LUMP SUM DESIGN-BUILD
AGREEMENT
SIOUXLAND ETHANOL, LLC (“
OWNER ”)
FAGEN, INC. (“
DESIGN-BUILDER ”)
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*
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Portions
omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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Page
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Article 1 Definitions; Rules of
Interpretation
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1
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1.1 Rules of Construction
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1
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1
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6
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2.1 Services to be Performed
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6
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6
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2.3 Conflicting Provisions
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6
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Article 3 Design-Builder
Responsibilities
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7
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3.1 Design-Builder’s Services in
General
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7
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3.2 Design Development and Services
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7
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8
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3.4 Government Approvals and Permits
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9
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9
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9
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9
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3.8 Submission of Reports
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10
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10
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Article 4 Owner’s
Responsibilities
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11
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11
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4.2 Furnishing of Services and
Information
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11
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4.3 Financial Information; Cooperation with
Lenders; Failure to Obtain Financial Closing
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12
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4.4 Owner’s Representative
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12
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4.5 Government Approvals and Permits
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13
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4.6 Owner’s Separate
Contractors
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13
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Article 5 Ownership of Work Product; Risk
of Loss
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13
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13
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5.2 Owner’s Limited License Upon Payment
in Full
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13
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5.3 Owner’s Limited License Upon
Owner’s Termination for Convenience or Design-Builder’s
Election to Terminate
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14
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5.4 Owner’s Limited License Upon
Design-Builder’s Default
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15
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5.5 Owner’s Indemnification for Use of
Work Product
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15
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15
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Article 6 Commencement and Completion of
the Project
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15
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15
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6.2 Phase I and Phase II Engineering
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16
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6.3 Notice to Proceed; Commencement
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16
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6.4 Project Start-Up and Testing
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16
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Page
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6.5 Substantial Completion
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17
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18
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6.7 Post Completion Support
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19
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Article 7 Performance Testing and
Liquidated Damages
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20
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7.1 Performance Guarantee
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20
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20
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21
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7.4 Bonds and Other Performance
Security
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23
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8.1 Design-Builder Warranty
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23
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8.2 Correction of Defective Work
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8.3 Warranty Period Not Limitation to
Owner’s Rights
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Article 10 Payment Procedures
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10.1 Payment at Financial Closing
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10.4 Failure to Pay Amounts Due
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10.5 Design-Builder’s Payment
Obligations
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10.6 Record Keeping and Finance
Controls
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Article 11 Hazardous Conditions and
Differing Site Conditions
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11.1 Hazardous Conditions
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11.2 Differing Site Conditions;
Inspection
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27
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Article 12 Force Majeure; Change in Legal
Requirements
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28
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28
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12.2 Effect of Force Majeure Event
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28
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12.3 Change in Legal Requirements
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29
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12.4 Time Impact And Availability
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29
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Article 13 Changes to the Contract Price
and Scheduled Completion Dates
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29
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29
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13.2 Contract Price Adjustments
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30
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31
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13.4 Requests for Contract Adjustments and
Relief
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31
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31
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14.1 Tax Claim Indemnification
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31
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14.2 Payment Claim Indemnification
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31
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14.3 Design-Builder’s General
Indemnification
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31
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14.4 Owner’s General
Indemnification
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Article 15 Stop Work; Termination for
Cause
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15.1 Owner’s Right to Stop Work
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15.2 Owner’s Right to Perform and
Terminate for Cause
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15.3 Owner’s Right to Terminate for
Convenience
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15.4 Design-Builder’s Right to Stop
Work
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15.5 Design-Builder’s Right to Terminate
for Cause
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15.6 Bankruptcy of Owner or
Design-Builder
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36
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15.7 Lenders’ Right to Cure
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Article 16 Representatives of the
Parties
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37
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16.1 Designation of Owner’s
Representatives
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37
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16.2 Designation of Design-Builder’s
Representatives
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37
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38
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38
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17.2 Design-Builder’s Insurance
Requirements
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38
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17.3 Owner’s Liability
Insurance
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39
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17.4 Owner’s Property Insurance
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40
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17.5 Coordination with Loan Documents
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Article 18 Representations and
Warranties
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41
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18.1 Design-Builder and Owner Representations
and Warranties
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18.2 Design-Builder Representation and
Warranties
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42
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Article 19 Dispute Resolution
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43
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19.1 Dispute Avoidance and Mediation
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19.3 Duty to Continue Performance
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19.4 Consequential Damages
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Article 20 Confidentiality of Shared
Information
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44
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20.1 Non-Disclosure Obligation
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44
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20.2 Publicity and Advertising
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45
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45
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46
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46
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21.8 No Privity with Design
Consultant/Subcontractors
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47
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47
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47
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21.11 Third-Party Beneficiaries
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47
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Page
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47
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47
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EXHIBIT A Performance Guarantee
Criteria
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A-1
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EXHIBIT B General Project Scope
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B-1
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EXHIBIT C Owner’s
Responsibilities
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C-1
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EXHIBIT D ICM License Agreement
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D-1
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EXHIBIT E Schedule of Values
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E-1
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EXHIBIT F Form of Progress Report
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F-1
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EXHIBIT G Required Permits
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G-1
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EXHIBIT H Form of Performance Bond
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H-1
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EXHIBIT I Work Schedule and Owner’s
Milestones
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I-1
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EXHIBIT J Preliminary Construction
Documents
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J-1
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EXHIBIT K Draw (Payment) Schedule
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K-1
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EXHIBIT L Air Emissions Application or
Permit
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L-1
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EXHIBIT M Phase I and Phase II Engineering
Services Agreement
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M-1
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LUMP SUM DESIGN-BUILD
CONTRACT
This LUMP SUM
DESIGN-BUILD CONTRACT (the “ Agreement ”) is
made as of January 5, 2006, (the “ Effective Date
”) by and between Siouxland Ethanol, LLC, a Nebraska limited
liability company (the “ Owner ”) and Fagen,
Inc., a Minnesota corporation (the “Design-Builder”)
(each a “Party” and collectively, the
“Parties”).
A. The Owner
desires to develop, construct, own and operate a fifty
(50) million gallons per year (“ MGY ”) dry
grind ethanol production facility located at Jackson, Nebraska (the
“ Plant ”); and
B. Design-Builder
desires to provide design, engineering, procurement and
construction services for the Plant.
NOW, THEREFORE, in
consideration of the mutual covenants and obligations contained
herein and for other good and valuable consideration, Owner and
Design-Builder agree as follows.
Article 1
Definitions; Rules of Interpretation
1.1 Rules of
Construction. The capitalized terms listed in this Article
shall have the meanings set forth herein whenever the terms appear
in this Agreement, whether in the singular or the plural or in the
present or past tense. Other terms used in this Agreement but not
listed in this Article shall have meanings as commonly used in the
English language and, where applicable, in generally accepted
construction and design-build standards of the fuel ethanol
industry in the Midwest United States. Words not otherwise defined
herein that have well known and generally accepted technical or
trade meanings are used herein in accordance with such recognized
meanings. In addition, the following rules of interpretation shall
apply:
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(a)
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The
masculine shall include the feminine and neuter.
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(b)
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References to
“Articles,” “Sections,”
“Schedules,” or “Exhibits” shall be to
Articles, Sections, Schedules or Exhibits of this
Agreement.
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(c)
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This Agreement was negotiated and
prepared by each of the Parties with the advice and participation
of counsel. The Parties have agreed to the wording of this
Agreement and none of the provisions hereof shall be construed
against one Party on the ground that such Party is the author of
this Agreement or any part hereof.
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1.2 Defined
Terms. In addition to definitions appearing elsewhere in this
Agreement, the following terms have the following
meanings:
AAA is
defined in Section 19.1.
Agreement is defined in the Preamble.
Air
Emissions Tester means a
third party entity engaged by Owner meeting all required state and
federal requirements for such testing entities, to conduct air
emissions testing of the Plant in accordance with
Exhibit A.
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(a)
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any
and all laws, legislation, statutes, codes, acts, rules,
regulations, ordinances, treaties or other similar legal
requirements enacted, issued or promulgated by a Governmental
Authority;
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(b)
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any
and all orders, judgments, writs, decrees, injunctions,
Governmental approvals or other decisions of a Governmental
Authority; and
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(c)
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any
and all legally binding announcements, directives or published
practices or interpretations, regarding any of the foregoing in
(a) or (b) of this definition, enacted, issued or
promulgated by a Governmental Authority;
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to the extent,
for each of the foregoing in (a), (b) and (c) of this
definition, applicable to or binding upon (i) a Party, its
affiliates, its shareholders, its members, it partners or their
respective representatives, to the extent any such person is
engaged in activities related to the Project; or (ii) the
property of a Party, its affiliates, its shareholders, its members,
its partners or their respective representatives, to the extent
such property is used in connection with the Project or an activity
related to the Project.
Application
for Payment is defined in
Section 10.2.1.
As Built
Plans is defined in
Section 5.2.
Bankrupt
Party is defined in
Section 15.6.1.
Certificate
of Substantial Completion is defined in Section 6.5.3.
Construction
Documents is defined in
Section 3.2.2.
Contract
Documents is defined in
Section 2.2.
Contract
Price is defined in
Section 9.1.
Damages is defined in Section 14.3.1.
Day or
Days shall mean calendar days unless otherwise specifically
noted in the Contract Documents.
Design-Builder is defined in the Preamble.
Design-Builder’s Representative is defined in
Section 16.2.
Design-Builder’s Senior
Representative is defined
in Section 16.2.
Design
Consultant is a
qualified, licensed design professional that is not an employee of
Design-Builder, but is retained by Design-Builder, or employed or
retained by anyone under contract with Design-Builder or
Subcontractor, to furnish design services required under the
Contract Documents.
Differing
Site Conditions is
defined in Section 11.2.1.
Early
Completion Bonus is
defined in Section 6.5.4.
Effective
Date is defined in the
Preamble.
Final
Application for Payment is defined in Section 10.3.
Final
Completion is defined in
Section 6.6.2.
Final
Completion Date is the
date that is 90 Days after the Substantial Completion
Date.
Final
Payment is defined in
Section 10.3.
Financial
Closing means the
execution of the Financing Documents by all the parties thereto,
and the fulfillment of all conditions precedent thereunder
necessary to permit the advance of funds to pay amounts due under
this Agreement.
Financing
Documents means the final
loan documents with the lender or lenders providing financing for
the construction or term financing of the Plant.
Force
Majeure Event is defined
in Section 12.1.
Governmental
Approvals are any
material authorizations or permissions issued or granted by any
Governmental Authority to the Project, its Owner, the
Design-Builder, Subcontractors and their affiliates in connection
with any activity related to the Project.
Governmental
Authority means any
federal, state, local or municipal governmental body; any
governmental, quasi-governmental, regulatory or administrative
agency, commission, body or other authority exercising or entitled
to exercise any administrative, executive, judicial, legislative,
policy, regulatory or taxing authority or power; or any court or
governmental tribunal; in each case having jurisdiction over the
Owner, the Design-Builder, the Project, or the Site.
Hazardous
Conditions are any
materials, wastes, substances and chemicals deemed to be hazardous
under applicable Legal Requirements, or the handling, storage,
remediation, or disposal of which are regulated by applicable Legal
Requirements.
ICM is
defined in Section 5.2.1.
ICM License
Agreement means the
license agreement to be executed between Owner and ICM, Inc.,
substantially in the form attached hereto as
Exhibit D.
Indemnified
Parties is defined in
Section 5.2.
Independent
Engineer means
Owner’s and Lenders’ independent engineer.
Industry
Wide Disruption is
defined in Section 12.4.
Legal
Requirements or
Laws are all applicable federal, state and local statutes,
laws, codes, ordinances, rules, regulations, judicial decisions,
orders, decrees, plans, injunctions, permits, tariffs, governmental
agreements and governmental restrictions, whether now or hereafter
in effect, of any government or quasi-government entity having
jurisdiction over the Project or Site, the practices involved in
the Project or Site, or any Work, including any consensus standards
for materials, products, systems, and services established by ASTM
International, any successor organization thereto, or any
Governmental Authority.
Lenders means the lenders that are party to the
Financing Documents.
Lenders’ Agent means an agent or agents acting on behalf of the
Lenders.
Manufacturer’s Warranty
shall mean a warranty provided by
the original manufacturer or vendor of equipment used by
Design-Builder in the Plant.
MGY is
defined in the Recitals.
Notice to
Proceed is defined in
Section 6.3.
Oversight
Items is defined in
Section 4.3.
Owner is defined in the Preamble.
Owner
Indemnified Parties is
defined in Section 14.3.1.
Owner’s Representative
is defined in
Section 16.1.
Owner’s Senior Representative
is defined in
Section 16.1.
Pass Through
Warranties mean any
warranties provided to Design-Builder by a Subcontractor which are
assigned to Owner.
Pay
Period means, with
respect to a given Application for Payment or Progress Report, the
one month period following the last day of the previous Pay Period
to which the immediately prior Application for Payment or Progress
Report is applied; provided that the initial Pay Period shall
commence on the date of delivery of the Notice to Proceed and end
on the twenty fourth (24th) day of the calendar month during which
the Notice to Proceed is issued.
Performance
Bond is defined in
Section 7.4.1.
Performance
Guarantee Criteria means
the criteria listed in Exhibit A.
Performance
Tests is defined in
Section 7.2.1.
Phase
I is defined in
Exhibit C.
Phase
II is defined in
Exhibit C.
Plant is defined in the Recitals.
Preliminary
Construction Documents is
defined in Section 3.2.1.
Progress
Report is defined in
Section 3.8.
Project is defined in Section 2.1.
Project
Scope is defined in
Exhibit B.
Punch
List is defined in
Section 6.5.3.
Qualified
Independent Expert means
an expert retained by Owner and approved by Design-Builder pursuant
to Section 11.1.2.
Safety
Representative is defined
in Section 3.7.1.
Schedule of
Values is defined in
Section 10.2.5.
Scheduled
Substantial Completion Date is defined in Section 6.5.1.
Site is the land or premises on which the Project is
located.
Subcontractor is any person or entity retained by
Design-Builder, or by any person or entity retained directly or
indirectly by Design-Builder, in each case as an independent
contractor to perform a portion of the Work and shall include
materialmen and suppliers.
Substantial
Completion is defined in
Section 6.5.2.
Work is defined in Section 3.1.
Work
Product is defined in
Section 5.1.
Work
Schedule is defined in
Section 6.1.
2.1 Services
to be Performed. Pursuant to this Agreement, Design-Builder
shall perform all work and services in connection with the
engineering, design, procurement, construction startup, testing and
training for the operation and maintenance of the Plant, and
provide all material, equipment, tools and labor necessary to
complete the Plant in accordance with the terms of this Agreement.
The Plant, together with all equipment, labor, services and
materials furnished hereunder is defined as the
“Project.”
2.2 Extent of
Agreement. This Agreement consists of the following documents,
and all exhibits, schedules, appendices and attachments hereto and
thereto (collectively, the “ Contract Documents
”):
2.2.1 All written modifications, amendments and change
orders to this Agreement.
2.2.2 This Agreement, including all exhibits and
attachments, executed by Owner and Design-Builder, including those
below:
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List of
Exhibits
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Exhibit A
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Performance
Guarantee Criteria
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Exhibit B
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General Project
Scope
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Exhibit C
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Owner’s
Responsibilities
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Exhibit D
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ICM License
Agreement
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Exhibit E
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Schedule of
Values
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Exhibit F
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Progress
Report
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Exhibit G
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Permits
Required
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Exhibit H
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Form of
Performance Bond
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Exhibit I
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Work Schedule
and Owner’s Milestones
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Exhibit J
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Preliminary
Construction Documents
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Exhibit K
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Draw (Payment)
Schedule
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Exhibit L
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Air Emissions
Application or Permit
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Exhibit M
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Phase I and
Phase II Engineering Services Agreement
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2.2.3 Preliminary Construction Documents prepared by
Design-Builder pursuant to Section 3.2.1 and the Construction
Documents to be prepared by Design-Builder pursuant to
Section 3.2.2 shall be incorporated in this
Agreement.
2.3 Conflicting Provisions. In the event of any conflict or
inconsistency between the body of this Agreement and any Exhibit or
Schedule hereto, the terms and provisions of this Agreement, as
amended from time to time, shall prevail and be given priority.
Subject to the foregoing, the several documents and instruments
forming part of this Agreement are to be taken as mutually
explanatory of one another and in the case of ambiguities or
discrepancies within or between such parts the same shall be
explained and interpreted, if possible, in a manner which gives
effect to each part and which avoids or minimizes conflicts among
such parts. No oral
representations
or other agreements have been made by the Parties except as
specifically stated in the Contract Documents.
Article 3
Design-Builder Responsibilities
3.1
Design-Builder’s Services in General. Except for services
and information to be provided by Owner and specifically set forth
in Article 4 and Exhibit C, Design-Builder shall perform
or cause to be performed all design, engineering, procurement,
construction services, supervision, labor, inspection, testing,
start-up, material, equipment, machinery, temporary utilities and
other temporary facilities to complete construction of the Project
consistent with the Contract Documents (the “ Work
”). All design and engineering and construction services and
other Work of the Design-Builder shall be performed in accordance
with (i) the Project Scope as set forth in Exhibit B,
(ii) the Construction Documents, (iii) all Legal
Requirements, and (iv) generally accepted construction and
design-build standards of the fuel ethanol industry in the Midwest
United States. Any design and engineering or other professional
service to be performed pursuant to this Agreement, which under
Applicable Law must be performed by licensed personnel, shall be
performed by licensed personnel as required by Law. The enumeration
of specific duties and obligations to be performed by the
Design-Builder under the Contract Documents shall not be construed
to limit in any way the general undertakings of the Design-Builder
as set forth herein. Design-Builder’s Representative shall be
reasonably available to Owner and shall have the necessary
expertise and experience required to supervise the Work.
Design-Builder’s Representative shall communicate regularly
with Owner and shall be vested with the authority to act on behalf
of Design-Builder.
3.2 Design
Development and Services.
3.2.1 As of the Effective Date, but in no event later than
thirty (30) Days from the Effective Date, Design-Builder has
or shall have provided to Owner the following documents, and any
other documents reasonably agreed to by Design-Builder and Owner as
applying to the conceptual design of the Project and required to
apply for the construction air permit or completion of the Site
layout in cooperation with Owner’s rail engineer
(collectively, the “ Preliminary Construction
Documents ”), which shall be consistent with the Project
Scope and once approved by Owner, shall be part of this
Agreement:
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(a)
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major equipment lists, with
sizes;
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(b)
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process flow diagram;
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(c)
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process design criteria and/or
process description; and
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(d)
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Site layout.
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Owner shall
have thirty (30) days from the date it receives the
Preliminary Construction Documents to review and approve such
documents. The Preliminary Construction Documents shall establish
performance standards for the completed Project and identify
components required to meet those performance standards. Any
changes to the Preliminary Construction
Documents shall
be subject to the prior review and approval by Owner, such approval
not to be unreasonably withheld or delayed.
3.2.2 Where required by Law, Design-Builder shall provide
through qualified, licensed design professionals employed by
Design-Builder, or procured from qualified, independent licensed
Design Consultants, the necessary design services, including
architectural, engineering and other design professional services,
for the preparation of the required drawings, specifications and
other design submittals required to permit construction and
completion of the Work in accordance with this Agreement and the
Preliminary Construction Documents (such drawings, specifications
and design submittals collectively and together with the
Preliminary Construction Documents, the “ Construction
Documents ”). To the extent not prohibited by Legal
Requirements, Design-Builder may prepare Construction Documents for
a portion of the Work to permit construction to proceed on that
portion of the Work prior to completion of the Construction
Documents for the entire Work.
3.2.3 Construction of the Plant shall be consistent with the
Construction Documents.
3.2.4 Design-Builder shall maintain a current, complete set
of drawings and specifications at the Site. Owner shall the right
to review such drawings and specifications. Owner and Independent
Engineer may not make copies of the available drawings and
specifications without Design-Builder’s written permission,
and, granted such permission, may only do so to the extent such
drawings and specifications directly pertain to the Plant; provided
however that, pursuant to Section 5.1 of this Agreement,
Design-Builder retains ownership of and property interests in any
drawing or specifications made available and/or copied.
3.2.5 Except as provided elsewhere in this Agreement, it is
understood and agreed that review, comment and/or approval by Owner
(or its designees) or Independent Engineer of any documents or
submittals that Design-Builder is required to submit to Owner (or
its designees) or Independent Engineer hereunder for their review,
comment and/or approval (including without limitation the
Preliminary Construction Documents pursuant to Section 3.2.1
hereof or other Construction Documents pursuant to
Sections 3.2.2 and 3.2.4 hereof) shall not relieve or release
Design-Builder from any of its duties, obligations or liabilities
provided for under the terms of this Agreement or transfer any
design liability from Design-Builder to Owner.
3.3 Standard
of Care. All services performed by the Design-Builder and its
Subcontractors pursuant to the Construction Documents shall be
performed in accordance with the standard of care and skill
generally accepted in the fuel ethanol industry in the Midwest
United States during the relevant time period or in accordance with
any of the practices, methods and acts that in the exercise of
reasonable judgment in light of the facts known at the time the
decision was made, could have been expected to accomplish the
desired result at a reasonable cost consistent with good business
practices, safety and expedition. This standard of care is not
intended to be limited to the optimum practice, method or act to
the exclusion of all others, but rather to be acceptable practices,
methods or acts generally accepted in the construction and
design-build standards of the fuel ethanol industry in the Midwest
United States. Design-Builder and its Subcontractors shall perform
all construction activities efficiently and with the requisite
expertise, skill, competence, resources and care to satisfy the
requirements of the Contract
Documents and
all applicable Legal Requirements. Design-Builder shall at all
times exercise complete and exclusive control over the means,
methods, sequences and techniques of construction.
3.4 Government
Approvals and Permits. Except as identified in Exhibit C
and, with respect to items identified as Owner’s
responsibility, in Exhibit G (which items shall be obtained by
Owner pursuant to Section 4.5), Design-Builder shall obtain
and pay for all necessary permits, approvals, licenses, government
charges and inspection fees required for the prosecution of the
Work by any government or quasi-government entity having
jurisdiction over the Project. Design-Builder shall provide
reasonable assistance to Owner in obtaining those permits,
approvals and licenses that are Owner’s
responsibility.
3.5.1 Design-Builder may subcontract portions of the Work in
accordance with the terms hereof. Design-Builder shall employ only
Subcontractors who are duly licensed and qualified to perform the
Work consistent with the Contract Documents.
3.5.2 Design-Builder assumes responsibility to Owner for the
proper performance of the Work of Subcontractors and any acts and
omissions in connection with such performance. Nothing in the
Contract Documents is intended or deemed to create any legal or
contractual relationship between Owner and any Subcontractor,
including but not limited to any third-party beneficiary
rights.
3.5.3 Design-Builder shall coordinate the activities of all
of Design-Builder’s Subcontractors. If Owner performs other
work on the Project or at the Site with separate contractors under
Owner’s control, Design-Builder agrees to reasonably
cooperate and coordinate its activities with those separate
contractors so that the Project can be completed in an orderly and
coordinated manner without unreasonable disruption.
3.5.4 Design-Builder shall ensure that each subcontract with
a Subcontractor is assignable to Owner without consent of the
Subcontractor or any other person or entity in the event that
Design-Builder shall be in an uncured default or terminated with
cause under the terms of this Agreement.
3.6
Maintenance of Site. Design-Builder shall keep the Site
reasonably free from debris, trash and construction wastes to
permit Design-Builder to perform its construction services
efficiently, safely and without interfering with the use of
adjacent land areas. Upon Substantial Completion of the Work, or
portion of the Work, as applicable, Design-Builder shall remove all
debris, trash, construction wastes, materials, equipment, machinery
and tools arising from the Work or applicable portions thereof to
permit Owner to occupy the Project for its intended use.
3.7.1 Design-Builder recognizes the importance of performing
the Work in a safe manner so as to prevent damage, injury or loss
to (i) any individuals at the Site, whether working or
visiting, (ii) the Work, including materials and equipment
incorporated into the Work
or stored
on-Site or off-Site, and (iii) any other property at the Site
or adjacent thereto. Design-Builder assumes responsibility for
implementing and monitoring all safety precautions and programs
related to the performance of the Work. Design-Builder shall, prior
to commencing construction, designate a representative (the “
Safety Representative ”) with the necessary
qualifications and experience to supervise the implementation and
monitoring of all safety precautions and programs related to the
Work. Unless otherwise required by the Contract Documents,
Design-Builder’s Safety Representative shall be an individual
stationed at the Site who may have responsibilities on the Project
in addition to safety. The Safety Representative shall make routine
daily inspections of the Site and shall hold weekly safety meetings
with Design-Builder’s personnel, Subcontractors and others as
applicable.
3.7.2 Design-Builder and Subcontractors shall comply with
all Legal Requirements relating to safety, as well as any
Owner-specific safety requirements set forth in the Contract
Documents; provided, that such Owner-specific requirements do not
violate any applicable Legal Requirement. As promptly as
practicable, Design-Builder will report in writing any
safety-related injury, loss, damage or accident arising from the
Work to Owner’s Representative and, to the extent mandated by
Legal Requirements, to all government or quasi-government
authorities having jurisdiction over safety-related matters
involving the Project or the Work.
3.7.3 Design-Builder’s responsibility for safety under
this Section 3.7 is not intended in any way to relieve
Subcontractors of their own contractual and legal obligations and
responsibility for (i) complying with all Legal Requirements,
including those related to health and safety matters, and
(ii) taking all necessary measures to implement and monitor
all safety precautions and programs to guard against injury,
losses, damages or accidents resulting from their performance of
the Work.
3.8 Submission
of Reports. Design-Builder shall provide Owner with regular
communication (no less frequently than monthly) regarding the
progress (“ Progress Report ”) and any revisions
to the drawings and specifications of the Work, including whether
(i) the Work is proceeding according to schedule,
(ii) discrepancies, conflicts, or ambiguities exist in the
Contract Documents that require resolution, (iii) health and
safety issues exist in connection with the Work, and
(iv) other items require resolution so as not to jeopardize
Design-Builder’s ability to complete the Work for the
Contract Price and within the contract time(s). Progress Reports
shall be in the form of Exhibit F attached hereto.
3.9
Training. At a mutually agreed time prior to start-up,
Design-Builder shall provide two (2) weeks of training at a
plant in Russell, Kansas (or other location) for all of
Owner’s employees required for the operation and maintenance
of the Plant in accordance with all design specifications therefor
contained in the Contract Documents and necessary in order to
maintain the Performance Guarantee Criteria, including operators,
laboratory personnel, general, plant and maintenance managers.
Other personnel of Owner may receive such off-site training by
separate arrangement between Owner and Design-Builder and as time
is available. All training personnel and costs associated with such
training personnel, including labor and all training materials will
be provided to Owner within the Contract Price at no additional
cost. Owner will be responsible for all travel and expenses of
their employees and the Owner will pay all wages and all other
expenses for their personnel during the training. The training
services will include
training on
computers, laboratory procedures, field operating procedures, and
overall plant section performance expectations. Prior to the
start-up training, Design-Builder shall provide Owner training
manuals and operating manuals and other documents reasonably
necessary for the start-up process.
Article 4
Owner’s Responsibilities
4.1.1 Owner shall, throughout the performance of the Work,
cooperate with Design-Builder and perform its responsibilities,
obligations and services in a timely manner to facilitate
Design-Builder’s timely and efficient performance of the Work
and so as not to delay or interfere with Design-Builder’s
performance of its obligations under the Contract
Documents.
4.1.2 Owner shall provide timely review and approval of
Preliminary Construction Documents subject to
Section 3.2.1.
4.1.3 Owner shall have no responsibility for any winter
construction related activities, including but not limited to,
special material costs, sheltering, heating, and equipment rental,
except Owner shall pay all the reasonable costs incurred by
Design-Builder for frost removal so that winter construction can
proceed. Such costs may include but are not limited to, equipment
costs, equipment rental costs, and associated labor costs. Owner
acknowledges and agrees that such costs are in addition to, and not
included in, the Contract Price.
4.2 Furnishing
of Services and Information.
4.2.1 Prior to the issuance of the Notice to Proceed, Owner
shall provide to Design-Builder, at Owner’s own cost and
expense, for Design-Builder’s information and use, the
following, all of which Design-Builder is entitled to rely upon in
performing the Work:
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(a)
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surveys describing the property,
boundaries, topography and reference points for use during
construction, including existing service and utility
lines;
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(b)
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geotechnical studies describing
subsurface conditions including soil borings, and other surveys
describing other latent or concealed physical conditions at the
Site;
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(c)
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temporary and permanent easements,
zoning and other requirements and encumbrances affecting land use,
or necessary to permit the proper design and construction of the
Project and enable Design-Builder to perform the Work;
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(d)
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A
legal description of the Site;
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(e)
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to
the extent available, as-built and record drawings of any existing
structures at the Site;
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(f)
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environmental studies, reports and
impact statements describing the environmental conditions,
including Hazardous Conditions, in existence at the
Site;
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4.2.2 Owner shall provide to Design-Builder all
Owner’s deliverables under Exhibit C pursuant to
Owner’s Milestones. Such deliverables shall be provided, at
Owner’s own cost and expense, for Design-Builder’s
information and use. Design-Builder is entitled to rely upon such
deliverables in performing the Work.
4.2.3 Owner is responsible for securing and executing all
necessary agreements with adjacent land or property owners that are
necessary to enable Design-Builder to perform the Work and that
have been identified and notified in writing by Design-Builder to
Owner prior to the Effective Date. Owner is further responsible for
all costs, including attorneys’ fees, incurred in securing
these necessary agreements.
4.3 Financial
Information; Cooperation with Lenders; Failure to Obtain Financial
Closing. Design-Builder acknowledges that Owner is seeking
financing for the Project. Design-Builder agrees to cooperate with
Owner in good faith in order to satisfy the requirements of
Owners’ financing arrangements, including, where appropriate,
the execution and delivery of documents or instruments necessary to
accommodate the Financial Closing. Owner agrees to pay all
documented costs incurred by Design-Builder incurred prior to and
at Financial Closing, and thereafter during the term of this
Agreement, in connection with satisfying the requirements of
Owners’ financing arrangements including all documented
attorney’s fees, and Design-Builder shall provide written
Notice to Owner prior to incurring such costs. Design-Builder and
Owner also acknowledge that the Lenders, as a condition to
providing financing for the Plant, shall require Owner to provide
the Independent Engineer with certain participation and review
rights with respect to Design-Builder’s performance of the
Work. Design-Builder acknowledges and agrees that such
participation and review rights shall consist of the right to
(i) enter the Site and inspect the Work upon reasonable notice
to Design-Builder; (ii) attend all start-up and testing
procedures; and (iii) review and approve such other items for
which Owner is required by Lenders to obtain the concurrence,
opinion or a certificate of the Independent Engineer or the Lenders
pursuant to the Financing Documents which items do not alter the
rights or impose additional obligations on Design-Builder
(collectively, the “ Oversight Items ”). Nothing
in this Section 4.3 shall be deemed to require Design-Builder
to agree to any amendments to this Agreement that would adversely
affect Design-Builder’s risks, rights or obligations under
this Agreement. Upon Financial Closing, Owner shall promptly
provide to Design-Builder an officer’s certificate certifying
that Financial Closing has occurred and such Owner’s
officer’s certificate shall constitute evidence satisfactory
to Design-Builder that Owner has adequate funds available and
committed to fulfill its obligations under the Contract Documents
for all purposes hereunder. Owner must obtain Financial Closing
prior to issuing the Notice to Proceed.
4.4
Owner’s Representative. Owner’s Representative, as
set forth in Section 16.1 hereof, shall be responsible for
providing Owner-supplied information and approvals in a timely
manner to permit Design-Builder to fulfill its obligations under
the Contract Documents.
Owner’s
Representative shall also provide Design-Builder with prompt notice
if it observes any failure on the part of Design-Builder to fulfill
its contractual obligations, including any errors, omissions or
defects in the performance of the Work. Owner’s
Representative shall be vested with the authority to act on behalf
of Owner and Design-Builder shall be entitled to rely on written
communication from Owner’s Representative with respect to a
Project matter.
4.5 Government
Approvals and Permits. Owner shall obtain and pay for all
necessary Governmental Approvals required by Law, including
permits, approvals, licenses, government charges and inspection
fees set forth in Exhibit C and, to the extent identified as
Owner’s responsibility, Exhibit G. Owner shall provide
reasonable assistance to Design-Builder in obtaining those permits,
approvals and licenses that are Design-Builder’s
responsibility pursuant to Exhibits G and Section 3.4.
4.6
Owner’s Separate Contractors. Owner is responsible for
all work, including such work listed on Exhibit C, performed
on the Project or at the Site by separate contractors under
Owner’s control. Owner shall contractually require its
separate contractors to cooperate with, and coordinate their
activities so as not to interfere with, Design-Builder in order to
enable Design-Builder to timely complete the Work consistent with
the Contract Documents.
4.7.1 Owner shall be responsible for Site security
(including fencing, alarm systems, security guarding services and
the like) at all times during the term of this Agreement to prevent
vandalism, theft and danger to the Project, the Site, and
personnel. Owner shall coordinate and supervise ingress and egress
from the Site so as to minimize disruption to the Work.
4.7.2 Design-Builder shall at all times conduct its
operations in a manner to minimize the risk of loss, theft, or
damage by vandalism, sabotage, or any other means. Design-Builder
shall continuously inspect all Work, materials, and equipment to
discover and determine any conditions that might involve such risks
and shall be solely responsible for discovery, determination, and
correction of any such conditions.
Article 5
Ownership of Work Product; Risk of Loss
5.1 Work
Product. All drawings, specifications, calculations, data,
notes and other materials and documents, including electronic data
furnished by Design-Builder to Owner under this Agreement (“
Work Product ”) shall be instruments of service and
Design-Builder shall retain the ownership and property interests
therein, including the copyrights thereto.
5.2
Owner’s Limited License Upon Payment in Full. Upon
Owner’s payment in full for all Work performed under the
Contract Documents, Design-Builder shall grant Owner a limited
license to use the Work Product in connection with Owner’s
use, operation, occupancy and repair of the Plant. Design-Builder
acknowledges and agrees that the limited license to use the Work
Product granted hereby shall provide Owner sufficient rights in and
to the Work Product as shall be necessary for Owner to operate and
maintain the Plant and shall include any
Pass Through
Warranties in connection therewith. Design-Builder shall provide
Owner with a copy of the plans of the Plant, as built, (the “
As Built Plans ”) conditioned on Owner’s express
understanding that its use of the Work Product and its acceptance
of the As Built Plans is at Owner’s sole risk and without
liability or legal exposure to Design-Builder or anyone working by
or through Design-Builder, including Design Consultants of any tier
(collectively the “ Indemnified Parties ”);
provided, however, that any performance guarantees, and warranties
(of equipment or otherwise) shall remain in effect according to the
terms of this Agreement.
5.2.1 Owner shall be entitled to use the Work Product solely
for purposes relating to the Plant, but shall not be entitled to
use the Work Product for any other purposes whatsoever, including
without limitation, expansion of the Plant. Notwithstanding the
foregoing sentence, Owner shall be entitled to use the Work Product
for the operation, maintenance and repair of the plant including
the interconnection of, but not the design of, any future
expansions to the Plant. The limited license granted to Owner under
Sections 5.2, 5.3 or 5.4 to use the Work Product shall be
limited by and construed according to the same terms contained in
the ICM License Agreement between Owner and ICM, Inc., attached
hereto as Exhibit D and incorporated herein by reference
thereto, except (i) references in such ICM License Agreement
to ICM and Proprietary Property shall refer to Design-Builder and
Work Product, respectively, (ii) the Laws of the State of
Minnesota shall govern such limited license, and (iii) the
dispute resolution provisions contained in Article 19 hereof
shall apply to any breach or threatened breach of Owner’s
duties or obligations under such limited license, except that
Design-Builder shall have the right to seek injunctive relief in a
court of competent jurisdiction against Owner or its
Representatives for any such breach or threatened breach.
Design-Builder is utilizing certain proprietary property and
information of ICM, Inc., a Kansas corporation (“ ICM
”), in the design and construction of the Project, and
Design-Builder may incorporate proprietary property and information
of ICM into the Work Product. Owner’s use of the proprietary
property and information of ICM shall be governed by the terms and
provisions of the License Agreement between Owner and ICM, attached
hereto as Exhibit D, to be executed by such parties in
connection with the execution of this Agreement. This paragraph
also applies to Articles 5.3 and 5.4 below.
5.3
Owner’s Limited License Upon Owner’s Termination for
Convenience or Design-Builder’s Election to Terminate. If
Owner terminates the Project for its convenience as set forth in
Section 15.3 hereof, or if Design-Builder elects to terminate this
Agreement in accordance with Section 15.5, Design-Builder shall,
upon Owner’s payment in full of the amounts due
Design-Builder under this Agreement, grant Owner a limited license
to use the Work Product to complete the Plant and subsequently
occupy and repair the Plant, subject to the following:
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(a)
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Use
of the Work Product is at Owner’s sole risk without liability
or legal exposure to any Indemnified Party; provided, however, that
any Pass Through Warranties regarding equipment or express
warranties regarding equipment provided by this Agreement shall
remain in effect according to their terms; and
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(b)
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If
the termination for convenience is by Owner in accordance with
Section 15.3 hereof, or if Design-Builder elects to terminate
this Agreement in accordance with Section 15.5, then Owner
agrees to pay Design-Builder the additional sum of One
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Million Two
Hundred Thousand Dollars ($1,200,000.00) as compensation for the
limited right to use the Work Product completed “as is”
on the date of termination in accordance with this
Article 5.
5.4
Owner’s Limited License Upon Design-Builder’s
Default. If this Agreement is terminated due to
Design-Builder’s default pursuant to Section 15.2 and
(i) it is adjudged that Design-Builder was in default, and
(ii) Owner has fully satisfied all of its obligations under
the Contract Documents through the time of Design-Builder’s
default, then Design-Builder shall grant Owner a limited license to
use the Work Product in connection with Owner’s completion
and occupancy and repair of the Plant. This limited license is
conditioned on Owner’s express agreement that its use of the
Work Product is at Owner’s sole risk without liability or
legal exposure to any Indemnified Party; provided, however, that
any Pass Through Warranties regarding equipment or express
warranties regarding equipment provided by this Agreement shall
remain in effect according to their terms. This limited license
grants Owner the ability to repair the Plant at Owner’s
discretion.
5.5
Owner’s Indemnification for Use of Work Product. If Owner
uses the Work Product or Plant under any of the circumstances
identified in this Article 5, to the fullest extent allowed by
Law, Owner shall defend, indemnify and hold harmless the
Indemnified Parties from and against any and all claims, damages,
liabilities, losses and expenses, including attorneys’ fees,
arising out of or resulting from the use of the Work Product and
Plant; provided, however, that any Pass Through Warranties
regarding equipment or express warranties regarding equipment
provided by this Agreement shall remain in effect according to
their terms.
5.6 Risk of
Loss. Design-Builder shall have no liability for a physical
loss of or damage to the Work unless such loss or damage is caused
by Design-Builder or someone acting under its direction or control.
Design-Builder shall not be liable for physical loss of or damage
to the Work where such loss or damage is caused by the willful
misconduct or gross negligence of Owner’s employees or third
parties who are not Subcontractors. Design-Builder shall have no
liability for losses or damages for which insurance coverage under
this Agreement is available to Owner; in such circumstances, Design
Builder’s liability for losses and damages as described in
this Section 5.6 shall be limited to losses or damages which
exceed insurance coverage available to the Owner.
Article 6
Commencement and Completion of the Project
6.1 Work
Schedule. The preliminary schedule for the execution of the
Work is attached as Exhibit I hereto (the “ Work
Schedule ”). The final schedule for execution of the Work
shall be provided within thirty (30) Days after receipt of the
Notice to Proceed. The Work Schedule provides the scheduled dates
for the commencement and completion of the various stages of Work,
including the dates when Owner’s obligations are required to
be complete to enable Design-Builder to achieve the contract
time(s). The Work Schedule shall be revised as required by
conditions and progress of the Work but such revisions shall not
relieve Design-Builder of its obligations to complete the Work
within the contract time(s), unless such revisions to the Work
Schedule are required as a result of any delay in the completion of
Owner’s
obligations or
as a result of a Force Majeure Event. In such event, the Work
Schedule shall be revised to provide, without penalty to
Design-Builder, a Day-for-Day extension of the contract time(s) for
completion of the Work for each Day during which Owner’s
failure to complete its obligations or a Force Majeure Event causes
such delay.
6.2 Phase I
and Phase II Engineering. Owner and Design-Builder have entered
into that certain Phase I and Phase II Engineering Services
Agreement dated September 28, 2005 and attached hereto as
Exhibit M. The Phase I and Phase II Engineering Services
Agreement provides for Design-builder to commence work on the Phase
I and Phase II engineering for the Project as set forth therein.
Owner has agreed to pay Design-Builder Ninety-Two Thousand Five
hundred Dollars ($92,500.00) for such engineering services pursuant
to the terms of that agreement, the full amount of which shall be
included in and credited to the Contract Price. Notwithstanding the
foregoing sentence, if a Notice to Proceed is not issued pursuant
to Section 6.2, or Financial Closing is not obtained pursuant
to Section 4.3, then Design-Builder shall keep the full amount
paid under the Phase I and Phase II Engineering Services Agreement
as compensation for the services provided thereunder.
6.3 Notice to
Proceed; Commencement. The Work shall commence within five
(5) Days of Design-Builder’s receipt of Owner’s
written valid notice to proceed (“ Notice to Proceed
”) unless the Parties mutually agree otherwise in writing.
The Parties agree that a valid Owner’s Notice to Proceed
cannot be given until: [*] Design-Builder must receive a valid
Owner’s Notice to Proceed within one hundred and eighty
(180) Days of the Effective Date; otherwise, the Contract
Price referred to in Section 9.1 is shall be subject to a
price increase, or this Agreement shall terminate, either at
Design-Builder’s sole option. If Design-Builder chooses to
terminate this Agreement pursuant to its right under the
immediately preceding sentence, then Design-Builder shall have no
further obligations hereunder.
6.4 Project
Start-Up and Testing. Owner shall provide, at Owner’s
cost, equipment, tools, instruments and materials necessary for
Owner to comply with its obligations under Exhibit C, raw
materials, consumables and personnel, necessary for start-up and
testing of the Plant, and Design-Builder shall provide supervision,
standard and special test instruments, tools, equipment and
materials required to perform component and equipment checkout and
testing, initial start-up, operations supervision and corrective
maintenance of all permanent Plant equipment within the scope of
the Work. Notwithstanding the foregoing sentence, Design-Builder
shall be responsible for raw materials and consumables to the
extent such amounts provided by Owner are destroyed or damaged (as
opposed to consumed in the ordinary course of
[*] Portion
omitted pursuant to a

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