Document:

Exhibit 10.3

Ethanol Marketing and Services Agreement

This Agreement is made and entered into this 24th day of April, 2007,
by and between Northern Lights Ethanol, LLC having an address near Big
Stone City. South Dakota (hereinafter referred to as Owner), and Ethanol
Products, LLC d/b/a POET Ethanol Products having an address of 9530 B. 37th Street North, Wichita, Kansas
67226 (hereinafter referred to as Marketer).

RECITALS:

A)           The Owner would like to utilize the services of a Marketer to market
fuel grade ethanol (hereinafter referred to as Ethanol) from its plant sited
near Big Stone City, South Dakota.

B)            Marketer is in the business of marketing
Ethanol in the United States.

C)            The parities desire to enter into and execute
this Agreement for the purpose of setting forth agreed upon terms and
conditions.

NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties agree as follows:

1.             Marketing Rights. Owner gives Marketer exclusive rights to
market all Ethanol produced from its ethanol plant near Big Stone City,
South Dakota.

2.             Term of Agreement. The initial term of this agreement shall be
five (5) years effective on. July 1, 2007 (the “Commencement Date”). This Agreement
renews automatically for additional five (5) year periods, at the end of the
initial period and at the end of any subsequent five (5) year renewal period,
unless terminated by either party. Either party may terminate this agreement at
the end of the initial period or at the end of any five (5) year renewal period
by giving to the other party ninety (90) days written notice of termination
prior to the end of the then current period. Within fifteen (15) days of
receipt of written notice of termination by either party, Marketer will provide
Owner with a quantity per month of Ethanol for up to one (1) year from
termination that will be needed to fulfill sales contracts in existence at the
time of termination and copies of said contracts. Owner agrees that all such
existing contracts disclosed in the fifteen (15) day period will be fulfilled,
and that the terms of this Agreement will remain in effect for all such
Ethanol.

3.             Marketing Services Provided.  
Marketer will provide to Owner the following marketing services:

a.             Marketing.  Marketer will use its best
efforts to effect the same of Owner’s Ethanol at available market prices.

b.             Scheduling. Marketer will be responsible for scheduling all shipments of Owner’s
Ethanol. Marketer will provide to Owner a shipping order, and Owner will provide
a combined shipping schedule as stated in Section 8 below.

c.             Leased Storage.  If it
is deemed necessary by Marketer to market Owner’s Ethanol through storage
facilities, Owner will pay all lease and throughput costs associated with such
leases.

d.             Freight and Transportation. When necessary to market Owner’s Ethanol,
Marketer will arrange for all freight and transportation services, including
rail equipment, for delivery of Owner’s Ethanol.  Owner will pay all freight, transportation
service and. throughput costs.

e.             Customer Creditworthiness. Marketer will make reasonable efforts to
review the creditworthiness of Owner’s Ethanol customers. As deemed necessary
at Marketer’s discretion, Marketer will obtain at its expense Credit Bureau
reports or Dunn and Bradstreet reports for customers of Owner. Marketer will
then recommend to Owner, which, if any, accounts Marketer believes should be
rejected. Owner will have the right to request and review the rejection
recommendations and/or reports and notify Marketer in writing of any customers
in addition to the recommendations of Marketer that should be rejected or
accepted by Owner. Marketer will not sell Ethanol to any customer rejected by
Owner or Marketer.

f.              Accounts Receivable. Marketer will make reasonable efforts to
collect any past due accounts. However, Marketer shall not be required to
initiate litigation to collect delinquent accounts.  Marketer is authorized to turn over to
collection agencies a delinquent account unless Owner determines that it will
assume responsibility for collecting the account. Any collection agency fees
resulting from the collections process will be borne by Owner.  All accounts receivable losses arising from
the marketing of Ethanol are the sole responsibility of Owner, however, there
will be no marketing fee paid to Marketer on these receivable losses.

g.             Title To and Risk of Loss. Title to and risk of loss shall pass from
Owner directly to Owner’s customer according to the provisions of each sales
transaction.

h.             Transaction Processing. Marketer will be responsible for invoicing
all Ethanol marketed, receiving payments from customers, and paying freight
and/or storage when necessary. Owner will be responsible for furnishing
Marketer a report by 10:00 AM each 

 2
 

workday
of the previous day’s shipments. Marketer will send to the customers invoices
the same day as the report is received.

i.              Remittance of Payment.  Each
week a payment will be made to Owner for all Ethanol invoiced thirteen to
nineteen (13-19) days prior to said date that has been paid by Owner’s
customers. This payment will be adjusted for all; freight, transportation
services, storage costs, throughput costs, Fees, costs incurred due to a
Regulatory Change or Change in Customer Requirements, taxes, and when applicable,
an adjustment for value-added as stated in Section 7 below.

4.             Administrative Services Provided. Marketer will provide to Owner the
following Administrative Services:

a.             Distribution Services. 
Marketer will be responsible for an on-going program to conduct carrier
audits and will be responsible for carrier selection and dispatching, freight
rate bundling and distribution optimization.

b.             Transaction Processing. 
Marketer will be responsible for ethanol licensing, monitoring and state
compliance reporting, state surety bonding, tax collection, remittance and
reporting, purchase and sales acknowledgments, late payment collections and
electronic funds transfer services.

c.             Inventory Management. Marketer will be responsible for monitoring
future ethanol stock levels projected for Owner’s plant to facilitate the
marketing program established by Marketer.

d.             Proprietary Software. Marketer will install and maintain a
proprietary software system to handle linked transaction processing and
necessary data access to ethanol marketing and sales information.

e.             Denaturant Supply. Marketer has the exclusive right to supply
denaturant to Owner’s Ethanol plant subject to terms, conditions, and pricing
as mutually agreed to by Marketer and Owner.

5.             Marketing and Administrative Service Fee.  The
Marketing and Administrative Service Fee (the “Service Fee”) shall be initially
$0.0085/gallon of denatured Ethanol as produced by the Ethanol Plant located
near Big Stone City, South Dakota, from the Commencement Date to the
fifth annual anniversary of the Commencement Date. The Service Fee shall be
adjusted on the fifth anniversary of the Commencement Date and every fifth
annual anniversary thereafter during any renewal period for which this
Agreement remains in effect (the “Adjustment Dates”). The Service Fee shall be
adjusted in accordance with the percent change in the 

 3
 

Producer Price Index for “All
Finished Goods” (Series ID: WPUSOP3000), not seasonally adjusted, as it appears
in the periodical PPI Detailed Report as published by the U.S.
Department of Labor (the “Index”). The Service Fee in effect immediately prior
to an Adjustment Date shall be adjusted on the Adjustment Date, based upon the
percent increase or decrease between the reference base date and the current
Adjustment Date. The reference base date for the adjustment to be made on the
fifth anniversary shall be the Commencement Date. The reference base date for
the adjustment to be made on any subsequent five year anniversary shall be the
previous Adjustment Date. Thus, the reference base date for the adjustment to
be made on the tenth anniversary shall be the fifth anniversary of the
Commencement Date. All calculations for the Index shall be based upon the
latest version of the Index published as of the Adjustment Date. If the Index
value is not available for the month of the Adjustment Date, the Index value
for the immediately preceding three months, whichever is the most recent month
which has a published value, shall be used as the Index value for adjusting the
Service Fee. If no Index values have been published for those months, then the
parties shall agree upon a substitute index.

The Service Fee to be paid to Marketer by
Owner as of each Adjustment Date shall be calculated as follows:

a.             Subtract the Index value for the reference
base date from the Index value as of the Adjustment Date.

b.             Divide the result of the subparagraph a
calculation by the Index value for the reference base date.

c.             Multiply the result of the subparagraph b
calculation times the Service Fee in effect immediately prior to the Adjustment
Date.

d.             Add the result of the subparagraph e
calculation to the Service Fee in effect immediately prior to the Adjustment
Date.

e.             The result of the subparagraph d calculation
is the Service Fee to be paid from the current Adjustment Date until the next
Adjustment date.

 4
 

The
following example demonstrates the elements of the above-described formula:

	
  Adjustment Date Index value

  	
   

  	
  100

  
	
  Base date Index
  value

  	
   

  	
  94

  
	
  Result (a)

  	
   

  	
  6.0

  
	
  Divide result
  (a) by base date Index value

  	
   

  	
  ÷94

  
	
  Result (b)

  	
   

  	
  .064

  
	
  Result (b)
  multiplied by current Service Fee

  	
   

  	
  .0085

  
	
  Result (c)

  	
   

  	
  .0005

  
	
  Result (d) added
  to current Service Fee

  	
   

  	
  .0085

  
	
  Result (e)
  equals New Service Fee

  	
   

  	
  0.0090

  

 

6.             Marketer’s Purchase of Ethanol. Marketer may purchase for its own account
all or a portion of Owner’s Ethanol at a price to be agreed upon by the parties
at the time of the purchase.

7.             Value-Added Opportunities. Marketer and Owner mutually recognize that
on occasion Marketer will be able to develop a sale opportunity for Owner’s
ethanol that is above the market value for sales typically completed on a spot
market or contract rollover basis (a “value-added transaction”).  Examples of value-added transactions include
the building of new markets, time exchanges, location exchanges, rack pricing,
and negotiation of spread differentials. The parties acknowledge that new
value-added opportunities not yet known to the parties are expected to be
developed by Marketer in the future. Owner and. Marketer acknowledge that for
value-added opportunities, the Marketing Fee is insufficient to compensate
Marketer for additional income and profits generated for Owner. Therefore,
Owner and Marketer agree to share the additional margin generated from
value-added transactions at the ratio of 50% for Owner and 50% for Marketer.
The additional margin will be calculated based on. the difference in the sales
price of the value-added opportunity at Owner’s production facility (net of
transportation, cost) and the sales price of a typical market transaction (net
of transportation cost) for a similar lime period.

In order to facilitate the completion of
value-added opportunities, which occur and disappear quickly within the market,
Owner agrees to identify representatives of Owner with authority to approve
value-added transactions. Marketer will upon identification of a value-added opportunity
present to any one of Owner’s representatives the value-added opportunity,
including the details of said transaction, for consideration. Owner has
complete and sole discretion to accept or reject the value-added opportunity.
If agreed upon by Owner’s representative, Marketer will 

 5
 

confirm in writing to Owner’s representative
the agreement of the parties regarding the value-added opportunity. In this
case, Marketer shall Ethanol complete the value-added transaction in accordance
with the agreement of the parties. If Owner’s representative declines to
participate in the value-added opportunity, then Marketer will not complete the
value-added opportunity for Owner’s account.

8.             Reporting. Marketer will provide Owner with the following reports on a schedule
described below during the term of this Agreement:

	
  Shipping Orders

  	
   

  	
  Daily

  
	
  Market Information

  	
   

  	
  Weekly

  
	
  Sales Summary

  	
   

  	
  Monthly

  

 

Owner will provide Marketer with the
following reports on a scheduled described below during the tern of this
Agreement:

	
  Daily Production

  	
   

  	
  Daily

  
	
  Combined
  Shipping Schedule

  	
   

  	
  Daily

  

 

In addition to the aforementioned reports,
Owner will timely inform Marketer of daily inventories, plant shutdowns, daily
production projections, and any other information requested by Marketer in
which to perform wider this Agreement.

9.             Discontinuation of Production. In the event that Owner wishes to
discontinue or reduce the production of Ethanol, Owner will notify Marketer one
(1) year in advance of Owner’s decision so that all contract commitments made
by Marketer for Owner may be net. If less than one (1) year notice of
discontinuance or reduction of production is provided to Marketer, or if
unforeseen circumstances cause Owner to cease or reduce production at its
plant, Owner grants to Marketer the power to buy in Ethanol short falls for the
account of the Owner on any unfilled contracts, and that any associated losses
will be reimbursed by Owner to Marketer.

10.           Liability. Owner recognizes that Marketer will be performing its duties
hereunder as an undisclosed agent for and on behalf of Owner.  Nevertheless, any and all liability related
to the Ethanol, including but not limited to Ethanol quality and condition, the
timely delivery of Ethanol, and the handling, transportation, storage and
release of Ethanol into the 

 6
 

environment, shall remain
the sole responsibility of Owner, except to the extent provided in. Section 12.

11.           Indemnification of Marketer. Owner shall indemnify, hold harmless and
defend Marketer, and its officers, directors, employees and agents from and
against any and all claims, actions, damages, liabilities and expenses,
including but not limited to, attorneys’ and other professional fees, in
connection with loss of life, personal injury and/or damage to property of
third parties, arising from or out of Marketer’s services provided under the
terms and conditions of this Agreement, and for Owner’s breach of this
Agreement, the quality and condition of the Ethanol, the breach of any warranty
or representation regarding the quality and condition of the Ethanol, the
failure of the Owner to timely deliver Ethanol, and the handling,
transportation, storage and release of Ethanol into the environment, except
that Owner shall not indemnify, hold harmless and defend Marketer from (i) the
negligent or willful and wanton misconduct of Marketer and its officers,
directors, employees and agents, (ii) any act beyond the scope of the Marketer’s
services to be rendered under the terms and conditions of this Agreement,(iii)
any violation of laws, regulations, ordinances and/or court orders by Marketer.

12.           Indemnification of Owner. Marketer shall indemnify, hold harmless and
defend Owner, and its officers, employees and agents from and against any and
all claims, actions, damages, liabilities and expenses, including, but not
limited to, attorneys’ and other professional fees, in connection with
Marketers’ breach of this agreement and, in connection with loss of life,
personal injury and/or damage to property of third parties arising from or out
of (i) the negligent or willful or wanton misconduct of Marketer and its
officers, directors, employees and agents, (ii) any act beyond the scope of -
Marketer’s services to be rendered under the terms and conditions of this
Agreement, and (iii) any violation of laws, regu1ations, ordinances and/or
court orders by Marketer.

13.           Insurance. Marketer will furnish Owner with an insurance certificate verifying
that Marketer has commercial general liability insurance with a limit of at
least $1 million per occurrence and a $2 million aggregate limit, and umbrella
insurance with at least a $4 million limit.

14.           Taxes. Owner shall be solely responsible for payment of all taxes and
charges, now or hereafter imposed (whether by federal, state, municipal or
other public authority), by reason of this Agreement or its performance, including
but not limited to, sales or use taxes, but excluding any income tax imposed
upon the net profits of Marketer. 
Marketer shall deduct from 

 7
 

the proceeds of sales of
Ethanol an amount equal to any taxes imposed by reason of the Original
Agreement or its performance and shall remit to the appropriate government
entity the taxes owed.

15.           Entire Agreement and Amendment. This Agreement contains the entire Ethanol
Marketing Agreement between the parties. No oral statements, representations or
prior written matter not contained in this Agreement shall have any effect
regarding products marketing. This Agreement shall not be amended or modified
in any manner except by a writing executed by both parties.

16.           Confidential Nature of Agreement. Marketer and Owner agree to keep all sales,
prices, inventory positions, and the details of this Agreement strictly
confidential.

17.           Assignment.  This Agreement shall not be
assigned by either party, except to an affiliate controlled by or in control of
said party, without the written consent of the other party.

18.           Governing Law.  This
Agreement shall be governed, construed and enforced under the laws of the State
of South Dakota.

19.           Force Majeure. 
Marketer shall not be liable to Owner for its failure to deliver
services hereunder, and Owner shall not be liable to Marketer for its failure
to produce ethanol; when such failure shall be due to the failure of processing
equipment, fires, floods, storms, weather conditions, strikes,  lock outs, other industrial disturbance, riots,
legal interference, governmental action or regulation, acts of terrorism, acts
of God or public enemy, or, without limitation by enumeration, any other cause
beyond Marketer’s or Owner’s reasonable control; provided Marketer or Owner
shall promptly and diligently take such action as may be necessary and
practicable under the then existing circumstances to remove the c1ause of
failure and resume delivery of services or ethanol, The party seeking to invoke
this provision shall provide notice within 48 hours or such other time as is
reasonable under the circumstances. The party shall further notify the other
party as to the time when the force majeure condition is no longer in effect.

20.           Termination Of Other Contracts. 
Affiliates of Marketer have entered into with Owner contracts under
which the Affiliates provide various services and licenses. Those Affiliate
contracts include, but may not be limited to, the following contracts:

 8
 

 

	
  Affiliate
  Companies

  	
   

  	
  Affiliate Contracts

  
	
  Broin
  Management, LLC

  	
   

  	
  Management Agreement

  
	
  Broin Management
  LLC

  	
   

  	
  Corn and Natural Gas Price Risk Management Agreement

  
	
  Dakota Gold
  Marketing, Inc

  	
   

  	
  DDGS Marketing Agreement

  
	
  Broin Companies,
  LLC

  	
   

  	
  Information Technology, Systems Management and Data
  Management Services Agreement

  
	
  Broin Research,
  Inc.

  	
   

  	
  Technology and Patent Rights License Agreement

  
	
  Broin and
  Associates, Inc.

  	
   

  	
  Standard Form Agreement Between Owner and Design
  Builder

  

 

The above-described Affiliate contracts, and
any other contract that might be in existence now or in the future between
Owner and an Affiliate, shall constitute the “Affiliate Contracts.” In the
event that an Affiliate Contract is terminated for any reason, without the
Affiliate Contract having been renewed or replaced with a similar contract
between an Affiliate and Owner, then Marketer may in its sole discretion
terminate this Agreement upon sixty (60) days’ advance written notice to Owner.
“Affiliate” means any of the above-described affiliates, or any other present
or future company of which ten percent (10%) or more of the outstanding
securities are owned or controlled by Jeff Broin and/or one or more of the
Affiliates.

21.           Regulatory Changes and Changes in Customer
Requirements.  In the event that at any time subsequent to
the Effective Date there occurs a Regulatory Change or any Change in Customer
Requirements which increases the cost to Marketer of providing the services set
forth herein, and if Ethanol Products so elects by notice to Owner, then Owner
shall reimburse Ethanol Products for the additional costs incurred as a result
of the Regulatory Change or Change in Customer Requirements. A “Regulatory
Change” means any change after the Effective Date in any applicable statute,
law, code, determination, rule, regulation, decree, injunction, franchise, permit,
certificate, license, ordinance, standard or control of any governmental
authority. By way of example, a Regulatory Change would include increased
reporting requirements of government authorities for the marketing, sale,
transportation or storage of ethanol. A “Change in Customer Requirements” means
any change after the Effective Date in any requirement for the purchase,
delivery, transportation, storage, testing, 

 9
 

reporting or insuring of
ethanol, By way of example, a Change in Customer Requirements would include a
customer imposing upon Marketer a requirement that Marketer use a specific
software package in order for Marketer to market ethanol to the customer.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.

	
  

  	
  NORTHERN LIGHTS ETHANOL, LLC
  (Owner)

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Delton
  Strasser

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  ETHANOL
  PRODUCTS, LLC d/b/a POET Ethanol

  
	
   

  	
  Products
  (Marketer)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/Robert Casper

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its

  	
  President

  	
   

  
							

 

 10Exhibit 10.4

POET

AGREEMENT BETWEEN

OWNER AND DESIGN BUILDER

THIS AGREEMENT

made
as of this 3rd day of
April in the year of 2007.

BETWEEN the Owner:

Northern
Lights Ethanol, LLC

46416 144” St.

P0 Box 356

Big Stone City SD 57216

And
the Design Builder:

POET
Design and Construction, Inc.

4615 North Lewis Avenue

Sioux Fails, SD 57104

For
the following Project:

Additional
Corn Storage

The
Owner and Design Builder, in consideration of the mutual covenants hereinafter
set forth, agree as follows:

 1
 

ARTICLE I - GENERAL PROVISIONS

1.1                               BASIC DEFINITIONS

1.1.1        The Contract Documents consist of this Agreement the Design
Builder’s Exhibits and written addenda identified in Article 14, the
Construction Documents approved by the Owner and Modifications issued after
execution of this Agreement A Modification is a Change Order or a written
amendment to this Agreement signed by both parties, or a Construction Change
Directive issued by the Owner In accordance with Paragraph 8.3.

1.1.2        The term “Work” means the construction and services provided
by the Design Builder to fulfill the Design Builder’s obligations.

1.2                               EXECUTIONS, CORRELATION AND
INTENT

1.2.1        It is the intent of the Owner and Design Builder that the
Contract Documents include all Items necessary for proper execution and
completion of the Work. The Contract Documents are complimentary and what Is
required by one shall be as binding as If required by all; performance by the
Design Builder shall be required only to the extent consistent with and
reasonably inferable from the Contract Documents as being necessary to produce
the intended results. Words that have well-known technical or construction
industry meanings are used In the Contract Documents In accordance with such
recognized meanings.

1.2.2        If the Design Builder believes or is advised by another
design professional retained by the Design Builder to provide services on the
Project that implementation of any instruction received from the Owner would
cause a violation of any applicable law, the Design Builder shall notify the
Owner in writing.  Neither the Design
Builder nor another design professional retained by the Design Builder shall be
obligated to perform any act which either believes will violate any applicable
law.

1.2.3        Nothing contained in this Agreement shall create a
contractual relationship between the Owner and any person or entity other than
the Design Builder.

1.3                               OWNERSHIP AND USE OF
DOCUMENTS

1.3.1        Drawings specifications, and other documents and electronic
data furnished by the Design Builder and other design professionals retained by
the Design Builder, are instruments of service. The Design Builder and other
providers of professional services shall retain all common law, statutory and
other 

 2
 

reserved rights, including
copyright in those instruments of service furnished by them. Drawings,
specifications, and other documents and electronic data are furnished for use
solely with respect to this Agreement The Owner shall be permitted to retain
copies, including reproducible copies, of the drawings, specifications, and
other documents and electronic data furnished by the Design Builder for
information and reference in connection with the Project except as provided in
Subparagraphs 1.3.2 and 1.3.3.

1.3.2        Drawings, specifications, and other documents and electronic
data furnished by the Design Builder shall not be used by the Owner or others
on other projects, for additions to this Project or for completion of this
Project by others, except by agreement in writing and with appropriate
compensation to the Design Builder.

1.3.3        Submission or distribution of the Design Builder’s documents
to meet official regulatory requirements or for similar purposes in connection
with the Project is not to be construed as publication in derogation of the
rights reserved in Subparagraph 1.3.1.

ARTICLE 2 - OWNER

2.1          The Owner shall
designate a representative authorized to act on the Owner’s behalf with respect
to the Project. The Owner or such authorized representative shall examine
documents submitted by the Design Builder and shall render decisions In a
timely manner and in accordance with the schedule accepted by the Owner. The
Owner may obtain independent review of the Contract Documents by a separate
architect, engineer, contractor, or cost estimator under contract to or employed
by the Owner. Such independent review shall be undertaken at the Owner’s
expense in a timely manner and shall not delay the orderly progress of the
Work.

2.2          The Owner shall
cooperate with the Design Builder In securing building and other permits, licenses
and inspections. The Owner shall not be required to pay the fees for such
permits, licenses and inspections unless the cost of such fees is excluded from
the Design Builder’s Scope of Services.

2.3          The Owner shall furnish
services of land surveyors, geotechnical engineers, and other consultants for
subsoil, air and water conditions, when such services are deemed necessary by
the Design Builder to properly carry out the design services required by this
Agreement.

2.4          The Owner shall
disclose, to the extent known to the Owner, the results and 

 3
 

reports
of prior tests, inspections or investigations conducted for the Project
involving: structural or mechanical systems; chemical; air and water pollution;
hazardous materials; or other environmental and subsurface conditions.  The Owner shall disclose all information
known to the Owner regarding the presence of pollutants at the Project’s site.

2.5          The Owner shall furnish
all legal, accounting and insurance counseling services as may be necessary at
any time for the Project including services as the Owner may require to verify
the Design Builder’s Applications for Payment.

2.6          Those services,
information, surveys and reports required by Paragraphs 2.3 through 2.5 which
are within the Owner’s control shall be furnished at the Owner’s expense. The
Design Builder shall be entitled to rely upon the accuracy and completeness
thereof, except to the extent the Owner advises the Design Builder to the
contrary in writing.

2.7          If the Owner requires
the Design Builder to maintain any special insurance coverage, policy,
amendment, or rider, the Owner shall pay the additional cost thereof, except as
otherwise stipulated in this Agreement.

2.8          If the Owner observes or
otherwise becomes aware of a fault of defect in the Work or nonconformity with
the Design Builder’s Scope of Services or the Construction Documents, the Owner
shall give prompt written notice thereof to the Design Builder.

2.9          The Owner shall promptly
upon the request of the Design Builder, furnish to the Design Builder
reasonable evidence that financial arrangements have been made to fulfill the
Owner’s obligations under the Contract.

2.10        The Owner shall
communicate with persons or entitles employed or retained by the Design Builder
through the Design Builder, unless otherwise directed by the Design Builder.

ARTICLE 3 – DESIGN BUILDER

3.1                               SERVICES AND
RESPONSIBILITIES

3.1.1        Standard of Care: Design Builder shall perform or furnish
Design Professional Services and related services in all phases of the project.
The standard of care for all such services performed or furnished under this
Agreement will be the care and skill ordinarily used by members of the
engineering profession practicing under similar conditions at the same time and
locality.

3.1.2        The Design Builder shall be responsible to the Owner for acts
and 

 4
 

omissions of the Design
Builder’s employees, subcontractors and their agents and employees, and other
persons, including other design professionals, performing any portion of the
Design Builder’s obligations under this Agreement.

3.2          BASIC
SERVICES

3.2.1        The Design Builder’s Basic Services are described below and
in Article 14.

3.2.2        The Design Builder shall designate a representative
authorized to act on the Design Builder’s behalf with respect to the Project.

3.2.3        The Design Builder, with the assistance of the Owner, shall
file documents required to obtain necessary approvals of governmental
authorities having jurisdiction over the Project.

3.2.4        Unless otherwise provided in the Contract Documents, the
Design Builder shall provide or cause to be provided and shall pay for design
services, labor, materials, equipment, tools, construction equipment and
machinery, water, heat, utilities, transportation and other facilities and
services necessary for proper execution and completion of the Work, whether
temporary or permanent and whether or not incorporated or to be incorporated in
the Work.

3.2.5        Design Builder shall supervise, inspect and direct the
Construction competently and efficiently, devoting such attention thereto and
applying such skills and expertise as may be necessary to provide the
Construction in accordance with the Contract Documents. Design Builder shall be
solely responsible for the means, methods, techniques, sequences and procedures
employed for the provision of Construction. Design Builder shall be responsible
to see that the complete Construction compiles accurately with the Contract
Documents and shall keep Owner advised as to the quality and progress of the
Construction.

3.2.6        The Design Builder shall keep the Owner informed of the
progress and quality of the Work.

3.2.7        The Design Builder shall be responsible for correcting Work
which does not conform to the Contract Documents.

3.2.8        The Design Builder warrants to the Owner that materials and
equipment furnished under the Contract will be of good quality and new unless
otherwise required or permitted by the Contract Documents, that the
construction will be free from faults and defects, and that the construction
will conform with the requirements of the Contract Documents. Construction not
conforming to these 

 5
 

requirements, including
substitutions not properly approved by the Owner, shall be corrected in
accordance with Article 9.

3.2.9        The Design Builder shall pay all state sales, consumer, use
and similar taxes which had been legally enacted prior to the date of this
Agreement, and shall secure and pay for building and other permits and
governmental fees, licenses and inspections necessary for the proper execution
and completion of the Work which are either customarily secured after execution
of a contract for construction or are legally required prior to the date of
this Agreement.

3.2.10      Laws and Regulations

1.             Design Builder shall give all
notices and comply with all Laws and Regulations of the place of the Project
which are applicable to furnishing and performance of the Work, Except where
otherwise expressly required by applicable Laws and Regulations, Owner shall
not be responsible for monitoring Design Builder’s compliance with any Laws or
Regulations.

2.             If Design Builder performs any Work
knowing or having reason to know that it is contrary to Laws or Regulations,
Design Builder shall bear all costs arising therefrom.

3.             Changes in Laws and Regulations not
known or foreseeable on the date of receipt of Proposals having an effect on
the cost or time of performance may be the subject of a claim under Article 8.

3.2.11      Design Builder shall pay all license fees
and royalties and assume all costs incident to the use in the performance of
the Work or the incorporation In the Work of any invention, design, process,
product or device which is subject of patent rights or copyrights held by
others. If a particular invention, design, process, product or device is
specified in the Conceptual Documents for use in the performance of the
Construction and if to the actual knowledge of Owner its use is subject to
patent rights or copyrights calling for the payment of any license fee or
royalty to others, the existence of such rights shall be disclosed by Owner in
the Conceptual Documents.  To the fullest
extent permitted by Laws and Regulations, Design Builder shall indemnify and
hold harmless Owner, from and against-all claims; costs, losses and damages
(including but not limited to all fees and charges of engineers, architects,
attorneys and other professionals and all court or arbitration or other dispute
resolution costs) arising out of or resulting from any infringement of patent
rights or copyrights incident to the use In the performance of the Work or
resulting from the incorporation in the Work of any invention, design, process,
product or device not specified in the Conceptual Documents.

 6
 

3.2.12      Use of Site and Other Areas

1.             Design Builder shall confine
construction equipment, the storage of materials and equipment and the
operations of construction workers to those lands and areas permitted by the
Owner and other land and areas permitted by Laws and Regulations,
rights-of-way, permits and easements, and shall not unreasonably encumber the
premises with construction equipment or other materials or equipment, Design
Builder shall assume full responsibility for any damage to any such land or
area, or to the owner or occupant thereof or of any adjacent land or areas,
resulting from the performance of the Construction. Should any claim be made by
any such owner or occupant because of the performance of the Construction,
Design Builder shall promptly settle with such other party by negotiation or
otherwise resolve the claim by arbitration or other dispute resolution
proceeding or at law. Design Builder shall, to the fullest extent permitted by
Laws and Regulations, indemnify and hold harmless Owner, Owner’s Consultants
and anyone directly or indirectly employed by any of them from and against all
claims, costs, losses and damages (including, but not limited to, fees of
engineers, architects, attorneys and other professionals and court and
arbitration or other dispute resolution costs) arising out of or resulting from
any claim or action, legal or equitable, brought by any such owner or occupant
against Owner, or any other party indemnified hereunder to the extent caused by
or based upon Design Builder’s performance of the Construction.

2.             During the performance of the
Construction, Design Builder shall keep the premises free from accumulations of
waste materials, rubbish and other debris resulting from the Construction. At
the completion of the Construction Design Builder shall remove all waste
materials, rubbish and debris from and about the premises as well as all tools,
appliances, construction equipment, temporary construction and machinery and
surplus materials, Design Builder shall leave the Site clean and ready for
occupancy by Owner at Substantial Completion. Design Builder shall restore to
original condition all property not designated for alteration by the Contract
Documents.

3.             Design Builder shah not load nor
permit any part of any structure to be loaded in any manner that will endanger
the structure, nor shall Design Builder subject any part of the Work or
adjacent property to stresses or pressures that will endanger it.

 7
 

3.2.13 The Design Builder shall notify the
Owner when the Design Builder believes that the Work or an agreed upon portion
thereof is substantially completed. if the Owner concurs, the Design Builder
shall issue a Certificate of Substantial Completion which shall establish the
Date of Substantial Completion, shall state the responsibility of each party
for security, maintenance, heat, utilities, damage to the Work and insurance, shall
include a list of items to be completed or corrected and shall fix the time
within which the Design Builder shall complete items listed therein. Disputes
between the Owner and Design Builder regarding the Certificate of Substantial
Completion shall be resolved in accordance with provisions of Article 10.

3.2.14 The Design Builder shall maintain at
the site for the Owner one record copy of the drawings, specifications, product
data, samples, shop drawings, Change Orders and other modifications, in good order
and regularly updated to record the completed construction. These shall be
delivered to the Owner upon completion of construction and-prior to-final
payment.

3.2.15 Unless otherwise provided in the
Contract Documents, Design Builder shall directly or through one or more
Subcontractors obtain and pay for all permits and licenses necessary for
construction. Owner shall assist Design Builder, when necessary, in obtaining
such permits and licenses. Design Builder shall pay all governmental charges
and inspection fees necessary for the prosecution of the Construction, which
are applicable on the date of this Agreement The Owner is responsible for
paying any and all utility company connection charges and/or capital costs
related thereto.

3.2.16 Design Builder’s General Warranty and
Guarantee

1.             Design Builder warrants and
guarantees to Owner that all Construction will be in accordance with the
Contract Documents and will not be defective. 
This warranty shall be effective for a period of twelve months from the
date of substantial completion and will cover all labor and materials to
correct any deficiencies. Design Builder’s warranty and guarantee hereunder
excludes defects or damage caused by:

a.                                       Abuse, modification or improper maintenance
or operation by persons other than Design/Builder, Subcontractors or Suppliers;
or

b.                                      Normal wear and tear under normal usage.

2.             Design Builder’s obligation to
perform and complete the Work In 

 8
 

accordance
with the Contract Documents shall be absolute. None of the following will
constitute an acceptance of Work that is not in accordance with the Contract
Documents or a release of Design Builder’s obligation to perform the Work in
accordance with the Contract Documents:

a.             Observations by Owner:

b.             The making of any progress or final
payment;

c.             The issuance of a certificate of
Substantial Completion;

d.             Use or occupancy of the Work or any
part thereof by Owner;

e.             Any acceptance by Owner or any
failure to do so;

f.              Any review and approval of a
Submittal;

g.             Any inspection, test or approval by
others; or

h.             Any correction of defective
Construction by Owner

3.2.17 Operational Phase: During the
Operations Phase, Design Builder shall:

1.                                       Provide assistance in connection with the
start-up, testing, refining and adjusting of any equipment or system.

2.                                       Assist Owner in training staff to operate and
maintain the Project.

3.                                       Assist Owner in developing systems and
procedures for control of the operation and maintenance of and record keeping
for the Project.

3.3          ADDITIONAL
SERVICES

3.3.1        The-services described in this Paragraph 3.3 are not included
in Basic Services unless so identified in Article 14, and they shall be paid
for by the Owner as provided in this Agreement in addition to the compensation
for Basic Services. The services described in this Paragraph 3.3 shall be
provided only if authorized or confirmed in writing by the Owner.

3.3.2        Making revisions In drawings, specifications, and other
documents or 

 9
 

electronic data when such
revisions are required by the enactment or revision of codes, laws on
regulations subsequent to the preparation of such documents or electronic data.

3.3.3        Providing consultation concerning replacement of Work damaged
by fire or other cause during construction, and furnishing services required in
connection with the replacement of such Work.

3.3.4        Providing services in connection with a public hearing,
arbitration proceeding or legal proceeding, except where the Design Builder is
a party thereto.

3.3.5        Providing coordination of construction performed by the Owner’s
own forces or separate contractors employed by the Owner, and coordination of
services required in connection with construction performed and equipment
supplied by Owner.

3.3.6        Submitting Construction Documents for review and approval by
the Owner. Construction Documents may include drawings, specifications, and
other documents and electronic data setting forth in detail the requirements
for construction of the Work.

3.3.7        Preparing a set of reproducible record documents or
electronic data showing significant changes in the Work made during
construction.

3.3.8        Providing additional assistance for training personnel,
preparing manuals or consulting during operation outside of the Scope of Basic
Services.

ARTICLE 4 -TIME

4.1                               Unless otherwise indicated, the Owner and the
Design Builder shall perform their respective obligations as expeditiously as
is consistent with reasonable skill and care and the orderly progress of the
Project.

4.2                               Time limits stated in the Contract Documents
are of the essence, The Work to be performed under this Agreement shall
commence on March 28, 2007 unless otherwise agreed and, subject to authorized
Modifications, Substantial Completion shall be achieved on or before the date
established in Article 14.

4.3                               Substantial Completion is the stage in the
progress of the Work when the Work or designated portion thereof is
sufficiently complete in accordance with the Contract Documents so the Owner
can occupy or utilize the Work for its intended use.

 10
 

4.4                               Based on the Design Builder’s Scope of
Services, a construction schedule shall be provided consistent with Paragraph
4.2 above.

4.5                               If the Design Builder is delayed at any time
in the progress of the Work by an act or neglect of the Owner, Owner’s
employees, or separate contractors employed by the Owner, or by changes ordered
in the Work, or by labor disputes, fire, unusual delay in deliveries, adverse
weather conditions not reasonably anticipatable, unavoidable casualties or
other causes beyond the Design Builder’s control, or by delay authorized by the
Owner pending arbitration, or by other causes which the Owner and Design
Builder agree may justify delay, then Contract Time shall be reasonably
extended by Change Order.

ARTICLE 5 - PAYMENTS

5.1                             PROGRESS PAYMENTS

5.1.1        The Design Builder shall deliver to the Owner itemized
Applications for Payment in such detail as indicated in Article 14.

5.1 .1.1    Application shall be made on AIA forms 0702
and 0703 or similar documents. Two percent retainage shall be held by the owner
on up to fifty percent value of the original contract value after which no
additional retainage will be held.

5.1.2        Within ten (10) days of the Owner1s receipt of a properly
submitted and correct Application for Payment, the Owner shall make payment to
the Design Builder.

5.1.3        The Application for Payment shall constitute a representation
by the Design Builder to the Owner that the design and construction have
progressed to the point indicated; the quality of Work covered by the
application is in accordance with the Contract Documents; and the Design
Builder is entitled to payment in the amount requested.

5.1.4        Upon receipt of payment from the Owner, the Design Builder
shall promptly pay the other design professionals and each contractor the
amount to which each is entitled in accordance with the terms of their
respective contracts.

5.1.5        The Owner shall have no obligation under this Agreement to
pay or to be responsible in any way for payment to another design professional,
or a contractor performing portions of the Work.

5.1.6        Neither progress payment nor partial or entire use or
occupancy of the 

 11
 

Project by the Owner shall
constitute acceptance of Work not in accordance with the Contract Documents.

5.1.7        The Design Builder warrants that title to all construction
covered by an Application for Payment will pass to the Owner no later than the
time of payment. The Design Builder further warrants that upon submittal of an
Application for Payment all construction for which payments have been received
from the Owner shall be free and clear of liens, claims, security interests or
encumbrances in favor of the Design Builder or any other person or entity
performing construction at the site or furnishing materials or equipment
relating to the construction.

5.1.8        Upon substantial completion, the Owner shall pay the Design
Builder the retainage, if any less the reasonable cost to correct or complete
incorrect or incomplete Work. Final payment of such withheld sum shall be made
upon correction or completion of such Work.

5.2.                            FINAL PAYMENT

5.2.1        When the Work has been completed and the contract fully
performed, the Design Builder shall submit a final application for payment to
the Owner, who shall make final payment within ten (10) days of receipt.

5.2.2        The making of final payment shall constitute a waiver of
claims by the Owner except those arising from:

5.2.2.1     liens,
claims, security interests or encumbrances arising out of the Contract and
unsettled;

5.2.2.2     failure
of the Work to comply with the requirements of the Contract Documents; or

5.2.2.3     terms
of special warranties required by the Contract Documents

5.2.3        Acceptance of final payment shall constitute a waiver of all
claims by the Design Builder except those previously made in writing and
identified by the Design Builder as unsettled at the time of final Application
for Payment.

5.3                               INTEREST PAYMENTS

5.3.1        Payments due to the Design Builder under this Agreement which
are not paid when due shall bear interest from the date due at the rate
specified in Article 13, or in the absence of a specified rate, at the legal
rate prevailing where the Project is located.

 12
 

ARTICLE 6 - PROTECTION OF PERSONS AND PROPERTY

6.1                               The Design Builder shall be responsible for
initiating, maintaining and providing supervision of safety precautions and
programs in connection with the performance of this Agreement.

6.2                               The Design Builder shall take reasonable
precautions for the safety of, and shall provide reasonable protection to
prevent damage, injury or loss to: (1) employees on the Work and other persons
who may be affected thereby; (2) the Work and materials and equipment to be
incorporated therein, whether in storage on or off the site, under care,
custody, or control of the Design Builder or the Design Builder’s contractors;
and (3) other property at or adjacent thereto, such as trees, shrubs, lawns,
walks, pavements, roadways, structures and utilities not designated for removal
relocation, or replacement in the course of construction.

6.3                               The Design Builder shall give notices and
comply with applicable laws, ordinances, rules, regulations and lawful orders
of public authorities bearing on the safety of persons or property or their
protection from damage, injury or loss.

6.4                               The Design Builder shall promptly remedy
damage and loss (other than damage or loss insured under property insurance
provided or required by the Contract Documents) to property at the site
Agreement Between Owner and Design caused in whole or in part by the Design
Builder, a contractor of the Design Builder or anyone directly or indirectly
employed by any of them, or by anyone for whose acts they may be liable.

ARTICLE 7 - INSURANCE AND BONDS

7.1                               PERFORMANCE, PAYMENT AND
OTHER BONDS

7.1.1        If it is required by the Primary Lender, Design Builder shall
furnish performance and payment Bonds, each in an amount at least equal to the
Contract Price as security for the faithful performance and payment of all
Design Builder’s obligations to furnish, provide and pay for Construction and
related materials under the Contract Documents. These Bonds shall remain in
effect at least until one year after the date when final payment becomes due,
except as provided otherwise by Laws or Regulations or by the Contract
Documents. Design Builder shall also furnish such other Bonds as are required
by Article 14. All Bonds shall be In the form prescribed by the Contract
Documents except as provided otherwise by Laws or Regulations, and shall be
executed by such sureties as are named in the current list of “Companies
Holding Certificates of Authority as Acceptable Surety Companies” as published
in Circular 570 (amended) by the Audit Staff, Bureau of 

 13
 

Government Financial
Operations, U.S. Treasury Department All Bonds signed by an agent must be
accompanied by a certified copy of such agent’s authority to act. The cost of
the performance and payment bonds shall be paid by the Owner.

7.1.2        If the surety on any Bond furnished by Design Builder is
declared bankrupt or becomes insolvent or its right to do business is
terminated in any state where any part of the Project is located or It ceases
to meet the requirements of paragraph 7.1.1, Design Builder shall within thirty
days thereafter substitute another Bond and surety meeting the requirements of
paragraphs 7.1.1 and 7.9.

7.2                               DESIGN/BUILDER’S LIABILITY
INSURANCE

7.2.1        The Design Builder shall purchase from and maintain, in a
company or companies lawfully authorized to do business in the jurisdiction In
which the Project is located, such insurance as will protect the Owner and
Design Builder from claims set forth below which may arise out of or result
from operations under this Agreement by the Design Builder.

7.2.1.1 
Claims under workers’ compensation, disability benefits and other similar
employee benefit acts;

7.2.1.2 
Claims for damages because of bodily injury, occupational sickness or
disease, or death of Design Builder’s employees;

7.2.1.3 
Claims for damages because of bodily injury, sickness or disease, or
death of any person other than Design Builder’s employees;

7.2.1.4 
Claims for damages insured by customary personal injury liability coverage
which are sustained (I) by any person as a result of an offense directly or
indirectly related to the employment of such person by Design Builder, or (ii)
by any other person for any other reason;

7.2.1.5 Claims for damages, other than to the
Work itself, because of injury to or destruction of tangible property wherever
located, including loss of use resulting therefrom; and

7.2.1.6 
Claims for damages because of bodily injury or death of any person or
property damage arising out of the ownership, maintenance or use of any motor
vehicle.

7.2.2        The policies of insurance required by paragraph 7.2.1 shall: 

 14
 

7.2.2.1 
With respect to insurance required by paragraphs 7,2.1.3 through

7.2.1.6 inclusive, include as additional insureds
Owner and any other persona or entities indicated in Article 14, all of whom
shall be listed as additional insureds, and include coverage for the respective
officers and employees of all such additional insureds;

7.2.2.2 Include at least the specific
coverages and be written for not less than the limits of liability provided In
7.2.2.2.a through 7.2.2.2.c or required by Laws or Regulations, whichever is
greater;

a.                                       Worker’s Compensation under Paragraph 7.2.1.1
of the General Conditions:

	
  1.

  	
   

  	
  State:

  	
   

  	
  Statutory

  	
   

  
	
  2.

  	
   

  	
  Applicable
  Federal:

  	
   

  	
  Statutory

  	
   

  
	
  3.

  	
   

  	
  Employer’s Liability:

  	
   

  	
  $

  	
  500,000

  	
   

  
							

 

b.                                      Design Builder’s General Liability (under
paragraphs 7,2.1.2 through 7.2.1.5) which shall include completed operations
and product liability coverages.

	
  1.

  	
   

  	
  General
  Aggregate:

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  (Except
  Products – Completed Operations)

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Products
  – Completed Operations

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  Aggregate

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Personal
  and Advertising Injury

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  (Per
  Person/Organization)

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Each
  Occurrence

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  (Bodily
  Injury and Property Damages)

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Property
  Damage liability insurance will 

  provide Explosion, Collapse and Underground 

  coverages where applicable.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Excess
  Liability

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  General
  Aggregate

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
   

  	
   

  	
  Each
  Occurrence

  	
   

  	
  $

  	
  5,000,000

  	
   

  

 

 15
 

 

	
  c.

  	
   

  	
  Automobile
  Liability:

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  Combine Single

  Limit (Bodily Injury
  and Property Damage)

  	
   

  	
  $

  	
  1,000,000

  	
   

  
							

 

7.2.2.3 Include completed
operations insurance;

7.2.2.4 Include contractual
liability insurance covering Design Builder’s indemnity obligations under
paragraphs 3.2.11, 3.2.12 and 11.4;

7.2.2.5 Contain a provision
or endorsement that the coverage afforded will not be canceled until at least
30 days’ prior written notice has been given to Owner and each other additional
insured indicated in Article 14 to whom a Certificate of Insurance has been
issued (and the Certificate of insurance furnished by the Design Builder
pursuant to paragraph 7.9,2 will so provide);

7.2.2.6. Remain in effect at
least until final payment and at all times thereafter when Design Builder may
be correcting, removing or replacing defective Construction in accordance with
Article 9; and

7.2.2.7 With respect to
completed operations insurance, and any other insurance coverage written on a
claims-made basis, this insurance shall remain in effect for at least one year
after final payment.

7.2.3        Design Builder’s insurance agency shall agree in writing to
give to owner notice of cancellation of insurance by either party.

7.3                               OWNER’S LIABILITY INSURANCE

7.3.1        The Owner shall be responsible for purchasing and maintaining
the Owner’s General, Auto and Workmen’s Compensation liability insurance.
Optionally, the Owner may purchase and maintain other insurance for
self-protection against claims which may arise from operations under this
Agreement. The Design Builder shall not be responsible for purchasing and
maintaining this optional Owner’s liability insurance unless specifically
required by the Contract Documents.

7.4                               PROPERTY INSURANCE

7.4.1        Unless otherwise provided in Article 14, Owner shall purchase
and 

 16
 

maintain property Insurance
upon the Construction at the Site in the amount of the full replacement cost
thereof (subject to deductible amounts not exceeding $5000 per occurrence).
This Insurance will:

7.4.1.1 
Include the interests of Owner, Design/Builder, Subcontractors, and any
other persons or entities indicated in the Supplementary Conditions, each of
whom is deemed to have an Insurable interest and shall be listed as an insured
or additional insured;

7.4.1.2 
Be written on a Builder’s Risk “all-risk” or open peril or special causes
of loss policy form that shall at least include insurance for physical loss and
damage to the Construction, temporary buildings, falsework and all materials
and equipment in transit, and shall insure against at least the following
perils or causes of loss: fire, lightning, extended coverage, theft, vandalism
and malicious mischief, collapse, debris removal, demolition occasioned by
enforcement of Laws and Regulations, and such other perils or causes of loss as
may be specifically required by the Supplementary Conditions;

7.4.1.3  
Include expenses incurred in the repair or replacement of any insured
property (including but not limited to fees and charges of engineers and design
professionals);

7.4.1.4 
Be maintained in effect until final payment is made unless otherwise
agreed to in writing by Owner and Design/Builder with thirty days written
notice to each other additional insured to whom a certificate of insurance has
been issued; and

7.4.1.5 
Allow partial utilization in accordance with paragraph 7.8.

7.4.2        All the policies of insurance (and the certificates or other
evidence thereof) required to be purchased and maintained by Owner in
accordance with paragraph 7.4 will contain a provision or endorsement that the
coverage afforded will not be canceled until at least 30 days’ prior written
notice has been given to Design Builder and to each other additional insured to
whom a Certificate of Insurance has been issued and will contain waiver
provisions in accordance with paragraph 7.5.1. In addition, the insurance
agency representing the Owner shall agree in writing to give to Design Builder
notice of cancellation by either party.

7.4.3.       Owner shall not be responsible for
purchasing and maintaining any property insurance to protect the interests of
Design Builder, Subcontractors, Supplies, Engineers or others in the Work to
the extent of any deductible amounts.

 17

The risk of loss within such identified
deductible amount, will be borne by Design Builder, Subcontractor or others
suffering any such loss and if any of them wishes property insurance coverage
within the limits of such amounts, each may purchase and maintain it at the
purchaser’s own expense.

7.5          WAIVER OF RIGHTS

7.5.1        Owner and Design Builder intend that all policies purchased in
accordance with paragraph 7.4 will protect Owner, Design Builder, Engineers,
Subcontractors, and all other individuals or entities indicated In Article 14
to be listed as insured or additional insureds in such policies and will
provide primary coverage for all losses and damages caused by the perils or
causes of loss covered thereby. All such policies shall contain provisions to the
effect that in the event of payment of any loss or damage the insurers will
have no rights of recovery against any of the insureds or additional insureds
thereunder. Owner and Design Builder waive all rights against each other and
their respective officers, directors, employees and agents for all losses and
damages caused by, arising out of or resulting from any of the perils or causes
of loss covered by such policies and any other property insurance applicable to
the Work; and, in addition, waive all such rights against Subcontractors,
Suppliers, Engineers and all other individuals or entities indicated in the
Supplementary Conditions to be listed as insureds or additional insureds under
such policies for losses and damages so caused. None of the above waivers shall
extend to the rights that any party making such waiver may have to the proceeds
of insurance held by Owner as trustee or otherwise payable under any policy so
issued. In addition, Owner waives all rights against Design Builder,
Subcontractors, Engineers and Suppliers and the officers, directors, employees
and agents of any of them for business interruption, loss of use of Owner’s
property and any other consequential damages caused by, arising out of or
resulting from any of such insured perils or causes of loss or any other peril
or cause of loss whether or not insured.

7.6          RECEIPT AND APPLICATION OF PROCEEDS

7.6.1        Any insured loss under the policies of Insurance required by paragraph
7.4 will be adjusted with Owner and made payable to Owner as fiduciary for the
insureds, as their interests may appear, subject to the requirements of any
applicable mortgage clause and of paragraph 7.6.3.

7.6.2.       Owner shall deposit in a separate account any money so received, and
shall distribute it in accordance with such agreement as the parties in
Interest may reach. If no other special agreement is reached the damaged Work
shall be repaired or replaced, the moneys so received applied on account
thereof and the 

 18
 

Work and the cost thereof
covered by an appropriate Change Order or Written Amendment.

7.6.3.       Owner as fiduciary shall have power to adjust and settle any loss with
the insurers unless one of the parties In interest shall object in writing
within fifteen days after the occurrence of loss to Owner’s exercise of this
power. If such objection be made, Owner as fiduciary shall make settlement with
the insurers in accordance with such agreement as the parties in interest may
reach. If no such agreement among the parties in interest is reached, Owner as
fiduciary shall adjust and settle the loss with the insurers and, if required
in writing by any party in interest, Owner as fiduciary shall give bond for the
proper performance of such duties.

7.7          ACCEPTANCE OF BONDS AND INSURANCE; OPTION TO REPLACE

7.7.1        If either party has any objection to the coverage afforded by or other provisions
of the Bonds or insurance required to be purchased and maintained by the other
party in accordance with Article 7 on the basis of their not complying with the
Contract Documents, the objecting party shall so notify the other party In
writing within ten days after receipt of the certificates, Owner and Design
Builder shall each provide to the other such additional information in respect
of insurance provided as the other may reasonably request if either party does
not purchase or maintain all of the Bonds and insurance required of such party
by the Contract Documents, such party shall notify the other party in writing
of such failure to purchase prior to the start of the Work, or of such failure
to maintain prior to any change in the required coverage. Without prejudice to
any other right or remedy, the other party may elect to obtain equivalent Bonds
or insurance to protect such other party’s interests at the expense of the
party who was supposed to provide such coverage, and a Change Order or Written
Amendment shall be issued to adjust the Contract Price accordingly.

7.8          PARTIAL UTILIZATION – PROPERTY INSURANCE

7.8.1        If Owner finds it necessary to occupy or use a portion or portions of the
Work prior to Substantial Completion of all the construction, such use or
occupancy may be accomplished; provided that no such use or occupancy shall
commence before the insurers providing the property insurance have acknowledged
notice thereof and in writing effected any changes in coverage necessitated
thereby. The insurers providing the property insurance shall consent by
endorsement on the policy or policies, but the property Insurance shall not be
cancelled or permitted to lapse on account of any such partial use or
occupancy.

 19
 

7.9          LICENSED SURETIES AND INSURERS; CERTIFICATES OF INSURANCE

7.9.1        All Bonds and insurance required by the Contract Documents to be purchased
and maintained by Owner or Design Builder shall be obtained from surety or
insurance companies that are duly licensed or authorized in the jurisdiction in
which the Project is located to issue Bonds or insurance policies for the
limits and coverage’s so required. Such surety and insurance companies shall
also meet such additional requirements and qualifications as may be provided in
Article 14.

7.9.2        Design Builder shall deliver to Owner, with copies to each additional insured
indicated in Article 14, certificates of insurance (and other evidence of
insurance requested by Owner or any other additional insured) which
Design/Builder is required to purchase and maintain in accordance with
paragraph 7.2.1. Owner shall deliver to Design Builder, with copies to each
additional insured indicated in Article 14, certificates of insurance (and other
evidence of insurance requested by Design Builder or any other additional
insured) which Owner is required to purchase and maintain in accordance with
paragraphs 7.4.1 and 7.4.2.

ARTICLE 8 – CHANGES IN THE WORK

8.1          CHANGES

8.1.1        Changes in the Work may be accomplished after execution of this
Agreement, without invalidating this Agreement, by Change Order, Construction
Change Directive, or order for a minor change in the Work, subject to the
limitations stated in the Contract Documents.

8.1.2        A Change Order shall be based upon agreement between the Owner and the
Design Builder; a Construction Change Directive may be issued by the Owner
without the agreement of the Design Builder; an order for a minor change in the
Work may be issued by the Design Builder alone.

8.1.3        Changes in the Work shall be performed under applicable provisions of
the Contract Documents, and the Design Builder shall proceed promptly, unless
otherwise provided in the Change Order, Construction Change Directive, or order
for a minor change in the Work.

8.1.4        If unit prices are stated in the Contract Documents or subsequently
agreed 

 20
 

upon, and if quantities
originally contemplated are so changed in a proposed Change Order or
Construction Change Directive that application of such unit prices to
quantities of Work proposed will cause substantial inequity to the Owner or the
Design Builder, the applicable unit prices shall be equitably adjusted.

8.2          CHANGE ORDERS

8.2.1        A Change Order is a written instrument prepared by the Design Builder
and signed by the Owner and the Design Builder, stating their agreement upon
all of the following:

1.             a change in the Work

2.             the amount of the adjustment, If any, in the
Contract Sum; and

3.             the extent of the adjustment, if any, in the
Contract Time.

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

8.3          CONSTRUCTION CHANGE DIRECTIVES

8.3.1        A Construction Change Directive is a written order prepared and signed
by the Owner, directing a change in the Work prior to agreement on adjustment,
if any, in the Contract Sum or Contract Time, or both.

8.3.2        Except as otherwise agreed by the Owner and the Design Builder, the adjustment
to the Contract Sum shall be determined on the basis of reasonable expenditures
and savings of those performing the Work attributable to the change, including
the expenditures for design services and revisions to the Contract Documents,
In such case, the Design Builder shall keep and present an itemized accounting
together with appropriate supporting data for inclusion in a Change Order.
Unless otherwise provided In the Contract Documents, costs for these purposes
shall be limited to the following:

1.             costs of labor, Including social security,
old age and insurance, fringe benefits required by agreement or custom, and
workers’ compensation insurance;

 21
 

2.             costs of materials, supplies and equipment,
including cost of transportation, whether Incorporated or consumed;

3.             rental costs of machinery and equipment
exclusive of hand tools, whether rented from the Design Builder or others;

4.             costs of premiums for all bonds and insurance
permit fees, and sales, use or similar taxes;

5.             additional costs of supervision and field
office personnel directly attributable to the change; and fees paid to other
design professionals.

8.3.3        Pending final determination of cost to the Owner, amounts not in
dispute may be included in Applications for Payment. The amount of credit to be
allowed by the Design Builder to the Owner for deletion or change which results
in a net decrease in the Contract Sum and Contract Time, such agreement shall
be effective immediately and shall be recorded by preparation and execution of
an appropriate Change Order.

8.4          MINOR CHANGES IN THE WORK

8.4.1        The Design Builder shall have authority to make minor changes in the Construction
Documents and construction consistent with the intent of the Contract Documents
when such minor changes do not involve adjustment In the Contract Sum or
extension of the Contract Time.  The
Design Builder shall promptly inform the Owner, in writing, of minor changes in
the Construction Documents and construction.

8.5          CONCEALED CONDITIONS

8.5.1        If conditions are encountered at the site which are (1) subsurface or otherwise
concealed physical conditions which differ materially from those indicated in
the Contract Documents, or (2) unknown physical conditions of an unusual nature
which differ materially from those ordinarily found to exist and generally
recognized as inherent in construction activities of the character provided for
in the Contract Documents, then notice by the observing party shall be given to
the other party promptly before conditions are disturbed and in no event later
than 21 days after first observance of the conditions. The Contract Sum shall
be equitably adjusted for such concealed or unknown conditions by Change Order
upon claim by either party made within 21 days after the claimant becomes aware
of the conditions.

 22
 

8.6          REGULATORY CHANGES

8.6.1        The Design Builder shall be compensated for changes in the construction
necessitated by the enactment or revisions of codes, laws or regulations
subsequent to the submission of the Design Builder’s Proposal.

ARTICLE 9 - CORRECTION OF WORK

9.1          The Design Builder shall promptly correct
Work rejected by the Owner or known by the Design Builder to be defective or
failing to conform to the requirements of the Contract Documents, whether
observed before or after Substantial Completion and whether or not fabricated,
installed or completed. The Design Builder shall bear costs of correcting such
rejected Work, including additional testing and Inspections.

9.2          If, within one (1) year after the date of
Substantial Completion of the Work or, after the date for commencement of
warranties established in a written agreement between the Owner and the Design
Builder, or by terms of an applicable special warranty required by the Contract
Documents, any of the Work is found to be not in accordance with the
requirements of the Contract Documents, the Design Builder shall correct it
promptly after receipt of a written notice from the Owner to do so unless the
Owner has previously given the Design Builder a written acceptance of such
condition.

9.3          Nothing contained in this Article 9 shall be
construed to establish a period of limitation with respect to other obligations
which the Design/Builder might have under the Contract Documents.  Establishment of the time period of one (1)
year as described in Subparagraph 9.2 relates only to the specific obligation
of the Design Builder to correct the Work, and has no relationship to the time
within which proceedings may be commenced to establish the Design Builder’s
liability with respect to the Design Builder’s obligations other than
specifically to correct the Work.

9.4           If the Design Builder fails to correct nonconforming Work as required
or fails to carry out Work in accordance with the Contract Documents, the
Owner, by written order signed personally or by an Agent specifically so
empowered by the Owner in writing, may order the Design Builder to stop the
Work, or any portion thereof, until the cause for such order has been
eliminated; however, the Owner’s right to stop the Work shall not give rise to
a duty on the part of the Owner to exercise the right for benefit of the Design
Builder or other persons or entities.

 23
 

9.5          If the Design Builder defaults or neglects to
carry out the Work in accordance with the Contract Documents and fails within
fourteen (14) days after receipt of written notice from the Owner to commence
and continue correction of such default or neglect with diligence and
promptness, the Owner may give a second written notice to the Design Builder
and, fourteen (14) days following receipt by the Design Builder of that second
written notice and without prejudice to other remedies the Owner may have, correct
such deficiencies. in such case an appropriate Change Order shall be issued
deducting from payments then or thereafter due the Design Builder, the costs of
correcting such deficiencies. If the payments then or thereafter due the Design
Builder are not sufficient to cover the amount of the deduction, the Design
Builder shall pay the difference to the Owner. Such action by the Owner shall
be subject to dispute resolution procedures as provided in Article 10.

ARTICLE 10 - DISPUTE RESOLUTION – MEDIATION AND ARBITRATION

10.1        Claims, disputes or other matters in question
between the parties to this Agreement arising out of or relating to this
Agreement or breach thereof shall be subject to and decided by mediation or
arbitration. Such mediation or arbitration shall be conducted in accordance
with the Construction Industry Mediation or Arbitration Rules of the American
Arbitration Association currently in effect.

10.2        In addition to and prior to arbitration, the
parties shall endeavor to settle disputes by mediation.  Demand for mediation shall be filed in
writing with the other party to this Agreement and with the American
Arbitration Association.  A demand for
mediation shall be made within a reasonable time after the claim, dispute, or
other matter in question has arisen. In no event shall the demand for mediation
be made after the date when institution of legal or equitable proceedings based
on such claim, dispute or other matter in question would be barred by the
applicable statutes or repose or imitations.

10.3        Demand for arbitration shall be filed in
writing with the other party to this Agreement and with the American
Arbitration Association. A demand for arbitration shall be made within a
reasonable time after the claim, dispute or other matter In question has
arisen. In no event shall the demand for arbitration be made after the date
when institution of legal or equitable proceedings based on such claim, dispute
or other matter in question would be barred by the applicable statutes of
repose or limitations.

10.4        An arbitration pursuant to this Article may
be joined with an arbitration involving common issues of law or fact between
the Design Builder and any person or entity with whom the Design Builder has a
contractual obligation to arbitrate disputes. 

 24
 

No other arbitration arising
out of or relating to this Agreement shall include, by consolidation, joinder
or in any other matter, an additional person or entity not a party to this
Agreement or not a party to an agreement with the Design Builder, except by
written consent containing a specific reference to this Agreement signed by the
Owner, the Design Builder and any other person or entities sought to be joined,
Consent to arbitration involving an additional person or entity shall not
constitute consent to arbitration of any claim, dispute or other matter in
question not described in the written consent or with a person or entity not
named or described therein. The foregoing agreement to arbitrate and other
agreements to arbitrate with an additional person or entity duly consented to
by the parties to this Agreement shall be specifically enforceable in
accordance with applicable law in any court having jurisdiction thereof.

10.5        The award rendered by the arbitrator or
arbitrators shall be final, and judgment may be entered upon it in accordance
with applicable law in any court having jurisdiction thereof. Any and all
arbitration or mediation hearings shall be held in Sioux Falls, SD.

ARTICLE 11 - MISCELLANEOUS PROVISIONS

11.1        Unless otherwise provided, this Agreement
shall be governed by the law of the place where the Project is located.

11.2        RELATED CONSTRUCTION OF SITE

11.2.1      Owner may
perform other Work related to the Project at the Site by Owner’s own forces, or
let other direct contracts therefore or have other work performed by utility
owners. If the fact that such other work is to be performed was not noted in
the Conceptual Documents then (i) written notice thereof will be given to
Design Builder prior to starting any such other work and (ii) Design Builder
may make a claim therefore as provided in Article 6 if Design Builder believes
that such performance will involve additional expense to Design Builder or
requires additional time and the parties are unable to agree as to the amount
or extent thereof.

11.2.2      Design
Builder shall afford each other contractor who is a party to such a direct
contract and each utility owner (and Owner, if Owner is performing the
additional work with Owner’s employees) proper and safe access to the Site and
a reasonable opportunity for the introduction and storage of materials and
equipment and the execution of such other work and shall properly connect and
coordinate the Construction with theirs. 
Unless otherwise provided in the Contract Documents, Design Builder
shall do all cuffing, fitting and patching of the Work 

 25
 

that may be required to make its several
parts come together properly and integrate with such other work.  Design Builder shall not endanger any work of
others by cutting, excavating or otherwise altering their work without the
written consent of Owner and the others whose work will be affected. The duties
and responsibilities of Design Builder under this paragraph are for the benefit
of such utility owners and other contractors to the extent that there are
comparable provisions for the benefit of Design Builder in said direct
contracts between Owner and such utility owners and other contractors.

11.2.3      If the
proper execution or results of any part of Design Builder’s Work depends upon
work performed or services provided by others under this paragraph 11.2, Design
Builder shall inspect such other work and appropriate instruments of service
and promptly report to Owner in writing any delays, defects of deficiencies in
such other work or services that render it unavailable or unsuitable for the
proper execution and results of Design Builder’s Work. Design Builder’s failure
so to report will constitute an acceptance of such other work as fit and proper
for integration with Design Builder’s Work except for latent or nonapparent
defects and deficiencies in such other work.

11.2.4      Coordination

11.2.4.1   If Owner
contracts with others for the performance of other work on the Project at the
Site, the following will be set forth in Article 14: 

a.             The individual or entity who will have
authority and responsibility for coordination of the activities among the
various prime contractors will be identified;

b.             The specific matters to be covered by such
authority and responsibility will be itemized; and

c.             The extent of such authority and
responsibilities will be provided.

11.2.4.2   Unless
otherwise provided in Article 14, Owner shall have sole authority and
responsibility in respect of such coordination.

11.3        CLAIMS FOR DAMAGES

11.3.1      If either
party to this Agreement suffers injury or damage to person or property because
of an act or omission of the other party, of any of the other party’s employees
or agents, or of others for whose acts such party is legally 

 26
 

liable, written notice of such injury or
damage, whether or not insured, shall be given to the other party within a
reasonable time not exceeding 21 days after first observance, The notice shall
provide sufficient detail to enable the other party to Investigate the matter,
if a claim of additional cost or time related to this claim is to be asserted,
it shall be filed in writing.

11.4        INDEMNIFICATION

11.4.1 
To the fullest extent permitted by law, the Design Builder shall
indemnify and hold harmless the Owner’s, the Board of Managers, Officers, Owner’s
consultants, and agents and employees of any of them from and against claims,
damages, losses and expenses, including but not limited to attorney’s fees,
arising out of or resulting from performance of the Work, provided that such
claim, damage, loss or expense is attributabie to bodily injury, sickness,
disease or death, or to injury to or destruction of tangible property (other
than the Work itself) including loss of use resulting therefrom, but only to
the extent caused in whole or in part by negligent acts or omissions of the
Design Builder, anyone directly or indirectly employed by the Design Builder or
anyone for whose acts the Design Builder may be liable. Such obligation shall
not be construed to negate, abridge, or reduce other rights or obligations of
indemnity which would otherwise exist as to a party or person described in this
Paragraph 11.4.

11.4.2  
To the fullest extent permitted by law, the Owner shall indemnify and hold
harmless the Design Builder, Broin’s Board of Directors and Officers, Design
Builder’s consultants, and agents and employees of any of them from and against
claims, damages, losses and expenses, including but not limited to attorney’s
fees, arising out of or resulting from performance of the Work, provided that
such claim, damage, loss or expense is attributable to bodily injury, sickness,
disease or death, or to injury to or destruction of tangible property (other
than the Work itself) including loss of use resulting therefrom, but only to
the extent caused in whole or in part by negligent acts or omissions of the
Owner, anyone directly or indirectly employed by the Owner or anyone for whose
acts the Owner may be liable. Such obligation shall not be construed to negate,
abridge, or reduce other rights or obligations of indemnity which would otherwise
exist as to a party or person described in this Paragraph 11.4.

11.4.3  
In claims against any person or entity indemnified under this Paragraph
11.4 by an employee of the Design Builder, anyone directly or indirectly
employed by the Design Builder or anyone for whose acts the Design Builder may
be liable, the indemnification obligation under this Paragraph 11.4 shall not
be limited by a limitation on amount Or type of damages, compensation or
benefits payable by or for the Design Builder under worker’s compensation acts,
disability benefit acts or other employee benefit acts.

 27
 

11.5        SUCCESSORS AND ASSIGNS

11.5.1  
The Owner and Design Builder, respectively, bind themselves, their partners,
successors, assigns and legal representatives to the other party to this
Agreement and to the partners, successors and assigns of such other party with
respect to all covenants of this Agreement Neither the Owner nor the Design
Builder shall assign this Agreement without the written consent of the other.
The Owner may assign this Agreement to any institutional lender providing
construction financing, and the Design Builder agrees to execute all consents
reasonably required to facilitate such an assignment if either party makes such
an assignment, that party shall nevertheless remain legally responsible for all
obligations under this Agreement, unless otherwise agreed by the other party.

11.6        EXTENT OF AGREEMENT

11.6.1 
This Agreement represents the entire agreement between the Owner and the
Design Builder and supersedes prior negotiations, representations or
agreements, either written or oral. This Agreement may be amended only by
written instrument and signed by both the Owner and the Design Builder.

11.7        TERMINATION OF POET CONTRACTS

11.7.1  
Design Builder, the POET Companies and Owner have entered into contracts
under which the POET Companies provide certain materials, services and
licenses. The contracts include, but may not be limited to, the following
contracts:

	
  POET
  COMPANIES

  	
   

  	
  POET

  
	
  POET Design and
  Construction, Inc.

  	
   

  	
  Agreement Between Owner and Design Builder

  
	
  POET, LLC

  	
   

  	
  Confidentiality and Nondisclosure Agreement

  
	
  POET, LLC

  	
   

  	
  Information Technology, Systems Management and Data
  Management Services Agreement

  
	
  POET Plant
  Management, LLC

  	
   

  	
  Management Agreement

  
	
  POET Plant
  Management, LLC

  	
   

  	
  Corn and Natural Gas Price Risk Management Agreement

  
	
  POET Research,
  Inc.

  	
   

  	
  Technology and Patent Rights License Agreement

  
	
  POET Nutrition,
  Inc.

  	
   

  	
  Dakota Gold Marketing Agreement

  
	
  Ethanol
  Products, LLC d/b/a POET Ethanol Products

  	
   

  	
  Ethanol Marketing and Service Agreement

  

 

 28
 

The above-described contracts, and any other
contract that might be in existence now or in the future between Owner and one
of the POET Companies, shall constitute the “POET Contracts.”  In the event that a POET Contract is
terminated for any reason, without a POET Contract having been renewed or
replaced with a similar contract between Owner and a POET Company, then Design
Builder may in its sole discretion terminate this Agreement upon 60 days’
advance written notice to Owner.

“Affiliate” means any present or future
Entity of which ten percent (10%) of the equity interests are owned or
Controlled by one or more of the following: (i) the POET Companies; (ii) Jeff
Broin; (iii) a member of Jeff Broin’s immediate Family and/or (iv) a trust the
beneficiaries of which include Jeff Broin and/or Jeff Broin’s immediate Family.

“Controlled by” means the power to direct or
cause the direction of the management and policies of a company through the
ownership of voting securities, by contract or otherwise.

“Entity” means a corporation, limited
liability company, partnership, limited partnership, cooperative, trust,
estate, governmental body or any other organization created under or pursuant
to the laws of the United States of America, of another country or of any
state, county, municipality or governmental unit of any of the foregoing.

“Immediate Family” means Jeff Broin’s spouse,
children and/or lineal descendants.

“POET Companies” shall mean POET, LLC; POET
Design and Construction, Inc.; POET Research, Inc.; POET Nutrition, Inc.; POET
Plant Management, L.L.C.; Ethanol Products, d/b/a POET Ethanol Products; POET
Investments, Inc.; POET Research Center, Inc.; Risk Management Services, Inc.;
and the Affiliates, whether now existing, later created or that become related
to any of the foregoing in the future by ownership, contract or through the
establishment of business relationships.

ARTICLE 12 - TERMINATION OF THE AGREEMENT

12.1        TERMINATION BY THE OWNER

12.1.1  
This Agreement may be terminated by the Owner upon 14 days’ written notice
to the Design Builder in the event that the Project is abandoned, if such
termination occurs, the Owner shall pay the Design Builder for Work completed 

 29
 

and for proven loss sustained upon materials,
equipment, tools, and construction equipment machinery, including reasonable
profit and applicable damages.

12.1.2  
If the Design Builder defaults or persistently fails or neglects to
carry out the Work in accordance with the Contract Documents or fails to perform
the provisions of this Agreement, the Owner may give written notice that the
Owner intends to terminate this Agreement. If the Design Builder fails to
correct the defaults, failure or neglect within fourteen (14) days after being
given notice, the Owner may then give a second written notice and, after an
additional fourteen (14) days the Owner may without prejudice to any other
remedy terminate the employment of the Design Builder and take possession of
the site and of all materials, equipment and finish the Work by whatever method
the Owner may deem expedient.  If the
unpaid balance of the Contract Sum exceeds the expense of finishing the Work
and all damages incurred by the Owner, such excess shall be paid to the Design
Builder. If the expense of completing the Work and all damages incurred by the
Owner exceeds the unpaid balance, the Design Builder shall pay the difference
to the Owner, This obligation for payment shall survive termination of this
Agreement.

12.2        TERMINATION BY THE DESIGN/BUILDER

12.2.1  
If the Owner fails to make payment when due, the Design Builder may give
written notice of the Design Builder’s intention to terminate this Agreement.
If the Design Builder fails to receive payment within fourteen (14) days after
receipt of such notice by the Owner, the Design Builder may give a second
written notice and, fourteen (14) days after receipt of such second written
notice by the Owner, may terminate this Agreement and recover from the Owner
payment for Work executed and for proven losses sustained upon materials,
equipment, tools, and construction equipment and machinery, including
reasonable profit and applicable damages.

ARTICLE 13 - BASIS OF COMPENSATION

The
Owner shall compensate the Design Builder in accordance with Article 5,
Payments, and the other provisions of this Agreement as described below.

13.1        COMPENSATION

13.1.1         For the Design Builder’s performance of the Work, as described in
Paragraph 3.2 and including any other services listed in Article 14 as part 

 30
 

of Basic Services, the Owner
shall pay the Design Builder in current funds the Contract Sum as follows:

Four Million Three Hundred Eighty Six
Thousand Two Hundred Forty Nine Dollars and Seventy Three Cents
($4,385,249.73). This price includes sales and excise tax and will remain valid
as long as construction is started by March 28, 2007. A Start date after that
time will cause the price to be reviewed and adjusted accordingly.

13.1.2  
For Additional Services, as described in Paragraph 3.3 and including any
other services listed in Article 14 as Additional Services, compensation shall
be at a negotiated price.

13.2        REIMBURSABLE EXPENSES

13.2.1  
Reimbursable Expenses are In addition to the compensation for Basic and Additional
Services, and include actual expenditures made by the Design Builder and the
Design/Builder’s employees and contractors in the interest of the Project.

13.2.2  
FOR REIMBURSABLE EXPENSES, compensation shall be a multiple of(1.1)
times the amounts expended.

13.3        INTEREST PAYMENTS

13.3.1  
The rate of interest for past due payments shall be as follows:

(1.5%) one and one half percent per month.

ARTICLE 14 – OTHER CONDITIONS AND SERVICES

14.1        The Basic Services to be performed shall be
commenced on March 28, 2007 and, subject to authorized adjustments and to delays
not caused by the Design Builder, Substantial Completion shall be achieved in
ten (10) months following the start of concrete work.

14.2        The Design Builders Exhibits include the
following documents:

Exhibit 1- Schedule of Contract Values consisting of one (1) page

Exhibit 2 - Scope of Work consisting of two (2) pages.

 31
 

14.3        OTHER CONDITIONS

NO
OTHER CONDITIONS ARE NEITHER EXPRESSED NOR IMPLIED OTHER THAN THOSE STATED
ABOVE.

IN
WITNESS WHEREOF, OWNER and DESIGN BUILDER have signed this Agreement in duplicate.
One counterpart each has been delivered to OWNER and DESIGN BUILDER. All
portions of the Contract Documents have been signed, initialed or identified by
OWNER and DESIGN BUILDER.

This
Owner – Design Builder Agreement will be effective on the day and year first
written above.

	
  OWNER:

  	
  DESIGN BUILDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Northern Lights
  Ethanol, LLC

  	
  POET Design and Construction, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Delton
  Strasser

  	
   

  	
  BY:

  	
  /s/ James Moe

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Blame Gomer -
  Delton Strasser

  	
   

  	
  Name:

  	
  James Moe

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  General Manager
  - President

  	
   

  	
  Title:

  	
  Chief Operating Officer

  	
   

  
														

 

 32

Exhibit 1

Northern Lights Ethanol, LLC - Additional Corn Storage

SCHEDULE OF CONTRACT VALUES

CONTRACT COSTS

	
  100

  	
  SITE WORK

  	
   

  	
  $

  	
  22,680.00

  	
   

  
	
  141

  	
  SITE GRADING & REMOVALS (ALLOWANCE)

  	
   

  	
  $

  	
  361,500.00

  	
   

  
	
  200

  	
  BUILDINGS

  	
   

  	
  $

  	
  181,000.00

  	
   

  
	
  500

  	
  ELECTRICAL

  	
   

  	
  $

  	
  277,105

  	
   

  
	
  600

  	
  INSTRUMENTATION

  	
   

  	
  $

  	
  82,403.00

  	
   

  
	
  700

  	
  GRAIN SYSTEMS

  	
   

  	
  $

  	
  2,450,841.00

  	
   

  
	
  800

  	
  GENERAL CONSTRUCTION, TAX, FREIGHT,

  COATINGS, MISC.

  	
   

  	
  $

  	
  115,718.00

  	
   

  
	
  1000

  	
  DESIGN, ENGINEERING, MANAGEMENT, MISC.

  LABOR, ETC.

  	
   

  	
  $

  	
  507,270.00

  	
   

  
	
  1042

  	
  EXCISE TAX (ALLOWANCE)

  	
   

  	
  $

  	
  87,732.73

  	
   

  
	
  TOTAL CONTRACT COST

  	
   

  	
  $

  	
  4,386,249.73

  	
   

  
	
        

  	
   

  	
   

  	
   

  
	
  THE CONTRACT PROVIDES ALLOWANCES FOR:

  	
   

  	
   

  	
   

  
	
  $361,500.00 for Site Grading
  & Removals

  	
   

  	
   

  	
   

  
	
  $87,732.73 for Excise Tax

  	
   

  	
   

  	
   

  
							

 

 1

Exhibit
2

Northern
Lights Ethanol

Corn Storage Project Scope of Work

Summary

The basis of this Scope
of Work is to upgrade the corn storage capacity of Northern Lights Ethanol, Big
Stone City, SD. Included are the additional pieces of equipment required, upgrades
to existing system, and the items which will not be improved, but reused.

Corn
Storage

·              Two (2) new 509,000 bushel corn storage
bins Will be installed north of the existing bins. The new bins will be

90’ diameter Behlen, inside-stiffened grain silos.

·      Aeration
equipment will be installed in each new bin.

·      A
roof stair unit, inside ladders, and catwalk support will be provided for each
bin.  An exterior ladder will be provided
on the last bin to accommodate 2 means of egress.

·              The existing alcohol line and vapor line
will be relocated to accommodate the new bins. 
Concrete foundations, pipe supports, and pipe racks will be installed
for the new lines,

·      After
relocation, the existing concrete and pipe will be removed and disposed of.

·              GSI Series 2 continuous rotation
industrial bin sweeps will be installed in the new bins.

·              The receiving dust air flow will be tied
into the existing control filter. No upgrades to the existing filter system
have been included in this Scope of Work.

·              Temperature monitoring cables will be
installed in each of the new bins.

·              Ohmart/Vega level transmitters will be
installed in each new bin.

Corn
Fill/Reclaim

·              A new HiRoller conveyor will extend from
the existing conveyor to feed the new fill conveyor installed across the new
bins. The conveyor will be rated at 30,000 bu/hr.

·      A
new two-way head section will be installed to divert corn to the existing bin
or to the new bin fill conveyor.

·      New
steel catwalks and platforms will be connected to the existing system for access
similar to what is currently provided.

·      Lighting
will be installed on the new catwalk and bins.

·              A new HiRoller reclaim conveyor will be
installed below the new bins and tie into the existing reclaim conveyor. The
new reclaim conveyor will be rated at 5,000 bu/hr.

 1
 

Electrical
Equipment & Control System

·              New MCC gear will be supplied and
installed in the existing grains MCC room.

·              Underground conduit will be run from the
MCC room to the new bins and equipment.

·              The existing control system will be upgraded
to accommodate the additional equipment.

Site
Grading & Permitting

·              Soil borings will be taken at several
locations before the project begins.

·              The site grading will be modified to
accommodate the new equipment layout and traffic patterns.

·      The
site civil work will require temporary removal of the fence.

·      All
civil work will be completed as an allowance account to the Owner.

·              The site grading contractor will
remobilize for final grading after all contractors are complete and offsite.

·              All necessary environmental &
building permits are included in this scope.

Assumptions
and Exclusions

·              A Project Superintendent will not be
onsite throughout the duration of the project.

·      Site
visits will be made by the B&A staff and/or a project superintendent as
needed.

·              Upgrades to the existing dump pit bag
house not included in this scope of work.

·              The existing corn bin sweeps will not be
upgraded.

·              The existing corn receiving pit and
conveyors not be upgraded.

·              The existing receiving dust control
filter will not be upgraded.

·              The level transmitters on the existing
bins will not be upgraded.

·              Temperature cables are not included for
the existing bins.

·              Magnets are not included on any new or
existing conveyors.

·              Bearing temperature sensors are not
included on any new conveyors.

·              Pavement for existing and additional
roads is not included in this scope of work.

·              This system will not be set-up to recycle
corn stored in bins.

·              Explosion venting on the legs is not
included in this scope of work.

·              Only listed upgrades to the existing bins
will be made. No changes other than those mentioned are implied.

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