4    Fagen shall ensure that each subcontract with a Subcontractor is
assignable to (i) Owner without consent of the Subcontractor or any other
person or entity in the event that Fagen shall be in an uncured default or
terminated with cause under the terms of this Agreement, or (ii) the Port
in the event that Owner is in an uncured default of its Lease.

 

3.4.5    Except to the extent timely payment has not been made by Owner to Fagen
for work performed and billed by Fagen, Fagen shall not directly or indirectly
create, incur, assume or suffer to be created by it, or any of its
Subcontractors, employees, laborers, mechanics or materialmen of goods or
services, any lien on the Site, the Project, the Work or any part of, or
interest in, any part thereof.  In the
event such a lien is recorded in contravention of this provision, Fagen shall
take all necessary actions to immediately have such lien released.

 

8

 

3.5          Maintenance of Site.  Fagen shall keep the Site reasonably free
from debris, trash and construction wastes to permit Fagen to perform its
construction services efficiently, safely and without interfering with the use
of adjacent land areas.  Upon Mechanical
Completion of the Work, Fagen shall remove all debris, trash, construction
wastes, materials, equipment, machinery and tools arising from the Work to
permit Owner to occupy the Plant for its intended use (provided however, that
Fagen may keep such materials, equipment, machinery, and tools on Site through
Final Completion as are necessary to complete the Punch List).

 

3.6          Project Safety.

 

3.6.1    Fagen recognizes the importance of performing the Work in a safe manner
so as to prevent damage, injury or loss to (i) any 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) any
other property at the Site or adjacent thereto. 
Fagen assumes responsibility for implementing and monitoring all safety
precautions and programs related to the performance of the Work.  Fagen shall, prior to commencing
construction, designate a representative (the “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, Fagen’s Safety
Representative shall be an individual stationed at the Site who may have
responsibilities on the Project in addition to safety.

 

3.6.2    Fagen 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. 
Fagen will promptly 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 Plant
or the Work.

 

3.6.3    Fagen’s responsibility for safety under this Section 3.6  is not intended in any way to relieve
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.

 

3.7          Submission of Reports.   Fagen shall provide Owner with a monthly
informational report substantially in
the form of Exhibit E attached hereto (“Informational Report”).

 

3.8          Startup and
Performance Testing.  Fagen shall provide such services as Owner
may request in writing in conjunction with the startup of the Plant after
Mechanical Completion and any performance tests of the Plant. All such services
shall be provided by Fagen on a time and materials basis.

 

9

 

3.9          Decisions
Involving the Work.  Fagen’s on-site project manager will consult
with Owner’s on-site project manager in the decisions regarding the performance
of the Work on a  daily basis.  In this regard, Owner’s on-site project
manager will have equal input in such decisions.  If there is disagreement between Fagen’s
on-site project manager and Owner’s on-site project manager on any decision,
the matter will immediately be referred to Fagen’s Representative and Owner’s
Representative for resolution.  In the
event of disagreement between Fagen’s Representative and Owner’s
Representative, the Parties shall proceed pursuant to Article 19.

 

3.10        Performance
of Work.  Fagen
hereby acknowledges that, based upon its review of all documents provided to it
by or on behalf of Owner and its review of the Site prior to its execution of
this Agreement, it believes in good faith it can perform the Work in order to
complete the Project for the Target Price and in accordance with the Contract
Times.  Owner acknowledges, however, that
the foregoing is not a guarantee that the Project will be completed for the
Target Price or in accordance with the Contract Times.

 

Article 4

 

Owner’s Responsibilities

 

4.1          Duty to Cooperate. 
Owner shall, throughout the performance of the Work, reasonably
cooperate with Fagen and perform its responsibilities, obligations and services
in a timely manner to facilitate Fagen’s timely and efficient performance of
the Work and so as not to delay or interfere with Fagen’s performance of its
obligations under the Contract Documents.

 

4.2          Furnishing of Services and
Information.

 

4.2.1    Prior to the issuance of the Notice to Proceed, at its own cost and
expense, Owner shall provide the following items to Fagen for Fagen’s
information and use and all of which Fagen is entitled to rely upon in
performing the Work:

 

(a)                                  surveys
describing the Site, boundaries, topography and reference points for use during
construction, including existing service and utility lines;

 

(b)                                 geotechnical
studies describing subsurface conditions including soil borings and other
surveys describing other latent or concealed physical conditions at the Site;

 

(c)                                  temporary and
permanent easements, zoning and other requirements and encumbrances affecting
land use, or necessary to permit the proper design and construction of the
Plant and enable Fagen to perform the Work;

 

(d)                                 legal
descriptions of the Site;

 

(e)                                  to the extent
available, as-built and record drawings of any existing structures at the Site;

 

10

 

(f)                                    all
environmental studies, reports and impact statements describing the
environmental conditions, including Hazardous Conditions, in existence at the
Site that have been conducted or performed;

 

(g)                                 all standard
operating procedures and permits necessary to construct the Plant;

 

(h)                                 all P&IDs, ISOS
(Pipe Detail Drawings), ORTHOS (Pipe Layout and General Drawings), Mechanical
(Including Plumbing & HVAC), Electrical Power Drawings (Including all
instrument & motor loops), Electrical Control Drawings, Civil
Drawings, Structural Drawings, Architectural Drawings, General Arrangement
Drawings, and Equipment Arrangement Drawings in each case that are in Owner’s
possession;

 

(i)                                     all Civil,
Structural, Mechanical (equipment), and Electrical specifications in Owner’s
possession; and

 

(j)                                     such other
information as Fagen may reasonably request in order to perform the Work.

 

4.2.2    Owner shall provide to Fagen all Owner deliverables under Exhibit C
pursuant to Owner’s Milestones.  Such
deliverables shall be provided, at Owner’s own cost and expense, for Fagen’s
information and use. Fagen is entitled to rely upon such deliverables in
performing the Work.

 

4.2.3    Owner is responsible for securing and executing all necessary agreements
with adjacent land or property owners that are necessary to enable Fagen to
perform the Work and that have been identified and notified in writing by Fagen
to Owner prior to the Effective Date. 
Owner is further responsible for all costs, including attorneys’ fees,
incurred in securing these necessary agreements.

 

4.3          Owner’s Representative. 
Owner’s Representative, as set forth in Section 16.1 hereof, shall
be responsible for providing Owner-supplied information and approvals in a
timely manner to permit Fagen to fulfill its obligations under the Contract
Documents.  Owner’s Representative shall
also provide Fagen with prompt notice if it observes any failure on the part of
Fagen to fulfill its contractual obligations, including any errors, omissions
or defects in the performance of the Work.  Owner’s Representative shall be vested with
the authority to act on behalf of Owner and Fagen shall be entitled to rely on
written communication from Owner’s Representative with respect to any Project
matter.

 

4.4          Government Approvals and Permits.  Owner shall obtain and pay for all necessary
Governmental Approvals required by Law (including permits, approvals, licenses,
government charges, reviews, and inspection fees) which are identified in
Exhibit C and Exhibit F as Owner’s responsibility (the “Permits”).  Owner shall provide reasonable assistance to
Fagen in obtaining those permits, approvals and licenses that are Fagen’s
responsibility pursuant to Exhibit F and Section 3.3.  Notwithstanding the foregoing, in addition to
the indemnification set forth in Section 14.4.1, Owner shall hold harmless
Fagen, its officers, directors, employees, and

 

11

 

agents, for Owner’s failure to comply with all
Applicable Laws in obtaining or maintaining the required Permits.  The denial or revocation of any permits
obtained by Owner as a result of Owner’s failure to comply with Applicable Law
or the requirements of the permits and any Owner actions affecting the validity
of any required permit obtained by Owner, shall be deemed a failure of Owner to
fulfill Owner’s Milestones and shall entitle Fagen, to the extent it is
adversely impacted thereby, to any and all remedies available pursuant to this
Agreement and Applicable Law.

 

4.5          Owner’s Separate Contractors.  Owner is responsible for all work, including
such work listed on Exhibits A and C, performed on the Project or at the
Site by separate contractors under Owner’s control.  Owner shall contractually require its
separate contractors to reasonably cooperate and coordinate their activities
with Fagen so that the Project can be completed in an orderly and coordinated
manner without unreasonable disruption.

 

4.6          Security.  Owner shall
be responsible for Site security at the Site (including fencing, alarm systems,
security guarding services and the like) at all times during the term of this
Agreement, to prevent vandalism, theft and danger to the Project, the Site, and
personnel.  Owner shall coordinate and
supervise ingress and egress from the Site so as to minimize disruption to the
Work.  Owner shall consult with
Contractor and hire a security firm familiar with union picketing and related
interferences so as to minimize disruption to the Work.

 

Article 5

 

Ownership
of Work Product; Risk of Loss

 

5.1          Work Product.  All drawings,
specifications, calculations, data, notes and other materials and documents,
including electronic data, furnished by Fagen to Owner under this Agreement (“Work
Product”) shall, upon payment in full therefore by Owner, become the
property of Owner.  For the avoidance of
doubt, as Owner pays in full for any portion of the Work Product, such portion
of the Work Product shall be owned by Owner. 
In addition, for any portion of the Work Product which Owner so pays in
full Fagen shall be given an irrevocable, royalty-free, exclusive license to
use such Work Product at any time and for all legal purposes.  Fagen’s use of such Work Product shall be at
its sole risk without liability or legal exposure to Owner, its affiliates, or
any of their officers, directors, employees or agents. Transfer of title to the
Work Product is conditioned on Owner’s express agreement that its revision of,
modification to, or failure to strictly adhere to or follow, the Work Product
by Owner or any party under its direction or control, is at Owner’s sole risk
without liability or legal exposure to any Fagen, its affiliates, or any of
their officers, directors, employees, or agents; provided, however, that any
Pass Through Warranties or express warranties provided by this Agreement shall
remain in effect according to their terms.

 

5.2          Risk of Loss.  Fagen shall have no
liability for a physical loss of or damage to the Work unless such loss or
damage is caused by the misconduct or negligence of Fagen, its Subcontractors,
or someone acting under its direction or control. Fagen shall not be liable for
physical loss of or damage to the Work where such loss or damage is caused by
the misconduct or negligence of Owner’s employees or third parties who are not
Subcontractors.  Except to the extent of
a warranty claim, Fagen shall have no liability for a physical loss of or
damage to the

 

12

 

Work occurring after Final Completion.  Fagen shall have no liability for losses or
damages for a physical loss of or damage to the Work for which insurance
coverage obtained by Owner under this Agreement is available for such loss or
damage; in such circumstances, any liability for losses and damages as
described in this sentence shall be limited to payment of the deductible and
any losses or damages in excess of such coverage (or the percentage thereof
which is equal to Fagen’s or its Subcontractors’ degree of negligence or
misconduct - if it is or they are not the sole cause therefor) for the
applicable insurance policy.

 

Article 6

 

Commencement
and Completion of the Project

 

6.1          Reserved.

 

6.2          Notice to Proceed; Commencement.  The Work shall commence
following Fagen’s receipt of Owner’s written valid notice to proceed (“Notice
to Proceed”) unless the Parties mutually agree otherwise in writing.  The Parties agree that a valid Owner’s Notice
to Proceed cannot be given until:  (1) Owner
has title to or has obtained all necessary rights and permits to the real
estate on which the Plant will be constructed and; (2) the Site work
required of Owner, as described in Exhibit C, has been reviewed and deemed
adequate by Fagen;  (3) the
air permit(s) and/or other applicable local, state or federal permits
necessary so that construction can begin, as listed on Exhibit F, have
been obtained; (4) Owner has provided proof of financing to Fagen; (5) if
applicable, Owner has executed a sales tax exemption certificate and provided
the same to Fagen; (6) Owner has provided the name of its
property/all-risk insurance carrier and the specific requirements for fire
protection; (7) Owner has, in accordance with Section 17.4.4,
provided insurance certificates or copies of insurance policies demonstrating
that Owner has obtained the insurance policies required pursuant to Section 17.4
hereof and naming additional insured and protecting other interests as
prescribed in Section 17.4, and (8) Fagen provides Owner written
notification of its acceptance of the Notice to Proceed.  Such Notice to Proceed and Fagen’s acceptance
of same shall be provided concurrent with the execution of this Agreement.

 

6.2.1    Notice to Proceed shall be delivered by Owner to Fagen, in a form
reasonably acceptable to Fagen, pursuant to the notice requirements set forth
in Section 21.7 hereof, with a copy to:

 

Fagen, Inc.

501
W. Highway 212

P.
O. Box 159

Granite
Falls, MN  56241

Attention:
Becky Dahl

Fax:  (320) 564-3278

 

6.3          Project Start-Up.  Fagen shall have no responsibility for
start-up of the Plant, but shall provide such assistance as Owner may request
pursuant to Section 3.8 above.

 

13

 

6.4          Mechanical Completion.

 

6.4.1       Mechanical Completion of the Plant shall be achieved no later than September 1,
2010, subject to adjustment in accordance with the Contract Documents hereof
(the “Scheduled Mechanical Completion Date”).

 

6.4.2       “Mechanical
Completion” with respect to the Plant shall be deemed to occur on the date
on which the Work has been physically completed as provided in this
Agreement.  No production is guaranteed on
the date of Mechanical Completion.

 

6.4.3    Procedures.  Fagen shall prepare and issue a “Certificate
of Mechanical Completion” for the Work for the Plant that will set forth
(i) the date of Mechanical Completion, (ii) the remaining items of
Work, as reasonably agreed to by Fagen and Owner, that have to be completed
before Final Payment (“Punch List”), (iii) provisions (to the
extent not already provided in this Agreement) establishing Owner’s and Fagen’s
responsibility for the Plant’s security, maintenance, utilities and insurance
pending Final Payment, and (iv) an acknowledgment that warranties with
respect to the Work commence on the date of Mechanical Completion, except as
may otherwise be noted in the Certificate of Mechanical Completion.  Upon Mechanical Completion, Owner shall pay
to Fagen all unpaid amounts, less an amount equal to the reasonable value of
all remaining or incomplete items of Work as noted in the Certificate of
Mechanical Completion, and less an amount equal to the value of any Subcontractor
lien waivers not yet obtained with respect to such Plant, and less a portion of
the Fee equal to ***** Dollars ($*****).

 

6.5          Final Completion.

 

6.5.1    Final Completion of the Work for the Plant must be achieved by Fagen
within ninety (90) Days after the earlier of the actual date of Mechanical
Completion or the Scheduled Mechanical Completion Date (the “Final
Completion Date”).

 

6.5.2    “Final Completion” of the Plant shall be achieved when the Owner
reasonably determines that the following conditions have been met:

 

(a)                                  Mechanical
Completion has been achieved;

 

(b)                                 the items
identified on the Punch List have been completed by Fagen, unless and to the
extent of any such Punch List items which Fagen is prevented from completing
because of the actions or inactions of Owner or seasonal weather conditions,
provided however that in the event of weather delays, Fagen shall complete such
items as soon as reasonably practical;

 

(c)                                  clean-up of the
Site has been completed;

 

(d)                                 all permits and
inspections required to have been obtained or passed by Fagen have been
obtained and completed; and

 

14

 

(e)                                  release and
waiver of all claims and liens from Fagen and its Subcontractors and suppliers
have been provided.

 

After
receipt of a Final Summary of Payment from Fagen in accordance with Section 10.4,
Owner shall make Final Payment in accordance with Section 10.4, less an
amount equal to the value of any Subcontractor lien waivers not yet obtained.

 

6.5.3    Upon making Final Payment, Owner waives all claims against Fagen under
this Agreement and relating to the Work except claims relating to (i) Fagen’s
failure to satisfy its payment or indemnity, defense and/or hold harmless
obligations under the Contract Documents, (ii) Fagen’s failure to complete
the Work in accordance with the Contract Documents, including, but not limited
to, defects appearing within one (1) year after Mechanical Completion, (iii) the
terms of Fagen’s warranties under the Contract Documents,  (iv) audit rights of Owner and any
claims resulting from the exercise of such audit rights, and (v) Fagen’s
failure to comply with its obligations under Article 20.

 

6.6          Post Completion Support.  Adequate personnel to
complete all Work within the Contract Time(s) will be maintained on-Site
by Fagen or a Subcontractor until Final Completion has been achieved.

 

Article 7

 

 Waiver of Damage Claims

 

7.1          Waiver of Damage Claims. Owner, for itself and its
successors and assigns, hereby expressly waives any claims, causes of action
(including breach of contract), and right it has, may have, or may hereafter
accrue to pursue or collect any amount of money or damages, including but not
limited to those relating to 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 arise solely due to a delay in
achieving Final Completion by the Final Completion Date.

 

Article 8

 

Warranties

 

8.1          Fagen Warranty.  Fagen
warrants to Owner that the construction, including all materials and equipment
furnished by Fagen and its Subcontractors as part of the construction, shall be
new, of good quality, in conformance with the Contract Documents and all Legal
Requirements, free of defects in materials and workmanship.  Fagen’s warranty obligation excludes (i) defects
caused by abuse, damage, modification, alterations, or failure to maintain the
Work by persons other than Fagen or anyone for whose acts Fagen may be liable
or responsible and (ii) defects or errors in any Owner supplied or third
party (i.e. other than Fagen Affiliates or Subcontractors) supplied equipment,
drawings, deliverables, specifications, materials, labor, or information.
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 8.1 or the Contract

 

15

 

Documents. 
Fagen will provide to Owner all manufacturers’ and Subcontractors’
warranties upon the earlier of Mechanical Completion or termination of this
Agreement.   Owner’s failure to comply
with all Operating Procedures shall void those warranties, whether expressed or
implied (if any), that were given by Fagen to Owner that are affected by such
failure.  If Fagen reasonably determines
that all damage caused by such failure can be repaired and Owner makes all
repairs needed to correct such damage, such warranties shall be reinstated for
the remaining term thereof, if any, from the date of the repair.

 

8.2          Correction of Defective Work.

 

8.2.1    Fagen’s warranty obligation extends for a period of one (1) year
from the date of Mechanical Completion of the Work; provided that Owner must
report such non-conformance within ten (10) Days of the date Owner first
learns or should have learned of such failure or non-conformance and that such
one (1)-year period shall be extended one (1) Day for any part of the
warrantied Work that is found to be not in conformance with the Contract
Documents for each Day that such part of the Work is not in conformity with the
Contract Documents, including any time during which any part of the Work is
repaired or replaced pursuant to this Article 8.

 

8.2.2    Fagen 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 and complete correction of such nonconforming
Work, including the correction, removal or replacement of the nonconforming
Work and correction or replacement of any Work damaged by such nonconforming
Work.  If Fagen fails to commence the
necessary steps within such seven (7) Day period or fails thereafter to
continue to diligently perform such steps through completion, Owner, in
addition to any other remedies provided under the Contract Documents, may
provide Fagen with written notice that Owner will commence or assume correction
of such nonconforming Work and repair of such damaged Work with its own
resources.  If, following such written
notice, Owner performs such corrective and repair Work, Fagen shall be
responsible for all reasonable costs incurred by Owner in performing the
correction.

 

8.3          Warranty Period Not Limitation to Owner’s Rights.  The one (1)-year period referenced in Section 8.2
above applies only to Fagen’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 Fagen’s other obligations under the Contract
Documents.

 

8.4          Disclaimer.  EXCEPT FOR CONTRACTOR’S WARRANTIES SET FORTH IN SECTION 8.1,
CONTRACTOR MAKES NO REPRESENTATIONS, GUARANTEES, WARRANTIES, OR CLAIMS WITH
RESPECT TO, AND ASSUMES NO RESPONSIBILITY FOR, THE PERFORMANCE OR USE OF THE
COMPLETED WORK AND SHALL HAVE NO RESPONSIBILITY FOR TESTING OR OPERATION OF THE
WORK.  EXCEPT FOR CONTRACTOR’S WARRANTIES
SET FORTH IN SECTION 8.1, CONTRACTOR EXPRESSLY DISCLAIMS ALL WARRANTIES
AND GUARANTEES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, INCLUDING

 

16

 

ANY IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR USE, INFRINGEMENT, AND
OPERABILITY.

 

Article 9

 

Contract
Price

 

9.1          Payment Basis.  As
full consideration to Fagen for complete performance of the Work and all costs
incurred in connection therewith, Owner shall pay to Fagen the following costs
and fees, which shall along with Fagen’s Fee, comprise the Contract Price:

 

9.1.1    All costs actually incurred by Fagen in connection with its performance
of the Work (“Reimbursable Costs”).

 

9.1.2    The Reimbursable Costs include but are not limited to:

 

1.               Procurement and related
services provided by Fagen’s personnel in connection with the Work, which
services shall be billed to Owner at Fagen’s standard rates for such services,
which rates are attached hereto as Exhibit D;

 

2.               Wages and salaries for Fagen’s
personnel who provide services in connection with the Work, including
construction workers and supervisory and administrative personnel for that
portion of their time required for the Work, except for those personnel whose
services are reimbursable pursuant to Section 9.1.2.1;

 

3.               Costs paid or incurred by
Fagen for fringe benefits, statutory charges and employment benefits, including
but not limited to vacation pay, sick leave, per diems and related expenses
including but not limited to taxes, insurance contributions, assessments and
benefits required by law or collective bargaining agreements, customary
benefits such as sick leave, medical and health benefits, holidays, vacations,
and pensions, for Fagen’s personnel who provide services in connection with the
Work, except for those personnel whose services are reimbursable pursuant to Section 9.1.2.1;

 

4.               Reasonable lodging and
subsistence expenses of Fagen’s personnel while traveling in discharge of
duties connected with the Work;

 

5.               Fagen’s payments to
Subcontractors, including service providers and consultants for Work performed,
services provided, and royalties and license fees paid for the use of a
particular design process or product required by this Agreement;

 

6.               Costs, including
transportation and storage thereof, of all materials, supplies and equipment
incorporated or to be incorporated in the Work including costs of materials in
excess of those actually installed to allow for reasonable waste and spoilage;

 

7.               Costs, including
transportation, storage, installation, maintenance, dismantling and removal, of
all materials, services, supplies,

 

17

 

temporary facilities, machinery, equipment, and tools (excluding hand
tools referenced in item 12 below) that are provided by Fagen at the Plant and
used in the performance of the Work and the cost (less salvage value) of such
items used, but not consumed, which remain Fagen’s property; provided, however,
that all materials, supplies, temporary facilities, machinery, equipment and
tools (excluding hand tools referenced in item 12 below) which are purchased by
Fagen for performance of the Work for which Fagen receives one hundred percent
(100%) reimbursement from Owner shall be owned by Owner upon completion of the
Project.

 

8.               Rental charges for temporary
facilities, machinery, equipment and tools that are provided by Fagen for the
Project and rented from others, and costs of transportation, installation,
maintenance, repairs and replacements, dismantling and removal thereof, at
rental charges consistent with those prevailing in the area; or which cover
Fagen’s expenses, whichever is greater;

 

9.               Rental charges for temporary
facilities, machinery, equipment and tools that are provided by Fagen for the
Project, and are rented from Fagen, and costs of transportation, installation,
maintenance, repairs and replacements, dismantling and removal thereof at
rental rates equal to ten percent (10%) less than the lowest of the
then-current rates charged by Hertz, RSC, and United Rental;

 

10.         Costs of removal of Fagen
generated debris from the site;

 

11.         Costs of storage of
materials and equipment stored off-site, provided such storage is approved by
Owner;

 

12.         Costs for small hand tools
purchased by Fagen for the use of its workers on the Site shall be reimbursed
by the Owner based on an allowance of 4.0% of base wages of construction
workers described in Subparagraph 9.1.2.2 above (excluding benefits, per diems,
taxes, etc.).  The list of hand
tools that apply to this section shall be agreed to in advance by Owner and
Fagen.

 

13.         Costs of blueprinting and
other document reproduction, computer services, facsimile transmissions, messenger
services, office supplies, payroll services, postage and parcel delivery
charges, photographs, fixed and mobile telephone (installation, monthly
service, local and long distance calls), word and data processing, and other
incidental expenses in carrying on the Work;

 

14.         All reasonable costs
incurred by Fagen for frost removal so that winter construction, if necessary,
can proceed;

 

15.         Premiums for all insurance
which Fagen is required to procure under the Contract Documents;

 

16.         Any sales, use, excise and
other taxes on materials, labor, receipts, installations or services furnished
(including those furnished by Owner), or any other taxes arising out of the
performance of the Work (excluding income taxes) imposed by any governmental
authority, for which Fagen may become liable, to the extent Owner

 

18

 

is not exempt from such taxes;

 

17.         Costs, fees and assessments
for the building permit and other permits, licenses and inspections by any
Governmental Authority for which Fagen is required to pay under this Agreement;

 

18.         Fees and expenses related to
any testing required by this Agreement, including heat and x-ray testing,
except for those related to retesting defective or non-conforming Work;

 

19.         Out-of-pocket legal,
mediation and arbitration costs, including attorneys’ fees and expenses, other
than those arising from disputes between Owner and Fagen, incurred by Fagen in
connection with the Work;

 

20.         Other costs reasonably
incurred in performance of the Work if and to the extent proven to be expended
in the execution of the Work, including but not limited to Work performed as a
result of Differing Site Conditions or Hazardous Materials, excluding: the
costs identified above, overhead and general expenses, capital expenses on
Fagen’s capital, and costs to correct damaged, defective or nonconforming Work
resulting from Fagen’s gross negligence or material breach of its obligations
under the Contract Documents;

 

21.         Costs of repairing,
reperforming, or otherwise correcting damaged or non-conforming Work executed
by Fagen or its Subcontractors, provided that the damage to or nonconformance
of the Work was not caused by Fagen, Subcontractors, or parties within their
control and only to the extent that the cost of repair, reperformance or other
correction is not recovered by Fagen or Owner from insurance, sureties,
Subcontractors, or suppliers; and

 

22.         Removing debris, trash, and
other materials left at the Site by third parties prior to Fagen’s acceptance of
Notice to Proceed.

 

9.1.3  The Reimbursable Costs shall not include:

 

(a)   Salaries and other
compensation of Fagen’s personnel stationed at Fagen’s principal office or
offices other than the Site office except as provided in Section 9.1.2;

 

(b)   Expenses of Fagen’s
principal office and offices other than the Site office, except as may be
expressly included in Section 9.1.2;

 

(c)   Overhead and general
expenses, except as may be expressly included in Section 9.1.2;

 

(d)   Fagen’s capital expenses,
including interest on Fagen’s capital employed for the Work; and

 

(e)   Costs, including costs to
repair damage to the Work or defective Work, arising from the negligence or
misconduct of Fagen, its Subcontractors, or anyone

 

19

 

directly or indirectly
employed by them or those for whose acts any of them may be liable.

 

9.2          Fagen’s Fee.  Fagen shall
be paid a fee in addition to all Reimbursable Costs (“Fagen’s Fee”).  Fagen’s Fee shall be in the minimum amount of
***** Dollars ($*****) and shall be subject to adjustment as follows:

 

9.2.1       After taking into
consideration any and all adjustments as may be provided herein, Fagen’s Fee
shall be increased by an amount equal to *****.

 

9.2.2       If *****,
as each may be adjusted pursuant to this Agreement, Fagen’s Fee shall be *****
Dollars ($*****).

 

9.2.3.      For
illustrative purposes only: If *****, then Fagen’s Fee shall be an amount
determined as follows;

 

*****

 

*****

 

*****

 

9.3          Additional Costs.  The
Parties agree that any time and materials work performed by Fagen under this
Agreement (i.e. work specifically identified in this Agreement as to be
performed on a time and material basis or specifically requested in writing by
Owner to be performed on a time and material basis) shall not be calculated in,
or impact, either the Reimbursable Costs or the Target Price.  Additionally, Change Order amounts (excluding
Change Order amounts involving Change Orders which expand the scope of Work to
be provided by Fagen under the Contract Documents, with work under such Change
Orders to be provided on a time and material basis (unless otherwise agreed in
writing by Fagen and Owner)) , or other adjustments to Fagen’s Work and/or the
Schedule which impact Fagen and are agreed to by the Parties, shall be added
to, or subtracted from, (as applicable) both the Reimbursable Costs and Target
Price.  Further, any adjustment resulting
from a Force Majeure event shall be added to, or subtracted from, the
Reimbursable Costs and the Target Price.

 

9.4          Books and Records.  Contractor shall keep and
maintain such full and detailed books, records and accounts as may be
reasonably necessary for proper financial management of the Project under the
Contract Documents, including one set of records showing all payments made to
Contractor by Owner.  Such records shall
be maintained for at least two (2) years after final payment to
Contractor.  At any reasonable time
within two (2) years after final payment to Contractor, Owner and its
representatives may inspect, copy and audit all such books, records and
accounts, including, without limitation, those relating to (i) payments to
Contractor for Work performed, (ii) Taxes assessed or imposed on the Work
or (iii) any regulatory or other

 

20

 

proceeding before a
Governmental Authority.  All information,
books, records and accounts provided to Owner by Contractor pursuant to this
Section shall be subject to the confidentiality requirements of Section 20.1.

 

Article 10

 

Payment
Procedures

 

10.1        Payment Prior to Financial Closing;

 

10.1.1     Mobilization Fee.  As
part of the Payment Basis, Owner shall pay Fagen ***** Dollars ($*****), as a
mobilization fee as soon as allowed by its organizational documents, but in no
event later than five (5) days after the Effective Date.

 

10.2        Rework and Enhancements.  Owner and Fagen acknowledge
the Plant has been partially constructed prior to the Effective Date by a third
party (“Prior Work”) and Fagen has not verified the Prior Work’s
conformance with the Contract Documents. 
Accordingly, should Fagen discover any nonconforming or defective Prior
Work, Fagen will immediately notify Owner, and following consultation with
Owner, repair and/or replace such Prior Work on a time and materials basis, if
and to the extent such Work is within Fagen’s capabilities (i.e. within the
expertise and capability of Fagen’s employees). 
Any such rework not within Fagen’s capabilities may be contracted to a
third party by Owner, provided that such third party shall not interfere with
Fagen’s Work and/or schedule. 
Additionally, should Owner request in writing that Fagen design or
construct any enhancements to the Plant’s existing design (“Enhancements”),
such Enhancements shall be performed on a time and materials basis.  Fagen’s time and materials rates are attached
hereto as Exhibit G and are incorporated herein by reference.

 

10.3        Progress Payments.

 

10.3.1     Following the issuance of Notice to Proceed pursuant to Section 6.2,
Fagen shall submit to Owner, on or before the tenth (10th) and twenty-fifth (25th) day of each month following the acceptance of
Notice to Proceed requests for payment (each, a “Summary of Payment”).  Each Summary of Payment shall seek payment
for Reimbursable Costs incurred by Fagen during the pay period for which the
Summary of Payment is issued together with the applicable portion of Fagen’s
Fee (excluding *****) of Fagen’s Fee until such withheld amount equals *****
Dollars ($*****) (after which time no amount of Fagen’s Fee shall be
withheld)).  The ***** Dollars ($*****)
withheld by Owner pursuant to this paragraph 10.3.1 shall be referred to herein
as “Retainage”.  Along with each Summary
of Payment Fagen will submit to Owner (1) an itemized list of employee labor
costs, including benefits, fringe, statutory burdens, and per diem amounts; (2)
details of labor hours worked (e.g., copies of
timesheets) to the extent not already provided to Owner during the performance
of the work; (3) invoices and purchase orders for Reimbursable Costs; and (4) a
schedule showing rental equipment used during the relevant pay period.  One half of the Retainage ($*****) shall be
paid to Fagen upon Mechanical Completion and all remaining Retainage shall be
paid to Fagen upon Final Completion.

 

21

 

10.3.2     The Summary of Payment shall be substantially in the form attached hereto
as Exhibit J.  Along with each Summary of Payment, Fagen shall submit to
Owner, via hardcopy or by electronic means including facsimile or portable
document format, signed lien waivers, substantially in the form attached hereto
as Exhibit K, received from Subcontractors and suppliers for the Work included
in the Summary of Payment submitted for the immediately preceding Pay Period
and for which payment has been received. 
Notwithstanding the foregoing, nothing herein requires that signed lien
waivers submitted pursuant to this section be notarized or otherwise certified
in any manner.

 

10.3.3     The Summary of Payment shall constitute Fagen’s representation that the
Work has been performed in accordance with the Contract Documents and has
progressed to the point indicated in the Summary of Payment.  No additional documentation will be provided
to Owner in support of the Summary of Payment, provided however, that Fagen
will work with Owner to provide such additional information as Owner needs to
apply for sales tax exemptions and/or refunds. 
The Work completed at the Site and the documentation provided pursuant
to Section 10.3.1 and 10.3.2 hereof shall provide sufficient substantiation to
Owner of the accuracy of the Summary of Payment for Owner to pay such Summary
of Payment.  Title to the Work, including
Work reflected in a Summary of Payment, which is in process, is in transit, is
in storage, or has been incorporated into the Site or is otherwise on Site,
shall pass to Owner free and clear of all claims, liens, encumbrances, and
security interests upon Fagen’s receipt of payment therefore.

 

10.3.4     Within ten (10) Days after Owner’s receipt of each Summary of Payment in
accordance with Section 10.3.2, Owner shall pay Fagen all amounts properly due,
and less amounts properly withheld under this Agreement.

 

10.3.5     The Summary of Payment may request payment for: (i) completed Work; (ii)
prepayments for materials or equipment for the Project when prepayment is
required by the manufacturer or supplier of such materials or equipment; or
(iii) equipment and materials not yet incorporated into the Project provided
that (x) the equipment and materials are suitably stored at either the Site or
another location (subject to Owner’s prior approval), (y) the equipment and
materials are protected by suitable insurance, and (z) upon payment, Owner will
receive the equipment and materials free and clear of all liens and
encumbrances.

 

10.3.6     Withholding of Payments.  On or before the date set forth in Section
10.3.4, Owner shall pay Fagen all amounts properly due.  If Owner determines that Fagen is not
entitled to all or part of a Summary of Payment, it will notify Fagen 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 Fagen must take to rectify Owner’s
concerns.  Fagen and Owner will attempt
to resolve Owner’s concerns prior to the date payment is due.  If the Parties cannot resolve such concerns,
Fagen may pursue its rights under the Contract Documents, including those under
Article 19.  Notwithstanding
anything to the contrary in the Contract Documents, Owner shall pay 

 

22

 

Fagen
all undisputed amounts in a Summary of Payment within the times required by the
Agreement.

 

10.4        Final Payment.  Fagen shall deliver to Owner
a request for final payment (the “Final Summary of Payment”) when Final
Completion has been achieved in accordance with Section 6.5. Owner shall make
final payment (except for amounts in dispute) within thirty (30) Days after
Owner’s receipt of the Final Summary of Payment (“Final Payment”).

 

10.5        Failure to Pay Amounts Due.

 

10.5.1     Interest.  Payments which are due and unpaid by Owner to
Fagen shall bear interest commencing five (5) Days after payment is due at the
rate that is the lower of eighteen percent (18%) per annum, or the maximum rate
allowed by Law.

 

10.5.2     Right to Suspend Work.  If Owner fails to pay Fagen any undisputed
amount that becomes due, Fagen, in addition to all other remedies provided in
the Contract Documents, may stop Work pursuant to Section 15.3
hereof.  All payments properly due and
unpaid shall bear interest at the rate set forth in Section 10.5.1.

 

10.5.3     Failure to Make Final Payment.  Owner’s failure to make Final
Payment pursuant to section 10.4 hereof shall void any and all warranties,
whether express or implied, provided by Fagen pursuant to this Agreement.

 

10.6        Fagen’s Payment Obligations.  Fagen will pay
Subcontractors in accordance with its contractual obligations to such parties,
all the amounts Fagen has received from Owner on account of their work.  Fagen will impose similar requirements on
Subcontractors to pay those parties with whom they have contracted.  Fagen will indemnify and defend Owner against
any claims for payment and mechanic’s liens as set forth in Section 14.2
hereof.

 

10.7        Reconciliation of Fagen’s Fee.  Within thirty (30) days
after all Reimbursable Costs are totaled and made known to Owner, but in no
event sooner than thirty (30) days after Final Completion, Owner shall pay to
Fagen the sum of money necessitated by the adjustment provided for in Section
9.2.1.

 

Article 11

 

Hazardous
Conditions and Differing Site Conditions

 

11.1        Hazardous Conditions.

 

11.1.1     Unless otherwise expressly provided in the Contract Documents to be part
of the Work, Fagen is not responsible for any Hazardous Conditions encountered
at the Site.  Upon encountering any
Hazardous Conditions, Fagen will stop Work immediately in the affected area and
as promptly as practicable notify Owner and, if Fagen is specifically required
to do so by Legal Requirements, all 

 

23

 

Governmental
Authorities having jurisdiction over the Project or Site.  Fagen shall not remove, remediate or handle
in any way (except in case of emergency) any Hazardous Conditions encountered
at the Site without prior written approval of Owner.

 

11.1.2     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 is required under applicable Legal Requirements to
take with respect to such Hazardous Conditions in order for the Work to
proceed.  Owner’s choice of such
Qualified Independent Experts shall be subject to the prior approval of Fagen,
which approval shall not be unreasonably withheld or delayed.

 

11.1.3     Fagen shall be obligated to resume Work at the affected area of the
Project only after Owner’s Qualified Independent 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 entities having jurisdiction over the Project or Site and a
remediation plan has been undertaken permitting the Work to proceed.

 

11.1.4     Fagen will be entitled, in accordance with this Article 11, to an
adjustment in Contract Time(s) and Target Price to the extent Fagen’s time of
performance and costs have been adversely impacted by the presence of Hazardous
Conditions, provided that such Hazardous Materials were not introduced to the
Site by Fagen, Subcontractors or anyone for whose acts they may be liable.

 

11.1.5     To the fullest extent permitted by Law, Owner shall indemnify, defend and
hold harmless Fagen, 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.

 

11.1.6     Notwithstanding the preceding provisions of this Section 11.1, Owner
is not responsible for Hazardous Conditions introduced to the Site by Fagen,
Subcontractors or anyone for whose acts they may be liable.  Fagen 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 Fagen, Subcontractors or anyone for whose
acts they may be liable.

 

24

 

11.2        Differing Site Conditions; Inspection.

 

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

 

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

 

Article 12

 

Force
Majeure; Change in Legal Requirements

 

12.1        Force Majeure Event.  A force
majeure event (“Force Majeure Event”) shall mean a cause or event beyond
the reasonable control of, and without the fault or negligence of a Party
claiming Force Majeure, including, without limitation, an emergency under
Section 13.2, floods, earthquakes, hurricanes, tornadoes, adverse weather
conditions not reasonably anticipated or acts of God; sabotage; vandalism
beyond that which could reasonably be prevented by a Party claiming Force
Majeure; terrorism; war; riots; fire; explosion; blockades; insurrection;
strike; slow down or labor disruptions (even if such difficulties could be
resolved by conceding to the demands of a labor group); economic hardship or
delay in the delivery of materials or equipment that is beyond the control of a
Party claiming Force Majeure, and action or failure to take action by any
Governmental Authority after the Effective Date (including the adoption or
change in any rule or regulation or environmental constraints lawfully imposed
by such Governmental Authority), but only if such requirements, actions, or
failures to act prevent or delay performance; and inability, despite due
diligence, to obtain any licenses, permits, or approvals required by any
Governmental Authority.

 

12.2        Effect of Force Majeure Event.  Neither Party shall be considered in default
in the performance of any of the obligations contained in the Contract
Documents, except for the Owner’s or Fagen’s obligations to pay money
(including but not limited to, Summary of Payments), when and to the extent the
failure of performance shall be caused by a Force Majeure Event.  If either Party is rendered wholly or partly
unable to perform its obligations under the Contract Documents because of a Force
Majeure Event, such Party will be excused from performance affected by the
Force Majeure Event to the extent and for the period of time so affected;
provided that:

 

(a)                                  the
nonperforming Party, within seventy two (72) hours after the nonperforming
Party actually becomes aware of the occurrence of the Force Majeure Event,
gives 

 

25

 

the other Party written
notice describing the event or circumstance in detail, including if known, an
estimation of its expected duration and probable impact on the performance of
the affected Party’s obligations hereunder and continues to furnish timely
regular reports with respect thereto during the continuation of and upon the
termination of the Force Majeure Event;

 

(b)                                 the suspension
of performance is of no greater scope and of no longer duration than is
reasonably required by the Force Majeure Event;

 

(c)                                  the obligations
of either Party that arose before the occurrence causing the suspension of
performance and the performance that is not prevented by the occurrence, shall
not be excused as a result of such occurrence;

 

(d)                                 the
nonperforming Party uses its best efforts to remedy its inability to perform
and mitigate the effect of such event and resumes its performance at the
earliest possible time after cessation of such occurrence;

 

(e)                                  when the
nonperforming Party is able to resume performance of its obligations under the
Contract Documents, that Party shall give the other Party written notice to
that effect; and

 

(f)                                    Fagen shall be
entitled to a Day-for-Day time extension for those events set forth in Section
12.1 to the extent the occurrence of such event delayed Fagen’s performance of
its obligations under this Agreement.

 

12.3        Change in Legal Requirements.  The Contract Time(s) shall be adjusted to
compensate Fagen for the effects of any changes to the Legal Requirements that
occur after the date of this Agreement and as a result of such change, the
performance of the Work is adversely affected. 
Such effects may include, without limitation, revisions Fagen is required
to make to the Work because of changes in Legal Requirements.

 

Article 13

 

Changes to
the Contract Price and Scheduled Completion Dates

 

13.1        Change Orders.

 

13.1.1     A change order (“Change Order”) is a written instrument issued
after execution of this Agreement signed by Owner and Fagen, stating their
agreement upon all of the following:

 

(a)                                  the scope of
the change in the Work;

 

(b)                                 the amount of
the adjustment to the Target Price; and

 

(c)                                  the extent of
the adjustment to the Contract Time(s).

 

26

 

13.1.2     All changes in the Work authorized by an applicable Change Order shall be
performed under the applicable conditions of the Contract Documents.  Prior to incurring any costs with respect to
estimating services, design services and any other services involved in the
preparation of the proposed revisions to the Contract Documents, Fagen must
obtain the written approval of Owner for such costs.

 

13.1.3     If Owner requests a proposal for a change in the Work from Fagen and
subsequently elects not to proceed with the change, a Change Order shall be
issued to reflect resulting adjustments to the Contract Times, and reimburse
Fagen for reasonable costs incurred for estimating services, design services
and any other services involved in the preparation of proposed revisions to the
Contract Documents; provided that such costs were previously approved by Owner
pursuant to Section 13.1.2.

 

13.2        Emergencies.  In any emergency affecting the safety of
persons and/or property, Fagen shall act, at its discretion, to prevent
threatened damage, injury or loss and shall notify the Owner as soon as
practicable and in any event within seventy two (72) hours after Fagen becomes
aware of the emergency.  The notice to
Owner shall describe the emergency in detail, including a reasonable estimation
of its expected duration and impact, if any, on the performance of Fagen’s
obligations hereunder.  Any change in the
Target Price and/or Contract Time(s) on account of emergency work shall be
determined as provided in this Article 13. 
Notwithstanding the above, the Parties agree that impact to the Target
Price and/or Contract Time(s) shall be borne by the Party responsible for the
emergency, or to the extent both Parties are partially responsible, to the
extent of their comparative fault.

 

13.3        Failure to Complete Owner’s Milestones.  The dates when Owner’s obligations are
required to be completed to enable Fagen to achieve the Contract Time(s) are
identified in Exhibit C (“Owner’s Milestones”).  The Contract Time(s) shall be revised to
provide a Day-for-Day extension of the Contract Time(s) for completion of the
Work for each full Day during which Owner fails to timely complete its
obligations pursuant to the Owner’s Milestones.

 

Article 14

 

Indemnity

 

14.1        Tax Claim Indemnification.  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 Fagen (and its officers, directors,
agents, successors and assigns) from and against any and all damages, claims
costs, losses, liabilities, and expenses (including penalties, interest, fines,
taxes of any kind, attorneys’ fees, accountants and other professional fees and
associated expenses or costs) incurred by Fagen as a result of any action taken
by Fagen in accordance with Owner’s directive.

 

14.2        Payment Claim Indemnification.  To the extent Fagen has
received payment for any portion of the Work, Fagen shall indemnify, defend and
hold harmless Owner Indemnified Parties from any claims or mechanic’s liens
brought against Owner Indemnified Parties or against the Project as a result of
the failure of Fagen, or those for whose acts it is responsible, to 

 

27

 

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) business
days of receiving written notice from Owner that such a claim or mechanic’s
lien has been filed, Fagen shall commence, and shall thereafter
diligently,  take the steps necessary to
discharge such claim or lien.

 

14.3        Fagen’s General Indemnification.

 

14.3.1     Fagen, to the fullest extent permitted by Law, shall indemnify, hold
harmless and defend Owner and its successors, assigns, officers, directors,
employees and agents (“Owner Indemnified Parties”) from and against any
and all losses, costs, damages, injuries, liabilities, claims, demands,
penalties, interest and causes of action, including without limitation attorney’s
fees (collectively, the “Damages”) 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, willful misconduct or omissions of
Fagen, Subcontractors, their agents or anyone employed directly or indirectly
by any of them or anyone for whose acts any of them may be liable.

 

14.3.2     If an employee of Fagen, Subcontractors, their agents, 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 Indemnified Parties, Fagen’s indemnity
obligation set forth in Section 14.3.1 above shall not be limited by any
limitation on the amount of damages, compensation or benefits payable by or for
Fagen, Subcontractors, their agents or other entity under any employee benefit
acts, including workers’ compensation or disability acts.

 

14.3.3     Without limiting the generality of Section 14.3.1 hereof, Fagen shall
fully indemnify, save harmless and defend the Owner Indemnified Parties from
and against any and all Damages in favor of any Governmental Authority or other
third party to the extent caused by (a) failure of Fagen or any
Subcontractor or any of their agents to comply with Legal Requirements as
required by this Agreement, or (b) failure of Fagen or any Subcontractor
or any of their agents to properly administer and pay any taxes or fees
required to be paid by Fagen under this Agreement.

 

14.3.4     Nothing in Fagen’s General Indemnification contained in this Section 14.3
shall be read to limit in any way any entitlement Fagen shall have to insurance
coverage under any insurance policy, including any insurance policy required by
either Party under this Agreement.

 

28

 

14.4        Owner’s General Indemnification.  Owner, to the fullest extent permitted by
Law, shall indemnify, hold harmless and defend Fagen and any of Fagen’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, willful misconduct, or
omissions of Owner, its officers, directors, employees, agents, or anyone for
whose acts any of them may be liable.

 

14.4.1     Without limiting the generality of Section 14.4 hereof, Owner shall fully
indemnify, save harmless and defend Fagen and any of Fagen’s officers, directors,
employees, or agents from and against any and all Damages in favor of any
Governmental Authority or other third party to the extent caused by
(a) failure of Owner or any of Owner’s agents to comply with Legal
Requirements as required by this Agreement, or (b) failure of Owner or
Owner’s agents to properly administer and pay any taxes or fees required to be
paid by Owner under this Agreement.

 

14.4.2     Owner shall indemnify and hold harmless Fagen, 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 but not limited to all fees and expenses
of engineers, architects, attorneys, and other professionals and all court or
arbitration or other dispute resolution costs), arising out of or relating to
the (i) implementation, (ii) construction, (iii) performance, (iv) maintenance,
or (v) lack; in each case, of soil stabilization on the Site after Final Completion.

 

14.4.3     Nothing in the Owner’s General Indemnification contained in this Section
14.4 shall be read to limit in any way any entitlement Owner shall have to
insurance coverage under any insurance policy, including any insurance policy
required by either Party under this Agreement.

 

14.5        Indemnification.  Owner, to the fullest extent permitted by
Law, shall (i) indemnify, hold harmless and defend Fagen and all of Fagen’s
officers, directors, employees and agents from and against all third party claims,
losses, damages, liabilities, including attorneys’ fees and expenses, and (ii)
waive all claims, rights, causes of action, losses, damages, liabilities,
including attorneys’ fees and expenses against Fagen and its officers,
directors, employees and agents, in each case; arising from or attributable to
(a) any Prior Work, and (b) agreements for design, build, procurement,
engineering, construction, or related services entered into by Aventine with
third parties which relate to, or were related to, the Project.

 

Article 15

 

Stop Work;
Termination for Cause

 

15.1        Owner’s Right to Stop Work.  Owner may, without cause and
for its convenience, order Fagen in writing to stop and suspend the Work.  Such suspension shall not exceed sixty (60)
consecutive Days, or in the aggregate more than ninety (90) Days, during the
duration of construction of the Plant. 
Fagen is entitled to seek an adjustment of the Contract 

 

29

 

Time(s) and Target Price if its time and/or cost to
perform the Work has been adversely impacted by any suspension or stoppage of
work by Owner.

 

15.2        Owner’s Right to Perform and Terminate
for Cause.

 

15.2.1     If Fagen 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, Subcontractors;
(v)  perform the Work with promptness and diligence to ensure that the
Work is completed by the Contract Time(s), as such times may be adjusted in
accordance with this Agreement; 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 or equity, shall have the rights
set forth in Sections 15.2.2 and 15.2.3 below.

 

15.2.2     Upon the occurrence of an event set forth in Section 15.2.1 above,
Owner may provide written notice to Fagen that it intends to terminate the
Agreement unless the problem cited is cured, or commenced to be cured within
seven (7) Days of Fagen’s receipt of such notice.  If Fagen fails to cure, or reasonably
commence to cure such problem and thereafter diligently pursue such cure to
completion, then Owner may give a second written notice to Fagen of its intent
to terminate following an additional seven (7) Day period.  If Fagen, within such second seven (7) Day
period, fails to cure, or reasonably commence to cure such problem and
thereafter diligently pursue such cure to completion, then Owner may declare
the Agreement terminated for default by providing written notice to Fagen of
such declaration.  If (i) the insurance
coverage required to be provided by Fagen pursuant to Article 17 hereof is
suspended or cancelled without Fagen providing immediate replacement coverage
(and, in any case, within seven (7) Days of the occurrence thereof) meeting the
requirements specified in Article 17 hereof; (ii) Fagen purports to make an
assignment of this Agreement in breach of the provisions of Section 21.1
hereof, or (iii) any representation or warranty made by Fagen under Section
18.1 hereof was false or materially misleading when made, then Owner may
terminate this Agreement upon written notice to Fagen.

 

15.2.3     In addition to any other remedy available to Owner under the Contract
Documents or at Law, upon declaring the Agreement terminated pursuant to
Section 15.2.2 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 paid for by Owner for the performance of the Work, all of which Fagen
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.  If Owner improperly terminates the Agreement
for cause, Owner shall pay Fagen for the following:

 

(a)                                  all Work,
including without limitation costs and expenses incurred in performing the
Work, executed but not previously paid for;

 

30

 

(b)                                 the reasonable
costs and expenses attributable to such termination, including demobilization
costs;

 

(c)                                  amounts due in
settlement of terminated contracts with Subcontractors; and

 

(d)                                 A termination
fee in the amount of twenty percent (20%) on the sum of items (a), (b), and (c)
above.

 

15.3        Fagen’s Right to Stop Work.

 

15.3.1     Fagen may, in addition to any other rights afforded under the Contract
Documents or at Law, stop work for Owner’s failure to pay amounts properly due
under Fagen’s Summary of Payment in accordance with Section 15.3.2 below.

 

15.3.2     If any of the events set forth in Section 15.3.1 above occur, Fagen
has the right to stop work by providing written notice to Owner that Fagen will
stop work unless such event is cured within seven (7) Days from Owner’s receipt
of Fagen’s notice. If Owner fails to cure or reasonably commence to cure such
problem and thereafter diligently pursue such cure to completion, then Fagen
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 and thereafter diligently pursue such cure to
completion, then Fagen may stop work unless such problem involves an amount
disputed in good faith by Owner.  In such
case, Fagen shall be entitled to make a claim for adjustment to the Contract
Time(s) to the extent it has been adversely impacted by such stoppage.

 

15.4        Fagen’s Right to Terminate for Cause.

 

15.4.1     Fagen, 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:

 

(a)                                  Work on the Plant has been
stopped for thirty five (35) consecutive Days, or more than sixty (60) Days,
during the duration of construction of such Plant, because of court order, any
Governmental Authority having jurisdiction over the Work, or orders by Owner
under Section 15.1 hereof, provided that such stoppages are not due to the
acts or omissions of Fagen, Design Consultant and their respective officers,
agents, employees, Subcontractors or any other person for whose acts Fagen may
be liable under Law.

(b)                                 Owner’s failure to provide
Fagen with any information, permits or approvals that are Owner’s
responsibility under the Contract Documents which result in the Work being
stopped for thirty five (35) consecutive Days, or more than sixty (60) Days,
during the duration of the Work, even though Owner has not ordered Fagen in
writing to stop and suspend the Work pursuant to Section 15.1 hereof.

 

31

 

(c)                                  Owner fails to meet its
obligations under Exhibits A or C and such failure results in the Work being
stopped for thirty five (35) consecutive Days, or more than sixty (60)  Days, during the duration of the Work even
though Owner has not ordered Fagen in writing to stop and suspend the Work
pursuant to Section 15.1 hereof.

(d)                                 Owner’s failure to cure the
problems set forth in Section 15.3.1 above within seven (7) Days after
Fagen has stopped the Work.

 

15.4.2     Upon the occurrence of an event set forth in Section 15.4.1 above,
Fagen may elect to terminate this Agreement by providing written notice to
Owner that it intends to terminate the Agreement unless the problem cited is
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 Fagen 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, such problem, then Fagen may declare the
Agreement terminated for default by providing written notice to Owner of such
declaration.  In such case, Fagen shall
be entitled to recover in the same manner as if Owner had wrongfully terminated
the Agreement as provided in Section 15.2.3.

 

15.5        Bankruptcy of Owner or Fagen.

 

15.5.1     If either Owner or Fagen institutes or has instituted against it a case
under the United States Bankruptcy Code (such Party being referred to as the “Bankrupt
Party”), such event may impair or frustrate the Bankrupt Party’s ability
to perform its obligations under the Contract Documents.  Accordingly, should such event occur:

 

(a)                                  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 obligations under the Contract Documents, which assurances shall be
provided within ten (10) Days after receiving notice of the request; and

 

(b)                                 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.

 

15.5.2     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 15.

 

15.5.3     The rights and remedies under this Section 15.5 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 

 

32

 

Fagen,
if it is the non-Bankrupt Party, to stop Work under any applicable provision of
this Agreement.

 

Article 16

 

Representatives
of the Parties

 

16.1        Designation of Owner’s Representatives.  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 Article 19:

 

Tom Manuel

Chief Executive Officer

Aventine Renewable Energy — Mt Vernon, LLC

P.O.  Box 1800

Pekin, IL 61555

Phone: (309) 347-9388

Facsimile: (309)
347-8541

 

Owner designates the individual listed below as its
representative (“Owner’s Representative”), which individual has the
authority and responsibility set forth in Section 4.3:

 

Jeffrey
G. See

V.P.
of Project Development

Aventine
Renewable Energy — Mt Vernon, LLC

7201
Port Road

Mount
Vernon, IN 47620

Cell
605-691-9258

Facsimile:
309-478-1892

 

16.2        Designation of Fagen’s Representatives.  Fagen designates the individual listed below
as its senior representative (“Fagen’s Senior Representative”), which
individual has the authority and responsibility for avoiding and resolving
disputes under Article 19:

 

Roland “Ron” Fagen

CEO and President

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Telephone:  (320) 564-3324

Facsimile: (320) 564-3278

 

33

 

Fagen designates the individual listed below as its
representative (“Fagen’s  Representative”), which individual has
the authority and responsibility set forth in Section 3.1:

 

Evan Fagen

Executive Vice President

501 W. Highway 212

P.O. Box 159

Granite Falls, MN 56241

Telephone:  (320) 564-3324 

Facsimile: (320) 564-5196

 

Article 17

 

Insurance

 

17.1        Insurance.  Fagen shall procure and maintain in force
through the Final Completion Date the following insurance coverage with the
policy limits indicated, and otherwise in compliance with the provisions of
this Agreement:

 

	
  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

  	
   

  	
   

  	
   

  
	
  Each
  Occurrence

  	
   

  	
  $

  	
  1,000,000

  	
   

  
					

 

	
  Excess Liability — Umbrella Form:

  	
   

  	
   

  	
   

  

 

	
  Each
  Occurrence

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  Aggregate

  	
   

  	
  $

  	
  20,000,000

  	
   

  

 

	
  Workers’ Compensation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Statutory limits as required by the state in which
  the Work is performed.

  
	
   

  	
   

  	
   

  	
   

  
	
  Employers’ Liability:

  	
   

  	
   

  	
   

  

 

	
  Each
  Accident

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Disease-Policy
  Limit

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Disease-Each
  Employee

  	
   

  	
  $

  	
  1,000,000

  	
   

  

 

34

 

	
  Professional Errors and Omissions

  	
   

  	
   

  	
   

  

 

	
  Per
  Claim

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
  Annual

  	
   

  	
  $

  	
  5,000,000

  	
   

  

 

17.2        Fagen’s Insurance Requirements.

 

17.2.1     Fagen is responsible for procuring and maintaining from insurance
companies authorized to do business in the state in which the Plant is located,
the following insurance coverage for claims which may arise from or out of the
performance of the Work and obligations under the Contract Documents:

 

(a)                                  coverage for
claims arising under workers’ compensation, disability and other similar
employee benefit Laws applicable to the Work;

 

(b)                                 coverage for
claims by Fagen’s employees for bodily injury, sickness, disease, or death;

 

(c)                                  coverage for
claims by any person other than Fagen’s employees for bodily injury, sickness,
disease, or death;

 

(d)                                 coverage for
personal injury liability claims for damages sustained by a person as a direct
or indirect result of Fagen’s employment of the person, or sustained by any
other person;

 

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

 

(f)                                    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

 

(g)                                 coverage for
contractual liability claims arising out of Fagen’s obligations under
Section 14.3.

 

17.2.2     Fagen’s liability insurance required by this Section 17.2 shall be
written for the coverage amounts set forth in Section 17.1 and shall
include completed operations insurance for the period of time set forth in the
Agreement, and shall name Owner as an additional insured, without application
of deductible, retention or retrospective premiums as to the additional
insured.

 

17.2.3     To the extent Owner requires Fagen or any Design Consultant to provide
professional liability insurance for claims arising from the negligent
performance of design services by Fagen 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 coverage because of the design-build delivery of the
Project.  Such policies shall be provided
prior to the commencement of any design services hereunder.

 

35

 

Promptly following execution of this Agreement, Fagen
shall provide Owner with copies of insurance certificates reflecting coverage
required under this Section 17.2. evidencing that (i) all of Fagen’s insurance
obligations required by the Contract Documents are in full force and in effect
and will remain in effect for the duration required by the Contract Documents
and (ii) no insurance coverage required hereunder will be canceled, renewal
refused, or changed unless at least thirty (30) Days prior written notice is
given to Owner.  All
insurance certificates provided by Fagen pursuant to this Section 17.2.3 shall,
as applicable, clearly identify in writing as additional insured and/or
expressly include Owner. 
Fagen’s insurance shall not lapse or be cancelled during the term of
this Agreement. Owner shall have the right to review, at Fagen’s offices, all
insurance policies to which Owner is named as an additional insured.  In the event Fagen replaces insurance
providers for any policy required under this Section, revises policy coverage,
or otherwise modifies any applicable insurance policy in any way, Fagen shall
provide Owner, for its review or possession as provided under this Section
17.2.3, prompt notice of such fact and the certificate of insurance for such
new, revised or modified policy when available.

 

17.3        Owner’s Liability Insurance.  Owner shall procure and maintain from
insurance companies authorized to do business in the state in which the Plant
is located the following liability insurance with the policy limits indicated:

 

	
  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

  	
   

  	
   

  	
   

  
	
  Each
  Occurrence

  	
   

  	
  $

  	
  1,000,000

  	
   

  
					

 

	
  Excess Liability — Umbrella Form:

  	
   

  	
   

  	
   

  

 

	
  Each
  Occurrence

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  Aggregate

  	
   

  	
  $

  	
  20,000,000

  	
   

  

 

	
  Employers’ Liability:

  	
   

  	
   

  	
   

  

 

	
  Each
  Accident

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Disease-Policy
  Limit

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Disease-Each
  Employee

  	
   

  	
  $

  	
  1,000,000

  	
   

  

 

36

 

The
general liability insurance obtained by Owner shall name Fagen, and
Subcontractors as additional insured, without application of deductible,
retention or retrospective premiums as to the additional insured.

 

17.4        Owner’s Property Insurance.

 

17.4.1     Unless otherwise provided in the Contract Documents, Owner shall procure
from insurance companies authorized to do business in the state in which the
Plant is located, and maintain through Final Completion, property insurance
upon the entire Plant in a minimum amount equal to the full insurable value of
the Plant, 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 insured the interests of Owner, Fagen, and
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 and without application of any deductible, retention or retrospective
premium.  Except as set forth in the last
sentence of this paragraph, Owner shall maintain coverage equal to or in excess
of the value of each of Fagen’s and Subcontractors’ property on the Site.  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. 
Notwithstanding the foregoing, the property insurance provided by Owner
hereunder shall not be required to include Fagen’s and Subcontractors’ tools or
construction equipment.

 

17.4.2     Unless the Contract Documents provide otherwise (e.g. the last sentence
of Section 17.4.1 above), (i) Owner shall procure and maintain Work equipment
and machinery insurance that will include as additional insured Owner, Fagen,
and Subcontractors, in an amount not less than the Contract Price , and without
application of any deductible, retention or retrospective premium as to the
additional insured and (ii) Owner shall maintain coverage equal to or in excess
of the value of each of Fagen’s, and Subcontractors’ interest or investment in
Work equipment or machinery on the Site.

 

17.4.3     [Reserved.]

 

17.4.4     Promptly following execution of this Agreement, Owner shall provide Fagen
with copies of the insurance certificates reflecting coverage required under
this Section 17.4 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 Fagen has completed all of the Work and has received
Final Payment from Owner, and (ii) no insurance coverage will be canceled,
renewal refused, or changed unless at least thirty (30) Days prior written
notice is given to Fagen.  All insurance certificates provided by Owner pursuant to this Section
17.4.4 shall, as applicable, clearly identify in writing as additional insured
and/or expressly include the interests of Fagen and Subcontractors.  Owner’s property insurance shall not lapse or
be cancelled during the term of this Agreement. Fagen shall have the right to
review, at Owner’s offices, all insurance policies to which Fagen and
Subcontractors are named as 

 

37

 

additional
insured.  In the event Owner replaces
insurance providers for any policy required under this Section, revises policy
coverage, or otherwise modifies any applicable insurance policy in any way,
Owner shall provide Fagen prompt notice of such fact, the certificate of
insurance for such new, revised or modified policy when available.

 

17.4.5     Owner and Fagen waive against each other and Owner’s separate
contractors, Subcontractors, agents and employees of each and all of them all
damages covered by insurance provided herein, except such rights as they may
have to the proceeds of such insurance. 
Fagen and Owner shall, where appropriate and where agreed to by
applicable counterparties, (i) require similar waivers of subrogation from Owner’s
separate contractors, Subcontractors, and insurance providers and (ii) require
each of them to include similar waivers in their contracts or policies.

 

Article 18

 

Representations
and Warranties

 

18.1        Fagen and Owner Representations and Warranties.  Each of Fagen and Owner represents that:

 

(a)                                  it is duly organized, validly existing and in good standing under the
Laws of its state of formation and has all requisite power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby;

 

(b)                                 this Agreement has been duly executed and delivered by such Party and
constitutes the legal, valid and binding obligations of such Party, enforceable
against such Party in accordance with their respective terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or similar
Laws affecting creditor’s rights or by general equitable principles;

 

(c)                                  the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby do not and will not conflict with or
violate (a) the certificate of incorporation or bylaws or equivalent
organizational documents of such Party, or (b) any Law applicable to such Party
and other than the permits listed on Exhibit F, such execution, delivery and
performance of this Agreement does not require any Governmental Approval; and

 

(d)                                 there is no action pending or, to the knowledge of such Party,
threatened, which would hinder, modify, delay or otherwise adversely affect
such Party’s ability to perform its obligations under the Contract Documents.

 

18.2        Fagen Representations and Warranties.  Fagen further represents that it has the
necessary financial resources to fulfill its obligations under this Agreement.

 

38

 

Article 19

 

Dispute
Resolution

 

19.1        Dispute Avoidance and Mediation.  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, Fagen 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.

 

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

 

If
a dispute or disagreement cannot be resolved through Fagen’s Representative and
Owner’s Representative, Fagen’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.

 

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 in
Indianapolis, Indiana 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 Arbitration
Rules and Mediation Procedures.  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.  Mediation
is a condition precedent to arbitration, unless the Parties agree otherwise.

 

19.2        Arbitration.  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 19.1 above shall be decided by arbitration
to be conducted in Indianapolis, Indiana in accordance with the Construction
Industry Arbitration Rules and Mediation Procedures of the AAA then in effect,
unless the Parties mutually agree otherwise. 
A demand for arbitration shall be made within a reasonable time after
the dispute has arisen, and in no event shall it be made after the date when
institution of legal or equitable proceedings based on such dispute would be
barred by the applicable statute of limitations.  The arbitration shall be governed
by the Federal Arbitration Act.

 

The
award of the arbitrator(s) shall be final and binding upon the Parties.  Judgment may be entered upon it by any court
having jurisdiction thereof.

 

Fagen
and Owner expressly agree that any arbitration pursuant to this
Section 19.2 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, 

 

39

 

dispute
or controversy.  Both Fagen and Owner
will include appropriate provisions in all contracts they execute after the
date of execution of this Agreement with other parties in connection with the
Project to require arbitration of all disputes and such joinder or
consolidation (to the extent such other parties will agree to such provisions).

 

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 in such arbitration or such other dispute proceeding.

 

19.3        Duty to Continue Performance.  Unless provided to the contrary in the
Contract Documents, Fagen shall continue to perform the Work and Owner shall
continue to satisfy its payment obligations to Fagen, pending the final
resolution of any dispute or disagreement between Fagen and Owner.

 

19.4        No Consequential Damages.  Notwithstanding anything herein to the
contrary, neither Fagen 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,

 

19.5        Limitation of Liability.  Notwithstanding anything else in this
Agreement to the contrary, the aggregate liability of Fagen, its
Subcontractors, vendors, suppliers, agents and employees, to Owner (or any
successor thereto or assignee thereof) for any and all claims and/or
liabilities arising out of or relating in any manner to the Work or to Fagen’s
performance or non-performance of its obligations hereunder, whether based in
contract, tort (including negligence), strict liability, or otherwise, shall
not exceed, in the aggregate, the Target Price and shall be reduced, upon the
issuance of each Summary of Payment, by the total value of such Summary of Payment
until such time as Fagen’s aggregate liability has been reduced to *****
Dollars ($*****).  Upon Final Completion,
Fagen’s aggregate liability shall be reduced to the greater of (1) Ten Percent
(10%) of the Target Price or (2) the amount of insurance coverage available to
respond to the claim or liability under any policy of insurance provided by
Fagen under this Agreement. Except for any remaining warranty obligations,
Fagen’s aggregate liability shall be reduced to zero on the one year
anniversary of the Final Completion Date.

 

Article 20

 

Confidentiality
of Shared Information

 

20.1        Non-Disclosure Obligation.  Except as required by court order, subpoena,
or Applicable Law, the Parties will hold in confidence, and will use only for
the purposes of completing the Project, any and all Confidential Information
disclosed to each other.  Neither Party
shall disclose to third parties any Confidential Information without the
express written consent of the other Party, which consent shall not be
unreasonably withheld.  The Parties shall
at all times use their respective reasonable efforts to keep all Confidential
Information and information regarding the terms and conditions of this
Agreement confidential.  However, the
Parties may disclose Confidential Information to their respective lenders,
lenders’ agents, advisors and/or consultants only as reasonably necessary in
connection with the financing of the

 

40

 

Plant or to enable them to advise the Parties with
regard to the Contract Documents and the Project, provided that prior to such
disclosure any party to whom Confidential Information is disclosed is informed
by the disclosing Party of the existence of this confidentiality obligation and
agrees to be obligated to maintain the confidentiality of any information
received. The term “Confidential Information” will mean (i) confidential
or proprietary information regarding the other Party’s business affairs, finances,
technology, processes, plans or installations, product information, know-how,
or other information that is received from the other Party pursuant to this
Agreement or the Parties’ relationship prior thereto or is developed pursuant
to this Agreement, (ii) any and all information concerning the Contract
Documents, the Agreement, or the terms thereof, and (iii) all information which
one Party, directly or indirectly, may acquire from another Party; however,
Confidential Information will not include information falling into any of the
following categories:

 

(a)                                  information
that, at the time of disclosure hereunder, is in the public domain;

 

(b)                                 information
that, after disclosure hereunder, enters the public domain other than by breach
of this Agreement or the obligation of confidentiality;

 

(c)                                  information
that, prior to disclosure hereunder, was already in the recipient’s possession,
either without limitation on disclosure to others or subsequently becoming free
of such limitation;

 

(d)                                 information
obtained by the recipient from a third party having an independent right to
disclose this information; and

 

(e)                                  information
that is available through discovery by independent research without use of or
access to the Confidential Information acquired from the other Party; and

 

(f)                                    photographs and
descriptive information regarding the Project, including, Owner’s name and
Plant location.

 

Each Party’s obligation to maintain Confidential Information in
confidence will be deemed performed if such Party observes with respect thereto
the same safeguards and precautions, which such Party observes with respect to
its own Confidential Information of the same or similar kind.  It will not be deemed to be a breach of the
obligation to maintain Confidential Information in confidence if Confidential
Information is disclosed upon the order of a court or other authorized
Governmental Authority, or pursuant to other Legal Requirements.  However, if Owner is required to file the
Contract Documents or a portion thereof with a Governmental Authority, it
agrees that it will not do so without first informing Fagen of the requirement
and seeking confidential treatment of the Contract Documents, or as much
thereof as such Governmental Authority permits, prior to filing the documents
or a portion thereof.

 

Notwithstanding the above, or any other provision of this Agreement,
Fagen agrees that any Delta-T Technology (as defined in the License) it
receives from Owner, APTI, or any other person or entity in conjunction with
the Project is subject to the terms and provisions of that 

 

41

 

certain Amended and Restated License of Technology between Applied
Process Technology International LLC (“APTI”), as successor to Delta-T
Corporation, and Aventine Renewable Energy — Mt Vernon, LLC dated February 26,
2010 (the “License”), a copy of which is attached hereto as Exhibit L.  As such, Fagen agrees to maintain the
confidentiality of, and to use, the Delta-T Technology in accordance with and
as permitted under the terms of the License.

 

20.2        Publicity and Advertising.  Neither Party shall make, nor permit any of
its subcontractors, agents, or vendors to make any external announcement or
publication, release any photographs or information concerning the Project or
any part thereof, or make any other type of communication to any member of the
public, press, business entity, or any official body which names the other
Party unless prior written consent is obtained from such Party, which consent
shall not be unreasonably withheld.

 

20.3        Term of Obligation.  The confidentiality obligations of the
Parties pursuant to this Article 20 shall survive the expiration or other
termination of this Agreement for a period of five (5) years, except for the
obligations relating to the Delta-T Technology, which shall apply as long as
the License is in effect.

 

Article 21

 

Miscellaneous

 

21.1        Assignment.  This
Agreement shall be binding upon, shall inure to the benefit of, and may be
performed by, the successors and permitted assigns of the Parties, except that
neither Fagen nor Owner shall, without the written consent of the other, assign
or transfer this Agreement or any of the Contract Documents.  Fagen’s subcontracting portions of the Work
in accordance with this Agreement shall not be deemed to be an assignment of
this Agreement.

 

21.2        Successors.  Fagen and
Owner intend that the provisions of the Contract Documents are binding upon the
Parties, their employees, agents, heirs, successors and assigns.

 

21.3        Governing Law.  This
Agreement shall be governed by and construed and enforced in accordance with,
the substantive laws of the state of Indiana, without regard to the conflict of
laws provisions thereof.

 

21.4        Severability.  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.

 

21.5        No Waiver.  The failure
of either Fagen or Owner to insist, in any one (1) 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.

 

42

 

21.6        Headings.  The table of
contents and the headings used in this Agreement or any other Contract
Document, are for ease of reference only and shall not in any way be construed
to limit, define, extend, describe, alter, or otherwise affect the scope or the
meaning of any provision of this Agreement.

 

21.7        Notice.  Whenever the
Contract Documents require that notice be provided to a Party, notice shall be
delivered in writing to such Party at the address listed below, or to such
other address as a Party may notify the other Party in accordance with this
Section 21.7.  Notice will be deemed to
have been validly given if delivered (i) in person to the individual intended
to receive such notice, (ii) by registered or by certified mail, postage
prepaid to the address indicated in the Agreement within four (4) Days after
being sent, or (iii) by facsimile, by the time stated in a machine-generated
confirmation that notice was received at the facsimile number of the intended
recipient.

 

If
to Fagen, to:

 

Fagen,
Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN 56241

Attention: Evan Fagen

Fax:  (320) 564-5196

 

with
a copy to:

 

Fagen,
Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN 56241

Attention: Jennifer Johnson

Fax:  (320) 564-3278

 

and
to:

 

Fagen,
Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN 56241

Attention: Ryan Manthey

Fax:  (320) 564-3278

 

If
to Owner, to:

 

Aventine Renewable
Energy — Mt Vernon, LLC

7201 Port Road

Mount Vernon, IN 47620

 

43

 

Cell 605-691-9258

Attention: Jeffrey G.
See

Fax:         (309) 478-1892

 

with
a copy to:

 

Aventine Renewable
Energy — Mt Vernon, LLC

P.O. Box 1800

Pekin, IL 61555

Attention: John Castle

Fax:         (309) 347-8541

 

and
to:

 

Aventine
Renewable Energy — Mt Vernon, LLC

P.O.
Box 1800

Pekin,
IL 61555

Attention: Christopher
Nichols

Fax:         (309) 347-8541

 

21.8        No Privity with Design Consultant/Subcontractors.  Nothing in the Contract Documents is intended
or deemed to create any legal or contractual relationship between Owner and any
Design Consultant or Subcontractor.

 

21.9        Amendments.  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.

 

21.10      Entire Agreement.  This Agreement consists of
the terms and conditions set forth herein, as well as the Exhibits hereto,
which are incorporated by reference herein and made a part hereof.  This Agreement sets forth the full and
complete understanding of the Parties as of the Effective Date with respect to
the subject matter hereof and shall supersede and replace in all respects any
other agreement entered into by and between the Parties with respect to the
Project.

 

21.11      Third-Party Beneficiaries.  Except as expressly provided herein, this
Agreement is intended to be solely for the benefit of the Owner, Fagen and
permitted assigns, and is not intended to and shall not confer any rights or
benefits on any person not a signatory hereto.

 

21.12      Counterparts.  This Agreement may be executed in one (1) or
more counterparts, each of which shall be deemed an original and all of which
together shall be deemed one and the same Agreement, and may be executed and
delivered by facsimile signature, which shall be considered an original.

 

21.13      Survival.   Notwithstanding any
provisions herein to the contrary, the Work Product provisions set forth in
Article 5, the warranty provisions set forth in Article 8, the indemnity,
defense and hold harmless obligations set forth herein, and the confidentiality
and other obligations set forth in Article 20, shall survive (in full force and
effect) the expiration or 

 

44

 

termination of this Agreement and shall continue to
apply to the Parties to this Agreement even after termination of this Agreement
or the transfer of such Party’s interest in this Agreement.

 

[INTENTIONALLY LEFT BLANK]

 

45

 

IN WITNESS
WHEREOF, the Parties hereto have caused their names to be hereunto subscribed
by their officers thereunto duly authorized, intending thereby that this
Agreement shall be effective as of April 29, 2010.

 

 

	
  OWNER:

  	
   

  	
  FAGEN:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Aventine
  Renewable Energy-Mt Vernon, LLC

  	
   

  	
  Fagen,
  Inc.

  
	
  (Owner)

  	
   

  	
  (Name
  of Fagen)

  
	
   

  	
   

  	
   

  
	
  /s/
  Thomas Manuel

  	
   

  	
  /s/
  Evan Fagen

  
	
  (Signature)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
  Thomas
  Manuel

  	
   

  	
  Evan
  Fagen

  
	
  (Printed
  Name)

  	
   

  	
  (Printed
  Name)

  
	
   

  	
   

  	
   

  
	
  CEO

  	
   

  	
  Executive
  Vice President

  
	
  (Title)

  	
   

  	
  (Title)

  
	
   

  	
   

  	
   

  
	
  Date:
  

  	
  May
  17, 2010

  	
   

  	
  Date:
  

  	
  May
  17, 2010

  
					

 

46

 

EXHIBIT A

 

Owner’s
Scope of Work

 

Owner’s
Scope of Work shall consist of all work not expressly provided as the
responsibility of Fagen in Exhibit B attached to this Agreement or as expressly
agreed to by the parties.

 

A-1

 

EXHIBIT B

 

General
Scope of Work for Fagen

 

See attached.

 

B-1

 

EXHIBIT C

 

Owner’s
Requirements

 

[To be determined.]

 

C-1

 

EXHIBIT D

 

Fagen’s
Standard Rates

 

Home
Office Purchasing and Procurement - $*****/hour

 

D-1

 

EXHIBIT E

 

Form of
Informational Report

 

E-1

 

EXHIBIT F

 

Required
Permits

 

See
attached.

 

F-1

 

EXHIBIT G

 

Fagen’s
Time and Material Rates

 

See
attached.

 

G-1

 

EXHIBIT
H

 

Reserved

 

H-1

 

EXHIBIT
I

 

Reserved

 

I-1

 

EXHIBIT J

 

Form of
Summary of Payment

 

See
attached.

 

J-1

 

EXHIBIT K

 

Form of
Lien Waiver

 

GENERAL CONTRACTOR’S PARTIAL WAIVER OF MECHANIC’S LIEN

RIGHTS AND AFFIDAVIT OF DEBTS AND CLAIMS

CONDITIONAL LIEN WAIVER

 

	
  STATE:  (  
  INSERT STATE   )

  	
   

  	
  FAGEN,
  INC.

  
	
  COUNTY:  (  
  INSERT COUNTY   )

  	
   

  	
   

  

 

The undersigned is the General Contractor (aka Fagen)
regarding labor and materials for construction and maintenance work performed
for (   INSERT CUSTOMER/PLANT NAME   ), at the Facility located at or near (   INSERT PLANT CITY & STATE   ) under the terms of a contract.

 

On condition of receiving full payment for billings up to date hereof under the terms of the above mentioned
contract, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the undersigned does hereby waive and release any and all
liens, and any and all claims and rights to lien on the Facility (including all
buildings on the premises) under the statutes of the State of (   INSERT STATE   ) relating to mechanic’s liens on account of
labor and materials furnished by the undersigned up to the date hereof at the
Facility, as located on real estate legally described as follows:

 

TRACT
1:  (  
INSERT LEGAL DESCRIPTION   )

 

 

TRACT
2:  (  
INSERT LEGAL DESCRIPTION   )

 

K-1

 

The undersigned further certifies that all obligations
of General Contractor entered into between suppliers/subcontractors and General
Contractor regarding this Facility are current as of this date, including all
obligations of General Contractor for all work, labor and services performed;
materials and equipment furnished; and all known indebtedness and claims
against General Contractor for damages arising in any manner in connection with
General Contractor’s performance of the contract mentioned above for which
General Contractor or property of General Contractor might in any way be held
responsible.

 

Dated this
             day of
                                      ,
200

 

 

	
   

  	
   

  	
  GENERAL CONTRACTOR:

  
	
   

  	
   

  	
  FAGEN, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By (Print):

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature):

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Witness (Print):

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature):

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  In the alternative (or if requested):

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Subscribed and sworn to before me this

  	
   

  	
   

  	
   

  
	
   

  	
                
  day of
                                ,
  200    .

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  My Commission Expires:

  	
   

  	
   

  	
   

  

 

K-2

 

EXHIBIT L

 

APTI
License

 

See attached.

 

L-1Exhibit 10.35

 

FIFTH AMENDMENT

 

THIS FIFTH AMENDMENT (this “Amendment”)
is made and entered into as of May 20th, 2010, by and between CA-FOOTHILL
RESEARCH CENTER LIMITED PARTNERSHIP, a Delaware limited partnership (“Landlord”), and AFFYMAX, INC., a Delaware
corporation (“Tenant”).

 

RECITALS

 

A.                                   Landlord (as
successor in interest by conversion to EOP-Foothill Research Center, L.L.C., a
Delaware limited liability company, successor in interest to Spieker
Properties, L.P., a California limited partnership, successor in interest to
Miranda Associates, a California general partnership) and Tenant (as successor
in interest to Affymax Research Institute, a California corporation) are
parties to that certain Research and Development/Office Lease dated May 30,
1990 (the “Original Lease”), as amended by
that certain Consent to Sublease dated July 30, 1990 (the “Consent”),
that certain First Amendment to Lease dated November 16, 1999 (“the First Amendment”), that certain Second Amendment to Lease
dated December 20, 1999, that certain Third Amendment dated December 31, 2001,
and that certain Fourth Amendment dated November 30, 2006 (the “Fourth Amendment”) (as amended, the “Lease”).  Pursuant to the Lease, Landlord has leased to
Tenant certain premises containing (1) approximately 53,830 rentable square
feet consisting of the entire building located at 4001 Miranda Avenue (the “Current Premises”), and (2) approximately 30,630 rentable square feet (the commencement date for which
has not yet occurred, as more particularly described in Section I.B of
the Fourth Amendment), consisting of the entire building  located
at  4015 Miranda Avenue (as more
particularly described in the Fourth Amendment, the “Must-Take
Space”), in Palo Alto, California, all in the project commonly known
as Foothill Research Center.

 

B.                                     The parties
wish to expand the Premises (defined in the Lease) to include additional space
containing (1) the approximately 12,364 rentable square feet described as Suite
No. 100 (the “Suite 100 Expansion Space”) on the
1st floor of the building located at 4009 Miranda
Avenue in Palo Alto, California (the “4009 Miranda Building”)
shown on Exhibit A-1 hereto, which
consists of an approximately 10,794 rentable square foot area shown on Exhibit A-1 (the “Suite 100 Main Space”) and an approximately 1,570 rentable
square foot area adjacent to the Suite 100 Main Space shown on Exhibit A-1 (the “Suite 100 Remainder Space”), and (2) the approximately
16,345 rentable square feet described as Suite No. 200 (the “Suite 200 Expansion Space”) on the 2nd floor of the 4009 Miranda Building and shown
on Exhibit A-2 attached hereto
(collectively, the “Expansion Space”),
on the following terms and conditions.

 

NOW, THEREFORE, in consideration of the above recitals
which by this reference are incorporated herein, the mutual covenants and
conditions contained herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:

 

1.                                       Suite
100 Main Expansion.

 

1.1.                              Effect of Suite 100 Main
Expansion.  Effective as
of the Suite 100 Main Expansion Effective Date (defined in Section 1.2
below), the Premises shall be increased to include the Suite 100 Main Space,
and, from and after the Suite 100 Main Expansion Effective Date, the Current
Premises and the Suite 100 Main Space (and, if an Advanced Must-Take Effective
Date (defined in Section I.E of the Fourth Amendment) has previously
occurred, the Must-Take Space) shall collectively be deemed the Premises.  The term of the Lease for the Suite 100 Main
Space (the “Suite 100 Main Expansion Term”)
shall commence on the Suite 100 Main Expansion Effective Date and, unless
sooner terminated in accordance with the Lease, end on the Extended Termination
Date (as defined in the Fourth Amendment), subject to Section 9
below.  From and after the Suite 100 Main
Expansion Effective Date, the Suite 100 Main Space shall be subject to all the
terms and conditions of the Lease except as provided herein, and except that,
except as may be expressly provided in this Amendment, (a) Tenant shall
not be entitled to receive, with respect to the Suite 100 Main Space, any
allowance, free rent or other financial concession granted with respect to the
Current Premises or the Must-Take Space, and (b) no representation or
warranty made by Landlord with respect to the Current Premises or Must-Take
Space shall apply to the Suite 100 Main Space.

 

1.2.                              Suite 100 Main Expansion Effective Date.  As
used herein, “Suite 100 Main Expansion
Effective Date” means the earlier to occur of (i) the date on
which Tenant first commences to conduct business in any portion of the Suite
100 Main Space, or (ii) July 1, 2010; provided, however, that if Landlord
fails to deliver the Suite 100 Main Space to Tenant on or before the date
described in the preceding clause (ii) as a result of any 

 

1

 

holdover
or unlawful possession by another party, the Suite 100 Main Expansion Effective
Date shall be the date on which Landlord delivers possession of the Suite 100
Main Space to Tenant free from occupancy by any party.  Any such delay in the Suite 100 Main
Expansion Effective Date shall not subject Landlord to any liability for any
loss or damage resulting therefrom; provided, however, Landlord, at its
expense, shall use commercially reasonable efforts to obtain possession of the
Suite 100 Main Space for delivery to Tenant as soon as practicable following
any such holdover.  If the Suite 100 Main
Expansion Effective Date is delayed, the Extended Termination Date under the
Lease shall not be similarly extended.

 

2.                                       Suite
100 Remainder Expansion.

 

2.1.                              Effect of Suite 100 Remainder
Expansion.  Effective as
of the Suite 100 Remainder Expansion Effective Date (defined in Section 2.2
below), the Premises shall be increased to include the Suite 100 Remainder
Space, and, from and after the Suite 100 Remainder Expansion Effective Date,
the Current Premises, the Suite 100 Main Space and the Suite 100 Remainder
Space (and, if the Must-Take Effective Date (defined in Section I.E of
the Fourth Amendment) has previously or concurrently occurred, the Must-Take
Space) shall collectively be deemed the Premises.  The term of the Lease for the Suite 100
Remainder Space (the “Suite 100 Remainder
Expansion Term”), and together with the Suite 100 Main Expansion
Term, the “Suite 100 Expansion Term”) shall
commence on the Suite 100 Remainder Expansion Effective Date and, unless sooner
terminated in accordance with the Lease, end on the Extended Termination Date
(as defined in the Fourth Amendment), subject to Section 9 below.  From and after the Suite 100 Remainder
Expansion Effective Date, the Suite 100 Remainder Space shall be subject to all
the terms and conditions of the Lease except as provided herein, and except
that, except as may be expressly provided in this Amendment, (a) Tenant
shall not be entitled to receive, with respect to the Suite 100 Remainder
Space, any allowance, free rent or other financial concession granted with
respect to the Current Premises or the Must-Take Space, and (b) no
representation or warranty made by Landlord with respect to the Current
Premises or Must-Take Space shall apply to the Suite 100 Remainder Space.

 

2.2.                              Suite 100 Remainder Expansion Effective Date.  As
used herein, “Suite 100 Remainder Expansion
Effective Date” means the earlier to occur of (i) the date on
which Tenant first commences to conduct business in any portion of the Suite
100 Remainder Space, or (ii) January 1, 2011; provided, however, that if
Landlord fails to deliver the Suite 100 Remainder Space to Tenant on or before
the date described in the preceding clause (ii) as a result of any
holdover or unlawful possession by another party, the Suite 100 Remainder
Expansion Effective Date shall be the date on which Landlord delivers possession
of the Suite 100 Remainder Space to Tenant free from occupancy by any
party.  Any such delay in the Suite 100
Remainder Expansion Effective Date shall not subject Landlord to any liability
for any loss or damage resulting therefrom; provided, however, Landlord, at its
expense, shall use commercially reasonable efforts to obtain possession of the
Suite 100 Remainder Space for delivery to Tenant as soon as practicable
following any such holdover.  If the Suite
100 Remainder Expansion Effective Date is delayed, the Extended Termination
Date under the Lease shall not be similarly extended.

 

3                                          Suite
200 Expansion.

 

3.1.                              Effect of Suite 200 Expansion.  Effective as of the Suite 200 Expansion
Effective Date (defined in Section 3.2 below), the Premises as then
constituted under the Lease shall be increased to include the Suite 200
Expansion Space, and, from and after the Suite 200 Expansion Effective Date,
the Current Premises, the entire Suite 100 Expansion Space, the Suite 200
Expansion Space (and, if the Must-Take Effective Date (defined in Section
I.B of the Fourth Amendment) has previously occurred, the Must-Take Space)
shall collectively be deemed the Premises. 
The term of the Lease for the Suite 200 Expansion Space (the “Suite 200 Expansion Term”) shall commence on the Suite 200
Expansion Effective Date and, unless sooner terminated in accordance with the
Lease, end on the Extended Termination Date (as defined in the Fourth
Amendment), subject to Section 9 below. 
From and after the Suite 200 Expansion Effective Date, the Suite 200
Expansion Space shall be subject to all the terms and conditions of the Lease
except as provided herein, and except that, except as may be expressly provided
in this Amendment, (a) Tenant shall not be entitled to receive, with
respect to the Suite 200 Expansion Space, any allowance, free rent or other
financial concession granted with respect to the Current Premises or the
Must-Take Space, and (b) no representation or warranty made by Landlord
with respect to the Current Premises or the Must-Take Space shall apply to the
Suite 200 Expansion Space.

 

2

 

3.2.                              Suite 200 Expansion Effective Date.  As used herein, “Suite 200 Expansion Effective Date” means the
earlier to occur of (i) the date on which Tenant first commences to
conduct business in the Suite 200 Expansion Space, or (ii) the later of
(A) May 1, 2011 (the “Target Suite 200 Expansion
Effective Date”), or (B) the date that the Suite 200 Demising Work
(defined in Section 8.3 below) is substantially complete (as reasonably
determined by Landlord), with the exception of any details of construction,
mechanical adjustment or any other similar matter the non-completion of which
does not materially interfere with Tenant’s use of the Suite 200 Expansion
Space; provided, however, that if Landlord fails to deliver the Suite 200
Expansion Space to Tenant on or before the later of the dates described in the
preceding clause (ii) as a result of any holdover or unlawful possession
by another party, the Suite 200 Expansion Effective Date shall be the date on
which Landlord delivers possession of the Suite 200 Expansion Space to Tenant
free from occupancy by any party.  Any
such delay in the Suite 200 Expansion Effective Date shall not subject Landlord
to any liability for any loss or damage resulting therefrom; provided, however,
Landlord, at its expense, shall use commercially reasonable efforts to obtain
possession of the Suite 200 Expansion Space for delivery to Tenant as soon as
practicable following any such holdover. 
If the Suite 200 Expansion Effective Date is delayed, the Extended
Termination Date under the Lease shall not be similarly extended.

 

4.                                       Confirmation
Letter(s).  At any time
after the Suite 100 Main Expansion Effective Date, the Suite 100 Remainder
Expansion Effective Date and/or the Suite 200 Expansion Effective Date,
Landlord may deliver to Tenant a notice substantially in the form of Exhibit C attached hereto with
respect to the applicable portion of the Expansion Space, as a confirmation of
the information set forth therein with respect to such portion of the Expansion
Space, which Tenant shall execute and return to Landlord within fifteen (15)
days after receiving it.  If Tenant fails
to execute and return (or reasonably object in writing to) such notice within
fifteen (15) days after receiving it, Tenant shall be deemed to have executed
and returned it without exception.

 

5.                                       Base
Rent.

 

A.                                   With respect to
the Suite 100 Main Space during the portion of the Suite 100 Expansion Term
prior to the Suite 100 Remainder Expansion Effective Date, the schedule of Base
Rent shall be as follows:

 

	
  Period
  of

  Suite 100 Expansion Term

  	
   

  	
  Annual Rate Per

  Square Foot

  	
   

  	
  Monthly Base Rent

  	
   

  
	
  Suite 100 Main Expansion
  Effective Date through day preceding Suite 100 Remainder Expansion Effective
  Date

  	
   

  	
  $

  	
  31.20

  	
   

  	
  $

  	
  28,064.40

  	
   

  
								

 

All such Base Rent shall be payable by Tenant in monthly installments
in accordance with the terms of the Lease, provided that the CPI adjustments
set forth in Section 4(b) of the Original Lease and Paragraph 2 of the First
Amendment shall not apply to the Suite 100 Main Space during the Suite 100 Main
Expansion Term.

 

B.                                     Effective as of
the Suite 100 Remainder Expansion Effective Date, during the remainder of the
Suite 100 Expansion Term, the schedule of Base Rent for the entire Suite 100
Expansion Space shall be as follows:

 

	
  Period
  of

  Suite 100 Expansion Term

  	
   

  	
  Annual Rate Per

  Square Foot

  	
   

  	
  Monthly Base Rent

  	
   

  
	
  Suite 100 Remainder Expansion Effective Date - 6/30/11

  	
   

  	
  $

  	
  31.20

  	
   

  	
  $

  	
  32,146.40

  	
   

  
	
  7/1/11 – 6/30/12

  	
   

  	
  $

  	
  32.14

  	
   

  	
  $

  	
  33,114.91

  	
   

  
	
  7/1/12 – 6/30/13

  	
   

  	
  $

  	
  33.10

  	
   

  	
  $

  	
  34,104.03

  	
   

  
	
  7/1/13 – 6/30/14

  	
   

  	
  $

  	
  34.09

  	
   

  	
  $

  	
  35,124.06

  	
   

  
	
  7/1/14 – 9/30/14

  	
   

  	
  $

  	
  35.12

  	
   

  	
  $

  	
  36,185.31

  	
   

  

 

All such Base Rent shall be payable by Tenant in monthly installments
in accordance with the terms of the Lease, provided that the CPI adjustments
set forth in Section 4(b) of the Original Lease and Paragraph 2 of the First
Amendment shall not apply to the Suite 100 Remainder Space during the Suite 100
Remainder Expansion Term.

 

3

 

C.                                     Effective as of
the Suite 200 Expansion Effective Date, during the Suite 200 Expansion Term,
the schedule of Base Rent for the Suite 200 Expansion Space shall be as
follows:

 

	
  Period
  During Suite 200

  Expansion Term

  	
   

  	
  Annual Rate Per

  Square Foot

  	
   

  	
  Monthly Base Rent

  	
   

  
	
  Suite 200 Expansion
  Effective Date - 6/30/11

  	
   

  	
  $

  	
  31.20

  	
   

  	
  $

  	
  42,497.00

  	
   

  
	
  7/1/11 – 6/30/12

  	
   

  	
  $

  	
  32.14

  	
   

  	
  $

  	
  43,777.36

  	
   

  
	
  7/1/12 – 6/30/13

  	
   

  	
  $

  	
  33.10

  	
   

  	
  $

  	
  45,084.96

  	
   

  
	
  7/1/13 – 6/30/14

  	
   

  	
  $

  	
  34.09

  	
   

  	
  $

  	
  46,433.42

  	
   

  
	
  7/1/14 – 9/30/14

  	
   

  	
  $

  	
  35.12

  	
   

  	
  $

  	
  47,836.37

  	
   

  

 

All such Base Rent shall be payable by Tenant in monthly installments
in accordance with the terms of the Lease, provided that the CPI adjustments
set forth in Section 4(b) of the Original Lease and Paragraph 2 of the First Amendment
shall not apply to the Suite 200 Expansion Space during the Suite 200 Expansion
Term.

 

6.                                       Additional
Security Deposit.  No
additional security deposit or letter of credit shall be required in connection
with this Amendment.

 

7.                                       Property
Expenses.

 

7.1                                 During the portion of the
Suite 100 Expansion Term prior to the Suite 100 Remainder Expansion Effective
Date, Tenant shall pay Property Expenses for the Suite 100 Main Space on the
same terms and conditions set forth in the Lease, except that in connection
with the Suite 100 Main Space, for purposes of Sections 6 and 47 of the
Original Lease the “Premises” shall mean the Suite 100 Main Space, the “Building”
shall mean the 4009 Miranda Building, “Tenant’s Pro Rata Share” for the Suite
100 Main Space shall be 19.7244%, and “Tenant’s Percentage” for the Suite 100
Main Space shall be 5.5250%.  During the
portion of the Suite 100 Expansion Term on and after the Suite 100 Remainder
Expansion Effective Date, Tenant shall pay Property Expenses for the entire Suite
100 Expansion Space on the same terms and conditions set forth in the Lease,
except that in connection with the Suite 100 Expansion Space, for purposes of
Sections 6 and 47 of the Original Lease the “Premises” shall mean the entire
Suite 100 Expansion Space, the “Building” shall mean the 4009 Miranda Building,
“Tenant’s Pro Rata Share” for the entire Suite 100 Expansion Space shall be
22.5934%, and “Tenant’s Percentage” for the entire Suite 100 Expansion Space
shall be 6.3286%. During the Suite 200 Expansion Term, Tenant shall pay
Property Expenses for the Suite 200 Expansion Space on the same terms and
conditions set forth in the Lease, except that in connection with the Suite 200
Expansion Space, for purposes of Sections 6 and 47 of the Original Lease the “Premises”
shall mean the Suite 200 Expansion Space, the “Building” shall mean the 4009
Miranda Building, “Tenant’s Pro Rata Share” for the Suite 200 Expansion Space
shall be 29.8681%, and “Tenant’s Percentage” for the Suite 200 Expansion Space
shall be 8.3663%.

 

7.2                                 Multi-Tenant Building.  The parties acknowledge that with respect to
the Expansion Space, the 4009 Building shall be considered a “Multi-Tenant
Building” (as defined in the Fourth Amendment) under the Lease, unless and
until Tenant leases the entire 4009 Miranda Building pursuant to the Lease.

 

7.3                                 Remeasurement.  The parties acknowledge and agree that the
Pro Rata Shares and Percentage Shares set forth in this Section 7 with
respect to the Expansion Space represent Landlord’s remeasurement of the 4009
Miranda Building and the Complex. 
Accordingly, for purposes of the Expansion Space only, the rentable
square footage of the 4009 Miranda Building is deemed to be 54,724 and the
rentable square footage of the Complex is deemed to be 195,366.

 

8.                                       Improvements
to Expansion Space.

 

8.1.                              Condition of Expansion
Space.  Tenant acknowledges that it
has inspected the Expansion Space and agrees to accept it “as is” without any
representation by Landlord regarding its condition and without any obligation on
the part of Landlord to perform or pay for any alteration or improvement,
except as may be otherwise expressly provided in this Amendment.  The first two sentences of Section 11 of the
Original Lease shall not apply to the Expansion Space, and no representations
by Landlord set forth in the Lease with respect to the Current Premises or the
Must-Take Space shall be deemed remade in connection with the Expansion Space,
unless specifically provided for herein.

 

4

 

8.2.                              Responsibility for Improvements
to Expansion Space.  Tenant shall be
entitled to perform improvements to the Suite 100 Main Space following the
Suite 100 Main Expansion Effective Date, to the Suite 100 Remainder Space
following the Suite 100 Remainder Expansion Effective Date and to the Suite 200
Expansion Space following the Suite 200 Expansion Effective Date (each an
applicable “Effective Date”), and, provided
that Tenant does not exercise its Acceleration Option (as described in Section
9 below), to receive an Expansion Allowance from Landlord for such
improvements, in accordance with the Expansion Work Letter attached hereto as Exhibit B.  As provided in the Expansion Work Letter,
Section 12.B of the Original Lease shall apply generally to the Expansion
Alterations even though the nature of such improvements is not yet determined;
provided that in determining categories of such improvements for purposes of
Section 12.B, Landlord shall not be required to designate any improvements that
are Nonremovable Tenant Improvements as “Leaseable Nonremovable Tenant
Improvements” (and accordingly will not be required to waive its interest in or
subordinate Landlord’s claim to any such improvements or equipment for the
benefit of Tenant’s lenders or equipment lessors) if such improvements are paid
for in whole or in part by the Expansion Allowance.

 

8.3                                 Demising of Suite 200 Expansion
Space. Landlord shall cause the construction or installation of the
following items in a good and workmanlike manner using Building-standard
materials, methods and finishes (collectively, the “Suite 200 Demising Work”): 
Install a demising wall between the Suite 200 Expansion Space and
adjoining tenant spaces, including studs, acoustical insulation and dry wall
ready for finish on tenant side only and any necessary penetrations, fire
dampers and sound traps.  The Suite 200
Demising Work shall be performed at Landlord’s sole expense and shall not be
deemed Expansion Alterations or Tenant Improvements.  Landlord shall use commercially reasonable
efforts to perform the Suite 200 Demising Work prior to the Target Suite 200
Expansion Effective Date.

 

8.4                                 Early Entry.  Notwithstanding Section 8.2 or
anything else to the contrary contained in this Amendment, but subject to the
provisions of this Section 8.4, Tenant may enter the Suite 100 Main
Space, the Suite 100 Remainder Space and the Suite 200 Expansion Space, from
and after the execution of this Amendment and before the applicable Effective
Date, at its sole risk, in order to identify and assess items of repair that
Tenant will need to make in the applicable portion of the Expansion Space, and
for the purpose of making repairs, installing telecommunications and data
cabling and equipment, furnishings and other personalty in the applicable
portion of the Expansion Space.  Other
than the obligation to pay Base Rent and Tenant’s Pro Rata Share and Tenant’s
Percentage of Property Expenses, all of Tenant’s obligations under the Lease
(as amended) shall apply during any period of such early entry.  Notwithstanding the foregoing, Tenant
acknowledges that the Expansion Space is and may continue to be occupied by
third parties up the applicable effective date(s), that Landlord has made no
representation that any portion of the Expansion Space will be available to
Tenant for early entry prior to the applicable Effective Date, and that Tenant’s
rights hereunder are strictly subject to the agreement and cooperation of any
then existing tenant(s) and occupant(s) of the applicable portion of the
Expansion Space, each in its sole discretion. 
Landlord shall request the cooperation of the necessary third parties to
provide Tenant with early entry to the Expansion Space, at no cost or risk to
Landlord, but if Landlord is unable to secure such cooperation to the
reasonable satisfaction of Landlord, Tenant shall not have the right of early
entry set forth in this Section 8.4. 
Upon Landlord’s request, Tenant shall execute an access and
indemnification agreement in a form acceptable to Landlord prior to any early
entry to the Expansion Space during any period in which the applicable portion
of the Expansion Space is leased and/or occupied by a third party or third
parties.  In addition, Landlord may
limit, suspend or terminate Tenant’s rights to enter the Suite 200 Expansion
Space pursuant to this Section 8.4 if Landlord reasonably determines
that such entry is endangering individuals working in the Suite 200 Expansion
Space or is delaying completion of the Suite 200 Demising Work.

 

9.                                       Acceleration
Option.

 

9.1                                 Tenant shall have the right
(the “Acceleration Option”) to
accelerate the Extended Termination Date, with respect to the entire Expansion
Space only, from September 30, 2014, to the day that is thirty (30) days after
the date of Tenant’s Acceleration Notice (defined below) (the  “Accelerated Expiration Date”) (the “Acceleration”) if:

 

A.                                   Tenant delivers
to Landlord, no later than the date that is six (6) months after the date of
this Amendment, a written notice (the “Acceleration Notice”)
exercising the Acceleration Option;

 

5

 

B.                                     Tenant is not
in default under the Lease when Tenant delivers the Acceleration Notice to
Landlord;

 

C.                                     No part of the
Expansion Space is sublet past the Accelerated Expiration Date when Tenant
delivers the Acceleration Notice to Landlord;

 

D.                                    The Lease has
not been assigned  before Tenant delivers the
Acceleration Notice to Landlord; and

 

E.                                      The
Acceleration Conditions (defined in Section 9.7 below) exist as of the
date Tenant delivers its Acceleration Notice, and Tenant’s Acceleration Notice
includes documentation thereof reasonably satisfactory to Landlord thereof.

 

9.2                                 If Tenant
validly exercises the Acceleration Option, then (i) notwithstanding any
contrary provision of the Lease, but subject to the terms of this Section 9,
the term of the Lease shall expire, with respect to the entire Expansion Space
only (but not with respect to any other portion of the Premises then leased by
Tenant under the Lease), on the Accelerated Expiration Date with the same force
and effect as if such term were, by the provisions of the Lease, fixed to
expire on the Accelerated Expiration Date; and (ii) without limiting the
foregoing:

 

A.                                   The portions of
the Base Rent schedules set forth in Section 5 of this Amendment that apply
during the period following the Accelerated Expiration Date shall be deleted
from this Amendment; and

 

B.                                     Tenant shall
surrender the Expansion Space to Landlord in accordance with the terms of the
Lease on or before the Accelerated Expiration Date; and

 

C.                                     Tenant shall
remain liable for all rent (including, without limitation, monthly Base Rent
and Property Expenses) and other amounts payable under the Lease for the period
up to and to and including the Accelerated Expiration Date, even though
billings for such amounts may occur after the Accelerated Expiration Date; and

 

D.                                    Tenant’s
restoration obligations shall be as set forth in the Lease; and

 

E.                                      If Tenant fails
to surrender any portion of the Expansion Space on or before the Accelerated
Expiration Date, Tenant’s tenancy thereof shall be subject to Section 10
of the Lease; and

 

F.                                      Any other
rights or obligations of Landlord or Tenant under the Lease that, in the
absence of the Acceleration, would have survived the Extended Termination Date
with respect to the Expansion Space shall survive the Accelerated Expiration
Date.

 

9.3                                 If Tenant exercises the
Acceleration Option, then concurrently with delivery of the Acceleration
Notice, Tenant shall pay to Landlord, as a fee in connection with the
acceleration of the Extended Termination Date with respect to the Expansion
Space only and not as a penalty, an amount (the “Acceleration
Fee”) equal to $700,000.00.

 

9.4                                 If, after delivering an
Acceleration Notice to Landlord, Tenant defaults under the Lease (including,
without limitation, by failing to timely pay the Acceleration Fee), or at any
time after delivering an Acceleration Notice and prior to the Accelerated
Expiration Date any of the Acceleration Conditions are no longer true,
Landlord, at its option, may (i) declare Tenant’s exercise of the
Acceleration Option to be null and void (in which event Landlord shall return
to Tenant any Acceleration Fee received from Tenant, but only after applying it
against any past due rent), or (ii) continue to honor Tenant’s exercise of
its Acceleration Option in accordance with the terms hereof.

 

9.5                                 If Tenant
validly exercises the Acceleration Option, Landlord shall prepare an amendment
(the “Acceleration Amendment”)
reflecting the same.  Landlord shall deliver
the Acceleration Amendment to Tenant within a reasonable time after receiving
the Acceleration Notice, and Tenant shall execute and return the Acceleration
Amendment to Landlord within 15 days after receiving it.  An otherwise valid exercise of the Acceleration
Option shall be fully effective whether or not the Acceleration Amendment is
executed.

 

6

 

9.6                                  Notwithstanding any contrary
provision of the Lease, as amended, from and after the date Tenant delivers an
Acceleration Notice to Landlord, Tenant’s rights with respect to the Expansion
Allowance shall automatically terminate and Landlord shall have no obligation
to disburse or otherwise apply any portion of the Expansion Allowance, and the
entire Expansion Allowance shall accrue to the benefit of Landlord.

 

9.7                                  For purposes of this
Acceleration Option, the “Acceleration Conditions”
shall mean that Tenant’s Board of Directors has determined in good faith that
because of negative results in Tenant’s peganesitide Phase 3 clinical trials,
as measured by failure to achieve the safety or efficacy primary endpoints,
Tenant must abandon its current plans to substantially expand its commercial
group and therefore cannot use the Expansion Space. Concurrently with Tenant’s
Acceleration Notice, Tenant shall deliver to Landlord a certificate signed by
an officer and the general counsel of Tenant certifying that the Board of
Directors has made the foregoing determination in good faith.

 

10.           Other
Pertinent Provisions.  Landlord
and Tenant agree that, effective as of the date of this Amendment (unless
different effective date(s) is/are specifically referenced in this Section),
the Lease shall be amended in the following additional respects:

 

10.1         Landlord’s Address for Notices.
Notwithstanding anything to the contrary contained in the Lease, Landlord’s
address for notices and payment of Rent set forth in Section 4(d) of the
Original Lease, as amended pursuant to Section VIII.C of the Fourth Amendment,
is hereby deleted in its entirety and replaced with the following:

 

c/o Equity Office

2655 Campus Drive, Suite 100

San Mateo, California 94403

Attn:  Building manager

 

with copies to:

 

Equity Office

2655 Campus Drive, Suite 100

San Mateo, California 94403

Attn:  Managing Counsel

 

and

 

Equity Office

Two North Riverside Plaza

Suite 2100

Chicago, IL 60606

Attn:  Lease Administration

 

10.2         Deletions.  Section VII (Rights of First Offer) of the
Fourth Amendment is hereby deleted in its entirety.

 

10.3         Parking.  During the Suite 100 Expansion Term, Tenant
shall be entitled to an additional 41 non-reserved spaces in the parking
facility in connection with the Suite 100 Expansion Space, on the terms and
conditions set forth in the Lease.  In
addition to the foregoing, during the Suite 200 Expansion Term, Tenant shall be
entitled to an additional 54 non-reserved spaces in the parking facility, on
the terms and conditions set forth in the Lease.

 

10.4         Must-Take Space.
Notwithstanding anything in Section I.B.2 of the Fourth Amendment to the contrary,
as of the Must-Take Space Effective Date the “Premises”, as defined in the
Lease, shall be increased from 53,830 rentable square feet in the 4001 Miranda
Building to 84,460 rentable square in the 4001 Miranda Building and the 4015
Miranda Building, and shall also include any portion of the Suite 100 Expansion
Space and/or the Suite 200 Expansion for which the term has then commenced.

 

10.5         Renewal Option.  Provided that Tenant does not exercise its
Acceleration Option (as defined in Section 9), the Expansion Space shall
be considered part of “all of the Premises (as then defined under the Lease)
that are coterminous with the Initial Premises” as set forth in the first
sentence of Section VI.A of the Fourth Amendment (Renewal Option).

 

10.6         Environmental Disclosure.  Pursuant to Section 25359.7 of the California
Health and Safety Code, Landlord hereby discloses to Tenant the condition of
the Complex described in that certain Phase I Environmental Site Assessment
(Foothill Research Center) dated 

 

7

 

January 9, 2007, prepared by EMG. Tenant acknowledges that Landlord has
made a copy of such report available to Tenant (without warranty as to its
accuracy or completeness), and the Tenant has fully reviewed such report.  Tenant acknowledges that the land underlying
the Premises may be subject to various covenants and restrictions imposed by
the California Regional Quality Control Board — San Francisco Bay Region, which
covenants and restrictions may impose certain limitation on the use of the
Premises, and Tenant covenants to comply with all of the terms and conditions
of any such covenants and restrictions.

 

10.7         Use.  The 3rd sentence of Section
7 of the Original Lease shall not apply to the Expansion Space.  Tenant acknowledges that the Ground Lease
imposes a fee on certain office uses in the Complex.  Landlord agrees to cooperate with Tenant in
obtaining the agreement of Ground Lessor that such fee shall not apply to
Tenant’s proposed office uses in the Expansion Space; provided that if Ground
Lessor’s agreement is conditioned upon Tenant’s office uses being ancillary to
Tenant’s ongoing research and development uses the Complex, then if Ground
Lessor later imposes an office use fee due to Tenant’s failure to meet the
conditions set forth in Ground Lessor’s consent, Tenant shall be solely
responsible for payment of such use fee.

 

10.8         Stanford Consent.  The effectiveness of this Amendment and
Landlord’s and Tenant’s rights and obligations hereunder are conditioned upon
the receipt of Stanford’s consent to this Amendment on terms and conditions
acceptable to the parties hereto and by Stanford and, if required by Stanford,
the execution of a nondisturbance and recognition agreement between Stanford
and Tenant. If Landlord and Tenant have not obtained such consent by the date
which is thirty (30) days after the mutual execution and delivery of this
Amendment by the parties, either party may terminate this Amendment by written
notice to the other party, effective as of the date of receipt of such notice,
provided that such notice is received by the other party prior to Landlord and
Tenant obtaining such consent.  Landlord
shall have no obligation to disburse any portion of any allowance provided for
in this Amendment until the required consent and agreement have been obtained.

 

10.9         Contingency.  Notwithstanding any contrary provision
hereof, if for any reason Landlord and Tibco Software, Inc., a Delaware
corporation (the “Other Party”),
fail to mutually execute and deliver the Required Agreement (defined below) on
or before the Contingency Date, then Tenant may terminate the provisions of
this Amendment (other than Sections 10.1, 10.2 and 10.6
above) by written notice to Landlord delivered no later than the earlier of (a)
ten (10) business days after the Contingency Date, or (b) the date that
Landlord and the Other Party enter into the Required Agreement.  In the event that Tenant so terminates this
Amendment, the provisions hereof (other than Sections 10.1, 10.2
and 10.6 above) shall be of no further force or effect and the Lease
shall continue as if (except for such excepted provisions) this Amendment had
never been executed.  As used herein, “Required Agreement” means an agreement pursuant to which the
expiration date under the Other Party’s existing lease is accelerated to a date
occurring on or prior to June 30, 2010, with respect to the Suite 100 Main
Space.  As used herein, “Contingency Date” means June 14, 2010.  In the event that the Required Agreement is
not entered into on or prior to the Contingency Date, but Tenant does not
timely terminate this Amendment as provide above, then this Amendment shall
continue in full force and effect but in Section 1.2 above the date “July
1, 2010” shall be automatically amended to be “January 1, 2011”, Tenant hereby
acknowledging the Other Party’s lease for the Suite 100 Main Space does not
expire by its terms until December 31, 2010.

 

10.10       Prior Tenant’s Property.  Landlord acknowledges that Tenant may acquire
certain furniture or other personal property located in the Expansion Space and
belonging to a third party tenant or other occupant of the Expansion Space
prior to the applicable Effective Date with respect to such portion of the
Expansion Space.  Landlord shall not be required
to remove from the Expansion Space (and agrees not to require the current
tenant or other occupant of the Expansion Space to remove from the Expansion
Space upon the expiration or earlier termination of its lease or other
occupancy agreement) any items of furniture or other personal property that are
identified by Tenant by notice to Landlord (“Property
Notice”) delivered at least 30 days prior to the applicable
Effective Date with respect to such portion of the Expansion Space (“Prior Tenant’s Property”). 
Tenant agrees that by delivery of a Property Notice, Tenant represents,
warrants and acknowledges that effective as of the commencement of Tenant’s
right of possession to the applicable portion of the Expansion Space, all of
the right, title and interest of Prior Tenant in and to Prior Tenant’s Property
will be transferred to Tenant, and that Tenant shall be responsible for such
Prior Tenant’s Property as Tenant’s personal property under the Lease.  Landlord shall have no obligation to deliver,
insure, maintain, repair or otherwise safeguard Prior Tenant’s Property.  As between Landlord and Tenant, all risk of
loss relating to Prior Tenant’s Property shall belong to Tenant.  Tenant shall look to 

 

8

 

Prior
Tenant, and not to Landlord, for recovery of any loss relating to the title to,
existence, quality or condition of Prior Tenant’s Property.

 

11.                                 Miscellaneous.

 

11.1                           This Amendment and the
attached exhibits, which are hereby incorporated into and made a part of this
Amendment, set forth the entire agreement between the parties with respect to
the matters set forth herein.  There have
been no additional oral or written representations or agreements.  Tenant shall not be entitled, in connection
with entering into this Amendment, to any free rent, allowance, alteration,
improvement or similar economic incentive to which Tenant may have been
entitled in connection with entering into the Lease, except as may be otherwise
expressly provided in this Amendment.

 

11.2                           Except as herein modified or
amended, the provisions, conditions and terms of the Lease shall remain
unchanged and in full force and effect.

 

11.3                           In the case of any
inconsistency between the provisions of the Lease and this Amendment, the
provisions of this Amendment shall govern and control.

 

11.4                           Submission of this Amendment
by Landlord is not an offer to enter into this Amendment but rather is a
solicitation for such an offer by Tenant. 
Landlord shall not be bound by this Amendment until Landlord has
executed and delivered it to Tenant.

 

11.5                           The capitalized terms used
in this Amendment shall have the same definitions as set forth in the Lease to
the extent that such capitalized terms are defined therein and not redefined in
this Amendment.

 

11.6                           Tenant shall indemnify and
hold Landlord, its trustees, members, principals, beneficiaries, partners,
officers, directors, employees, mortgagee(s) and agents, and the respective
principals and members of any such agents harmless from all claims of any brokers
claiming to have represented Tenant in connection with this Amendment.  Landlord shall indemnify and hold Tenant, its
trustees, members, principals, beneficiaries, partners, officers, directors,
employees, and agents, and the respective principals and members of any such
agents harmless from all claims of any brokers claiming to have represented
Landlord in connection with this Amendment. 
Tenant acknowledges that any assistance rendered by any agent or
employee of any affiliate of Landlord in connection with this Amendment has
been made as an accommodation to Tenant solely in furtherance of consummating
the transaction on behalf of Landlord, and not as agent for Tenant.

 

11.7                           Each signatory of this
Amendment represents hereby that he or she has the authority to execute and
deliver it on behalf of the party hereto for which such signatory is acting.

 

[SIGNATURES ARE ON FOLLOWING PAGE]

 

9

 

IN WITNESS WHEREOF, Landlord and Tenant have
duly executed this Amendment as of the day and year first above written.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  CA-FOOTHILL
  RESEARCH CENTER LIMITED PARTNERSHIP, a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  EOP
  Owner GP L.L.C., a Delaware limited liability company, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  C. Moe

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Market
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  AFFYMAX,
  INC., 

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Arlene
  M. Morris

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  

 

10

 

EXHIBIT A-1

 

OUTLINE AND LOCATION OF SUITE 100
EXPANSION SPACE

(INCLUDING SUITE 100 REMAINDER
SPACE)

 

A-1

 

EXHIBIT A-2

 

OUTLINE AND LOCATION OF SUITE 200
EXPANSION SPACE

 

A-2

 

EXHIBIT B

 

EXPANSION WORK LETTER

 

As
used in this Expansion Work Letter, the “Premises” shall
be deemed to mean the Expansion Space, as defined in the Fifth Amendment to
which this Expansion Work Letter is attached.

 

I.                                         Alterations
and Allowance.

 

A.                                   Tenant,
following the Suite 100 Main Expansion Effective Date with respect to the Suite
100 Main Space, following the Suite 100 Remainder Space Expansion Date with
respect to the Suite 100 Remainder Space, and following the Suite 200 Expansion
Effective Date, with respect to the Suite 200 Expansion Space, shall have the
right to perform alterations and improvements in the Premises (the “Expansion Alterations”). 
Notwithstanding the foregoing, Tenant and its contractors shall not have
the right to perform Expansion Alterations in the Premises unless and until
Tenant has complied with all of the terms and conditions of Section 12 of the
Lease (as amended), including, without limitation, approval by Landlord of the
final plans for the Expansion Alterations and the contractors to be retained by
Tenant to perform such Expansion Alterations. Tenant shall be responsible for
all elements of the design of Tenant’s plans (including, without limitation,
compliance with law, functionality of design, the structural integrity of the
design, the configuration of the premises and the placement of Tenant’s
furniture, appliances and equipment), and Landlord’s approval of Tenant’s plans
shall in no event relieve Tenant of the responsibility for such design.  Landlord’s approval of the contractors to
perform the Expansion Alterations shall not be unreasonably withheld.  The parties agree that Landlord’s approval of
the general contractor to perform the Expansion Alterations shall not be
considered to be unreasonably withheld if any such general contractor
(i) does not have trade references reasonably acceptable to Landlord,
(ii) does not maintain insurance as required pursuant to the terms of this
Lease, (iii) does not have the ability to be bonded for the work in an
amount of no less than 150% of the total estimated cost of the Expansion
Alterations, or (iv) is not licensed as a contractor in the
state/municipality in which the Premises is located.  Tenant acknowledges the foregoing is not
intended to be an exclusive list of the reasons why Landlord may reasonably
withhold its consent to a general contractor.

 

B.                                     Provided Tenant
is not in default and that Tenant’s Acceleration Option has expired without
being exercised by Tenant (as more particularly described in Section G
below, Landlord agrees to contribute the sum of $287,090.00 (or $10.00 per
rentable square foot of the Expansion Space) (the “Expansion
Allowance”) toward the cost of performing the Expansion Alterations
in preparation of Tenant’s occupancy of the Premises.  The Expansion Allowance may only be used for
the cost of design professionals and other third party consultants, preparing
design and construction documents and mechanical and electrical plans for the
Expansion Alterations, pre-construction administration, for repairs to the
Premises, obtaining building permits, for  hard costs
in connection with the Expansion Alterations, and payment of Landlord’s
Oversight Fee, all in connection with the Expansion Alterations.  The Expansion Allowance, less a 10% retainage
(which retainage shall be payable as part of the final draw), shall be paid to
Tenant or, at Landlord’s option, to the order of the general contractor that
performs the Expansion Alterations, in periodic disbursements within 30 days
after receipt of the following documentation: (i) an application for
payment and sworn statement of contractor substantially in the form of AIA
Document G-702 covering all work for which disbursement is to be made to a date
specified therein; (ii) a certification from an AIA architect
substantially in the form of the Architect’s Certificate for Payment which is
located on AIA Document G702, Application and Certificate of Payment;
(iii) Contractor’s, subcontractor’s and material supplier’s waivers of
liens which shall cover all Expansion Alterations for which disbursement is
being requested and all other statements and forms required for compliance with
the mechanics’ lien laws of the state in which the Premises is located,
together with all such invoices, contracts, or other supporting data as
Landlord or Landlord’s mortgagee, if any, may reasonably require; (iv) a
cost breakdown for each trade or subcontractor performing the Expansion Alterations;
(v) plans and specifications for the Expansion Alterations, together with
a certificate from an AIA architect that such plans and specifications comply
in all material respects with all laws affecting the 4009 Miranda Building, the
Complex and the Premises; (vi) copies of all construction contracts for
the Expansion Alterations, together with copies of all change orders, if any;
and (vii) a request to disburse from Tenant containing an approval by
Tenant of the work done and a good faith estimate of the cost to complete the
Expansion Alterations.  Upon completion
of the Expansion Alterations, and prior to final disbursement of the Expansion
Allowance, Tenant shall furnish Landlord with: 
(1) general contractor and architect’s completion affidavits, (2) full
and final waivers 

 

B-1

 

of
lien, (3) receipted bills covering all labor and materials expended and
used, (4) as-built plans of the Expansion Alterations, and (5) the
certification of Tenant and its architect that the Expansion Alterations have
been installed in a good and workmanlike manner in accordance with the approved
plans, and in accordance with applicable laws, codes and ordinances.  In no event shall Landlord be required to
disburse the Expansion Allowance more than one time per month.  If the Expansion Alterations exceed the
Expansion Allowance, Tenant shall be entitled to the Expansion Allowance in
accordance with the terms hereof, but each individual disbursement of the
Expansion Allowance shall be disbursed in the proportion that the Expansion
Allowance bears to the total cost for the Expansion Alterations, less the 10%
retainage referenced above. 
Notwithstanding anything herein to the contrary, Landlord shall not be
obligated to disburse any portion of the Expansion Allowance during the
continuance of an uncured default under the Lease, and Landlord’s obligation to
disburse shall only resume when and if such default is cured.

 

C.                                     In no event
shall the Expansion Allowance be used for the purchase of equipment, furniture
or other items of personal property of Tenant. 
If Tenant does not submit a request for payment of the entire Expansion
Allowance to Landlord in accordance with the provisions contained in this
Expansion Work Letter by December 15, 2012, any unused amount shall accrue to
the sole benefit of Landlord, it being understood that Tenant shall not be
entitled to any credit, abatement or other concession in connection therewith.
Tenant shall be responsible for all applicable state sales or use taxes, if
any, payable in connection with the Expansion Alterations and/or Expansion
Allowance.  Landlord
shall be entitled to deduct from the Expansion Allowance a construction
management fee for Landlord’s oversight of the Expansion Alterations in an
amount equal to 3% of the total cost of the Expansion Alterations (“Landlord’s Oversight Fee”).

 

D.                                    Tenant agrees
to accept the Premises in its “as-is” condition and configuration, it being
agreed that Landlord shall not be required to perform any work or, except as
provided above with respect to the Expansion Allowance, incur any costs in
connection with the construction or demolition of any improvements in the
Premises.

 

E.                                      This Expansion
Work Letter shall not be deemed applicable to the Current Premises or the
Must-Take Space, nor to any additional space added to the Premises at any time
or from time to time, whether by any options under the Lease or otherwise, or
to any portion of the Current Premises, Must-Take Space or any additions to the
Premises in the event of a renewal or extension of the Extended Term of the
Lease, whether by any options under the Lease or otherwise, unless expressly so
provided in the Lease or any amendment or supplement to the Lease.

 

F.                                      Section 13 of
the Work Letter attached as Exhibit C to the Original Lease is incorporated
herein by this reference with respect to the Expansion Alterations.  The Expansion Alterations shall be “Tenant
Improvements” under the Lease, including for purposes of Section 12.B and
Exhibit E of the Original Lease.  No
other provisions of the original Work Letter, or any provision of any work
letter attached to the Fourth Amendment, shall apply to the Expansion
Alterations, unless specifically set forth in this Paragraph F.

 

G.                                     Notwithstanding anything in the Amendment or
this Expansion Work Letter to the contrary, Tenant shall have no right to any
portion of the Expansion Allowance unless and until Tenant’s Acceleration
Option expires in accordance with its terms without having been exercised by
Tenant.

 

B-2

 

EXHIBIT C

 

NOTICE OF LEASE TERM DATES

 

                                          ,
20

 

To:                              

                                              

                                              

 

Re:                               Fifth Amendment (the “Amendment”),
dated
                            ,
2010, to a lease agreement dated May 30, 1990, between CA-FOOTHILL
RESEARCH CENTER LIMITED PARTNERSHIP, a Delaware limited partnership
(“Landlord”), and AFFYMAX, INC., a  Delaware corporation
(“Tenant”), concerning Suite
           on the
              
floor of the building located at 4009 Miranda Avenue in Palo Alto, California (the “                        
Space”).

 

Lease ID:

Business Unit Number:

 

Dear
                                  :

 

In accordance with the Amendment, Tenant
accepts possession of the
                          
Space and confirms that (a) the
            
Effective Date is
                          ,
20      , and (b) the expiration date of the
Lease is September 30, 2014.

 

Please acknowledge the foregoing by signing all
three (3) counterparts of this letter in the space provided below and
returning two (2) fully executed counterparts to my attention.  Please note that, pursuant to
Section 1.3 of the Amendment, if Tenant fails to execute and return (or
reasonably object in writing to) this letter within five (5) days after
receiving it, Tenant shall be deemed to have executed and returned it without
exception.

 

	
   

  	
  “Landlord”:

  
	
   

  	
   

  
	
   

  	
  CA-FOOTHILL
  RESEARCH CENTER LIMITED PARTNERSHIP, a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed and
  Accepted as

  	
   

  
	
  of                ,
  20     .

  	
   

  
	
   

  	
   

  
	
  “Tenant”:

  	
   

  
	
   

  	
   

  
	
  AFFYMAX, INC.,

  	
   

  
	
  a
  Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Arlene
  M. Morris

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief
  Executive Officer

  	
   

  	
   

  

 

C-1

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