Document:

exv10w6

 

Exhibit
10.6

PHASE I AND PHASE II

ENGINEERING SERVICES AGREEMENT

BETWEEN

FIRST
UNITED ETHANOL LLC AND

FAGEN
ENGINEERING, LLC

January 10,
2006

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

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	Article 2 Definitions; Rules of Interpretation
	 	 	1	 
	 
	 	 	 	 
	1.1 Rules of Construction
	 	 	1	 
	1.2 Defined Terms
	 	 	2	 
	 
	Article 2 Retention of Agent
	 	 	4	 
	 
	 	 	 	 
	2.1 Retention of Services
	 	 	4	 
	 
	Article 3 Engineer Responsibilities
	 	 	4	 
	 
	 	 	 	 
	3.1 Services
	 	 	4	 
	3.2 Phase I Design Package
	 	 	4	 
	3.3 Delivery of Phase I Design Package
	 	 	4	 
	3.4 The Phase II Design Package
	 	 	4	 
	3.5 Delivery of Phase II Design Package
	 	 	5	 
	3.6 Delays
	 	 	5	 
	3.7 Utility Routing and Design Services Limited
	 	 	5	 
	 
	 	 	 	 
	Article 4 Client Responsibilities
	 	 	5	 
	 
	 	 	 	 
	4.1 Client’s Representative
	 	 	5	 
	4.2 Client’s Requirements
	 	 	6	 
	4.3 Other Information
	 	 	6	 
	4.4 Access to Property
	 	 	6	 
	4.5 Review of Documents
	 	 	6	 
	4.6 Consents, Approvals, Licenses, and Permits
	 	 	6	 
	4.7 Bids
	 	 	6	 
	4.8 Other Services
	 	 	6	 
	4.9 Services Outside Scope of Engineer’s Services
	 	 	6	 
	4.10 Deviation from Design
	 	 	6	 
	4.11 Developments Affecting Scope or Timing of Services
	 	 	7	 
	 
	 	 	 	 
	Article 5 Compensation And Payment
	 	 	7	 
	 
	 	 	 	 
	5.1 Compensation
	 	 	7	 
	5.2 Reimbursement of Engineer Expenses
	 	 	7	 
	5.2 Reimbursement of Subcontractor Expenses
	 	 	7	 
	5.4 Fees for Work Outside Scope of Services
	 	 	7	 
	5.5 Collection of Unpaid Amounts
	 	 	8	 
	5.6 Fee Schedule and Reimbursable Rate Schedule Subject to Change
	 	 	8	 
	5.7 Invoices
	 	 	8	 
	5.8 Payment
	 	 	8	 
	5.9 Late Payment and Interest
	 	 	8	 
	5.10 Suspension for Failure to Pay
	 	 	8	 

 First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

i

 

Table of contents

(continued)

	 	 	 	 	 
	 	 	Page
	5.11 Payment
	 	 	8	 
	5.12 Withholding Payments
	 	 	8	 
	5.13 Purchase Orders
	 	 	8	 
	5.14 Changes in Project
	 	 	8	 
	 
	 	 	 	 
	Article 6 Construction Cost And Cost Estimates 
	 	 	8	 
	 
	6.1 Cost Estimates 
	 	 	8	 
	 
	 	 	 	 
	Article 7 Termination 
	 	 	9	 
	 
	7.1 Termination Upon Default 
	 	 	9	 
	7.2 Termination Upon Abandonment of Plant 
	 	 	9	 
	 
	 	 	 	 
	Article 8 Ownership of Work Product 
	 	 	9	 
	 
	8.1 Work Product 
	 	 	9	 
	8.2 Copies Provided to Client 
	 	 	9	 
	8.3 Prohibited Use of Work Product 
	 	 	9	 
	8.4 Derogation of Engineer’s Rights to Work Product 
	 	 	9	 
	 
	 	 	 	 
	 
	Article 9 Successors and Assigns 
	 	 	10	 
	 
	9.1 Successors 
	 	 	10	 
	9.2 Written Consent Required 
	 	 	10	 
	9.3 No Third-Party Beneficiaries 
	 	 	10	 
	 
	 	 	 	 
	Article 10 Warranty 
	 	 	10	 
	 
	10.1 No Warranty Extended 
	 	 	10	 
	10.2 No Responsibility for Construction 
	 	 	10	 
	 
	 	 	 	 
	Article 11 Indemnification 
	 	 	10	 
	 
	11.1 Engineer’s Indemnification 
	 	 	10	 
	11.2 Client’s Indemnification 
	 	 	11	 
	11.3 Hazardous Materials Indemnification 
	 	 	11	 
	 
	 	 	 	 
	Article 12 Dispute Resolution 
	 	 	11	 
	 
	12.1 Arbitration 
	 	 	11	 
	 
	 	 	 	 
	Article 13 Confidentiality 
	 	 	12	 
	 
	13.1 Non-Disclosure Obligation 
	 	 	12	 
	13.2 Publicity and Advertising 
	 	 	12	 
	13.3 Term of Obligation 
	 	 	12	 
	 
	 	 	 	 
	Article 14 Miscellaneous 
	 	 	12	 
	 
	14.1 Governing Law 
	 	 	12	 
	14.2 Severability 
	 	 	12	 
	14.3 No Waiver 
	 	 	12	 

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January 10, 2006

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Table of Contents

(continued)

	 	 	 	 	 
	 	 	Page
	14.4 Captions and Headings 
	 	 	13	 
	14.5 Engineer’s Accounting Records 
	 	 	13	 
	14.6 Counterparts 
	 	 	13	 
	14.7 Survival 
	 	 	13	 
	14.8 Period of Response 
	 	 	13	 
	14.9 No Privity with Client’s Contractors 
	 	 	13	 
	14.10 Amendments 
	 	 	13	 
	14.11 Entire Agreement 
	 	 	13	 
	14.12 Notice 
	 	 	13	 
	14.13 Extent of Agreement 
	 	 	14	 
	14.14 Subrogation Waiver 
	 	 	14	 
	 
	 	 	 	 
	EXHIBIT A            Fee Schedule 
	 	 	16	 
	 
	 	 	 	 
	EXHIBIT B            Reimbursable Expense Schedule 
	 	 	17	 
	 
	 	 	 	 
	EXHIBIT C            Client’s Deliverable Site Obligations 
	 	 	18	 

First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

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PHASE
I AND PHASE II

ENGINEERING SERVICES AGREEMENT

     THIS PHASE I AND PHASE II ENGINEERING SERVICES AGREEMENT (the “Agreement”) is made as
of January 10, 2006, (the “Effective Date”) by and between First United Ethanol, LLC, a
Georgia limited liability company (the “Client”) and Fagen Engineering, Inc. a
Minnesota Limited Liability Company (the “Engineer”). Each of the Client and
Engineer are referred to herein individually as a “Party” and collectively as
the “Parties.”

RECITALS

     WHEREAS, Client is developing a 100 million gallons per year dry grind ethanol production
facility to be located in Camilla, GA (the “Plant”) to be owned and operated by Client; and

     WHEREAS, Client and Fagen, Inc. (“Design-Builder”) intend to enter into that certain Lump-Sum
Design-Build Agreement (“ Design-Build Agreement ”) under which the Fagen, Inc.,
an affiliate of Engineer, will serve as the design-builder for the Plant and provide design,
engineering, procurement and construction services for the development and construction of the
Plant; and

     WHEREAS, Client wishes to retain an entity in advance of entering into the Design-Build
Agreement to perform certain engineering and design work that will be required under the
Design-Build Agreement on the terms and conditions set forth in this Agreement, and Engineer
desires to act as such entity on such terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending
to be legally bound by this Agreement, the parties do hereby agree as follows:

Article 1

Definitions; Rules of Interpretation

1.1 Rules of Construction.

     The capitalized terms listed in this Article 1 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 industry standards. 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:

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January 10, 2006

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	 	(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. The
following definitions will apply in this Agreement:

1.2 Defined Terms.

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

Agreement will have the meaning given to such term in the Preamble to this Agreement.

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, it partners or their
respective representatives, to the extent any such person is engaged in activities related to the
Services; 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 Services or an activity related to the Services.
	 
	 	 	Client will have the meaning given to such term in the Preamble to this Agreement.
	 
	 	 	Client’s Representative will have the meaning given to such term in Section 4.1
	 
	 	 	Design-Build Agreement will have the meaning given to such term in the Recitals to this Agreement.
	 
	 	 	Effective Date will have the meaning given to such term in the Preamble to this Agreement.
	 
	 	 	Engineer will have the meaning given to such term in the Preamble to this Agreement.
	 
	 	 	Engineer Responsible Parties will have the meaning given to such term in Section 4.10.

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January 10, 2006

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	 	 	Governmental Approvals will mean any material authorizations or permissions issued or granted by
any Governmental Authority to the project, the Client, the Engineer, subcontractors and their
affiliates in connection with any activity related to the Services.
	 
	 	 	Governmental Authority will mean 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 Client, the Engineer, the Plant, or the Site.
	 
	 	 	Monthly Invoice will have the meaning given to such term in Section 5.7.
	 
	 	 	Party or Parties will have the meaning given to such term in the Preamble to this Agreement.
	 
	 	 	Phase I Deliverables will mean the Client’s Deliverable obligations pursuant to Exhibit C attached
to this Agreement..
	 
	 	 	Phase I Design Package will have the meaning given to such term in Section 3.2.
	 
	 	 	Phase II Deliverables will mean the Client’s deliverable obligations pursuant to Exhibit C
	 
	 	 	Phase II Design Package will have the meaning given to such term in Section 3.4 attached to this
Agreement.
	 
	 	 	Plant will have the meaning given to such term in the Recitals to this Agreement.
	 
	 	 	Project will mean the plant, together with all equipment, labor, services and materials furnished
under the Design-Build Agreement.
	 
	 	 	Services will have the meaning given to such term in Section 3.1.
	 
	 	 	Site will mean the land or premises on which the Plant is located.
	 
	 	 	Subcontractor will mean any person or entity, including but not limited to independent engineers,
associates, and consultants, retained by Engineer, or by any person or entity retained directly or
indirectly by Engineer, in each case as an independent contractor, to perform a portion of the
Services.
	 
	 	 	Work Product will have the meaning given to such term in Section 8.1.

First United Ethanol, LLC

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January 10, 2006

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Article 2

Retention of the Agent

     2.1 Retention of Services. On the terms and subject to the conditions hereinafter set forth,
Client hereby retains Engineer to perform, and Engineer hereby agrees to perform, the Services.
Engineer will provide such Services solely pursuant to the terms and conditions set forth herein
including any indemnifications and limitations on liability.

Article 3

Engineer Responsibilities

     3.1 Services. Engineer shall perform the Phase I Design Package and Phase II Design Package
engineering services necessary to facilitate Client’s completion of the Phase I and Phase II Site
work required of Client prior to the issuance of a Notice to Proceed pursuant to the Design-Build
Agreement (collectively, the “Services”).

     3.2 Phase I Design Package. (Grading and Drainage). The Phase I Design Package to be provided
by Engineer shall consist of the Engineering and design of the Plant site and shall include the
following drawings

	 	a)	 	Cover Sheet

	 
	 	b)	 	Property Layout Drawing
	 
	 	c)	 	Grading, Drainage and Erosion Control Plan Drawing (Multiple Drawings
if Required)

	 	i.	 	Used for Land Disturbance Permitting

	 
	 	ii.	 	Site grading is held 6-inches low for topsoil and seeding

	 	d)	 	Roadway Alignment Drawing
	 
	 	e)	 	Culvert Cross Sections and Details (Multiple Drawings)
	 
	 	f)	 	Seeding and Landscaping (If Required)

Plan sets along with a Bid Tabulation Sheet will be supplied to the Client so all contractors bid
the same quantities. A telephone conference call for a Phase I pre-bid meeting will be provided
upon Client’s request.

     3.3 Delivery of Phase I Design Package. Engineer shall deliver the completed Phase I Design
Package no later than 60 days after the receipt of all Owner deliverables, however, this date is
to be determined.

     3.4 Phase II Design Package. The Phase II Design Package to be provided by engineer shall
provide the Engineering and design of site work and utilities for the Plant, all within the
property line of Plant, and shall consist of the following:

	 	a)	 	Cover Sheet
	 
	 	b)	 	Property Layout Drawing

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January 10, 2006

4

 

	 	c)	 	Site Grading and Drainage Drawing (Final Interior Plant Grading)
	 
	 	d)	 	Roadway Alignment
	 
	 	e)	 	Utility Layout (Fire Loop)
	 
	 	f)	 	Utility Layout (Potable Water)
	 
	 	g)	 	Utility Layout (Well Water) if using on-site wells
	 
	 	h)	 	Utility Layout (Sanitary Sewer)
	 
	 	i)	 	Utility Layout (Utility Water Blowdown)
	 
	 	j)	 	Utility Layout (Natural Gas)

	 	i.	 	Fagen Engineering provides a preferred routing through the Site, line size and pipe
specifications are typically provided by the gas supplier.

	 	k)	 	Geometric Layout (For Project Control Verification)
	 
	 	l)	 	Site Utility Piping Tables Drawing
	 
	 	m)	 	Tank Farm Layout Drawing
	 
	 	n)	 	Tank Farm Details Drawing
	 
	 	o)	 	Sections and Details Drawing (If required)
	 
	 	p)	 	Miscellaneous Details Drawing (If required)

A telephone conference call for a Phase 2 pre-bid meeting will be provided upon Client’s request.

     3.5 Delivery of Phase II Design Package. Engineer shall deliver the completed Phase II Design
Package no later than 60 days after the receipt of all Phase II Deliverables.

     3.6 Delays. The Parties agree that Engineer shall not be responsible for delays in providing
the Engineering services under this Agreement due to factors beyond Engineer’s control.

     3.7 Utility Routing and Design Services Limited. The Parties agree that Engineer shall provide
the routing and design for the utilities necessary for the Plant only within the Plant property
line and up to the Plant property line, and that, for purposes of this Agreement, Engineer assumes
a tie-in point to a city utility. The Parties agree that, if there is no city tie-in point,
Engineer will route the utilities to the Plant property line and stop. Any special tie-in
requirements necessary to connect the utilities at the Plant property line are not included in the
compensation or the scope of this Agreement and shall only be designed and engineered by Engineer
as change in the Project which affects the Services hereunder.

Article 4

Client Responsibilities

     4.1 Client’s Representative. Client shall, prior to the commencement of Services by Engineer,
name a representative (“Client’s Representative”) with authority to receive
information and transmit instructions for Client. Client’s Representative shall be vested with
authority to act on behalf of Client and Engineer shall be entitled to rely on Client’s
Representative’s communications with regard to the Services.

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Phase I and Phase II Engineering Agreement

January 10, 2006

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     4.2 Client’s Requirements. Client shall, prior to the commencement of Services by Engineer,
provide Engineer with Client’s requirements for the Project, including objectives and constraints,
design and construction standards, bonding and insurance requirements, and contract forms.

     4.3 Other Information. Prior to the commencement of Services by Engineer, Client shall
provide Engineer with all other information available to Client and pertinent to the project and
the Services including, but not limited to, all items required pursuant to Exhibit C. The items
required by Client pursuant to this Section 4.3 shall be furnished at Client’s expense, and
Engineer shall be entitled to rely upon the accuracy and completeness thereof.

     4.4 Access to Property. Prior to the commencement of Services and as necessary during the
performance of Services, Client shall arrange for access by Engineer upon public and private
property, as required for the performance of the Services under this Agreement

     4.5 Review of Documents. As related to the performance of Services hereunder, Client shall
examine documents presented by Engineer, obtain legal and other advice as Client deems
appropriate, and render written decisions within reasonable time. The items required by Client
pursuant to this Section 4.5 shall be furnished at Client’s expense, and Engineer shall be
entitled to rely upon the accuracy and completeness thereof.

     4.6 Consents, Approvals, Licenses and Permits. Prior to the commencement of Services and as
necessary during the performance of the Services, Client shall obtain all consents, approvals,
licenses, permits, and other Governmental Approvals necessary for the Project and for the
performance of the Services. The items required by Client pursuant to this Section 4.6 shall be
furnished at Client’s expense, and Engineer shall be entitled to rely upon the accuracy and
completeness thereof.

     4.7 Bids. Client shall advertise for and open bids when scheduled.

     4.8 Other Services. Client shall furnish all legal, accounting and insurance counseling
services as may be necessary at any time for the Services, including auditing services the Client
may require to verify the monthly invoices or to ascertain how or for what purposes the Engineer
and/or Subcontractors have used the money paid by or on behalf of the Client.

     4.9 Service Outside Scope of Engineer’s Services. Client shall, at its own expense, as
necessary for the performance and completions of the Services, provide any additional services
necessary for the Project that are outside scope of the Services provided by Engineer under this
Agreement. Engineer shall be entitled to rely upon, as applicable, the completeness and accuracy
of such additional services.

     4.10 Deviation from Design. Client shall indemnify and hold harmless Engineer, its
employees, its agents, its affiliates, and any other persons or entities within its control or for
whom Engineer would otherwise be responsible (“Engineer Responsible Parties”) against
claims arising out of Engineer’s design, if there has been, in the completion of the Phase I and
the Phase II Site work required of Client prior to the issuance of a Notice to Proceed pursuant to
the

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January 10, 2006

6

 

Design-Build Agreement, a failure to follow Engineer’s recommendation and such deviation or
failure caused the claims.

     4.11 Developments Affecting Scope or Timing of Services. Client shall promptly notify
Engineer, in writing, when Client learns of contractor error or any development that affects scope
or timing of Engineer’s Services.

Article 5

Compensation and Payment

     5.1 Compensation. In consideration of its performance of the Services, Client shall pay
Engineer for Engineer’s time in the performance of the Services
at a fixed fee of [*]
(“fixed fee”) as compensation. Engineer’s compensation under this Section 5.1 shall be pursuant
to the Fee schedule attached hereto as Exhibit A, as such schedule may be modified form time to
time. The full amount of compensation paid by Client under this Section 5.1 shall be included in
an credited to the Design-Build Agreement’s contract price if entered into upon payment in full by
Client.

     5.2 Reimbursement of Engineer Expenses. In addition to the fixed fee in 5.1, Client shall
reimburse Engineer for its expenses related to the performance of the Services in accordance with
Engineer’s current reimbursable expense schedule attached hereto Exhibit B.

     5.3 Reimbursement of Subcontractor Expenses.

          5.3.1 Subcontractor charges related to time spent in the performance of the Services shall
not be marked-up by Engineer. Client shall reimburse Engineer for costs related to Subcontractors’
time in accordance with the Subcontractors’ invoices for the work.

          5.3.2 Subcontractor reimbursable expenses will be marked up in accordance with the current
reimbursable schedule attached hereto as Exhibit B.

     5.4 Fees for Work Outside Scope of Services. Fees for all work outside the scope of
Engineer’s responsibilities described in Article 3, including change order work, shall be computed
in accordance with Engineer’s current fee schedules, attached hereto as Exhibits A and B, as such
schedules may be revised form time to time, unless otherwise agreed to in writing.

     5.5 Collection of Unpaid Amounts. If any amount due is not paid in accordance with this
Agreement and Engineer must collect that amount, Engineer shall be entitled to recover, in
addition to the amount due, the cost of collection, including reasonable attorney’s fees in
connection with those collection efforts.

     5.6 Reimbursement Schedule Subject to Change. Engineer’s reimbursement schedule and
reimbursable expense schedule attached hereto as Exhibits A and B are subject to change on
January 1 of each year.

 First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

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

7

 

     5.7 Invoices. Engineer shall submit a monthly invoice (“Monthly Invoice”) for
Services provided and for reimbursable expenses incurred by Engineer and any Subcontractors.

     5.8 Payment. Within thirty (30) days after Client’s receipt of each Monthly Invoice,
Client shall pay Engineer all amounts due.

     5.9 Late Payment and Interest. If Client fails to make payment within thirty (30) days
after receipt of Monthly Invoice, interest at maximum legal rate or at an annual rate of 18%,
whichever is less, shall accrue

     5.10 Suspension for Failure to Pay. If Client fails to make payment within thirty (30) days
after receipt of Monthly Invoice, Engineer may, at its option, after giving seven (7) days’ written
notice, suspend services until it all amounts due to Engineer by Client have been paid in full.

     5.11 Payments from Lawful Sources. Client shall provide for payment from one or more lawful
source of all sums to be paid Engineer.

     5.12 Withholding Payments. Engineer’s compensation shall not be reduced on account of any
amounts withheld from payment to Subcontractors.

     5.13 Purchase Orders. If Client issues a purchase order or other document to initiate the
commencement of Services hereunder, it is expressly agreed that any terms and conditions appearing
thereon shall have no application and only the provisions of this agreement shall apply.

     5.14 Changes in Project. If Client requests changes in the project which affect the Services,
compensation for and time of performance of Engineer’s services shall be adjusted appropriately.

Article 6

Construction Cost and Cost Estimates

     6.1 Cost Estimates. Client and Engineer acknowledge that Engineer has no control over cost of
labor, materials, equipment of services furnished by others, over contractors’ methods of
determining prices, or other competitive bidding or market conditions and that Engineer’s estimates
of Project construction cost will be made on the basis of its employees‘ experience and
qualifications and will represent Engineer’s employees‘ best judgment as experienced and
qualified professionals, familiar with the construction industry. Engineer does not guarantee that
proposal, bids, or actual construction cost will not vary from its estimates of Project cost and
Client acknowledges the same.

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January 10, 2006

8

 

Article 7

Termination

     7.1 Termination Upon Default. Either party may terminate this Agreement upon twenty (20)
days’ written notice if the non-terminating party has defaulted through no fault of the
terminating party.

     7.2 Termination Upon Abandonment of Project. Client may terminate Engineer’s obligation to
provide further services upon twenty (20) days’ written notice if Client abandons development of
the Plant. In such event, all past due amounts for services rendered (including Subcontractor’s
fees, if any) and any unpaid reimbursable expenses shall be immediately due and payable by Client.

Article 8

Ownership of Work Product

     8.1 Work Product. All tangible items prepared by Engineer, including but not limited to all
drawings, specifications, calculations, data, notes and other materials and documents, including
electronic data furnished by Engineer to Client and to Subcontractors under this Agreement
(“Work Product”) shall be instruments of service, and Engineer shall retain the ownership
and property interests therein, including the copyrights thereto.

     8.2 Copies Provided to Client. Client may retain copies of Work Product for reference;
provided, however, that Client may not make copies of the Work Product available without
Engineer’s written permission, and, granted such permission, may only do so to the extent the use
of such copies of the Work Product directly pertains to the Services, the Plant, or the
construction thereof. Pursuant to Section 8.1 of this Agreement, Engineer retains ownership of and
property interests in any Work Product made available and/or copied.

     8.3 Prohibited Use of Work Product. Reuse of the Work Product on any another Project without
Engineer’s written consent is prohibited. Client shall indemnify and hold harmless Engineer
Responsible Parties against claims resulting from such prohibited reuse. Said items are not
intended to be suitable for completion of this Project by others.

     8.4 Derogation of Engineer’s Rights to Work Product. Submittal or distribution of Work
Product in connection with the performance and completion of the Services and the construction
of the project does not constitute publication in derogation of Engineer’s rights and does not
in any way diminish Engineer’s Work Product rights established herein.

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January 10, 2006

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Article 9

Successors and Assigns

     9.1 Successors. The parties intend that the provisions of this Agreement are binding upon
the Parties, their employees, agents, heirs, successors and assigns.

     9.2 Written Consent Required. Neither party shall assign, sublet, or transfer any interest in
this Agreement without written consent of the other; provided, however, that Engineer may employ
such Subcontractors as it may deem appropriate and may transfer or assign any interest in this
Agreement or the Work Product to Design-Builder without consent of Client.

     9.3 No Third-Party Beneficiaries. None of the provisions of this Agreement will be for the
benefit of or enforceable by any person other than the Parties hereto, their successors and
permitted assigns and legal representatives

Article 10

Warranty

     10.1 No Warranty Extended. Engineer shall use reasonable care to reflect requirements of
all Applicable Laws, rules, or regulations of which Engineer has knowledge or about which Client
specifically advises in writing, which are in effect on the date of this Agreement. ENGINEER
INTENDS TO RENDER SERVICES IN ACCORDANCE WITH GENERALLY ACCEPTED PROFESSIONAL STANDARDS, BUT NO
OTHER WARRANTY IS EXTENDED, EITHER EXPRESS OR IMPLIED, IN CONNECTION WITH SUCH SERVICES. Client’s
rights and remedies in this Agreement are exclusive.

     10.2 No Responsibility for Construction. Engineer shall not be responsible for construction
of the Plant, contractors’ construction means, methods, techniques, sequences, or procedures, or
for contractors’ safety precautions and programs, or for contractors’ failure according to
contract documents.

Article 11

Indemnification

     11.1 Engineer’s Indemnification. To the fullest extent permitted by law, Engineer shall
indemnify and hold harmless Client, Client’s officers, directors, partners, employees, and agents
from and against any and all claims for bodily injury and for damage to tangible property caused
solely by the negligent acts or omissions of Engineer or Engineer Responsible Parties and
Engineer’s Engineers in the performance and furnishing of Engineer’s services under this
Agreement. Any indemnification shall be limited to the terms and amounts of coverage of the
Engineer’s insurance policies.

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January 10, 2006

10

 

     11.2 Client’s Indemnification. To the fullest extent permitted by law, Client shall
indemnify and hold harmless Engineer, Engineer’s officers, directors, partners, employees, and
agents and Engineer’s Engineers from and against any and all claims for bodily injury and for
damage to tangible property caused solely by the negligent acts of omission of Client or
Client’s officers, directors, partners, employees, agents, and Client’s Engineers with respect
to this Agreement on the Project.

     11.3 Hazardous Materials Indemnification. In addition to the indemnity provided under this
section, and to the fullest extent permitted by law, Client shall indemnify and hold harmless
Engineer and its officers, directors, partners, employees, and agents and Engineer’s Engineers
from and against all claims, costs, losses, and damages (including but not limited to all fees and
charges of engineers, architects, attorneys, and other professionals and all court of arbitration
or other dispute resolution costs) caused by, arising out of, or relating to the presence,
discharge, release, or escape of asbestos, PCBs, petroleum, hazardous waste, or radioactive
materials at, on, under, or from the Site.

Article 12

Dispute Resolution

     12.1 Arbitration. In an effort to resolve any conflicts that arise out of or relate to this
Agreement, the Client and the Engineer agree that all disputes shall be submitted first to
nonbinding mediation. If mediation does not resolve the conflicts, the controversy shall be
decided by final and binding arbitration conducted in Minneapolis, Minnesota in accordance with
the Construction Industry Arbitration Rules of the American Arbitration Association then in
effect, unless the Parties mutually agree otherwise.

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

Engineer and Client expressly agree that any arbitration pursuant to this Section 12.1 may be
joined or consolidated with any arbitration involving any other person or entity (i) necessary to
resolve the claim, dispute or controversy, or (ii) substantially involved in or affected by such
claim, dispute or controversy. Both Engineer and Client will include appropriate provisions in all
contracts they execute with other parties in connection with the Services to require such joinder
or consolidation.

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.

 First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

11

 

Article 13

Confidentiality

     13.1 Non-Disclosure Obligation. Except as required by court order, subpoena, or Applicable
Law, neither Party shall disclose to third parties any 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, 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 information regarding the terms and conditions of this Agreement confidential
and shall disclose such information to third Persons only as reasonably required for the
permitting of the Project; financing the development, construction, ownership, operation and
maintenance of the Plant; or as reasonably required by either Party for performing its obligations
hereunder and if prior to such disclosure, the disclosing Party informs such third Persons of the
existence of this confidentiality obligation and only if such third Persons agree to maintain the
confidentiality of any information received. This Article 13 shall not apply to information that
was already in the possession of one Party prior to receipt from the other, that is now or
hereafter becomes a part of the public domain through no fault of the Party wishing to disclose,
or that corresponds in substance to information heretofore or hereafter furnished by third parties
without restriction on disclosure.

     13.2 Publicity and Advertising. Neither Client nor Engineer shall make or permit any of their
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 the other Party, which consent
shall not be unreasonably withheld.

     13.3 Term of Obligation. The confidentiality obligations of the Parties pursuant to this
Article 13 shall survive the expiration or other termination of this Agreement.

Article 14

Miscellaneous

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

     14.2 Severability. If any provision or any part of a provision of the Agreement 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

 First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

12

 

Agreement, which shall remain in full force and effect as if the unenforceable provision or part
were deleted.

     14.3 No Waiver. The failure of either Engineer or Client to insist, in any one or more
instances, on the performance of any of the obligations required by the other under this Agreement
shall not be construed as a waiver or relinquishment of such obligation or right with respect to
future performance.

     14.4 Captions and Headings. The table of contents and the headings used in this Agreement
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.

     14.5 Engineer’s Accounting Records. Records of Engineer’s personnel time, reimbursable
expenses, and accounts between parties shall be maintained on a generally recognized accounting
basis.

     14.6 Counterparts. This Agreement may be executed in one 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.

     14.7 Survival. Notwithstanding any provisions herein to the contrary, the Work Product
provisions set forth in Article 8 and the indemnity obligations set forth herein shall survive (in
full force) the expiration or 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.

     14.8 No Privity with Client’s Contractors. Nothing in this Agreement is intended or deemed to
create any legal or contractual relationship between Engineer and any Client contractor or
subcontractor retained to perform the Phase I and Phase II Site work required of Client prior to
the issuance of a Notice to Proceed pursuant to the Design-Build Agreement.

     14.9 Amendments. This Agreement may not be changed, altered, or amended in any way except in
writing signed by a duly authorized representative of each Party.

     14.10 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.

     14.11 Notice. Whenever the Agreement requires that notice be provided to a Party, notice
shall be delivered in writing to such party at the address listed below. 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

 First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

13

 

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

     If to Engineer, to:

Fagen
Engineering LLC 

501 W. Highway 212

P. O. Box 159

Granite Falls, MN 56241

Attention: John Austgen

Fax: (320) 564-4861

     with a copy to:

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN 56241

Attention: Bruce Langseth

Fax: (320) 564-3278

     If to Client, to:

First United Ethanol, LLC

Mr. Murray Campbell

PO Box 386

Camilla, GA 31730

     14.12 Extent of Agreement. This Agreement and the Exhibits incorporated therein represent the
entire agreement between the parties and may be amended only by written instrument signed by both
parties.

     14.13 Subrogation Waiver. The parties waive all rights against each other, and against
contractors, Engineers, agents, and employees of the other for damages covered by any property
insurance during construction, and each shall require similar waivers from their contractors,
Engineers, and agents.

 First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

14

 

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
this January 10, 2006.

	 	 	 	 	 	 	 
	FIRST UNITED ETHANOL, LLC	 	FAGEN ENGINEERING LLC
	 
	 	 	 	 	 	 
	By:

	 	/s/ Murray Campbell
	 	By:
	 	/s/John R. Austgen
	 

	 	 
	 	 	 	 
	Title: President	 	Title: Sr. Vice President
	 
	Address for giving notices:	 	Address for giving notices:
	PO Box 386	 	501 West Highway 212
	Camilla, GA 31730	 	PO Box 159
	 	 	Granite Falls, MN 56241

First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

15

 

EXHIBIT A

FAGEN ENGINEERING LLC

Fee Schedule FY 2006

CONFIDENTIAL

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	TYPICAL ASSIGNMENT	 	BILLING CLASS	 	BILLING RATE
	Clerical / CADD Operator
	 	 	1	 	 	 	[*]	 
	Clerical / CADD Operator
	 	 	2	 	 	 	[*]	 
	CADD Operator / Designer
	 	 	3	 	 	 	[*]	 
	CADD Operator / Designer / Engineer
	 	 	4	 	 	 	[*]	 
	Designer I Engineer / PM
	 	 	5	 	 	 	[*]	 
	Engineer / Senior Engineer / PM
	 	 	6	 	 	 	[*]	 
	Senior Engineer / PM
	 	 	7	 	 	 	[*]	 
	Senior Engineer / PM
	 	 	8	 	 	 	[*]	 
	Senior Engineer / PM / Principal
	 	 	9	 	 	 	[*]	 
	PM / Principal
	 	 	10	 	 	 	[*]	 
	Principal
	 	 	11	 	 	 	[*]	 
	Principal
	 	 	12	 	 	 	[*]	 
	Principal
	 	 	13	 	 	 	[*]	 

Subject to Revision January 1, 2007

 First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

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

16

 

EXHIBIT B

Fagen Engineering LLC

Reimbursable Expense Billing Schedule

Effective January 1, 2005

CONFIDENTIAL

	 	 	 	 	 	 	 
	Expense Code	 	Expense Description	 	Billing Rate	 
	BCA
	 	Blackline Print Copy – A	 	 	[*]	 
	BCB
	 	Blackline Print Copy – B	 	 	[*]	 
	BCC
	 	Blackline Print Copy – C	 	 	[*]	 
	BCD
	 	Blackline Print Copy – D	 	 	[*]	 
	BCE
	 	Blackline Print Copy – E	 	 	[*]	 
	BOA
	 	Paper Print Original – A	 	 	[*]	 
	BOB
	 	Paper Print Original – B	 	 	[*]	 
	BOC
	 	Paper Print Original – C	 	 	[*]	 
	BOD
	 	Paper Print Original – D	 	 	[*]	 
	BOE
	 	Paper Print Original – E	 	 	[*]	 
	DISK
	 	Floppy Disk 3 1/2” /ea	 	 	[*]	 
	FAX
	 	Fax Machine Usage/Page	 	 	[*]	 
	LD
	 	Long Distance Phone Calls	 	 	[*]	 
	LODGING
	 	Lodging	 	 	[*]	 
	MEALS
	 	Meal Expense	 	 	[*]	 
	MILEAGE
	 	Mileage/Mile	 	 	[*]	 
	PC1
	 	Photocopies 81/2 x11 (<1OO)/ea	 	 	[*]	 
	PC2
	 	Photocopies 11 x 17/ea	 	 	[*]	 
	PC3
	 	Photocopies 8 (1/2) x11(>100)/ea	 	 	[*]	 
	PO
	 	Postage	 	 	[*]	 
	PROSVC
	 	Outside Professional Services	 	 	[*]	 
	PROSVCEXP
	 	Outside Professional Services Expenses	 	 	[*]	 
	FLM
	 	Film & Developing	 	 	[*]	 
	SPECCOV
	 	Specification Book–Cover Binder/ea	 	 	[*]	 
	TRANS
	 	Transportation	 	 	[*]	 
	UPS
	 	Delivery Service Charges	 	 	[*]	 
	VELLUM
	 	Original Print/square foot	 	 	[*]	 

Subject to Revision January 1, 2006

 First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

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

17

 

EXHIBIT C

Client Deliverable Site Obligations

Phase I Deliverables

     Prior to Engineer’s commencement of the Phase I Design Package work, the Client shall provide
Engineer with the following Phase I Deliverables:

	 	1.	 	A legal description of the Site.
	 
	 	2.	 	Temporary and permanent easements, zoning, and other requirements and encumbrances
affecting land use or necessary to permit the proper design and construction of the Project
and enable Design-Builder to perform the Work.
	 
	 	3.	 	To the extent available, as-built and record drawings of any existing structures at the
Site.
	 
	 	4.	 	Environmental studies, reports and impact statements describing the environmental
permitting emission points.
	 
	 	5.	 	Preliminary approval of final site layout including rail design and environmental
permitting emission points.
	 
	 	6.	 	Client’s written approval of final site layout including rail design and environmental
permitting emission points.
	 
	 	7.	 	Review, comment, and written approval of Client’s air permit application.
	 
	 	8.	 	Topographic Survey to one (1) foot contours including property boundaries and at least
two (2) benchmarks including existing service and utility lines.
	 
	 	9.	 	Soil borings logs for all soil borings complete at Engineer’s specified locations.
	 
	 	10.	 	Geotechnical Report regarding subsurface conditions with Client’s Geotechnical
Engineer’s recommendations from Engineer approved Geotechnical Engineer (Terracon is
preferred) including soil borings, and any other surveys or information available
describing other latent or concealed physical conditions at the Site.
	 
	 	11.	 	On-site location for Storm Water discharge.
	 
	 	12.	 	Preliminary NPDES discharge location for water discharges from utility discharges
including, but not limited to the water pre-treatment system, water softeners, and cooling
tower blowdown.
	 
	 	13.	 	Preliminary indication of source, analysis, and location of Client’s water supply.
	 
	 	14.	 	Client’s risk insurance provider’s specific requirements for fire protection or
approval to design fire protection to Liberty Insurance standards.
	 
	 	15.	 	Any special sizing or other requirements for ethanol storage tank farm.
	 
	 	16.	 	Preliminary location and design of administration building.

First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

18

 

Phase II Deliverables

     Prior to Engineer’s commencement of the Phase II Design Package work, the Client shall provide
Engineer with the following Phase II Deliverables:

	 	1.	 	Final location, source and quality of Client’s water supply.
	 
	 	2.	 	Off-site utility tie-in locations at or near the property lines (this includes, but is
not limited to, gas supply, electrical supply, water supply if no on-site wells, on-site or
off-site sanitary sewer)
	 
	 	3.	 	Final NPDES discharge location for Utility Water Blowdown.
	 
	 	4.	 	An insurance provider to allow the proper positioning and number of required hydrants
and hydrants with monitors.
	 
	 	5.	 	Written approval of final rail design form the Client’s rail service provider.
	 
	 	6.	 	Final location and design (general arrangement) of the Client’s administration
building.

First United Ethanol, LLC

Phase I and Phase II Engineering Agreement

January 10, 2006

19exv10w7

 

Exhibit 10.7

[ICM
Company Letter Head]

310 North First Street

Colwich, KS 67030

Nov. 22, 2005

Attn: Clint Thompson

Project Manager

First United Ethanol, LLC

P.O. Box 386

Camilla, GA 31730

cthompson@thompson-hoffinan.com

770 831-4554

			
	Subject:	 	Environmental Permitting Proposal for a 100 MM GPY Ethanol

Manufacturing Plant (100% DDGS) in Camilla, Georgia

Dear Mr. Thompson:

Per your request for assistance in securing state approval to start construction, the attached is
my estimate to prepare the appropriate environmental applications and plans for a selected site.
You will be required to obtain other local permits in order to start construction — this proposal
is strictly for environmental permitting. All billing will be on a Time & Material basis at the
following rates:

	 	 	 
	Personnel	 	Rate
	Engineering Specialist I
	 	$150 per hour
	Process Engineer I
	 	$150 per hour
	Engineering Specialist II
	 	$110 per hour
	Designer II
	 	$70 per hour
	Administrative
	 	$46 per hour

ICM’s billing for time is based on the above hourly rates with no additional markup.
Travel and travel expenses are billed at cost plus 15%. Other billings may include subcontractor
and/or necessary consultant costs and will be billed biweekly on a time & material plus 15% basis.
Applicable sales tax, if any, will be added accordingly. Any use, gross receipts, or other excise
taxes and charges imposed by any federal, state, or municipal law, ordinance, or regulation upon
the provision of services covered under this Agreement are also not included and will be billed as
required.

ICM’s experience is that a Time & Materials type agreement is generally preferable for the client
due to the unexpected circumstances that may arise during environmental permitting. Additional
costs may be imposed on the project if ICM is required to address significant public comment
and/or assist in lengthy agency negotiations regarding specific permit terms and conditions.

 

 

The following costs (if required) are not included in the proposal: permit application fees,
amended submittals, ambient air sampling, continuous emission monitoring, health risk assessment,
additional air dispersion modeling iterations for additional designs and/or layout changes, water
quality sampling and lab analysis, individual permit for storm water associated with construction,
PSD applications, Title V operating permit application, acquisition of emission offsets, public
hearings, and State requested meetings.

	 	•	 	Air Construction Permits:
	 
	 	 	 	It has been determined that the proposed facility will be a synthetic minor source of
emissions. If it turns out that the facility is a major source or that it requires ambient
air quality simulation modeling, LAER, or BACT analyses, then additional costs will be
incurred.

	 	•	 	Water Permits:
	 
	 	 	 	It is expected that the proposed facility will be subject to state water discharge
regulations. As noted above, my cost estimate assumes that a General Permit for Storm Water
Associated with Construction Site Activity will be adequate for the project site
construction. In addition, the state program will require that permits be obtained for water
supply and discharges for non-contact process wastewater and hydrostatic testing discharges.

ICM appreciates the opportunity to provide this proposal and cost quotation to assist with project
environmental permitting. ICM and our subcontractors are extremely well qualified to assist in
securing the required environmental permits and approvals for the proposed facility. Our technical
strength is our extensive ethanol industry experience, broad understanding of the environmental
control requirements impacting the ethanol industry, and solid working knowledge of environmental
regulations. I am confident that ICM will provide the necessary technical and regulatory skills to
help make your new ethanol plant a success.

Respectfully submitted,

/s/ William J. Roddy

William J. Roddy

Manager, Environmental Affairs

Authorization to Proceed: If the above terms and the attached Service Agreement are acceptable,
your signature on the signatory page of the Services Agreement will signify your approval for ICM
to proceed with the preparation of the permit application packages.

2

 

Attachment A

	 	 	 	 	 
	 	 	 	 	Check Box
	 	 	 	 	For ICM
	 	 	Estimated Cost	 	Task
	Before Ground Breaking
	 	 	 	 
	201. Air Construction Permit ( Modeling Costs Included )
	 	$10,000-$25,000	 	o
	202. Stormwater Notice of Intent (General Permit) — Construction
	 	$500-$1,000	 	o
	203. Stormwater Pollution Prevention Plan-Construction
	 	$4,000-$6,000	 	o
	204. State Historical Society Research
	 	$450	 	o
	205. Endangered Species Research
	 	$450	 	o
	206. Health Risk Assessment ( state dependent)
	 	$20,000-$50,000	 	o
	207. Above Ground Storage Tank General Permit Application (state dependent)
	 	$3,000-$5,000	 	o
	208. Odor Action Plan (Optional)
	 	$1,500	 	o
	209. Basic Environmental Assessment (state dependent)
	 	$4,500-$10,000	 	o
	211. Corps of Engineers Section 404 Permit (if wetlands are present)
	 	$1,500-$5,000	 	o
	212. Ethanol ECS (Environmental Compliance System) (Optional)
	 	$5,500	 	o
	295. Environmental Project Management
	 	$1,000-$5,000	 	See Notes
	 
	 	 	 	 
	Before Operation
	 	 	 	 
	221. Industrial Well Permit/Registration
(ICM recommends application prior to construction)
	 	$3,000-$40,000	 	o
	222. Water Discharge Permit (NPDES, POTW, Irrigation and/or Irrigation
Plan)
	 	$4,000-$15,000	 	o
	223. Hydrostatic Testing Water Discharge Permit
	 	$1,500-$2,500	 	o
	224. Stormwater Notice of Intent (General Permit) — Industrial Operation
	 	$500-$1,000	 	o
	225. Stormwater Pollution Prevention Plan—Industrial Operation
	 	$4,000-$6,000	 	o
	226. Risk Management Plan
	 	$1,500-$3,000	 	o
	227. Spill Prevention Controls and Countermeasures Plan
(PE Certification Not Included)
	 	$5,000-$12,000	 	o
	228. Public Water Supply Permit
	 	$3,500-$5,500	 	o
	229. Permit from the Bureau of Alcohol, Tobacco, and Firearm
	 	$500-$1,000	 	o
	231. County Health Department Septic System Permit (geological work extra)
	 	$1,500-$3,000	 	o
	232. Facility Response Plan
	 	$5,000-$12,000	 	o
	233. Site Security Plan
	 	$1,200	 	o
	234. NSPS Notifications (includes 4 notifications)
	 	$500-$1,200	 	o
	 
	 	 	 	 
	30-90 Days After Startup
	 	 	 	 
	241. Conditionally Exempt Small Quantity Generator Qualification
	 	$8,000-$12,000	 	o
	242. Tier II Initial Reporting
	 	$2,500	 	o
	243. Emissions Testing Contractor Support
	 	$2,500-$5,000	 	o
	244. Operations Monitoring Plan, CEMs, PEMs — evaluation, selection
and/or preparation
	 	$2,500-$5,000	 	o
	 
	 	 	 	 
	180 Days After Startup (After Emissions Testing)
	 	 	 	 
	251. Air Permit to Operate
	 	$10,000-$12,000	 	o
	 
	 	 	 	 
	Annually After Startup
	 	 	 	 
	261. Annual Emission Inventory
	 	$3,500-$4,500 per year	 	o
	262. Tier 2 Reporting
	 	$2,500-3,00 per year	 	o
	263. Form R Reporting
	 	$3,000-$4,000 per year	 	o

Confidential — Attachment A

 

 

General Notes:

	A.) Project Management costs are not an option, but are incurred during the course of
permit preparation. See explanation in Attachment
‘B’.

	B.) All external services (i.e. Professional Engineer, Hydrogeologist, laboratory test,
etc.) will be billed at cost plus 15%..

	C.) Permit application fees, amended submittals, ambient air sampling, continuous emission
monitoring, health risk assessment, additional air dispersion modeling iterations for
additional designs and/or layout changes, Title V operating permit application, acquisition
of emission offsets, public hearings, and State requested meetings are additional.

	D.) Water quality sampling and lab analysis (if necessary) and individual permit for storm
water associated with construction are additional to those listed above. The above rates
assume a reputable supplier has been selected by the client for the entire water treatment
program (boiler, cooling tower, R0, multi-media, water softeners, and associated equipment)
regarding state/local permitting needs.

	E.) If it is determined that a permit, plan, or application is not applicable or required
then only the time and materials for making the determination will be billed.

Confidential — Attachment A

 

 

Attachment B

Explanation of Permits and Scope of Work

	201.)	 	Air Construction Permit:
	 
	 	 	An air construction permit application package will be prepared for the owners review and
approval. It will then be submitted to the state for review. The air construction permit
allows a company to build, initially operate, and test a new source of air pollution. This
permit typically is valid from 12 to 24 months (depending on which state) and extensions may
be granted. Application fees for the construction permit vary by state and will be paid by
the owner. The air permit must be obtained before construction (pouring concrete) and in
some states before dirt work can occur.
	 
	202.)	 	Storm Water Notice of Intent (General Permit) — Construction
	 
	 	 	A Storm Water Notice of Intent must be submitted before grading can begin. This Notice is to
make the state aware that grading activities are to begin. State and federal storm water
programs are in place to protect rainfall, snow melt, and other storm water from becoming
contaminated with pollutants. The amount of time that this permit must be submitted prior to
work commencing varies by state. ICM will prepare the NOI for the owners review. Any fees
associated with the NOI will be paid by the owner.
	 
	203.)	 	Storm Water Pollution Prevention Plan — Construction
	 
	 	 	A Storm Water Pollution Prevention Plan for Construction details how storm waters will be
protected from exposure to pollutants. Also, included in this plan are details to prevent
excessive soil erosion until vegetation begins growing. Once the final plant footprint and
grading plan have been prepared by the civil engineering company, ICM will prepare the
construction Plan that must be maintained on the construction site before grading commences.
	 
	204.)	 	State Historical Society Research
	 
	 	 	State Historical Society checks for the existence of historical sites (including Indian
burial grounds) at the site where construction and industry are to occur. ICM will initiate
a historical review in the surrounding area and obtain state approval that there are no
historical issues associated with the site. Any filing fees are the owner’s responsibility.
	 
	205.)	 	Endangered Species Research
	 
	 	 	Endangered Species reviews consist of a record of review for protected species (state and
federal listed endangered or threatened), rare natural communities, state lands and waters
in the project area, including review by personnel representing state parks, preserves,
recreation areas, wetlands, fisheries, and wildlife. ICM will initiate an endangered species
review in the surrounding area and obtain state approval that there are no endangered
species issues associated with the site. Any filing fees are the owner’s responsibility.

Confidential — Attachment B

 

 

	206.)	 	Health Risk Assessment
	 
	 	 	A Health Risk Assessment looks at the potential for risks to human health due to the
existence and operation of the facility. The requirement for this assessment varies by state.
If this is required, ICM will contract with a consultant skilled in the preparation of
approvable health risk assessment techniques for the given state. Any filing fees are the
owner’s responsibility.
	 
	207.)	 	Above Ground Storage Tank General Permit Application
	 
	 	 	Storage tanks are typically registered through the state environmental agency and the fire
marshal for environmental and fire safety reasons. ICM in cooperation with the tank
manufacturing and construction company prepare the required permit application package. Any
filing fees are the owner’s responsibility.
	 
	208.)	 	Odor Action Plan
	 
	 	 	An Odor Action Plan is a “Good Neighbor” approach to looking at community concerns regarding
odor from a facility. If requested by the owner, ICM will prepare an “Odor Action Plan.” The
plan typically contains methods of validating the odor complaint and mitigation of the odor.
	 
	209.)	 	Basic Environmental Assessment
	 
	 	 	Some States require that reasonably available environmental data about a project’s
environmental be researched and presented in a document made available for public review and
comment. If required by a state, ICM will prepare the Environmental Assessment. In some
cases, experts may need to be retained. Any filing fees are the owner’s responsibility.
	 
	211.)	 	Corps of Engineers Section 404 Permit
	 
	 	 	Building on or disturbing land that is wet even part of the year may qualify the land as a
“wetland” under federal regulations. The section 404 permit allows and/or restricts
activities that can occur with the land. This permit also addresses development of areas in
floodplains. ICM will prepare the permit application. Any filing fees are the owner’s
responsibility.
	 
	212.)	 	Environmental Compliance System (ECS)
	 
	 	 	The ECS is a user friendly Microsoft® Excel spreadsheet designed to help a facility monitor,
track, and record all required permits and permit requirements. This program is designed to
help a facility meet environmental permitting obligations for every stage of permitting from
the very early stages of environmental permitting, through several years of operations. This
tool is not required from a permitting standpoint, but is highly recommended. Additional
assistance can be provided to help set up and populate the spreadsheet.
	 
	221.)	 	Industrial Well Permit/Registration
	 
	 	 	Industrial Well Permit/Registration is typically required for construction of a new well and
use of water in large quantities from a well or body of water so that interference with
neighboring wells does not occur. ICM will prepare the

Confidential — Attachment B

 

 

	 	 	permit/registration application. Depending on the state, this permit may require that ICM
retain independent and local consultants skilled in water allocation approval. Any filing
fees are the owner’s responsibility.
	 
	222.)	 	Water Discharge Permit (NPDES, POTW, Irrigation, and/or Irrigation Plan)
	 
	 	 	These
permits are associated with discharging wastewater from the facility (typically process
wastewater, cooling tower blow-down, boiler blow-down, etc.) to either a body of water
(NPDES), a public treatment system (POTW), and/or to ground applications in the form of
irrigation. If irrigation to crop land occurs an Irrigation Plan is also necessary, and
details how the irrigation amounts and contents will affect certain soils and crops. These
permits aid in the prevention of pollutants from entering natural waters and crops where
natural ecosystems and food supplies can be endangered. ICM will prepare the water discharge
permit application package depending on the customer’s requirements. Any filing fees are the
owner’s responsibility.
	 
	223.)	 	Hydrostatic Testing Water Discharge Permit
	 
	 	 	A Hydrostatic Testing Water Discharge Permit allows for the temporary discharge of water
used for testing the integrity of vessels and equipment as a part of construction
activities. ICM will prepare the discharge permit application package or obtain approval
from a facility (POTW) licensed to discharge such water. Any filing fees are the owner’s
responsibility.
	 
	224.)	 	Storm Water Notice of Intent (General Permit) – Industrial Operation
	 
	 	 	A Storm Water Pollution Prevention Plan for Industrial Operation is similar to the same
permit for construction in that it details how storm waters will be protected from exposure
to pollutants after the plant begins operation. Also, included in this plan are details to
prevent excessive soil erosion until vegetation begins growing. ICM will prepare the NOI for
the owners review. Any fees associated with the NOI will be paid by the owner.
	 
	225.)	 	Storm Water Pollution Prevention Plan – Industrial Operation
	 
	 	 	A Storm Water Pollution Prevention Plan for Industrial Operation is similar to the same
permit for construction in that it details how storm waters will be protected from exposure
to pollutants, however, this plan focuses on normal industrial activities at the site after
the plant begins operation. ICM will prepare the Industrial SWPPP for the owner’s review.
	 
	226.)	 	Risk Management Plan
	 
	 	 	This goal of this plan is to prevent the release of chemicals that could cause serious harm
to human health or the environment and to reduce the severity of releases that do occur.
Included in this plan are an offsite consequence analysis, a five-year accident history, an
accident prevention program, and an emergency response program. This plan requires updating
at least every five years, and within 6 months of making certain changes onsite. Ethanol
plants typically require a risk management plan that covers storing denaturants and/or
ammonia. This plan must

Confidential — Attachment B

 

 

	 	 	be in place prior to storage of covered chemicals on-site. ICM will prepare the Risk
Management Plan for the owner’s review and submission.
	 
	227.)	 	Spill Prevention Controls and Countermeasures Plan
	 
	 	 	Spill Prevention Controls and Countermeasures Plans are written to address the likelihood
and prevention of spills of petroleum based substances as well as what actions are to be
taken in the event that a spill does occur. Proposed regulations require the plan be in
place before storage of denaturant. ICM will prepare the SPCC Plan for the owner’s review.
	 
	228.)	 	Public Water Supply Permit
	 
	 	 	There are two reasons to receive a Public Water Supply Permit. One, if there are more than
25 people on a site the access to the public water supply must be permitted, and two, if the
process water is going to come from the public water supply, the quantity of water will
necessitate a permit. Public water supplies can not always supply quantities required by
some industries, and other sources may need to be evaluated. ICM will prepare the Public
Water Supply Permit for the owner’s review.
	 
	229.)	 	Permit from Alcohol, Tobacco Tax and Trade Bureau
	 
	 	 	This permit allows the facility to manufacture ethanol. In some states, registration with
the state agency may also be required. ICM will prepare the BATF permit application for the
owner’s review. Any filing fees are the owner’s responsibility.
	 
	231.)	 	County Health Department Septic System Permit
	 
	 	 	A septic system permit must be obtained if the sanitary sewer for a facility is to be tied
into a leach field or septic pond instead of a local POTW. ICM will prepare the septic
system permit application for the owner’s review. Any filing fees are the owner’s
responsibility.
	 
	232.)	 	Facility Response Plan
	 
	 	 	A Facility Response Plan is required when a facility stores oil or oil containing products
in quantities greater than 1,000,000 gallons and there is a potential for that oil to come
in contact with navigable waters. The FRP is designed to ensure that certain facilities have
adequate oil spill response capabilities. This plan is part of the SPCC requirements. ICM
will prepare this plan in conjunction with the SPCC for review and implementation.
	 
	233.)	 	Site Security Plan
	 
	 	 	A site security plan is required by the Department of Transportation and is a plan designed
to enhance the security of hazardous materials being transported. ICM has prepared a site
security plan which has been approved by the DOT. This plan can easily be modified to suit
an individual. Additional assistance can be provided to modify this plan to a specific
facility.

Confidential — Attachment B

 

 

	234.)	 	NSPS Notifications
	 
	 	 	A NSPS notification is required before and after the start of construction and operations for
several processes or pieces of equipment. ICM will prepare a notification letter (and form if
needed) for the owner to submit to comply with these regulations. This activity consists of
four (4) notifications.
	 
	241.)	 	CESQG Plan
	 
	 	 	The Resource Conservation and Recovery Act covers disposal of solid and hazardous wastes.
Typically, ethanol plants generate such a small quantity of hazardous and solid waste that
they are either classified as a conditionally exempt small quantity generator (CESQG). The
classification is entirely dependent on the amount of hazardous waste generated and can
change over time. While a Plan is not required by regulation for CESQG sources, a Plan can be
prepared by ICM so that the plant can document on a monthly basis that it is a CESQG and
therefore not subject to hazardous waste regulations.
	 
	242.)	 	Tier II Initial Reporting
	 
	 	 	Tier II reporting lists hazardous chemicals stored on-site. The information provides the
local emergency officials and the fire department that potential hazards exist at a site. A
Tier II report must be completed within 90 days of operating. After the initial report, the
Tier II is due annually. ICM will help prepared and submit this report to the appropriate
authorities.
	 
	243.)	 	Emissions Testing Contractor Support
	 
	 	 	Each facility will be required to complete stack testing after the plant begins
operations. ICM will help obtain bid specification, select a vendor, review testing protocol
and review final test reports in accordance with the facility’s air permit.
	 
	244.)	 	Operations Monitoring Plan, CEMs and PEMs
	 
	 	 	Depending on the size of boiler or thermal oxidizer, a facility may be required to install a
CEMs or PEMs, or complete an operations monitoring plan. ICM will help the facility find a
vendor or prepare the operations monitoring plan as required by a facility’s air permit.
	 
	251.)	 	Air Permit to Operate
	 
	 	 	The Air Operation Permit allows the company to operate the pollutant source within certain
requirements detailed in the permit. This permit is typically valid for up to five years, and
may be renewed. There is an annual fee associated with            this            permit that is based
upon the previous year’s actual emissions. ICM will prepare the Air Operating Permit
Application package for the owner’s review. Any filing fees are the owner’s responsibility.
	 
	261.)	 	Annual Emission Inventory
	 
	 	 	This is an annual accounting to the governing agencies of actual pollution generated by the
facility. Annual Air Operating Permit Fees are based upon this

Confidential — Attachment B

 

 

report. ICM will prepare the annual air emission inventory for the owner’s review and
submission. Any emission fees are the owner’s responsibility.

	262.)	 	Tier 2 Reporting
	 
	 	 	As mentioned above, Tier II reporting lists hazardous chemicals stored on-site. The
information provides the local emergency officials and the fire department that potential
hazards exist at a site. This is an annual requirement. ICM will prepare the annual Tier II
report for the owner’s review and submission. Any submission fees are the owner’s
responsibility.
	 
	263.)	 	Form R Reporting
	 
	 	 	Form R reporting is required for facilities that process or otherwise use certain listed
chemicals above a regulated quantity. Reporting includes documenting all releases to the
environment for those chemicals. This is an annual requirement. ICM will prepare the annual
Form R report for the owner’s review and submission. Any submission fees are the owner’s
responsibility.
	 
	295.)	 	Environmental Project Management
	 
	 	 	This category is for ICM’s project management costs and includes project management and
miscellaneous work that arises during the preparation of deliverables not specifically
anticipated. An example could be extended or unpredicted research at the request of the
customer or agency.

Confidential — Attachment B

 

 

SERVICE AGREEMENT

BETWEEN

ICM, INC.

AND

First United Ethanol, LLC

THIS AGREEMENT is entered into between ICM, INC. hereinafter called “Consultant", and
(Customer) hereinafter called “Client". In consideration of the covenants herein
contained and upon subject to the mutual terms and conditions set forth herein, the parties hereto
agree as follows:

	1.	 	SCOPE OF WORK — Consultant shall provide environmental consulting services for Client as
outlined in ICM, INC.’s letter proposal Attachment ‘B’ to Clint Thompson dated 11/22/05.

	2.	 	PAYMENT — For performance of the Services provided and as outlined in ICM, INC.’s letter
proposal dated 11/22/05, Consultant shall invoice the Client according to the attached
Schedule of Charges and Client shall pay Consultant at 310 N. 1st Street, Colwich,
Kansas 67030 at the time specified herein. Terms for payment are net 30 days with 1.5% per
month service charge on balances past due 30 days or more.

	3.	 	RESPONSIBILITY OF CONSULTANT — Consultant shall perform the Services as an independent
contractor in accordance with its own methods, terms of this Agreement, and applicable laws
and regulations. Consultant’s liability arising out of or in connection with the Services
shall be limited to performing at its own expense Services which are (1) deficient because of
Consultant‘s failure to perform said Services in accordance with normal
professional standards for performing services of a similar nature, and (2) reported in
writing to Consultant within a reasonable time, not to exceed thirty (30) days from the
completion of the Services in accordance with Article 5. Where Client’s project requires
public agency approval, Consultant will attempt to assist in facilitating approval. However,
Consultant does not assume responsibility for securing approval by such agency.
	 
	 	 	Because of the nature of the work involved in this proposal, the Client shall indemnify and
save and hold harmless from and against any damage, liability, loss, cost or claim, whether
occasioned by ICM, INC., its officers, employees and agents or any other person or persons
arising out of, resulting from or related to, the performance of the work provided for in
this agreement; provided, however, that Client shall not be obligated hereunder to
indemnify, save and hold harmless Consultant, its officers, employees or agents against any
damage, liability, loss, cost, or claim which arises out of or in connection with the
intentional wrongful acts of, or the active negligence of, Consultant, or its officers,
employees or agents.

	4.	 	ASSIGNMENT AND SUBCONTRACTING — This Agreement shall not be assigned by either party without
the prior written approval of the other. Consultant may, subcontract portions of the services
to a qualified subcontractor with prior approval of Client. Consultant agrees that Client will
incur no duplication of costs as a result of any such subcontract.

	5.	 	COMPLETION AND ACCEPTANCE — Upon completion of the Services by Consultant, Client shall
promptly provide Consultant with a written listing of any Services not completed. Any Services
not listed by Client as incomplete in a listing delivered to Consultant within thirty (30)
days of completion of said Services shall be deemed complete and accepted. With respect to
Services listed by Client as incomplete, Consultant shall complete such Services and the above
acceptance procedure shall be repeated.

SA-1

 

SERVICE AGREEMENT

Continued

	6.	 	TERMINATION — Client may terminate, with or without cause, upon thirty (30) days written
notice to Consultant. Absent Consultant’s breach of this Agreement, Consultant shall be paid
for Services rendered to the date of termination. Consultant may suspend or terminate this
Agreement upon seven days written notice to Client in the event of substantial failure by
Client to perform in accordance with the terms of this Agreement including, but not limited
to, nonpayment of amounts owing to Consultant through no fault of Consultant or an
unreasonable delay caused by Client or its agents.

	7.	 	DELAY; FORCE MAJEURE — Should performance of the Consultant‘s services be
materially hampered by causes beyond its reasonable control, a Force Majeure results. Force
Majeure includes, but is not restricted to, acts of contractors (other than
Consultant‘s contractors), fires, floods, labor disturbances, and unusually severe
weather.
	 
	 	 	If a Force Majeure occurs, Consultant will be granted a time extension based upon the effect
of the Force Majeure upon Consultant’s performance. The parties will also agree upon terms
and conditions, including additional compensation, for continuation or termination of this
Agreement.‘ If no agreement is reached, a Force Majeure which continues for 120
days from the event of Force Majeure gives Consultant the option to terminate its
obligations under this Agreement in accordance with Article 6.

	8.	 	GOVERNING LAW — This Agreement is to be governed by and construed in accordance with the laws
of Kansas, any action at law or judicial proceeding instituted for the breach of this
Agreement shall be resolved only in the State or Federal courts of the County of Sedgwick,
State of Kansas.

	9.	 	AMENDMENTS — Any amendment to this Agreement shall be in writing and signed by Consultant and
Client. In the event that any of the provisions of this Agreement are held to be unenforceable
or invalid by any court of competent jurisdiction, the parties shall negotiate an equitable
adjustment to the provisions with a view toward effecting the purpose of this Agreement In the
event that any of the provisions of this Agreement are held to be unenforceable or invalid by
any court of competent jurisdiction, the parties shall negotiate an Agreement. In such a case,
the validity and enforceability of the remaining provisions, or portions or applications
thereof, shall not be affected thereby.

	10.	 	TESTIMONY — Should Consultant, its directors, officers or employees be required to testify or
to submit information to any judicial or administrative hearing concerning matters in
accordance with the Cost Schedule then in effect. Should Consultant be required by a third
party to testify at such a hearing, Consultant shall notify Client as to the date and time of
such hearing. Client agrees to save and hold harmless Consultant from and against all costs
incurred as a result of a judicial or administrative hearing concerning the services provided
for herein.

SA-2

 

SERVICE AGREEMENT

Concluded

	11.	 	TIME TO BAR TO LEGAL ACTION

A. Period: All legal actions, including claims for indemnity, by either party
against the other for failure to perform or to perform properly under this Agreement or any
legal action however denominated essentially based upon such breach shall be barred 2 years
from commencement of the period defined in B.

B. Commencement of Period: The period commences when the claimant knew or should
have known of its claim. But, in any event, the period commences for:

	 	1.	 	Client claims when Consultant’s performance is substantially complete; and
	 
	 	2.	 	Consultant claims when final payment by Client has been made.

	12.	 	ENTIRE AGREEMENT — In the event any services provided for herein are authorized by the client
to be performed or caused to be performed by Consultant prior to the effective date of this
Agreement, such Services shall be deemed to have been performed under this Agreement. This
Agreement, including all attachments incorporated herein by reference, constitutes the entire
Agreement between the parties. Any oral agreements, understandings, proposals, purchase orders
or negotiations are intended to be integrated herein and to be superseded by the terms and
conditions of this Agreement.

AUTHORIZATION TO PROCEED:

	 	 	 	 	 	 	 
	Customer:  First
United Ethanol                                   

	 	 	 	     ICM, INC.
	 	 
	 
	 	 	 	 	 	 
	By:  /s/
Murray Campbell                                   

	 	By:
	 	     /s/
William J. Roddy	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title: Pres.                                        

	 	Title:
	 	[Handwritten: Mgr. Env. Affairs]	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date: 12/27/05                                        

	 	Date:
	 	     11/22/05	 	 
	 

	 	 	 	 	 	 

SA-3

 

SCHEDULE OF CHARGES — 2005

PERSONAL CHARGES

	 	 	 
	            Title	 	Billing Rate
	Engineering Specialist I
	 	$150/hr
	Process Engineer I
	 	$150/hr
	Engineering Specialist II
	 	$110/hr
	Designer II
	 	$70/hr
	Administrative
	 	$46/hr

Expert Testimony rates are quoted separately.

OTHER CHARGES

	 	 	 	 	 
	Photocopies (8.5 x 11)
	 	$	00.15	 
	Photocopies (8.5 x 11)
	 	$	00.20	 
	Facsimile transmissions (8.5 x 11)
	 	$	00.15	 
	Automobile (per mile)
	 	$	00.405	 

Outside services, equipment and facilities not furnished directly by ICM, INC., will be billed at
cost plus 15%. Services may include, but are not limited to the following:

Rental of equipment and vehicles,

Outside laboratory testing,

Special fees, permits, insurance, etc.,

Transportation on public carriers,

Printing and photographic reproduction,

Subcontractors to ICM, Inc.,

Meals, lodging, and

Shipping, telephone & other materials.

Payment Terms: Net thirty (30) days. Thereafter, one and one-half percent (1 1/2%) interest per
month on unpaid balance will be charged.

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