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EXHIBIT 10.1
FIRST AMENDMENT
TO AGREEMENT BETWEEN
OWNER AND DESIGN BUILDER
This First Amendment to Agreement Between Owner and Design Builder ("First
Amendment"), is made this 8th day of June, 2001, by and between Northern Lights
Ethanol, LLC ("Owner"), and Broin and Associates, Inc. ("Design Builder").
R E C I T A L S
A. Design Builder and Northern Growers Cooperative made, executed and
delivered each to the other an Agreement Between Owner and Design Builder dated
November 2, 2000, for construction of a 40-million gallon per year dry mill fuel
ethanol processing plant to be located in Grant County, South Dakota.
B. Northern Growers Cooperative assigned to Northern Lights Ethanol, LLC,
all of its right, title and interest in and to the Agreement Between Owner and
Design Builder.
C. The parties desire to amend the terms and conditions of the Agreement
Between Owner and Design Builder in accordance with the provisions of this First
Amendment.
NOW, THEREFORE, the parties agree that the Agreement Between Owner and
Design Builder is amended as follows (paragraph numbers correspond to those
contained in the Agreement Between Owner and Design Builder):
1. Paragraph 7.2.2.1: Deleted in its entirety.
2. Paragraph 7.2.2.5: This Paragraph is amended to read as follows:
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
Certificates of Insurance furnished by the Design Builder pursuant to
Paragraph 7.9.2 will so provide);
3. Paragraph 7.2.3: This Paragraph is added to the Agreement to read as
follows:
Design Builder's insurance agency shall agree in writing to give to
Owner notice of cancellation of insurance by either party.
4. Paragraph 7.4.2: Deleted in its entirety.
5. Paragraph 7.4.3: This Paragraph is amended to read as follows:
All the policies of insurance (and the certificates or other evidence
thereof) required to be purchased and maintained by Owner in
accordance with Paragraph
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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.
5. All of the terms and conditions of the Agreement Between Owner and
Design Builder shall remain in full force and effect except to the
extent modified herein.
BROIN AND ASSOCIATES, INC.
By: /S/ Robert Broin
--------------------------------
Its President
NORTHERN LIGHTS ETHANOL, LLC
By: /S/ Del Strasser
--------------------------------
Its Chairman
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AGREEMENT BETWEEN
OWNER AND DESIGN BUILDER
THIS AGREEMENT
made as of this 2nd day of November in the year of 2000.
BETWEEN the Owner:
Northern Growers Cooperative
P.O. Box 225
Milbank, SD 57252
And the Design Builder:
BROIN AND ASSOCIATES. INC.
2209 EAST 57TH STREET NORTH
SIOUX FALLS, SD 57104
For the following Project:
(INCLUDE PROJECT NAME, LOCATION AND A SUMMARY DESCRIPTION)
Northern Growers Cooperative located in Milbank, SD. The construction of a 40
MMGPY dry mill fuel ethanol processing plant
The Owner and Design Builder, in consideration of the mutual covenants
hereinafter set forth, agree as follows:
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ARTICLE 1 - GENERAL PROVISIONS
1.1 BASIC DEFINITIONS
1.1.1 The Contract Documents consist 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 complementary,
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
consisted 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
date furnished by the Design Builder and other design professional
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 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
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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 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
such auditing 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 entities 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
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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 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 complies 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 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
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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.
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.
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.3 Design Builder shall 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.
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 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;
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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 electronic data when such revisions are required by the
enactment or revision of codes, laws or 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
upon receipt of a Notice To Proceed unless
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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.
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 AlA forms G702 and G703
or similar documents. Two percent retainage shall be held by the owner
on up to fifty percent value of the completed work after which no
retainage will be held.
5.1.2 Within ten (10) days of the Owners 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 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.
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5.1.8 Upon compliance with the Process Guarantee, 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.
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 incorporate 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 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
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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 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:
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 persons 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;
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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 7.2.1.6) which shall
include completed operations and product
liability coverages.
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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
c. Automobile Liability:
Combine Single
Limit (Bodily Injury and Property Damage) $ 1,000,000
</Table>
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 cancelled, materially changed or renewal
refused 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 certificates 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
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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.
7.3 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 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 BOILER AND PRESSURE VESSEL INSURANCE
7.4.2.1 At the appropriate time during the construction
period, the Owner shall purchase and maintain Broad Coverage
Insurance for equipment such as boilers, other pressure
vessels, hot water boilers, fired storage water heaters,
fired coil water heaters, unfired pressure vessels,
machinery, and similar equipment or objects, which are
provided under the Contract for this Work and which may not
be covered under other insurances. The insurance shall be in
accordance with State Laws. Such coverage shall, as a
minimum, insure against loss or damages, including death or
bodily injury, from explosion, rupture, or bursting of the
equipment piping and normally covered appurtenances or other
similar hazards peculiar to the particular equipment or
object.
7.4.2.2 The policy shall name the Owner, the Design/Builder,
all Subcontractors and lower tier Sub-subcontractors as joint
insured.
7.4.2.3 The insurance shall be placed into effect prior to
the testing, use or start up of any equipment of object
provided under the Contract. The Design/Builder shall notify
the
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Owner or insurance agent in ample time prior to testing or
startup of the object to permit any required inspections.
7.4.2.4 The policy, shall cover, as a minimum, (1) loss to
property of the insured, including extra costs of temporary
repair (2) death or bodily injury liability, including
defense, settlement and supplementary payments, and (3)
property damage liability including defense, settlement and
supplementary payments. The minimum limits shall be
$1,000,000 per occurrence.
7.4.2.5 After acceptance of the Work, or Upon occupancy by
the Owner, the Owner will provide pressure vessel insurance.
Owner will purchase and maintain boiler, machinery and other
property insurance as indicated in paragraph 7.4.
7.4.2.6 Entities deemed to have an insurable interest shall
be listed as an insured or additional insured.
7.4.3 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 cancelled or materially changed
or renewal refused 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.
7.4.4. 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. 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
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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
7.6.2. 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 Work and the cost thereof
covered by an appropriate Change Order or Written Amendment.
7.6.2 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.
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
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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 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:
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.1 costs of labor, including social security, old age
and unemployment insurance, fringe benefits required
by agreement or custom, and workers' compensation
insurance;
.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.
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.
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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.
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 of repose or limitations.
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.
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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. 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 and
additional person or entity duty 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 8 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 cutting, fitting and patching
of the Work 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 with 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.
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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 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, 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 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 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, 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
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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.
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.
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 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.
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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 of Basic Services, the Owner shall pay the Design Builder in
current funds the Contract Sum as follows:
Forty Three Million Eight Hundred Fifty Seven Thousand Seven Hundred
and Ninety Two Dollars ($43,857,792.00). This price includes sales and
use tax and will remain valid as long as construction is started by
June 15, 2001. 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 issuance of Notice
to Proceed and, subject to authorized adjustments and to delays not caused by
the Design Builder, Substantial Completion shall be achieved in fourteen (14)
months following the start of concrete work.
14.2 The Basic Services beyond those described in Article 3 are as follows:
None
14.3 Additional Services beyond those described in Article 3 are as
follows:
None
14.4 The Design Builder shall submit an Application for Payment on or about
the Twelfth (12) day of each month.
14.5 The Design Builders Exhibits include the following documents:
Title Date
----- ----
Exhibit 1 -- Schedule of Contract Values consisting of 2 pages 10/4/2000
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Exhibit 2 -- Licensing Agreement for Ethanol Production Process
Exhibit 3 -- Process Guarantee consisting of 1 page 10/6/2000
Exhibit 4 -- Notice to Proceed consisting of 1 page
14.6 OTHER CONDITIONS
14.6.1 An initial payment of seventy five thousand dollars ($75,000)
for permitting and preliminary design will accrue at no
interest cost upon signing of this document and shall become
due and payable at completion of the Owner's initial Equity
Drive. Upon the completion of the Owner's successful Equity
Drive, three hundred thousand dollars ($300,000.00) will be
due and payable for Preliminary Engineering for the Project
within 15 days.
14.6.2 Owner will apply for and receive any applicable state sales
or excise tax refunds. Design Builder will assist the Owner
in compiling necessary documentation.
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.
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OWNER: NORTHERN GROWERS COOPERATIVE DESIGN BUILDER: BROIN AND ASSOCIATES,
INC.
BY: /S/ Jim Peterson BY: /S/ Jeffrey S. Broin
----------------------------------- -----------------------------------
Name: JIM PETERSON Name: JEFFREY S. BROIN
Title: CHAIRMAN Title: C.E.O.
[CORPORATE SEAL] [CORPORATE SEAL]
Attest: /S/ Del Strasser Attest: /S/ Wendy S. John
------------------------------- -------------------------------
Address for giving notices: Address for giving notices:
NORTHERN GROWERS COOPERATIVE BROIN AND ASSOCIATES, INC.
P.O. BOX 225 2209 EAST 57TH STREET NORTH
MILBANK, SD 57252 SIOUX FALLS, SD 57104
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[Portions of this Exhibit to Exhibit 10.1 are filed separately with the SEC
pursuant to a confidential treatment request.]
MILLBANK, SD 40 MMGPY PLANT
CONTRACT SCHEDULE OF VALUES, PROJECT ESTIMATE
(For location just South of Big Stone Power Plant perimeter fence)
THE CONTRACT INCLUDES:
Fire protection water line to Big Stone Plant
Steam line and condensate line to Big Stone Plant
Demineralized water line from Big Stone Plant
Wastewater discharge line to Big Stone Plant cooling pond
Wastewater treatment for discharge to Big Stone Plant cooling pond
Approximate discharge parameters: 50 mg/I BOD5 and 50 mg/I TSS
Connection to Big Stone City's sewer line for sanitary wastewater
Dual fuel boiler(s) to back up steam supply from Big Stone Plant
An allowance for a reboiler and pressure reducing station for steam from Big
Stone Plant
THE CONTRACT DOES NOT INCLUDE:
Water line to the site
Gas lines to the site and on-site gas lines
Electrical service to the site and primary transmission to the transformers
Electrical transformers to 460 Volt (To be provided by utility company?)
Water treatment systems (demineralized water will be purchased from Big Stone
Plant)
Improvements to existing roadways
Corn drying system
Performance and payment bond
Propane stand-by system for fuel supply
Co-generation or any back-up generation of electricity
ADDITIONAL NOTES:
The Contract includes the following Allowances:
*** for Site preparation
(Gravel roadways and parking lots, Storm sewers, Building
base excavation and backfill, Rail Spur Sub-grade, Excavation
and backfill, NOT Site water, Sewer, or Septic)
*** for a reboiler and pressure reducing station for steam from Big Stone
Plant
*** for Railroad switches and trackage
*** for other project equipment
(Truck & power equipment, Maintenance equipment, Spare parts, Lab
equipment, Safety equipment, Office equipment & office computer
systems)
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SCHEDULE OF CONTRACT VALUES AND PROJECT ESTIMATE
<Table>
<Caption>
CONTRACT VALUES AT BIG APPROX. DIFFERENCE
STONE SITE FROM GENERIC SITE
------------- ------------------
100 SITE WORK $ *** $ ***
200 BUILDINGS $ *** $ ***
300 MECHANICAL $ *** $ ***
400 PROCESS SYSTEMS $ *** $ ***
500 ELECTRICAL $ *** $ ***
600 INSTRUMENTATION $ *** $ ***
700 GRAIN SYSTEMS $ *** $ ***
800 OTHER CONSTRUCTION COSTS $ *** $ ***
900 OTHER PROJECT EQUIPMENT, COSTS $ *** $ ***
TOTAL CONTRACT COST $ 43,857,792 $ ***
EXCISE TAX $ 877,156 $ ***
OWNER'S PROJECT COSTS
1010 LAND $ 0 $ ***
1020 LOAN ORIGINATION AND INTEREST $ 1,100,000
1030 OPERATING COST PRIOR TO START-UP $ 300,000
1040 MISCELLANEOUS ADDITIONAL
DEVELOPMENT $ 300,000
1045 OWNER'S CONTINGENCY $ 411,792 $ ***
1050 START UP AND OPERATING CAPITAL $ 3,800,000
1090 REFUND OF SALES AND EXCISE TAX $ (1,846,740) $ ***
1000 OWNER'S PROJECT COSTS $ 4,065,052 $ ***
TOTAL PROJECT COST: $ 48,800,000 $ ***
</Table>
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PROCESS GUARANTEE
The following PROCESS GUARANTEE is provided by Broin and Associates, Inc.
in relation to the Northern Growers Cooperative ethanol plant project located in
Milbank, South Dakota (The Project).
BROIN AND ASSOCIATES GUARANTEES THE FOLLOWING:
1. PROJECT PERFORMANCE SPECIFICATION
The Project is guaranteed to produce 4,807 gallons per hour of fuel grade
(Williams Pipeline Standard) ethanol including the contained denaturant
(gasoline). The Project is guaranteed to have the ability to evaporate all
necessary thin stillage and dry all distillers' grains produced at 100%
guaranteed capacity. The plant is guaranteed to yield at least 2.7 gallons of
ethanol (denatured) and at least 17 pounds of distillers' dried grains with
solubles per 56 lb. bushel of corn (test weight 54 pounds or greater).
2. TESTING PERIOD
The project is guaranteed to reach performance specifications for a period
of seven (7) days before the Engineer will leave the site. The testing period
will be completed with the Owner's personnel and raw materials.
3. REMEDIES
If the Project does not meet the above guarantees during the timeframe
described in the Owners Agreement, Broin and Associates, Inc. will perform the
following at their expense: 1) use Broin and Associates, Inc.'s best effort to
correct any problem, 2) repair or replace any failing component(s) or system(s)
and 3) obtain any additional resources needed to satisfy guarantees.
This document contains the entire Process Guarantee provided by Broin and
Associates, Inc. No oral statements, representations or prior written matter not
contained in this document shall have any effect regarding Process Guarantee.
BROIN AND ASSOCIATES, INC.
/S/ Jeffrey S. Broin November 2, 2000
- ----------------------------------- -----------------------------
Jeffrey S. Broin Date
C.E.O.
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NOTICE TO PROCEED
Dated:________________________
TO: Broin and Associates
ADDRESS: 2209 East 57th Street North
Sioux Falls, SD 57104
Contract: Agreement Between Owner and Design Builder
Project: To perform and furnish design, engineering, and construction services
for a 40 MMGPY nameplate dry mill fuel ethanol processing plant. The
project is located in Milbank, South Dakota.
You are notified that the Contract times under the above contract will commence
to run on ___________________. By that date, you are to start performing your
obligations under the contract Documents. In accordance with Article 14 of the
Agreement the date of Substantial Completion is 14 MONTHS FOLLOWING THE START OF
CONCRETE WORK.
Before you may start any Work, you must deliver to the Owner (with copies to
other identified additional insureds) certificates of insurance which you are
required to purchase and maintain in accordance with the Contract Documents.
Also, before you may start any Work at the Site, you must
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Northern Growers Cooperative
----------------------------
(Owner)
By: /s/ Jim Peterson
--------------------------------
(Authorized Signature)
Chairman
-----------------------------------
(Title)
29