Exhibit 10.12
LUMP SUM DESIGN-BUILD AGREEMENT
BETWEEN
RED TRAIL ENERGY, LLC ("OWNER")
AND
FAGEN, INC. ("DESIGN-BUILDER")
August 29, 2005
TABLE OF CONTENTS
Article 1 Definitions
Article 2 Red Trail Energy Project
2.1 Services to Be Performed ....................................... 4
2.2 Extent of Agreement ............................................ 4
2.3 Conflicting Provisions ......................................... 4
Article 3 Design-Builder Responsibilities
3.1 Design-Builder's Services in General ........................... 5
3.2 Design Development and Services. ............................... 5
3.3 Standard of Care ............................................... 6
3.4 Government Approvals and Permits ............................... 6
3.3 Subcontractors. ................................................ 6
3.6 Maintenance of Site ............................................ 7
3.7 Project Safety. ................................................ 7
3.8 Submission of Reports .......................................... 8
3.9 Training ....................................................... 8
Article 4 Owner's Responsibilities
4.1 Duty to Cooperate. ............................................. 8
4.2 Furnishing of Services and Information. ........................ 9
4.3 Financial Information .......................................... 9
4.4 Owner's Representative ......................................... 10
4.5 Government Approvals and Permits ............................... 10
4.6 Owner's Separate Contractors ................................... 10
Article 5 Ownership of Work Product; Risk of Loss
5.1 Work Product. .................................................. 10
5.2 Owner's Limited License Upon Payment in Full ................... 10
5.3 Owner's Limited License Upon Owner's Termination for Convenience
or Design-Builder's Election to Terminate ...................... 11
5.4 Owner's Limited License Upon Design-Builder's Default .......... 11
5.5 Owner's Indemnification for Use of Work Product ................ 12
Article 6 Commencement and Completion of the Project
6.1 Work Schedule .................................................. 12
6.2 Notice to Proceed; Commencement ................................ 12
6.3 Project Start-Up and Testing ................................... 13
6.4 Substantial Completion. ........................................ 13
6.5 Final Completion. .............................................. 14
6.6 Post Completion Support ........................................ 15
Article 7 Performance Testing
7.1 Performance Guarantee .......................................... 15
7.2 Performance Testing. ........................................... 16
Article 8 Warranties
8.1 Design-Builder Warranty ........................................ 16
8.2 Correction of Defective Work. .................................. 17
8.3 Warranty Period Not Limitation to Owner's Rights ............... 17
Article 9 Contract Price
9.1 Contract Price ................................................. 17
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Table of Contents
(continued)
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Article 10 Payment Procedures
10.1 Payment at Financial Close ..................................... 18
10 2 Progress Payments .............................................. 18
10.3 Final Payment .................................................. 19
10.4 Failure to Pay Amounts Due. .................................... 19
10.5 Design-Builder's Payment Obligations ........................... 20
10.6 Record Keeping and Finance Controls ............................ 20
Article 11 Hazardous Conditions and Differing Site Conditions
11.1 Hazardous Conditions. .......................................... 20
11.2 Differing Site Conditions. ..................................... 21
Article 12 Force Majeure; Change in Legal Requirements
12.1 Force Majeure Event ............................................ 22
12.2 Effect of Force Majeure Event .................................. 22
12.3 Change in Legal Requirements ................................... 22
Article 13 Changes to the Contract Price and Contract Time(s)
13.1 Change Orders. ................................................. 23
13.2 Contract Price Adjustments. .................................... 23
13.3 Emergencies .................................................... 24
13.4 Requests for Contract Adjustments and Relief ................... 24
13.5 Contract Time Adjustment
Article 14 Indemnity
14.1 Patent and Copyright Infringement. ............................. 24
14.2 Tax Claim Indemnification ...................................... 25
14.3 Payment Claim Indemnification .................................. 25
14.4 Design-Builder's General Indemnification. ...................... 25
14.5 Owner's General Indemnification ................................ 26
Article 15 Stop Work; Termination for Cause
15.1 Owner's Right to Stop Work ..................................... 26
15.2 Owner's Right to Perform and Terminate for Cause. .............. 26
15.3 Owner's Right to Terminate for Convenience. .................... 27
15.4 Design-Builder's Right to Stop Work. ........................... 28
15.5 Design-Builder's Right to Terminate for Cause. ................. 28
15.6 Bankruptcy of Owner or Design-Builder. ......................... 29
15.7 Lenders Right to Cure .......................................... 30
Article 16 Representatives of the Parties
16.1 Owner's Representatives ........................................ 30
16.2 Design-Builder's Representatives ............................... 30
Article 17 Insurance
17.1 Insurance ...................................................... 31
17.2 Design-Builder's Insurance Requirements ........................ 32
17.3 Owner's Liability Insurance .................................... 33
17.4 Owner's Property Insurance. .................................... 33
17.5 Coordination with Loan Documents ............................... 34
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Table of Contents
(continued)
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Article 18 Representations and Warranties
18.1 Design-Builder and Owner Representations and Warranties ........ 34
18.2 Design-Builder Representation and Warranties ................... 35
Article 19 Dispute Resolution
19.1 Dispute Avoidance and Mediation ................................ 35
19.3 Duty to Continue Performance ................................... 35
19.4 Consequential Damages. ......................................... 35
Article 20 Miscellaneous
20.1 Assignment ..................................................... 36
20.2 Successors ..................................................... 36
20.3 Governing Law .................................................. 36
20.4 Severability ................................................... 36
20.5 No Waiver ...................................................... 36
20.6 Headings ....................................................... 37
20.7 Notice ......................................................... 37
20.8 No Privity with Design Consultant/Subcontractors ............... 38
20.9 Amendments ..................................................... 38
20.10 Cooperation with Lenders and Independent Engineer. ............. 38
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LUMP SUM DESIGN-BUILD CONTRACT
This LUMP SUM DESIGN-BUILD CONTRACT (the "Agreement") is made as of August 29,
2005, by and between Red Trail Energy, LLC, a North Dakota limited liability
company (the "Owner") and Fagen. Inc. a Minnesota corporation (the
"Design-Builder").
RECITALS
A. The Owner desires to develop, construct, own and operate a 50 million
gallons per year ("MGY") coal-fired fuel ethanol production facility located at
Richardton, ND (the "Red Trail Energy Plant'* or "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.
AGREEMENT
ARTICLE 1
DEFINITIONS
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.
Application for Payment is defined in Section 10.2.1.
Bankrupt Party is defined in Section 15.6.1.
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.
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.
Expected Daily Capacity is 50 MGY divided by 353 days, which equals 141,643
gallons per day.
Final Application for Payment is defined in Section 10.3.
Final Completion is defined in Section 6.5.
Financial Close is defined in Section 10.1.
Financing Documents is defined in Section 10.1.
Force Majeure Event is defined in Section 12.1.
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 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 independent engineer, if applicable.
Legal Requirements are all applicable federal, state and local laws, codes,
ordinances, rules, regulations, orders and decrees 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.
Lenders means the lenders that are party to the Financing Documents.
Lenders' Agent is defined in Section 20.10.1.
Notice to Proceed is defined in Section 6.2.
Oversight Items is defined in Section 20.10.3.
Owner is defined in the Preamble.
Owner's Representative is defined in Section 16.1.
Owner's Senior Representative is defined in Section 16.1.
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Pay Period means, with respect to a given Application for Payment or Progress
Report, the period following the last day of the previous Pay Period to which
the immediately prior Application for Payment or Progress Report applied;
provided, that the initial Pay Period shall commence on the Notice to Proceed
and end on the date determined by the Design-Builder.
Performance Guarantee Criteria means the criteria listed in Exhibit A.
Performance Tests is defined in Section 7.2.1.
Plant is defined in the Recitals.
Plant Capacity means for a given period, the number of gallons produced by the
Plant during such period of denatured fuel grade ethanol meeting ASTM 4806 and
all other applicable Legal Requirements.
Preliminary Construction Documents are defined in Section 3.2.1.
Progress Report is defined in Section 3.8.
Project is the Plant, including all related improvements, and is defined in
Section 2.1.
Project Scope is defined in Exhibit B.
Punch List is defined in Section 6.4.3.
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 6.4.1.
Site is the land or premises on which the Project is located.
State is the State in which the Project is located.
Sub-Subcontractor is any person or entity retained by a Subcontractor as an
independent contractor to perform any portion of a Subcontractor's Work and
shall include materialmen and suppliers.
Subcontractor is any person or entity retained by Design-Builder as an
independent contractor to perform a portion of the Work and shall include
materialmen and suppliers.
Substantial Completion is defined in Section 6.4.2.
Work is defined in Section 3.1.
Work Product is defined in Section 5.1.
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Work Schedule is defined in Section 6.1.
ARTICLE 2
RED TRAIL ENERGY PROJECT
2.1 SERVICES TO BE PERFORMED. Design-Builder shall perform all work and
services in connection with the engineering, design, procurement, and
construction of the Plant, and provide all material, equipment, tools and labor
necessary to complete the Plant in accordance with the terms of this Agreement.
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:
LIST OF EXHIBITS
Exhibit A Performance Guarantee Criteria
Exhibit B General Project Scope
Exhibit C - Owner's Responsibilities
Exhibit D - ICM License Agreement
Exhibit E - Schedule of Values
Exhibit F - Progress Report
Exhibit G Permits Required
2.2.3 Upon completion by Design-Builder, the Preliminary Construction
Documents to be 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. The Contract Documents are intended to permit
the parties to complete the Work and all obligations required by the Contract
Documents in accordance with the terms herein for the Contract Price. The
Contract Documents are intended to be complementary and interpreted in harmony
so as to avoid conflict, with words and phrases interpreted in a manner
consistent with construction and design industry standards. In the event of any
inconsistency, conflict, or ambiguity between or among the Contract Documents,
the Contract
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Documents shall take precedence in the order in which they are listed in Section
2.2 hereof. 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 specifically set forth in Article 4 and Exhibit C to be provided by
the Owner, 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 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) good ethanol fuel production industry
practices. 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 this date or within thirty (30) days from the date hereof,
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 reasonably approved by
Owner, shall be part of this Agreement:
a) major equipment lists, with sizes;
b) process flow diagram;
c) process design criteria and/or process description; and
d) site layout.
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
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required to meet those performance standards. Design-Builder shall have the
right to revise the layout of the equipment and substitute specific pieces of
equipment, provided the completed Project shall conform to or exceed the
performance standards established by the Preliminary Construction Documents.
3.2.2 Design-Builder may 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 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 Work 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 may review such drawings and
specifications, and Owner may be allowed, upon Design-Builder's approval, to
make copies of drawings and specifications available at the Work site that are
applicable to Owner.
3.3 STANDARD OF CARE. All services performed by the Design-Builder pursuant
to the Construction Documents shall be performed in accordance with the standard
of care and skill ordinarily used by members of design profession practicing
under similar conditions at the same time and locality of the Project.
Notwithstanding the preceding sentence, if the parties agree upon specific
higher performance standards for any aspect of the Work, including the standards
set forth in Exhibit A hereof, the professional services shall be performed to
achieve such standards. Design-Builder shall perform all construction activities
efficiently and with the requisite expertise, skill and competence to satisfy
the requirements of the Contract Documents and all 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 SUBCONTRACTORS.
3.5.1 Design-Builder shall employ only Subcontractors who are duly
licensed (if required) and qualified to perform the Work consistent with the
Contract Documents. Owner
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may reasonably object to Design-Builder's selection of any Subcontractor;
provided, that the Contract Price and/or the Contract Time shall be adjusted to
the extent that Owner's objection impacts Design-Builder's cost and/or time of
performance.
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 or Sub-Subcontractor, including but not limited to any third-party
beneficiary rights.
3.5.3 Design-Builder shall coordinate the activities of all of
Design-Builders 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 of such
separate contractors so that the Project can be completed in an orderly and
coordinated manner without unreasonable disruption.
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 PROJECT SAFETY.
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) all 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)
ail 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.
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3.7.3 Design-Builder's responsibility for safety under this Section
3.7 is not intended in any way to relieve Subcontractors and Sub-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. Attached as Exhibit F is an example of a
"Progress Report." Design-Builder shall provide Owner with regular
communication 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).
3.9 TRAINING. At a mutually agreed time prior to start-up,
Design-Builder shall provide up to two (2) weeks, as reasonably determined by
Design-Builder, of off-site training at a plant in Russell, Kansas (or other
location; e.g. Goldfield, Iowa) 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 its employees and
the Owner will pay all wages and all other expenses for its 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 DUTY TO COOPERATE.
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 reviews and approvals of Preliminary
Construction Documents subject to Section 3.2.1.
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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 (the cost of which activities is
included in the Contract Price), except that Owner shall use its best efforts to
minimize frost by providing and maintaining an insulation layer (hay or straw)
with a depth of not less than 24 inches on areas designated by the
Design-Builder. All other related costs shall be paid by Design-Builder.
4.2 FURNISHING OF SERVICES AND INFORMATION.
4.2.1 Unless expressly stated to the contrary in the Contract
Documents, Owner shall provide, at its 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:
a) Surveys describing the property, boundaries, topography
and reference points for use during construction,
including existing service and utility lines:
b) Geotechnical studies describing subsurface conditions,
and other surveys describing other latent or concealed
physical conditions at the Site;
c) Temporary and permanent easements, zoning and other
requirements and encumbrances affecting land use, or
necessary to permit the proper design and construction
of the Project and enable Design-Builder to perform the
Work;
d) A legal description of the Site;
e) To the extent available, as-built and record drawings
of any existing structures at the Site; and
f) To the extent available, environmental studies, reports
and impact statements describing the environmental
conditions, including Hazardous Conditions, in
existence at the Site.
4.2.2 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. Owner is further responsible for all costs,
including attorneys' fees, incurred in securing these necessary agreements.
4.3 FINANCIAL INFORMATION. Prior to Financial Close, at Design-Builder's
request, Owner shall promptly furnish reasonable evidence satisfactory to
Design-Builder that Owner has adequate funds available and committed to fulfill
all of Owner's contractual obligations under the Contract Documents. If Owner
fails to furnish such financial information in a timely manner, Design-Builder
may slop Work under Section 15.4 hereof or exercise any other right permitted
under the Contract Documents. Upon Financial Close, Owner shall promptly provide
to Design-
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Builder an officer's certificate certifying that Financial Close 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.
4.4 OWNER'S REPRESENTATIVE. Owner's Representative 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.
4.5 GOVERNMENT APPROVALS AND PERMITS. Owner shall obtain and pay for all
necessary 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.
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
occupancy and repair of the Project and Design-Builder shall provide Owner with
a copy of 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 for the purpose
relating to this Project, but shall not be entitled to use the Work Product on
any other projects, including
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expansion of this Project. The limited license granted to Owner under Section
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. The preceding
last three sentences of this paragraph also apply 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
Project and subsequently occupy and repair the Project, subject to the
following:
5.3.1 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
5.3.2 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 Million Dollars ($1,000,000.00) 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 Project. This limited license is conditioned on
Owner's express understanding 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
11
remain in effect according to their terms. This limited license grants Owner the
ability to repair the Project 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.
ARTICLE 6
COMMENCEMENT AND COMPLETION OF THE PROJECT
6.1 WORK SCHEDULE. Design-Builder shall prepare and submit a schedule for
the execution of the Work to Owner. The schedule ("Work Schedule") shall
indicate the dates for the start 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 the result
of any direct or indirect delay in the completion of Owner's obligations. Then
Design-Builder shall be relieved of its obligations to complete the Work within
the Contract Time(s) for completion of the Work shall be extended accordingly
without penalty to Design-Builder.
6.2 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 180
days of the signing of this Agreement; otherwise, the Contract Price referred to
in Section 9.1 is subject to a price increase.
6.2.1 Owner shall provide the following within 90 days of
Design-Builder's receipt of Owner's valid Notice to Proceed, as described in
Section 6.2 above of this Agreement:
- Owner shall determine its water supply and pretreatment system design
and provide Design-Builder with a detailed design, and
[ * ] Portions omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.
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- Owner shall provide the name of its property/all risk insurance
carrier and the specific requirements for fire protection.
The two bulleted requirements referred to above are further detailed in Exhibit
C. The Scheduled Substantial Completion date will likewise be extended a
corresponding amount of days for each day Owner exceeds the 90-day timeframe
referred to above in Section 6.2.1.
6.3 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 start-up and testing)
by Design-Builder or its personnel during start-up and testing. Design-Builder
shall supervise and direct Owner's employees who shall participate in the
start-up activities with Design-Builder's personnel to become familiar with all
aspects of the Plant. Owner and the Independent Engineer may witness start-up
and testing activities. Performance testing will be conducted in accordance with
the provisions of Section 7.2 hereof.
6.4 SUBSTANTIAL COMPLETION.
6.4.1 Substantial Completion of the entire Work shall be achieved no
later than 485 calendar days after the date of the Notice to Proceed, subject to
adjustment in accordance with the Contract Documents hereof (the "Scheduled
Substantial Completion Date").
6.4.2 "Substantial Completion" is the date on which the Work is
sufficiently complete so that Owner can occupy and use the Project for its
intended purposes. Substantial Completion shall be attained at the point in time
when the Plant is ready to begin operation for its intended use (ethanol
production; i.e., the "grind corn" date).
6.4.3 PROCEDURES. Design-Builder shall notify Owner in writing when it
believes Substantial Completion has been achieved with respect to the Work.
Within five (5) days of Owner's receipt of Design-Builder's notice, Owner and
Design-Builder will jointly inspect such Work to verify that it is substantially
complete in accordance with the requirements of the Contract Documents. If such
Work is substantially complete, Design-Builder shall prepare and issue a
Certificate of Substantial Completion for the Work that will set forth (i) the
date of Substantial Completion, (ii) the remaining items of Work that have to be
completed before final payment ("the Punch List"), (iii) provisions (to the
extent not already provided in this Agreement) establishing Owner's and
Design-Builder's responsibility for the Project's security, maintenance,
utilities and insurance pending Final Payment, and (iv) an acknowledgment that
warranties with respect to the Work commence on the date of Substantial
Completion, except as may otherwise be noted in the Certificate of Substantial
Completion. Upon Substantial Completion of the entire Work or, if applicable,
any portion of the Work, and Performance Testing, Owner shall release to
Design-Builder all retained amounts relating, as applicable, to the
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entire Work or completed portion of the Work, less an amount equal to the
reasonable value of all remaining or incomplete items of Work as noted in the
Certificate of Substantial Completion.
a) Owner, at its option, may use a portion of the Work prior to
completion of the entire Work; provided, that (i) a Certificate of
Substantial completion has been issued for the portion of Work addressing
the items set forth in Section 6.4.3 above, (ii) Design-Builder and Owner
have, to the extent required, obtained the consent of their sureties and
insurers and the appropriate government authorities having jurisdiction
over the Project, and (i) Owner and Design-Builder agree that Owner's use
or occupancy will not interfere with Design-Builder's completion of the
remaining Work in accordance with the Contract Documents.
6.5 FINAL COMPLETION.
6.5.1 final Completion of the Work shall be achieved as expeditiously
as reasonably practicable.
6.5.2 Final Completion shall be achieved when the Owner reasonably
determines that the following conditions have been met:
a) Substantial Completion has been achieved;
b) any outstanding amounts owed by Design-Builder to Owner have
been paid in full;
c) the items identified on the Punch List have been completed by
Design-Builder;
d) clean-up of the site has been completed;
e) all permits required to have been obtained by Design-Builder
have been obtained;
f) the information in Section 6.5.4 has been provided to Owner;
g) certificates of insurance confirming that required coverages
will remain in effect consistent with the requirements of the Contract
Documents; and
h) the performance test report has been completed according to
Section 7.2
6.5.3 After receipt of a Final Application for Payment from
Design-Builder, Owner shall make final payment in accordance with Section 10.3.
6.5.4 At the time of submission of its Final Application for Payment,
Design-Builder shall provide the following information:
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a) an affidavit that there are no claims, obligations or liens
outstanding or unsatisfied for labor, services, material, equipment, taxes
or other items performed, furnished or incurred for or in connection with
the Work which will in any way affect Owner's interests;
b) a general release executed by Design-Builder waiving, upon
receipt of final payment by Design-Builder, all claims for payment,
additional compensation, or damages for delay, except those previously made
to Owner in writing and remaining unsettled at the time of final payment
provided such general release shall not waive defenses to claims that may
be asserted by Owner after payment or claims arising after payment;
c) consent of Design-Builder's surety, if any, to final payment;
and
d) all other documents or materials relating to the Project not
previously provided to Owner, including as-built plans and drawings.
6.5.5 Upon making final payment, Owner waives all claims against
Design-Builder except claims relating to (i) Design-Builder's failure to satisfy
its payment obligations, if such failure affects Owner's interests, (ii)
Design-Builder's failure to complete the Work consistent with the Contract
Documents, including defects appearing after Substantial Completion, and (iii)
the terms of any special warranties required by the Contract Documents.
6.6 POST COMPLETION SUPPORT. Adequate personnel to complete all Work within
the guaranteed schedule will be maintained on-site by Design-Builder or a
Subcontractor until Final Completion has been achieved. In addition to
prosecuting the Work until Final Completion has been achieved, Design-Builder or
its Subcontractor will provide one month of on-site operational support for
Owner's personnel after successful completion of the Performance Tests and, from
the date of Substantial Completion, will provide six (6) months of off-site
technical and operating procedure support by telephone and other electronic data
transmission and communication.
ARTICLE 7
PERFORMANCE TESTING
7.1 PERFORMANCE GUARANTEE. The Design-Builder guarantees the Criteria
listed in Exhibit A. If there is a performance shortfall, Design-Builder will
pay all design, and construction, and all other costs associated with making the
necessary corrections, including corrections necessary to meet air emissions
standards, except that Owner is responsible for the increased cost(s) related to
the pollution control equipment referred to in Section 9.1. Design-Builder
retains the right to use its sole discretion in determining the method to remedy
any performance related issues.
7.1.1 If Owner, for whatever reason, prevents Design-Builder from
demonstrating the Performance Guarantee Criteria within 30 days of
Design-Builder's notice that the Project is ready for Performance Testing,
Design-Builder is thereby deemed to have fulfilled all of its
15
Performance Guarantee obligations listed in Exhibit A.
7.2 PERFORMANCE TESTING.
7.2.1 The Design-Builder shall direct and supervise the tests and, if
necessary, the retests of the Plant using Design-Builder's supervisory personnel
and the Air Emissions Tester shall conduct the air emissions test, in each case,
in accordance with the testing procedures set forth in Exhibit A (the
"Performance Tests"), to demonstrate, at a minimum, compliance with the
Performance Guarantee Criteria. Design-Builder shall cooperate with the Air
Emissions Tester to facilitate performance of all air emissions tests.
7.2.2 No later than thirty (30) days prior to the earlier of Scheduled
Substantial Completion and the Substantial Completion Date, Design-Builder shall
provide to Owner for review a detailed testing plan for Performance Tests (other
than for air emissions). Design-Builder shall notify the Owner five (5) business
days prior to the date Design-Builder intends to commence the Performance Tests
and shall notify the Owner upon commencement of the Performance Tests. Owner and
Independent Engineer each have the right to witness all testing, including the
Performance Tests and any equipment testing, whether at the Site or at the
Sub-contractor's or equipment supplier's premises during the course of this
Agreement. Owner shall bear the costs of providing a witness to any such
testing.
7.2.3 Design-Builder shall provide to Owner a performance test report
(excluding results from air emissions testing), including all applicable test
data, calculations and certificates indicating the results of the Performance
Tests and within five (5) business days of Owner's receipt of such results,
Owner, Independent Engineer and Design-Builder will jointly inspect such Work
and review the results of the Performance Tests to verify that the Performance
Guarantee Criteria have been met. If Owner reasonably determines that the
Performance Guarantee Criteria have not been met, Owner shall notify
Design-Builder the reasons why Owner determined that the Performance Guarantee
Criteria have not been met and Design-Builder shall promptly take such action or
perform such additional work as will achieve the Performance Guarantee Criteria
and shall issue to the Owner another notice in accordance with Section 7.2.2;
provided however that if the notice relates to a retest, the notice may be
provided no less than two (2) business days prior to the Performance Tests. Such
procedure shall be repeated as necessary until Owner verifies that the
Performance Guarantee Criteria have been met.
ARTICLE 8
WARRANTIES
8.1 Design-Builder Warranty. Design-Builder warrants to Owner that the
construction, including all materials and equipment furnished as part of the
construction, shall be new, of good quality, in conformance with the Contract
Documents and all Legal Requirements, free of defects in materials and
workmanship. Design-Builder's warranty obligation excludes defects caused by
abuse, alterations, or failure to maintain the Work by persons other than
Design-Builder or anyone for whose acts Design-Builder may be liable. Nothing in
this warranty is intended to limit any manufacturer's warranty which provides
Owner with greater warranty rights
16
than set forth in this Section 8.1 or the Contract Documents. Design-Builder
will provide to Owner all manufacturers' and Subcontractors' warranties upon the
earlier of Substantial Completion and termination of this Agreement. Owner's
failure to materially comply with all Operating Procedures shall void those
guarantees, representations and warranties, whether expressed or implied, that
were given by Design-Builder to Owner, concerning the performance of the Plant
that are reasonably determined by Design-Builder to be materially affected by
such failure. If Design-Builder reasonably determines that all damage caused by
such failure can be repaired and Owner makes all repairs needed to correct such
damage, as reasonably determined by Design-Builder, such guarantees,
representations and warranties shall be reinstated for the remaining term
thereof, if any, from the date of such repair.
8.2 CORRECTION OF DEFECTIVE WORK.
8.2.1 Design-Builder agrees to correct any Work that is found to not
be in conformance with the Contract Documents, including that part of the Work
subject to Section 8.1, within a period of one year from the date of Substantial
Completion of the Work; provided that such one-year period shall be extended for
any part of the Work that is found to be not in conformance with the Contract
Documents for each day that such part of the Work is not operating in conformity
with the Contract Documents, including any time during which any part of the
Work is repaired or replaced pursuant to this Article VIII.
8.2.2 Design-Builder shall, within seven (7) days of receipt of
written notice from Owner that the Work is not in conformance with the Contract
Documents, take meaningful steps to commence correction of such nonconforming
Work, including the correction, removal or replacement of the nonconforming
Work. If Design-Builder fails to commence the necessary steps within such seven
(7) day period, Owner, in addition to any other remedies provided under the
Contract Documents, may provide Design-Builder with written notice that Owner
will commence or assume correction of such nonconforming Work with its own
forces. If Owner does perform such corrective Work, Design-Builder shall be
responsible for all reasonable costs incurred by Owner in performing such
correction. If the nonconforming Work creates an emergency requiring an
immediate response, the seven (7) day periods identified herein shall be
inapplicable.
8.3 WARRANTY PERIOD NOT LIMITATION TO OWNER'S RIGHTS. The one-year period
referenced in Section 8.2 above applies only to Design-Builder's obligation to
correct nonconforming Work and is not intended to constitute a period of
limitations for any other rights or remedies Owner may have regarding
Design-Builder's other obligations under the Contract Documents.
ARTICLE 9
CONTRACT PRICE
9.1 CONTRACT PRICE. Owner shall pay Design-Builder in accordance with the
terms of Article 10, the sum of Seventy-five Million Eight Hundred Forty-one
Thousand Seven Hundred Forty Dollars ($75,841,740) ("Contract Price"), subject
to adjustments made in accordance with
17
Article 13. The Contract Price includes a Two Million Dollar ($2,000,000)
allowance for pollution control equipment; the purpose for which is to reduce or
control SOx emissions. Design and installation costs shall be at no markup to
Owner, and the $2,000,000 is a maximum not to exceed cost to the Owner. Unless
otherwise provided in the Contract Documents, the Contract Price is deemed to
include all sales, use, consumer and other taxes mandated by applicable Legal
Requirements. Design-Builder and Owner acknowledge that a portion of the Project
is exempt from sales tax, and Design-Builder agrees to reasonably cooperate with
Owner in claiming any applicable refund of sales tax paid by Owner by providing
reasonable documentation directly to the State Tax Agency only. Any refund of
such taxes Owner receives for the Project will be split evenly (50/50) with the
Design-Builder. The Contract Price assumes the use of non-union labor. If Legal
Requirements require Owner or Owner otherwise requires Design-Builder to use
union labor, the Contract Price shall be adjusted upwards to include any
increased costs associated with the use of union labor.
ARTICLE 10
PAYMENT PROCEDURES
10.1 PAYMENT AT FINANCIAL CLOSE. As part of the Contract Price, Owner shall
pay Design-Builder Five Million Dollars ($5,000,000) as soon as allowed by its
organizational documents and any other agreements or laws and at the latest, at
Financial Close, as a mobilization fee. "Financial Close" is defined as the
execution by Owner of final loan documents (the "Financing Documents") providing
for the advance of financing to Owner to construct the Project and the
fulfillment of all conditions precedent thereunder necessary to permit the
initial advance of funds to pay amounts due under this Agreement. The Five
Million Dollar ($5,000,000) mobilization fee payment shall be subject to
retainage as provided by Section 10.2.7.
10.2 PROGRESS PAYMENTS
10.2.1 APPLICATION FOR PAYMENT. On or before the twenty-fifth (25th)
day of each month beginning with the first month following the Notice to
Proceed, Design-Builder shall submit to Owner its request for payment for all
Work performed and not paid for during the previous Pay Period (the "Application
for Payment").
10.2.2 The Application for Payment shall constitute Design-Builder's
representation that the Work has been performed consistent with the Contract
Documents and has progressed to the point indicated in the Application for
Payment. Title to the Work shall pass to Owner free and clear of all claims,
liens, encumbrances, and security interests upon Design-Builder's receipt of
payment therefor, or upon the incorporation of the Work into the Project,
whichever occurs earlier.
10.2.3 Within ten (10) days after Owner's receipt of each properly
submitted Application for Payment, Owner shall pay Design-Builder all amounts
properly due, but in each case less the total of payments previously made, and
less amounts properly withheld under this Agreement.
18
10.2.4 The Application for Payment may request payment for equipment
and materials not yet incorporated into the Project; provided that (i) Owner is
satisfied that the equipment and materials are suitably stored at either the
Site or another acceptable location, (ii) the equipment and materials are
protected by suitable insurance, and (iii) upon payment, Owner will receive the
equipment and materials free and clear of all liens and encumbrances except for
liens of the Lenders and other liens and encumbrances permitted under the
Financing Documents.
10.2.5 SCHEDULE OF VALUES. Attached as Exhibit E is the "Schedule of
Values" for all of the Work. The Schedule of Values (i) subdivides the Work into
its respective parts, (ii) includes values for all items comprising the Work,
and (iii) serves as the basis for monthly progress payments made to
Design-Builder throughout the Work.
10.2.6 WITHHOLDING OF PAYMENTS. On or before the date set forth in
Section 10.2.3, Owner shall pay Design-Builder all amounts properly due. If
Owner determines that Design-Builder is not entitled to all or part of an
Application for Payment, it will notify Design-Builder in writing at least five
(5) days prior to the date payment is due. The notice shall indicate the
specific amounts Owner intends to withhold, the reasons and contractual basis
for the withholding, and the specific measures Design-Builder must take to
rectify Owner's concerns. Design-Builder and Owner will attempt to resolve
Owner's concerns prior to the date payment is due. If the parties cannot resolve
such concerns, Design-Builder may pursue its rights under the Contract
Documents, including those under Article 19. Notwithstanding anything to the
contrary in the Contract Documents, Owner shall pay Design-Builder all
undisputed amounts in an Application for Payment within the times required by
the Agreement.
10.2.7 RETAINAGE ON PROGRESS PAYMENTS. Owner will retain five (5%) of
each payment In addition. Owner shall retain 5% of the pollution control
equipment related payments (the Two Million Dollar allowance referred to in
Section 9.1) until successful completion of all compliance tests. Owner will
also reasonably consider reducing retainage for Subcontractors completing their
work early in the Project. Upon Substantial Completion of the entire Work or, if
applicable, any portion of the Work, pursuant to Section 6.4, Owner shall
release to Design-Builder all retained amounts relating, as applicable, to the
entire Work or completed portion of the Work, less an amount equal to the
reasonable value of all remaining or incomplete items of Work as noted in the
Certificate of Substantial Completion, provided that such payment shall only be
made if Design-Builder has met the Performance Guarantee Criteria listed in
Exhibit A
10.3 FINAL PAYMENT. Design-Builder shall deliver to Owner a request for
final payment (the "Final Application for Payment") when Design-Builder believes
Final Completion has been achieved in accordance with Section 6.5. Owner shall
make final payment within thirty (30) days after Owner's receipt of the Final
Application for Payment.
10.4 FAILURE TO PAY AMOUNTS DUE.
10.4.1 INTEREST. Payments which are due and unpaid by Owner to
Design-Builder, whether progress payments or final payment, shall bear interest
commencing five (5) days after
19
payment is due at the rate of ten percent (10%) per annum. This interest shall
not apply to any amount actually adjudged to be in dispute.
10.4.2 RIGHT TO SUSPEND WORK. If Owner fails to pay Design-Builder any
undisputed amount that becomes due, Design-Builder, in addition to all other
remedies provided in the Contract Documents, may stop Work pursuant to Section
15.4 hereof. All payments properly due and unpaid shall bear interest at the
rate set forth in Section 10.4.1.
10.5 DESIGN-BUILDER'S PAYMENT OBLIGATIONS. Design-Builder will pay Design
Consultants and Subcontractors, in accordance with its contractual obligations
to such parties, all the amounts Design-Builder has received from Owner on
account of their work. Design-Builder will impose similar requirements on Design
Consultants and Subcontractors to pay those parties with whom they have
contracted. Design-Builder will indemnify and defend Owner against any claims
for payment and mechanic's liens as set forth in Section 14.3 hereof.
10.6 RECORD KEEPING AND FINANCE CONTROLS. With respect to changes in the
Work performed on a cost basis by Design-Builder pursuant to the Contract
Documents, Design-Builder shall keep full and detailed accounts and exercise
such controls as may be necessary for proper financial management, using
accounting and control systems in accordance with generally accepted accounting
principles and as may be provided in the Contract Documents. During the
performance of the Work and for a period of three (3) years after Final Payment,
Owner and Owner's accountants shall be afforded access from time to time, upon
reasonable notice, to Design-Builder's records, books, correspondence, receipts,
subcontracts, purchase orders, vouchers, memoranda and other data relating to
changes in the Work performed on a cost basis in accordance with the Contract
Documents, all of which Design-Builder shall preserve for a period of three (3)
years after Final Payment.
ARTICLE 11
HAZARDOUS CONDITIONS AND DIFFERING SITE CONDITIONS
11.1 HAZARDOUS CONDITIONS.
11.1.1 Unless otherwise expressly provided in the Contract Documents
to be part of the Work, Design-Builder is not responsible for any Hazardous
Conditions encountered at the Site. Upon encountering any Hazardous Conditions,
Design-Builder will stop Work immediately in the affected area and as promptly
as practicable notify Owner and, if required by Legal Requirements, all
government or quasi-government entities with jurisdiction over the Project or
Site.
11.1.2 Upon receiving notice of the presence of suspected Hazardous
Conditions, Owner shall take the necessary measures required to ensure that the
Hazardous Conditions are remediated or rendered harmless. Such necessary
measures shall include Owner retaining qualified independent experts to (i)
ascertain whether Hazardous Conditions have actually been encountered, and, if
they have been encountered, (ii) prescribe the remedial measures that Owner
20
must take either to remove the Hazardous Conditions or render the Hazardous
Conditions harmless.
11.1.3 Design-Builder shall be obligated to resume Work at the
affected area of the Project only after Owner's expert provides it with written
certification that (i) the Hazardous Conditions have been removed or rendered
harmless, and (ii) all necessary approvals have been obtained from all
government entities having jurisdiction over the Project or Site.
11.1.4 Design-Builder will be entitled, in accordance with this
Article 11, to an adjustment in its Contract Price and/or Contract Time(s) to
the extent Design-Builder's cost and/or time of performance have been adversely
impacted by the presence of Hazardous Conditions.
11.1.5 To the fullest extent permitted by law, Owner shall indemnify,
defend and hold harmless Design-Builder, Design Consultants, Subcontractors,
anyone employed directly or indirectly for any of them, and their officers,
directors, employees and agents, from and against any and all claims, losses,
damages, liabilities and expenses, including attorneys' fees and expenses,
arising out of or resulting from the presence, removal or remediation of
Hazardous Conditions at the Site.
11.1.6 Notwithstanding the preceding provisions of this Section 11.1,
Owner is not responsible for Hazardous Conditions introduced to the Site by
Design-Builder, Subcontractors or anyone for whose acts they may be liable.
Design-Builder shall indemnify, defend and hold harmless Owner and Owner's
officers, directors, employees and agents from and against all claims, losses,
damages, liabilities and expenses, including attorneys' fees and expenses,
arising out of or resulting from those Hazardous Conditions introduced to the
Site by Design-Builder, Subcontractors or anyone for whose acts they may be
liable.
11.2 DIFFERING SITE CONDITIONS.
11.2.1 Concealed or latent physical conditions or subsurface
conditions at the Site that (i) materially differ from the conditions indicated
in the Contract Documents, or (ii) are of an unusual nature, differing
materially from the conditions ordinarily encountered and generally recognized
as inherent in the Work are collectively referred to herein as "Differing Site
Conditions." If Design-Builder encounters a Differing Site Condition,
Design-Builder will be entitled to an adjustment in the Contract Price and/or
Contract Time(s) to the extent Design-Builder's cost and/or time of performance
are adversely impacted by the Differing Site Condition.
11.2.2 Upon encountering a Differing Site Condition, Design-Builder
shall provide prompt written notice to Owner of such condition, which notice
shall not be later than fourteen (14) business days after such condition has
been encountered. Design-Builder shall, to the extent reasonably possible,
provide such notice before the Differing Site Condition has been substantially
disturbed or altered.
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ARTICLE 12
FORCE MAJEURE; CHANGE IN LEGAL REQUIREMENTS
12.1 FORCE MAJEURE EVENT. If Design-Builder is delayed in the performance
of the Work due to acts, omissions, conditions, events, or circumstances beyond
its control and due to no fault of its own or those for whom Design-Builder is
responsible, the Contract Time(s) for performance shall be reasonably extended
by Change Order. By way of example, events that will entitle Design-Builder to
an extension of the Contract Time(s) include acts or omissions of Owner or
anyone under Owner's control (including separate contractors), changes in the
Work, Differing Site Conditions. Hazardous Conditions, wars (declared or not),
hostilities, blockade, revolution, insurrection, riot, fire, floods,
earthquakes, storms, labor disputes, unusual delay in transportation, delay in
the delivery of materials or equipment that is beyond the control of
Design-Builder, epidemics abroad, adverse weather conditions not reasonably
anticipated, or similar acts of God, strikes or other labor difficulties ("Force
Majeure Event").
12.2 EFFECT OF FORCE MAJEURE EVENT. Neither party shall be considered in
default in the performance of any of the obligations contained in the Contract
Documents, except for the Owners or the Design-Builder's obligations to pay
money. If either party is rendered wholly or partly unable to perform its
obligations under the Contract Documents because of a Force Majeure Event, such
party will be excused from performance affected by the Force Majeure Event to
the extent and for the period of time so affected; provided that:
a) the nonperforming party gives the other party notice describing
the event or circumstance;
b) the suspension of performance is of no greater scope and of no
longer duration than is reasonably required by the Force Majeure
Event;
c) when the nonperforming party is able to resume performance of its
obligations under the Contract Documents, that party shall give
the other party written notice to that effect; and
d) in addition to Design-Builder's right to a time extension for
those events set forth in Section 12.1 above, Design-Builder
shall also be entitled to an appropriate adjustment of the
Contract Price provided, however, that the Contract Price shall
not be adjusted for those events set forth in Section 12.1 above
that are beyond the control of both Design-Builder and Owner.
12.3 CHANGE IN LEGAL REQUIREMENTS. The Contract Price and/or the Contract
Time(s) shall be adjusted to compensate Design-Builder for the effects of any
changes to the Legal Requirements that occur after the date of this Agreement
affecting the performance of the Work. Such effects may include, without
limitation, revisions Design-Builder is required to make to the Construction
Documents because of changes in Legal Requirements.
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ARTICLE 13
CHANGES TO THE CONTRACT PRICE AND SCHEDULED COMPLETION DATES
13.1 CHANGE ORDERS.
13.1.1 A Change Order is a written instrument issued after execution
of this Agreement signed by Owner and Design-Builder, stating their agreement
upon all of the following:
a) The scope of the change in the Work;
b) The amount of the adjustment to the Contract Price; and
c) The extent of the adjustment to the Contract Time(s).
13.1.2 All changes in the Work authorized by an applicable Change
Order shall be performed under the applicable conditions of the Contract
Documents. Owner and Design-Builder shall negotiate in good faith and as
expeditiously as possible the appropriate adjustments for such changes.
13.1.3 If Owner requests a proposal for a change in the Work from
Design-Builder and subsequently elects not to proceed with the change, a Change
Order shall be issued to reimburse Design-Builder for reasonable costs incurred
for estimating services, design services and any other services involved in the
preparation of proposed revisions to the Contract Documents.
13.2 CONTRACT PRICE ADJUSTMENTS.
13.2.1 The increase or decrease in Contract Price resulting from a
change in the Work shall be a mutually accepted lump sum, properly itemized and
supported by sufficient substantiating data to permit evaluation by Owner.
13.2.2 If Owner and Design-Builder disagree upon whether
Design-Builder is entitled to be paid for any services required by Owner, or if
there are any other disagreements over the scope of Work or proposed changes to
the Work, Owner and Design-Builder shall resolve the disagreement pursuant to
Article 19 hereof. As part of the negotiation process, Design-Builder shall
furnish Owner with a good faith estimate of the costs to perform the disputed
services in accordance with Owner's interpretations. If the parties are unable
to agree and Owner expects Design-Builder to perform the services in accordance
with Owner's interpretations, Design-Builder shall proceed to perform the
disputed services, conditioned upon Owner issuing a written order to
Design-Builder (i) directing Design-Builder to proceed, and (ii) specifying
Owner's interpretation of the services that are to be performed. If this occurs,
Design-Builder shall be entitled to submit in its Applications for Payment an
amount equal to fifty percent (50%) of its reasonable estimated direct cost to
perform the services, and Owner agrees to pay such amounts, with the express
understanding that (x) such payment by Owner does not prejudice Owner's right to
argue that it has no responsibility to pay for such services, and (y) receipt of
such payment by
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Design-Builder does not prejudice Design-Builder's right to seek full payment of
the disputed services if Owner's order is deemed to be a change to the Work.
13.3 EMERGENCIES. In any emergency affecting the safety of persons and/or
property, Design-Builder shall act, at its discretion, to prevent threatened
damage, injury or loss and shall notify the Owner as soon as practicable. Any
change in the Contract Price and/or the Contract Time(s) on account of emergency
work shall be determined as provided in this Article 13.
13.4 REQUESTS FOR CONTRACT ADJUSTMENTS AND RELIEF. If either Design-Builder
or Owner believes that it is entitled to relief against the other for any event
arising out of or related to the Work or Project, such party shall provide
written notice to the other party of the basis for its claim for relief. Such
notice shall, if possible, be made prior to incurring any cost or expense and in
accordance with the notice requirements contained Section 20.7. In the absence
of any specific notice requirement, written notice shall be given within a
reasonable time, not to exceed twenty-one (21) days, after the occurrence giving
rise to the claim for relief or after the claiming party reasonably should have
recognized the event or condition giving rise to the request, whichever is
later. Such notice shall include sufficient information to advise the other
party of the circumstances giving rise to the claim for relief, the specific
contractual adjustment or relief requested and the basis of such request.
13.5 CONTRACT TIME ADJUSTMENT. Design-Builder shall be entitled to an
extension of the Scheduled Substantial Completion Date or Final Completion Date
to the extent the Plant is unable to operate as expected not due to any act or
omission of the Design-Builder, in addition to time extensions available due to
an event as described in Section 12.1.
ARTICLE 14
INDEMNIFY
14.1 PATENT AND COPYRIGHT INFRINGEMENT.
14.1.1 Design-Builder shall defend any action or proceeding brought
against Owner, its officers, directors, employees and agents ("Owner Indemnified
Parties") based on any claim that the Work, or any part thereof, or the
operation or use of the Work or any part thereof, constitutes infringement of
any United States patent or copyright, now or hereafter issued. Owner shall give
prompt written notice to Design-Builder of any such action or proceeding and
will reasonably provide authority, information and assistance in the defense of
same. Design-Builder shall indemnify and hold harmless Owner Indemnified Parties
from and against all damages and costs, including but not limited to, attorneys'
fees and expenses awarded against Owner or Design-Builder in any such action or
proceeding. Design-Builder agrees to keep Owner informed of all developments in
the defense of such actions.
14.1.2 If Owner is enjoined from the operation or use of the Work or
any part thereof, as the result of any patent or copyright suit, claim, or
proceeding, Design-Builder shall at its sole expense take reasonable steps to
procure the right to operate or use the Work. If Design-Builder cannot so
procure such right within a reasonable time, Design-Builder shall promptly, at
Design-
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Builder's option and at Design-Builder's expense, (i) modify the Work so as to
avoid infringement of any such patent or copyright or (ii) replace the Work with
Work that does not infringe or violate any such patent or copyright.
14.1.3 Sections 14.1.1 and 14.1.2 above shall not be applicable to any
suit, claim or proceeding based on infringement or violation of a patent or
copyright (i) relating solely to a particular process or product of a particular
manufacturer specified by Owner and not offered or recommended by Design-Builder
to Owner, or (ii) arising from modifications to the Work by Owner or its agents
after acceptance of the Work, or (iii) relating to the operation or use of the
Work by the Owner is a manner not permitted by this Agreement or the License
Agreement attached to this Agreement as Exhibit D. If the suit, claim or
proceeding is based upon events set forth in the preceding sentence, Owner shall
defend, indemnify and hold harmless Design-Builder to the same extent
Design-Builder is obligated to defend, indemnify and hold harmless Owner in
Section 14.1.1 above.
14.1.4 The obligations set forth in this Section 14.1 shall constitute
the sole agreement between the parties relating to liability for infringement of
violation of any patent or copyright.
14.2 TAX CLAIM INDEMNIFICATION. If, in accordance with Owner's direction,
an exemption for all or part of the Work is claimed for taxes, Owner shall
indemnify, defend and hold harmless Design-Builder from and against any
liability, penalty, interest, fine, tax assessment, attorneys' fees or other
expenses or costs incurred by Design-Builder as a result of any action taken by
Design-Builder in accordance with Owner's directive.
14.3 PAYMENT CLAIM INDEMNIFICATION. To the extent Design-Builder has
received payment for the Work. Design-Builder shall indemnify, defend and hold
harmless Owner Indemnified Parties from any claims or mechanic's liens brought
against Owner Indemnified Parties or against the Project as a result of the
failure of Design-Builder, or those for whose acts it is responsible, to pay for
any services, materials, labor, equipment, taxes or other items or obligations
furnished or incurred for or in connection with the Work. Within three (3)
business days of receiving written notice from Owner that such a claim or
mechanic's lien has been filed, Design-Builder shall commence to take the steps
necessary to discharge such claim or lien, including, if necessary, the
furnishing of a mechanic's lien bond. If Design-Builder fails to do so, Owner
will have the right to discharge the claim or lien and hold Design-Builder
liable for costs and expenses incurred, including attorneys' fees.
14.4 DESIGN-BUILDER'S GENERAL INDEMNIFICATION.
14.4.1 Design-Builder, to the fullest extent permitted by law, shall
indemnify, hold harmless and defend Owner Indemnified Parties from and against
claims, losses, damages, liabilities, including attorneys' fees and expenses,
for bodily injury, sickness or death, and property damage or destruction (other
than to the Work itself) to the extent resulting from the negligent acts or
omissions of Design-Builder, Design Consultants, Subcontractors, anyone employed
directly or indirectly by any of them or anyone for whose acts any of them may
be liable.
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14.4.2 If an employee of Design-Builder, Design Consultants,
Subcontractors, anyone employed directly or indirectly by any of them or anyone
for whose acts any of them may be liable has a claim against Owner Indemnified
Parties, Design-Builder's indemnity obligation set forth in Section 14.4.1 above
shall not be limited by any limitation on the amount of damages, compensation or
benefits payable by or for Design-Builder, Design Consultants, Subcontractors,
or other entity under any employee benefit acts, including workers' compensation
or disability acts.
14.5 OWNER'S GENERAL INDEMNIFICATION. Owner, to the fullest extent
permitted by law, shall indemnify, hold harmless and defend Design-Builder and
any of Design-Builder's officers, directors, employees, or agents from and
against claims, losses, damages, liabilities, including attorneys' fees and
expenses, for bodily injury, sickness or death, and property damage or
destruction (other than to the Work itself) to the extent resulting from the
negligent acts or omissions of Owner, its officers, directors, employees,
agents, and Owner's separate contractors or anyone for whose acts any of them
may be liable.
ARTICLE 15
STOP WORK; TERMINATION FOR CAUSE
15.1 OWNER'S RIGHT TO STOP WORK. Owner may, without cause and for its
convenience, order Design-Builder in writing to stop and suspend the Work. Such
suspension shall not exceed sixty (60) consecutive days or aggregate more than
ninety (90) days during the duration of the Project. Design-Builder is entitled
to seek an adjustment of the Contract Price and/or the Contract Time(s) if its
cost or time to perform the Work has been adversely impacted by any suspension
or stoppage of work by Owner.
15.2 OWNER'S RIGHT TO PERFORM AND TERMINATE FOR CAUSE.
15.2.1 If Design-Builder persistently fails to (i) provide a
sufficient number of skilled workers, (ii) supply the materials required by the
Contract Documents, (iii) comply with applicable Legal Requirements, (iv) timely
pay, without cause, Design Consultants or Subcontractors, (v) prosecute the Work
with promptness and diligence to ensure that the Work is completed by the
Contract Time(s), as such times may be adjusted, or (vi) perform material
obligations under the Contract Documents, then Owner, in addition to any other
rights and remedies provided in the Contract Documents or by law, shall have the
rights set forth in Sections 15.2.2 and 15.2.3 below.
15.2.2 Upon the occurrence of an event set forth in Section 15.2.1
above, Owner may provide written notice to Design-Builder that it intends to
terminate the Agreement unless the problem cited is cured, or commenced to be
cured, within seven (7) days of Design-Builder's receipt of such notice. If
Design-Builder fails to cure, or reasonably commence to cure, such problem, then
Owner may give a second written notice to Design-Builder of its intent to
terminate within an additional seven (7) day period. If Design-Builder, within
such second seven (7) day period, fails to cure, or reasonably commence to cure,
such problem, then Owner may
26
declare the Agreement terminated for default by providing written notice to
Design-Builder of such declaration.
15.2.3 Upon declaring the Agreement terminated pursuant to Section
15.2.2 above, Owner may enter upon the premises and take possession, for the
purpose of completing the Work, of all materials, equipment, scaffolds, tools,
appliances and other items thereon, which have been purchased for the
performance of the Work, all of which Design-Builder hereby transfers, assigns
and sets over to Owner for such purpose, and to employ any person or persons to
complete the Work and provide all of the required labor, services, materials,
equipment and other items. In the event of such termination, Design-Builder
shall not be entitled to receive any further payments under the Contract
Documents until the Work shall be finally completed in accordance with the
Contract Documents. At such time, if the unpaid balance of the Contract Price
exceeds the cost and expense incurred by Owner in completing the Work, such
excess shall be paid by Owner to Design-Builder. If Owner's cost and expense of
completing the Work exceeds the unpaid balance of the Contract Price, then
Design-Builder shall be obligated to pay the difference to Owner. Such costs and
expense shall include not only the cost of completing the Work, but also losses,
damages, costs and expenses, including attorneys' fees and expenses, incurred by
Owner in connection with the re-procurement and defense of claims arising from
Design-Builder's default, subject to the waiver of consequential damages set
forth in Section 19.4 hereof.
15.2.4 If Owner improperly terminates the Agreement for cause, the
termination for cause will be converted to a termination for convenience in
accordance with the provisions of Section 153.
15.3 OWNER'S RIGHT TO TERMINATE FOR CONVENIENCE.
15.3.1 Upon ten (10) days' written notice to Design-Builder, Owner
may, for its convenience and without cause, elect to terminate this Agreement.
In such event, Owner shall pay Design-Builder for the following:
a) To the extent not already paid, all Work executed, and for proven
loss, cost or expense in connection with the Work;
b) The reasonable costs and expenses attributable to such
termination, including demobilization costs and amounts due in
settlement of terminated contracts with Subcontractors and Design
Consultants;;
c) Overhead and profit margin in the amount of fifteen percent (15%)
on the sum of items (a) and (b) above, except that overhead
and profit shall not be due regarding amounts due in settlement
of terminated contracts with subcontractors and design
consultants; and
d) all retainage withheld by Owner on account of Work that has been
completed in accordance with the Contract Documents.
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15.3.2 If Owner terminates this Agreement pursuant to this Section
15.3 above and proceeds to design and construct the Project through its
employees, agents or third parties, Owner's rights to use the Work Product shall
be as set forth in Section 5.3.
15.4 DESIGN-BUILDER'S RIGHT TO STOP WORK.
15.4.1 Design-Builder may, in addition to any other rights afforded
under the Contract Documents or at law, stop work for the following reasons:
a) Owner's failure to provide financial assurances as required
under Section 4.3: or
b) Owner's failure to pay amounts properly due under
Design-Builder's Application for Payment.
15.4.2 If any of the events set forth in Section 15.4.1 above occur
Design-Builder has the right to stop work by providing written notice to Owner
that Design-Builder will stop work unless such event is cured within seven (7)
days from Owner's receipt of Design-Builder's notice. If Owner fails to cure or
reasonably commence to cure, such problem, then Design-Builder may give a second
written notice to Owner of its intent to stop work within an additional seven
(7) day period. If Owner, within such second seven (7) day period, fails to
cure, or reasonably commence to cure, such problem, then Design-Builder may stop
work. In such case, Design-Builder shall be entitled to make a claim for
adjustment to the Contract Price and Contract Time(s) to the extent it has been
adversely impacted by such stoppage.
15.5 DESIGN-BUILDER'S RIGHT TO TERMINATE FOR CAUSE.
15.5.1 Design-Builder, in addition to any other rights and remedies
provided in the Contract Documents or by law, may terminate the Agreement for
cause for the following reasons:
a) The Work has been stopped for sixty (60) consecutive days, or
more than ninety (90) days during the duration of the Project, because of
court order, any government authority having jurisdiction over the Work, or
orders by Owner under Section 15.1 hereof, provided that such stoppages are
not due to the acts or omissions of Design-Builder or anyone for whose acts
Design-Builder may be responsible.
b) Owner's failure to provide Design-Builder with any
information, permits or approvals that are Owner's responsibility under the
Contract Documents which result in the Work being stopped for sixty (60)
consecutive days, or more than ninety (90) days during the duration of the
Project, even though Owner has not ordered Design-Builder in writing to
stop and suspend the Work pursuant to Section 15.1 hereof.
c) Owner fails to make available to Design-Builder the Plant as
required in Exhibit C which result in the Work being stopped for sixty
(60) consecutive days, or more than ninety (90) days during the duration of
the Project even though Owner
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has not ordered Design-Builder in writing to stop and suspend the Work
pursuant to Section 15.1 hereof.
d) Owner's failure to cure the problems set forth in Section
15.4.1 above after Design-Builder has stopped the Work.
15.5.2 Upon the occurrence of an event set forth in Section 15.5.1
above, Design-Builder may elect to terminate this Agreement by providing written
notice to Owner that it intends to terminate the Agreement unless the problem
cited is cured, or commenced to be cured, within seven (7) days of Owner's
receipt of such notice. If Owner fails to cure, or reasonably commence to cure,
such problem, then Design-Builder may give a second written notice to Owner of
its intent to terminate within an additional seven (7) day period. If Owner,
within such second seven (7) day period, fails to cure, or reasonably commence
to cure, such problem, then Design-Builder may declare the Agreement terminated
for default by providing written notice to Owner of such declaration. In such
case, Design-Builder shall be entitled to recover in the same manner as if Owner
had terminated the Agreement for its convenience under Section 15.3.
15.6 BANKRUPTCY OF OWNER OR DESIGN-BUILDER.
15.6.1 If either Owner or Design-Builder institutes or has instituted
against it a case under the United States Bankruptcy Code (such party being
referred to as the "Bankrupt Party"), such event may impair or frustrate the
Bankrupt Party's ability to perform its obligations under the Contract
Documents. Accordingly, should such event occur:
a) The Bankrupt Party, its trustee or other successor, shall
furnish, upon request of the non-Bankrupt Party, adequate assurance of the
ability of the Bankrupt Party to perform all future material obligations
under the Contract Documents, which assurances shall be provided within ten
(10) days after receiving notice of the request; and
b) The Bankrupt Party shall file an appropriate action within the
bankruptcy court to seek assumption or rejection of the Agreement within
sixty (60) days of the institution of the bankruptcy filing and shall
diligently prosecute such action.
15.6.2 If the Bankrupt Party fails to comply with its foregoing
obligations, the non-Bankrupt Party shall be entitled to request the bankruptcy
court to reject the Agreement, declare the Agreement terminated and pursue any
other recourse available to the non-Bankrupt Party under this Article 15.
15.6.3 The rights and remedies under this Section 15.6 above shall not
be deemed to limit the ability of the non-Bankrupt Party to seek any other
rights and remedies provided by the Contract Documents or by law, including its
ability to seek relief from any automatic stays under the United States
Bankruptcy Code or the right of Design-Builder to stop Work under any applicable
provision of this Agreement.
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15.7 LENDERS RIGHT TO CURE. At any time after the occurrence of any event
set forth in Section 15.4.1 or Section 15.5.1, the Lenders shall have the right,
but not the obligation, to cure such default on behalf of Owner.
ARTICLE 16
REPRESENTATIVES OF THE PARTIES
16.1 OWNER'S REPRESENTATIVES. Owner designates the individual listed below
as its Senior Representative ("Owner's Senior Representative"), which individual
has the authority and responsibility for avoiding and resolving disputes under
Article 19:
AMBROSE HOFF
CHAIRMAN
3754 HIGHWAY 85
RICHARDTON, ND 58652
TELEPHONE: (701) 974-4733
Owner designates the individual listed below as its Owner's Representative,
which individual has the authority and responsibility set forth in Section 4.4:
MICK J. MILLER
GENERAL MANAGER
3754 HIGHWAY 85
RICHARDTON, ND 58652
TELEPHONE: (701) 974-4733
16.2 DESIGN-BUILDER'S REPRESENTATIVES. Design-Builder designates the
individual listed below as its Senior Representative ("Design-Builder's Senior
Representative"), which individual has the authority and responsibility for
avoiding and resolving disputes under Article 19:
ROLAND "RON" FAGEN
CEO AND PRESIDENT
501 W. HIGHWAY 212
P.O. BOX 159
GRANITE FALLS, MN 56241
TELEPHONE: (320) 564-3324
Design-Builder designates the individual listed below as its Design-Builder's
Representative, which individual has the authority and responsibility set forth
in Section 3.1:
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AARON FAGEN
CHIEF OPERATING OFFICER
501 W. HIGHWAY 212
P.O. BOX 159
GRANITE FALLS, MN 56241
TELEPHONE: (320) 564-3324
ARTICLE 17
INSURANCE
17.1 INSURANCE. Design-Builder shall procure and maintain in force through
the Final Completion Date the following insurance coverages with the policy
limits indicated, and otherwise in compliance with the provisions of this
Agreement:
Commercial General Liability:
General Aggregate
Products-Comp/Op AGG $ 2,000,000
Personal & Adv Injury $ 1,000,000
Each Occurrence $ 1,000,000
Fire Damage (Any one fire) $ 50,000
Med Exp (Any one person) $ 5,000
Automobile Liability:
Combined Single Limit
Each Occurrence $ 1,000,000
Excess Liability - Umbrella Form:
Each Occurrence $20,000,000
Aggregate $20,000,000
Workers' Compensation
Statutory limits as required by the state in which the Work is performed.
Employers' Liability:
Each Accident $ 1,000,000
Disease-Policy Limit $ 1,000,000
Disease-Each Employee $ 1,000,000
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Prior to Design-Builder commencing any Work:
- Owner shall obtain a builder's risk policy naming Owner as the insured,
with Design-Builder and its subcontractors as additional insureds, in
an amount not less than the Contract Price.
- Owner shall also obtain Boiler and Machinery Insurance protecting
Owner, Design-Builder, Design Consultants, Subcontracts and
Subcontractors.
- In addition. Owner shall obtain terrorism coverage as described by the
Terrorism Risk Insurance Act of 2002.
17.2 DESIGN-BUILDER'S INSURANCE REQUIREMENTS
17.2.1 Design-Builder is responsible for procuring and maintaining
from insurance companies authorized to do business in the state in which the
Project is located, and with the minimum rating set forth below, the following
insurance coverages for certain claims which may arise from or out of the
performance of the Work and obligations under the Contract Documents:
a) Coverage for claims arising under workers' compensation,
disability and other similar employee benefit laws applicable to the Work;
b) Coverage for claims by Design-Builder's employees for bodily
injury, sickness, disease, or death;
c) Coverage for claims by any person other than Design-Builder's
employees for bodily injury, sickness, disease, or death;
d) Coverage for usual personal injury liability claims for
damages sustained by a person as a direct or indirect result of
Design-Builder's employment of the person, or sustained by any other
person;
e) Coverage for claims for damages (other than to the Work)
because of injury to or destruction of tangible property, including loss of
use;
f) Coverage for claims of damages because of personal injury or
death, or property damage resulting from ownership, use and maintenance of
any motor vehicle: and
g) Coverage for contractual liability claims arising out of
Design-Builder's obligations under Section 14.4.
17.2.2 Design-Builder's liability insurance required by this Section
17.2 above shall be written for the coverage amounts set forth in Section 17.1
and shall include completed operations insurance for the period of time set
forth in the Agreement.
17.2.3 Design-Builder's liability insurance set forth in Sections
17.2.1 (a) through (g) above shall specifically delete any design-build or
similar exclusions that could compromise coverages because of the design-build
delivery of the Project.
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17.2.4 To the extent Owner requires Design-Builder or any Design
Consultant to provide professional liability insurance for claims arising from
the negligent performance of design services by Design-Builder or the Design
Consultant, the coverage limits, duration and other specifics of such insurance
shall be as set forth in the Agreement. Any professional liability shall
specifically delete any design-build or similar exclusions that could compromise
coverages because of the design-build delivery of the Project. Such policies
shall be provided prior to the commencement of any design services hereunder.
17.2.5 Prior to commencing any construction services hereunder,
Design-Builder shall provide Owner with certificates evidencing that (i) all
insurance obligations required by the Contract Documents are in full force and
in effect and will remain in effect for the duration required by the Contract
Documents and (ii) no insurance coverage required hereunder will be canceled,
renewal refused, or materially changed unless at least thirty (30) days prior
written notice is given to Owner.
17.3 OWNER'S LIABILITY INSURANCE. Owner shall procure and maintain from
insurance companies authorized to do business in the state in which the Project
is located such liability insurance to protect Owner from claims which may arise
from the performance of Owner's obligations under the Contract Documents or
Owner's conduct during the course of the Project.
17.4 OWNER'S PROPERTY INSURANCE.
17.4.1 Unless otherwise provided in the Contract Documents, Owner
shall procure and maintain from insurance companies authorized to do business in
the state in which the Project is located property insurance upon the entire
Project to the full insurable value of the Project, including professional fees,
overtime premiums and all other expenses incurred to replace or repair the
insured property. The property insurance obtained by Owner shall include as
additional insureds the interests of Owner, Design-Builder, Design Consultants,
Subcontractors and Sub-Subcontractors, the Lenders and Lenders' Agent and shall
insure against the perils of fire and extended coverage, theft, vandalism,
malicious mischief, collapse, flood, earthquake, debris removal and other perils
or causes of loss as called for in the Contract Documents. The property
insurance shall include physical loss or damage to the Work, including materials
and equipment in transit, at the Site or at another location as may be indicated
in Design-Builder's Application for Payment and approved by Owner.
17.4.2 Unless the Contract Documents provide otherwise, Owner shall
procure and maintain boiler and machinery insurance that will include the
interests of Owner, Design-Builder, Design Consultants, Subcontractors and
Sub-Subcontractors.
17.4.3 Prior to Design-Builder commencing any Work, Owner shall
provide Design-Builder with certificates evidencing that (i) all Owner's
insurance obligations required by the Contract Documents are in full force and
in effect and will remain in effect until Design-Builder has completed all of
the Work and has received final payment from Owner, and (ii) no insurance
coverage will be canceled, renewal refused, or materially changed unless at
least thirty (30) days prior written notice is given to Design-Builder. Owner's
property insurance shall not lapse or be cancelled if Owner occupies a portion
of the Work pursuant to Section 6.5.3. Owner shall
33
provide Design-Builder with the necessary endorsements from the insurance
company prior to occupying a portion of the Work.
17.4.4 Any loss covered under Owner's property insurance shall be
adjusted with Owner and Design-Builder and made payable to both of them as
trustees for the insureds as their interests may appear, subject to any
applicable mortgage clause. All insurance proceeds received as a result of any
loss will be placed in a separate account and distributed in accordance with
such agreement as the interested parties may reach. Any disagreement concerning
the distribution of any proceeds will be resolved in accordance with Article 19
hereof.
17.4.5 Owner and Design-Builder waive against each other and Owner's
separate contractors. Design Consultants, Subcontractors, agents and employees
of each and all of them all damages covered by property insurance provided
herein, except such rights as they may have to the proceeds of such insurance.
Design-Builder and Owner shall, where appropriate, require similar waivers of
subrogation from Owner's separate contractors, Design Consultants and
Subcontractors and shall require each of them to include similar waivers in
their contracts.
17.5 COORDINATION WITH LOAN DOCUMENTS. Notwithstanding anything herein to
the contrary, all provisions relating to insurance and insurance proceeds shall
be conformed to the requirements of the Lenders in connection with any
financing.
ARTICLE 18
REPRESENTATIONS AND WARRANTIES
18.1 DESIGN-BUILDER AND OWNER REPRESENTATIONS AND WARRANTIES. Each of
Design-Builder and Owner represents that:
(1) If is duly organized, validly existing and in good standing under
the laws of its formation and has all requisite power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby;
(2) this Agreement has been duly executed and delivered by such party
and constitutes the legal, valid and binding obligations of such party,
enforceable against such party in accordance with their respective terms, except
as enforcement may be limited by bankruptcy, insolvency, moratorium or similar
laws affecting creditor's rights or by general equitable principles;
(3) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
conflict with or violate (i) the certificate of incorporation or bylaws or
equivalent organizational documents of such party, or (ii) any law applicable to
such party and other than the permits listed on Exhibit G, such execution,
delivery and performance of this Agreement does not require any governmental
approval; and
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(4) there is no action pending or, to the knowledge of such party,
threatened, which would hinder, modify, delay or otherwise adversely affect such
party's ability to perform its obligations under the Contract Documents.
18.2 DESIGN-BUILDER REPRESENTATION AND WARRANTIES. Design-Builder further
represents that it has the necessary financial resources to fulfill its
obligations under this Agreement.
ARTICLE 19
DISPUTE RESOLUTION
19.1 DISPUTE AVOIDANCE AND MEDIATION. The parties are fully committed to
working with each other throughout the Project and agree to communicate
regularly with each other at all times so as to avoid or minimize disputes or
disagreements. If disputes or disagreements do arise, Design-Builder and Owner
each commit to resolving such disputes or disagreements in an amicable,
professional and expeditious manner so as to avoid unnecessary losses, delays
and disruptions to the Work.
Design-Builder and Owner will first attempt to resolve disputes or disagreements
at the field level through discussions between Design-Builder's Representative
and Owner's Representative.
If a dispute or disagreement cannot be resolved through Design-Builder's
Representative and Owner's Representative, Design-Builder's Senior
Representative and Owner's Senior Representative, upon the request of either
party, shall meet as soon as conveniently possible, but in no case later than
thirty (30) days after such a request is made, to attempt to resolve such
dispute or disagreement. Prior to any meetings between the Senior
Representatives, the parties will exchange relevant information that will assist
the parties in resolving their dispute or disagreement.
If, after meeting, the Senior Representatives determine that the dispute or
disagreement cannot be resolved on terms satisfactory to both parties, the
parties shall submit the dispute or disagreement to non-binding mediation. The
mediation shall be conducted by a mutually agreeable impartial mediator, or if
the parties cannot so agree, a mediator designated by the American Arbitration
Association ("AAA") pursuant to its Construction Industry Mediation Rules. The
mediation will be governed by and conducted pursuant to a mediation agreement
negotiated by the parties or, if the parties cannot so agree, by procedures
established by the mediator.
19.2 DUTY TO CONTINUE PERFORMANCE. Unless provided to the contrary in the
Contract Documents, Design-Builder shall continue to perform the Work and Owner
shall continue to satisfy its payment obligations to Design-Builder, pending the
final resolution of any dispute or disagreement between Design-Builder and
Owner.
19.3 CONSEQUENTIAL DAMAGES.
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19.3.1 Notwithstanding anything herein to the contrary (except as set
forth in Section 19.4.2 below), neither Design-Builder nor Owner shall be liable
to the other for any consequential losses or damages, whether arising in
contract, warranty, tort (including negligence), strict liability or otherwise,
including but not limited to, losses of use, profits, business, reputation or
financing, except Design-Builder does not waive any such damages resulting from
or arising out of any breach of Owner's duties and obligations under the limited
license granted by Design-Builder to Owner pursuant to Article 5.
ARTICLE 20
MISCELLANEOUS
20.1 ASSIGNMENT. Neither Design-Builder nor Owner shall, without the
written consent of the other, which shall not be unreasonably withheld or
delayed, assign, transfer or sublet any portion or part of the Work or the
obligations required by the Contract Documents. Notwithstanding the foregoing,
Owner may, assign all of its rights and obligations under the Contract Documents
to its Lenders or Lenders' Agent as collateral security in connection with Owner
obtaining or arranging any financing for the Plant; provided, however, Owner
shall deliver, at least ten (10) days prior to any such assignment, to
Design-Builder (a) written notice of such assignment and (b) a written
instrument of assignment from the assignee in form and substance reasonably
acceptable to Design-Builder. In respect to any assignment to the Lenders or
Lenders' Agent, the written assignment may authorize such Lenders or Lenders'
Agent, to subsequently assign their rights under the Contract Documents in
connection with any foreclosure or other enforcement of their security interest,
if such Lenders or Lenders' Agent comply with clauses (a) and (b) above with
respect to such subsequent assignment. Design-Builder shall execute, if
requested, a consent to assignment for the benefit of the Lenders and/or the
Lenders' Agent, with respect to any such assignments.
20.2 SUCCESSORS. Design-Builder and Owner intend that the provisions of the
Contract Documents are binding upon the parties, their employees, agents, heirs,
successors and assigns.
20.3 GOVERNING LAW. The Agreement and all Contract Documents shall be
governed by the laws of Minnesota, without giving effect to its conflict of law
principles.
20.4 SEVERABILITY. If any provision or any part of a provision of the
Contract Documents shall be finally determined to be superseded, invalid,
illegal, or otherwise unenforceable pursuant to any applicable Legal
Requirements, such determination shall not impair or otherwise affect the
validity, legality, or enforceability of the remaining provision or parts of the
provision of the Contract Documents, which shall remain in full force and effect
as if the unenforceable provision or part were deleted.
20.5 NO WAIVER. The failure of either Design-Builder or Owner to insist, in
any one or more instances, on the performance of any of the obligations required
by the other under the Contract Documents shall not be construed as a waiver or
relinquishment of such obligation or right with respect to future performance.
36
20.6 HEADINGS. The headings used in this Agreement or any other Contract
Document, are for ease of reference only and shall not in any way be construed
to limit or alter the meaning of any provision.
20.7 NOTICE. Whenever the Contract Documents require that notice be
provided to a party, notice shall be delivered to such party at the address
listed below and will be deemed to have been validly given (i) if delivered in
person to the individual intended to receive such notice, (ii) four (4) days
after being sent by registered or certified mail, postage prepaid to the address
indicated in the Agreement or (iii) if transmitted by facsimile, by the time
stated in a machine-generated confirmation that notice was received at the
facsimile number of the intended recipient.
If to Design-Builder to:
Fagen. Inc.
501 W. Highway 212
P.O. Box 159
Granite Falls, MN 56241
Attention: Aaron Fagen
Fax: (320) 564-3278
with a copy to:
Fagen. Inc.
501 W. Highway 212
P.O. Box 159
Granite Falls, MN 56241
Attention: Bruce Langseth
Fax: (320) 564-3278
If to Owner, to:
Red Trail Energy, LLC
3754 Highway 85
Richardton,ND 58652
Attn: Ambrose Hoff and Frank Kirscheneiter
Telephone: (701) 974-4733
with copies to:
Michael J. Maus
Hardy, Maus & Nordsven, P.C.
137 First Avenue West
PO Box 570
Dickinson. ND 58602
Telephone: (701) 483-4500
Facsimile: (701) 483-4501
37
20.8 NO PRIVITY WITH DESIGN CONSULTANT/SUBCONTRACTORS. Nothing in the
Contract Documents is intended or deemed to create any legal or contractual
relationship between Owner and any Design Consultant or Subcontractor.
20.9 AMENDMENTS. The Contract Documents may not be changed, altered, or
amended in any way except in writing signed by a duly authorized representative
of each party.
20.10 COOPERATION WITH LENDERS AND INDEPENDENT ENGINEER.
20.10.1 In connection with any financing of the Project,
Design-Builder, at Owner's cost, shall, it so requested by Owner: (1) deliver to
the Lenders or the agent acting on behalf of the Lenders ("Lenders' Agent")
certified copies of its corporate charter and bylaws, resolutions, incumbency
certificates, and/or legal opinions (covering such items as the validity and
enforceability of the Contract Documents and the due organization and existence
of Design-Builder).
20.10.2 Design-Builder agrees that upon written notice that Owner has
assigned its rights under the Contract Documents to Lenders' Agent as security
for its obligations to Lenders: Design-Builder shall deliver to Lenders' Agent
notices given under the Contract Documents to Owner at the same time and in the
same manner as given to Owner; Lenders' Agent shall be entitled to exercise
rights and to cure any defaults of Owner under the Contract Documents and
Design-Builder shall accept such exercise or cure as though it had been done by
Owner; and Design-Builder shall execute such further agreements or documents
reasonably requested by Lenders' Agent providing assurances and other
protections to Lenders in furtherance of the provisions set forth above in
connection with the financing of the Work. Design-Builder further agrees that if
Lenders succeed to the interests of Owner in foreclosure or otherwise, Design-
Builder shall continue to perform in a timely manner its obligations under the
Contract Documents and shall recognize Lenders or any substitute entity with
proven sufficient financial and other resources to perform Owner's obligations
hereunder nominated by Lenders, and accepted by Design-Builder, in the place of
Owner.
20.10.3 Design-Builder and Owner 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 materially
alter the rights or impose additional obligations on Design-Builder
(collectively, the "Oversight Items").
20.10.4 Notwithstanding anything to the contrary contained in Section
20.10.3, all the rights of the Independent Engineer with respect to the
Oversight Items derive from the corresponding rights of Owner under the Contract
Documents, and as such, neither increase Owner's rights hereunder nor increase
Design-Builder's obligations hereunder. The exercise of any
38
such rights by Independent Engineer shall be completed within the same time
periods as are set forth in the Contract Documents for the exercise of the
corresponding rights by Owner and Owner shall be solely responsible for
obtaining any review, inspection or approval from Independent Engineer as
required by Lenders. Should Owner fail to provide any required response to
Design-Builder within the time periods set forth in the Contract Documents due
to the action or inaction of the Independent Engineer, such failure shall have
the same effect under the Contract Documents as if such failure had been caused
by the action or inaction of Owner.
20.10.5 For purposes hereof, Design-Builder may rely solely upon Owner
and shall have no duty to inquire as to whether or not the Independent Engineer
has exercised its rights with respect to the Oversight Items or has provided
Owner with any approval Owner may be required by Lenders to obtain from the
Independent Engineer. Any right that the Independent Engineer has failed to
exercise will be deemed waived.
OWNER: DESIGN-BUILDER:
Red Trail Energy, LLC Fagen, Inc.
(Name of Owner) (Name of Design-Builder)
/s/ Ambrose R. Hoff /s/ Roland "Ron" Fagen
- ------------------------------------- ----------------------------------------
(Signature) (Signature)
Ambrose R. Hoff Roland "Ron" Fagen
(Printed Name) (Printed Name)
President, RTE CEO and President
(Title) (Title)
Date: 9/9/05 Date: 9-20-05
39
EXHIBIT A
PERFORMANCE GUARANTEE CRITERIA
CRITERIA SPECIFICATION TESTING STATEMENT DOCUMENTATION
-------- ------------- ----------------- -------------
Plant Capacity - Operate at a rate of Seven day Production records
fuel grade ethanol 50 million gallons per performance test and written report
year of denatured fuel by Design-Builder.
grade ethanol meeting
the specifications of
ASTM 4806 based on 353
days of operation per
calendar year and
4.76% denaturant.
Corn to Ethanol Not be less than 2.80 As determined by Production records
Conversion ratio: denatured gallons of meter readings and written analysis
Corn must be #2 ethanol per bushel during a seven day by Design-Builder.
Yellow or better (56#) of corn performance test.
54.6#/bushel min.,
16% or less
moisture, zero
aflatoxin tolerance
Electrical Energy [ * ] kWh Per denatured As determined by Production records
gallon of fuel grade meter readings and written analysis
ethanol (less CO(2) during a seven day by Design-Builder.
plant) and chiller, performance test.
and water supply
and treatment)
Coal Shall not exceed As determined by Production records
[ * ] Btu per meter readings and written analysis
denatured gallon of during a seven day by Design-Builder.
fuel grade ethanol. performance test.
(This Performance
Criteria relates to
production of ethanol
and excludes any
energy usage that may
occur for drying
corn.)
Process Water Zero gallons under Process discharge Control System
Discharge normal operations. meter. reports.
Air Emissions Must meet the As required by State Written report by
[ * ] Portions omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.
A-1
requirements agency and performed Owner's Air
prescribed as of the by Owner's Air Emission Tester.
date hereof by the ND Emission Tester.
Department of Health-
Environmental Health
Section, Air Quality.
Design-Builder will
guarantee emissions
with the pollution
control equipment
allowance required by
Owner as referred to
in Sections 7.1.1 and
9.1.
Dry Distiller Grains Dry all DDGS to Determined from Production records
With Soluables produce 11% moisture calculation of mass and written analysis
DDGS flow from centrifuge by Design-Builder.
and dryers in a 7
day performance test.
DISCLAIMER: Owner's failure to materially comply with the operating
procedures issued by ICM, Inc./Fagen, Inc. shall void all
performance guaranties and warranties set forth in this Design-Build
Agreement.
Owner understands that the startup of the plant requires resources
and cooperation of the Owner, vendors and other suppliers to the
project. Design-Builder disclaims any liability and Owner
indemnifies Design-Builder for non-attainment of the Performance
Guarantee Criteria directly or indirectly caused by material
non-performance or negligence of third parties not retained by
Design-Builder.
A-2
EXHIBIT B
GENERAL PROJECT SCOPE
Construct a 50 million-gallon per year (MGY) coal-fired ethanol plant near
Richardton, North Dakota. The plant will grind approximately 17.9 million
bushels per year to produce approximately 50 MGY of fuel grade ethanol denatured
with five percent gasoline. The plant will also produce approximately 160,750
tons per year of 11% moisture dried distillers grains with solubles (DDGS), and
approximately 151,250 tons per year of raw carbon dioxide (CO(2)) gas.
Delivered corn will be dumped in the receiving building. The receiving building
will have one truck and one rail receiving bay. The rail receiving bay will be
serviced by both a 40,000 bushel/hour leg system and a 20,000 bushel/hour
back-up leg system. The 20,000 bushel/hour leg system will also service the
truck receiving bay, giving the plant the ability to unload unit trains of corn
in the rail bay and simultaneously unloading truck quantities of corn in the
truck bay. Said receiving building shall have sufficient height to accommodate
end-dump trailers. The truck driver will drive onto one of the two 115 foot long
scales located near the administration building, be weighed and sampled, then
drive to the receiving building, dump the grain, then proceed back to the scale
and obtain a final weight ticket from the scale operator. The trucks will not be
required to move during the unloading process in the receiving building. Maximum
truck dump time is ten minutes. The two independent legs will lift the corn to
one of two 750,000 - bushel concrete storage bins or corn day bin with adequate
clean out access or sweep auger. A dust collection system will be installed on
the grain receiving system to limit particulate emissions as described in the
Air Quality Permit application.
Ground corn will be mixed in a slurry tank, routed through a pressure vessel and
steam flashed off in a flash vessel. Cooked mash will continue through
liquefaction tanks and into one of the fermenters. Simultaneously, propagated
yeast will be added to the mash as the fermenter is filling. After batch
fermentation is complete, the beer will be pumped to the beer well and then to
the beer column to vaporize the alcohol from the mash.
Alcohol streams are purified in the rectifier column and the side stripper, and
dehydrated in the molecular sieve system. Two hundred proof alcohol is pumped to
the tank farm day tank and blended with five percent natural gasoline as the
product is being pumped into one of two 750,000 gallon final storage tanks.
Loading facilities for truck and rail cars will be provided. Tank farm tanks
include: one tank for 190 proof storage, one tank for 200 proof storage, one
tank for denaturant storage and two 750,000 gallon tanks for denatured ethanol
storage.
Corn mash from the beer column is dewatered in the centrifuge(s). The centrifuge
capacity shall allow for 100% name plate production with one centrifuge out for
maintenance. The solids, called wet cake are conveyed to the dryer system. The
liquid, called thin stillage is routed to the evaporators where moisture is
removed. The wet cake and syrup are routed to the drying system. The drying
system will consist of three steam tube dryers. The exhaust from the drying
system will be routed as combustion air to the coal combustor.
A modified wel or wet cake pad is located along side the DDGS dryer building to
divert modified wet or wet cake to the pad when necessary such as start up or
for limited production of modified wet or wet cake for sales. DDGS is
pneumatically conveyed to flat storage in the DDGS storage building. Shipping is
accomplished by scooping and pushing the product with a
B-1
front-end loader into an in-floor conveyor system. The DDGS load out pit has
capacity for approximately one semi-trailer load. DDGS is weighed with a bulk
weigh system.
Steam will be generated in a waste heat boiler driven by the flue gases from the
coal combustor. Since the dryer exhaust is routed to the coal combustor for
combustion air, the coal combustor destroys VOCs and acts like a Thermal
Oxidizer. The combustion air is routed in such fashion that it also fluidizes a
sand bed in which the coal is introduced to combust. The combustor requires
natural gas or propane for start up. To achieve emission constraints, limestone
will be metered in with the coal to react with sulfur. The layout of the
combustor, boiler, and economizer are intended to provide drop out points for
fly ash. The final item in the layout before the induced draft fan is a dust
collector. All ash exiting the system will exit as fly ash. Both fly ash and
limestone silos are included. The fly ash and limestone silos have nominal
storage capacities of seven days.
Coal, received by truck delivery, will be stored in two silos with a combined
storage capacity of approximately five days. At the outlet of each coal silo,
coal will be sized (3/4" minus) and limestone added before being routed to the
coal feeder bunkers. The coal combustor will also utilize anhydrous ammonia for
NOx emission reduction. A CEMS (Continuous emission monitoring system) is
included, sufficient to meet the monitoring requirements of the air permit
Fresh water for the boilers, cooking, cooling tower and other processes will be
obtained from the Owner supplied water pretreatment system. Boiler water
conditioned in regenerative softeners will be pumped through a deaerator
scrubber and into a deaerator tank. Appropriate boiler chemicals will be added
as preheated water is sent to the boiler.
The process will be cooled by circulating water through heat exchangers and a
cooling tower. No chiller is included and Owner assumes sole and complete
responsibility for any production capacity shortfalls or other limitations or
efficiency loss related to the elimination of the chiller from the design.
The design includes a compressed air system consisting of air compressor(s), a
receiver tank, pre-filter, coalescing filter, and double air dryer(s).
The design also incorporates the use of a clean-in-place (CIP) system for
cleaning cook, fermentation, distillation, evaporation, centrifuges, and other
systems. Fifty percent caustic soda is received by truck and stored in a tank.
Under normal operating circumstances, the plant will not have any wastewater
discharges that have been in contact with com, corn mash, cleaning system, or
contact process water. An ICM/Phoenix Bio-Methanator will reduce the BOD in
process water allowing complete reuse within the plant. The plant will have
blowdown discharges from the cooling tower and may have water discharge from any
water pre-treatment processes. Owner shall provide on-site connection to
sanitary sewer or septic system.
Most plant processes are computer controlled by a Siemens/Moore APACS
distributed control system with graphical user interface and three workstations.
The process control room control console will have dual monitors to facilitate
operator interface between two graphics screens at the same time. Additional
programmable logic controllers (PLCs) will control certain process equipment.
Design Builder provides lab equipment.
The cooking system requires the use of anhydrous ammonia, and other systems
require the use of sulfuric acid. Therefore, a storage tank for ammonia and a
storage tank for acid will be on site to
B-2
provide the quantities necessary. The ammonia storage requires that plant
management implement and enforce a Process Safety Management (PSM) program. The
plant design may require additional programs to ensure safety and to satisfy
regulatory authorities.
NOTE: Exhibit B is a general description of the plant's basic operation. Not all
equipment and equipment sizes quoted may be used on every plant. Site specific
equipment and equipment sizes will be determined during each plant's final
design.
B-3
EXHIBIT C
OWNER'S RESPONSIBILITIES
The Owner shall perform and provide the permits, authorizations, services and
construction as specifically described hereafter:
1) LAND AND GRADING -- Owner shall provide a site near or in Richardton, North
Dakota. Owner shall obtain all legal authority to use the site for its
intended purpose and perform technical due diligence to allow
Design-Builder to perform including, but not limited to, proper zoning
approvals, building permits, elevation restrictions, soil tests, and water
tests. The site shall be rough graded per Design-Builder specifications and
be +/- three inches of final grade including the rough grading for Site
roadways. The site soils shall be modified as required to provide a minimum
allowable soil bearing pressure as described in Table 1.
Other items to be provided by the Owner include, but are not limited to,
the following: initial site survey (boundary and topographic) as required
by the Design-Builder, layout of the property corners including two
construction benchmarks, Soil Borings and subsequent Geotechnical Report
describing recommendation for Roads, foundations and if required, soil
stabilization/remediation, land disturbance permit, erosion control permit,
site grading as described above with minimum soil standards, placement of
erosion control measures, plant access road from a county, state or federal
road designed to meet local county road standards, plant storm and sanitary
sewers, fire water system with hydrants and plant water main branches taken
from the system to be within five feet of the designated building
locations, all tanks, motors and other equipment associated with or
necessary to operate the fire water loop and associated systems, plant
roads as specified and designed for the permanent elevations and effective
depth, "construction" grading plan as drawn (including site retention
pond), plant water well and associated permit(s). Owner shall also provide
the final grading, seeding, and mulching, and the site fencing at the site.
Owner is encouraged to obtain preliminary designs/information and estimates
of the cost of performing all Owner required permits and services as stated
in this Exhibit C. Specifically, the cost of the fire water systems
(including associated fire water pumps, required tank, building (if
required), sprinklers, and all other equipment and materials associated
with the fire water delivery systems) is estimated being in excess of
$800,000. The requirements of each state and the decisions of each Owner
will increase or decrease the actual cost.
The Owner's required activities related to site preparation for
construction are to be divided into Phase I and Phase II activities as
described below:
DELIVERABLES BY OWNER PRIOR TO START OF PHASE I CIVIL DESIGN:
Procure Boundary & Topographic Survey (to one foot contours)
Procure Soil Borings and Geotechnical Report with recommendations
(at Design-Builder's requested locations and depth)
C-1
PHASE I (DELIVERABLE SITE):
Design-Builder provides engineering services to develop these items:
1. Final Plant Layout with FFE and Top of Road Elevations
2. Final Cut/Fill Quantity Calculations
3. Grading and Erosion Control Plan
4. Clear & Grubbing Plan - graded to +/- 3" of subgrade
Subgrade is defined as 1' below proposed Building FFE and
Administration Building FFE and 20" to 30" (based on rail
designer input) below top of rail for the rail spurs. Subgrade
for the in-plant roads will be determined upon recommendations
from the geotechnical engineer (12" to 24" below final top of
road)
* Owner shall prepare site according to Design-Builder's engineering
plans for the above items.
Plant Access Road and all in-plant roads (which will act as base for final
roadway system)
Soil Stabilization
Site Grading
Replacement Fill
Construction Layout (parking, laydown, access areas, temp. drainage and
temp. facilities) Storm Water Drainage & Detention
DELIVERABLES BY OWNER PRIOR TO START OF PHASE II CIVIL DESIGN:
Owner shall determine its water source and provide Design-Builder an
independent analysis of the water source.
PHASE II SITE WORK (FINAL CIVIL DESIGN PLANS):
Design-Builder provides engineering services to develop these items:
Site Utilities (Within Property Line):
1. Sanitary Sewer System
2. Potable Water Supply and Distribution
3. Process Water Supply and Distribution
4. Gas Supply and Distribution
5. Fire Loop and Fire Protection System
6. Site Electric
7. Site Natural Gas/Propane
Wells and Well Pumps (supply of sufficient quantity for construction
activities)
Minimum 3 Phase. 480 Volt, 1,000 KVA Electrical Power Available for
Construction at two locations (at Design-Builder's requested location)
Design/Builder shall be reimbursed on a "Time & Material" basis for any
management of these Owner requirements and any design engineering requested by
the Owner not otherwise required to be provided by Design-Builder pursuant to
this Agreement.
C-2
2) PERMITS - Owner shall obtain all Operating Permits including, but not
limited to, air quality permits, in a timely manner to allow construction
and startup of the plant as scheduled by Design-Builder. Owner shall obtain
all testing and site inspections required to secure the necessary operating
permits.
3) STORM WATER RUNOFF PERMIT - Owner shall obtain the construction storm-water
runoff permit, permanent storm-water runoff permit, and the erosion
control/land disturbance permit.
4) NORTH DAKOTA POLLUTANT ELIMINATION DISCHARGE PERMIT - Owner shall obtain a
permit to discharge cooling tower water and reverse osmosis ("R.O.") reject
water and any other waste water directly to a designated waterway or other
location. Owner shall supply the discharge piping to transport to the
designated waterway or other location.
5) NATURAL GAS, PROPANE, COAL SUPPLY AND ASH DISPOSAL AGREEMENTS - Owner shall
procure and supply a supply of natural gas or propane for the preheat and
start up of the coal combustor. For the coal combustor, two separate gas
burners will require natural gas or propane: the underbed air preheater
rated for 20 mmbtu/hr and the overfire air preheater rated for 50 mmbtu/hr.
Consumption will start at approximately 30% of the total rating and be
ramped up to maximum over a nominal 8 hr period, depending on the starting
temperature. Minimum demand will be 21 mm btu/hr and ramp up to a maximum
of 70 mm btu/hr. Owner shall provide all natural gas and/or propane piping
to the use points and supply meters, regulators, and vaporizers to provide
burner tip pressures as specified by Design-Builder. Owner shall also
supply a digital flowmeter on-site with appropriate output for monitoring
by the plant's computer control system.
The coal combustor design will be based on the North Dakota lignite coal
sample provided by Owner and tested by ICM on September 22, 2004, and the
ultimate analysis results performed by Hazen Research on October 27, 2004.
Planned emission control is to mix limestone with the coal, fed to the
combustor and dry scrubber treatment of the flue gas. Procurement and
supply of coal and limestone will be the responsibility of the Owner.
All ash is removed from the system as fly ash. Disposal will be at Owner's
responsibility.
6) ELECTRICAL SERVICE - (1) The Owner is responsible to secure continuous
service from an energy supplier to serve the facility. The service from the
energy supplier shall be of sufficient size to provide at a minimum 10 MW
of electrical capacity to the site. (2) The Owner is responsible for
procurement, installation and maintenance of the site distribution system,
including but not limited to the required substation and all associated
distribution lines, switchgear, sectional cabinets, distribution
transformers, transformer pads, etc. An on-site primary digital meter is
also to be supplied for monitoring of electrical usage and demand. This
meter must have the capability to be monitored via a telephone line or
other electrical signal. (3) The responsibility of the Design-Builder
starts at the secondary electrical terminals of the site distribution
system transformers that have been installed by Owner (i.e.. the 480 volt
terminals for the process building transformers; the 480 volt
C-3
terminals for the energy center transformers; the 480 volt terminals for
the grains transformer; the 480 volt terminals for the pumphouse
transformer; and the 4160 volt terminals for the chiller transformer; and
the 4160 volt terminals of the thermal oxidizer transformer). (4) The site
distribution system requirements, layout, and meters are to be determined
jointly by the Owner, the Design-Builder and the energy supplier.
Design-Builder will be providing soft start motor controllers for all
motors greater than 150 horsepower and where demanded by process
requirements. Owner is encouraged to discuss with its electrical service
supplier whether additional soft start motor controllers are advisable for
this facility and such can be added, with any increased cost being an
Owner's cost.
Design-Builder will provide power factor correction to 0.92 lagging at
plant nameplate capacity. Owner is encouraged to discuss with its
electrical service supplier any requirements for power factor correction
above 0.92 lagging. Additional power factor correction can be added with
any increased cost being an Owner's cost.
7) WATER SUPPLY AND SERVICE AGREEMENT - Owner shall supply on-site process
wells or other water source capable of providing a quantity of water which
includes process water, R.O. feed water, cooling tower make-up water, of a
quality which will allow discharges to comply with NPDES limits. Owner
should consider providing a redundant supply source. Design-Builder shall
provide the standard zeolite water softener system. Any increased costs
incurred for another water treatment system if water does not meet the
quality requirements shall be the responsibility of the Owner. Owner will
supply one process fresh water supply line terminating within five (5) feet
of the point of entry designated by Design-Builder, one potable supply line
terminating within five (5) feet of the process building at a point of
entry designated by Design-Builder, and one potable supply line to the
administration building at a point of entry designated by administration
building contractor.
Owner is advised that most projects require a water pretreatment system
including a reverse osmosis unit. Such system is an Owner's cost and Owner
is advised that the purchase and installation cost of a water pretreatment
system may exceed $2,000,000. Owner is also advised that such systems may
be leased if Owner desires to avoid the costs of owning such a system.
8) WASTEWATER DISCHARGE SYSTEM, PERMITS AND/OR SERVICE AGREEMENT - Owner to
provide the discharge piping, septic tank and drainfield system or connect
to municipal system as required for the sanitary sewer requirements of the
Plant. These provisions shall comply with all federal, state, and local
regulations, including any permitting issues.
9) ROADS AND UTILITIES - Owner shall provide and maintain the ditches and
permanent roads, including the gravel, pavement or concrete, with the roads
passing standard compaction tests. (Design-Builder will maintain aggregate
construction roads during construction of the Plant and will return to
original pre-construction condition prior to Owner completing final grade
and surfacing.)
Except as otherwise specifically stated herein the Owner shall install all
utilities so that they are within five (5) feet of the designated
building/structure locations.
C-4
10) ADMINISTRATION BUILDING - The administration building - one story free
standing, office computer system, telephone system, office copier and fax
machine and office furniture and any other office equipment and personal
property for the administration building shall be the sole and absolute
cost and responsibility of Owner and Design-Builder shall have no
responsibility in regards thereto.
11) MAINTENANCE AND POWER EQUIPMENT - The maintenance and power equipment as
described in Table 2 and any other maintenance and power equipment as
required by the plant or desired by Owner shall be the sole and absolute
cost and responsibility of Owner and Design-Builder shall have no
responsibility in regards thereto.
12) RAILROADS - Owner is responsible for any costs associated with the
railroads including, but not limited to, all rail design and engineering
and construction and Design-Builder shall have no responsibility in regards
thereto.
13) DRAWINGS - Owner shall supply drawings to Design-Builder of items supplied
under items 10) and 12) and also supply Phase II redline drawings.
14) FIRE PROTECTION SYSTEM - Fire protection system requirements vary by
governmental requirements per location and by insurance carrier
requirements. Owner is responsible to provide the required fire protection
system for the Plant. This may include storage tanks, pumps, underground
fire water mains, fire hydrants, foam or water monitor valves, sprinkler
systems, smoke and heat detection, deluge systems, or other provisions as
required by governmental codes or Owner's insurance carrier's fire
protection criteria. Design-Builder will provide assistance to the Owner on
a "Time & Material" basis for design and/or construction of the fire
Protection Systems required for the plant.
TABLE 1 MINIMUM SOIL BEARING PRESSURE-RESPONSIBILITY OF OWNER
REQUIRED ALLOWABLE SOIL BEARING PRESSURE
DESCRIPTION (POUNDS PER SQUARE FOOT)
- ----------- ----------------------------------------
Grain Storage Silos 8,000
Cook Water lank 3,500
Methanator Feed Tank 3,500
Liquefaction Tank #1 3,500
Liquefaction Tank #2 3,500
Coal Combustor 4,000
Coal Storage Silo #1 6,000
Coal Storage Silo #2 6,000
Lime Silo 6,000
Coal Unloading Building 4,000
Boiler 4,000
Dust Collector 3,500
Fermentation Tank #1 4,000
C-5
Fermentation Tank #2 4,000
Fermentation Tank #3 4,000
Fermentation Tank #4 4,000
Beerwell 4,000
Whole Stillage Tank 3,500
Thin Stillage Tank 3,500
Syrup Tank 3,500
190 Proof Day Tank 3,000
200 Proof Day Tank 3,000
Denaturant Tank 3,000
Fire Water Tank 3,000
Denatured Ethanol Tank #1 4,000
Denatured Ethanol Tank #2 4,000
All Other Areas 3,000
TABLE 2 MAINTENANCE AND POWER EQUIPMENT - RESPONSIBILITY OF OWNER
DESCRIPTION ADDITIONAL DESCRIPTION
- ----------- ----------------------
Spare Parts Spare parts
Parts bins
Misc. materials, supplies and equipment
Shop supplies and equipment One shop welder
One portable gas welder
One plasma torch
One acetylene torch
One set of power tools
Two sets of hand tools with tool boxes
Carts and dollies
Hoists (except centrifuge overhead crane)
Shop tables
Maintenance office furnishings & supplies
Fire Extinguishers
Reference books
Safety manuals
Safety cabinets & supplies, etc.
Rolling stock Used 1 1/2 yard front end loader
New Skid loader
Used Fork lift
Used Scissors lift, 30 foot
Used Pickup truck
Track Mobile
C-6
EXHIBIT D
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "License Agreement") is entered into and made
effective as of the 9 day of Sept, 2005 ("Effective Date") by and between Red
Trail Energy, LLC, a North Dakota limited liability company ("OWNER"), and ICM,
Inc., a Kansas corporation ("ICM").
WHEREAS, OWNER has entered into that certain Lump Sum Design-Build Contract
dated August 29, 2005 (the "Contract") with Fagen, Inc., a Minnesota corporation
("Fagen"), under which Fagen is to design and construct a 50 million gallon per
year ethanol plant for OWNER to be located in or near Richardton, North Dakota
(the "Plant");
WHEREAS, ICM has granted Fagen the right to use certain proprietary
technology and information of ICM in the design and construction of the Plant;
and
WHEREAS, OWNER desires from ICM, and ICM desires to grant to OWNER, a
license to use such proprietary technology and information in connection with
OWNER'S ownership and operation of the Plant, all upon the terms and conditions
set forth herein;
NOW, THEREFORE, the parties, in consideration of the foregoing premises and
the mutual promises contained herein and for other good and valuable
consideration, receipt of which is hereby acknowledged, agree as follows:
1. Upon OWNER's payment in full of all amounts due and owing to Fagen under
the Contract, ICM agrees to grant to OWNER a limited license to use the
Proprietary Property (hereinafter defined) solely in connection with the
design, construction, operation, maintenance and repair of the Plant,
subject to the limitations provided herein (the "Purpose").
2. The "Proprietary Property" means, without limitation, documents,
Operating Procedures (hereinafter defined), materials and other information
that are furnished by ICM to OWNER, whether directly or indirectly through
Fagen, in connection with the Purpose including, without limitation, the
design, arrangement, configuration, and specifications of (i) the
combinations of distillation, evaporation, and alcohol dehydration
equipment (including, but not limited to, pumps, vessels, tanks, heat
exchangers, piping, valves and associated electronic control equipment) and
all documents supporting those combinations; (ii) the combination of the
distillers grain drying (DGD), and heat recovery steam generation (HRSG)
equipment (including, but not limited to, pumps, vessels, tanks, heat
exchangers, piping and associated electronic control equipment) and all
documents supporting those combinations; and (iii) the computer system,
known as the distributed control system (DCS and/or PLC) (including, but
not limited to, the software configuration, programming, parameters, set
points, alarm points, ranges, graphical interface, and system hardware
connections) and all documents supporting that system. The "Operating
Procedures" means, without limitation, the process equipment and
specifications manuals, standards of quality, service protocols, data
collection methods, construction specifications, training methods,
engineering standards and any other information prescribed by ICM from time
to time concerning the Purpose. Proprietary Property shall not include any
information or materials that OWNER can demonstrate by written
documentation: (i) was lawfully in the possession of OWNER prior to
disclosure by ICM; (ii) was in the public domain prior to disclosure by
ICM; (iii) was disclosed to OWNER by a third party having the legal right
to possess and disclose such information or materials; or (iv) after
disclosure by ICM comes into the public domain through no fault of OWNER or
its directors, officers, employees, agents, contractors,
D-1
consultants or other representatives (hereinafter collectively referred to
as "Representatives"). Information and materials shall not be deemed to be
in the public domain merely because such information is embraced by more
general disclosures in the public domain, and any combination of features
shall not be deemed to be within the foregoing exceptions merely because
individual features are in the public domain if the combination itself and
its principles of operation are not in the public domain.
3. OWNER shall not use the Proprietary Property for any purpose other than
the Purpose. OWNER shall not use the Proprietary Property in connection
with any expansion or enlargement of the Plant.
4. OWNER's failure to materially comply with the Operating Procedures shall
void all guarantees, representations and warranties, whether expressed or
implied, if any, that were given by ICM to OWNER, directly or indirectly
through Fagen, concerning the performance of the Plant. OWNER agrees to
indemnify, defend and hold harmless ICM, Fagen and their respective
Representatives from any and all losses, damages and expenses including,
without limitation, reasonable attorneys' fees resulting from, relating to
or arising out of Owner's or its Representatives' (i) failure to materially
comply with the Operating Procedures or, (ii) negligent or unauthorized use
of the Proprietary Property.
5. Any and all modifications to the Proprietary Property by OWNER or its
Representatives shall be the property of ICM. OWNER shall promptly notify
ICM of any such modification and OWNER agrees to assign all of its right,
title and interest in such modification to ICM; provided, however, OWNER
shall retain the right, at no cost, to use such modification in connection
with the Purpose.
6. ICM has the exclusive right and interest in and to the Proprietary
Property and the goodwill associated therewith. OWNER will not, directly or
indirectly, contest ICM's ownership of the Proprietary Property. OWNER'S
use of the Proprietary Property does not give OWNER any ownership interest
or other interest in or to the Proprietary Property except for the limited
license granted to OWNER herein.
7. OWNER shall pay no license fee or royalty to ICM for OWNER'S use of the
Proprietary Property pursuant to the limited license granted to OWNER, the
consideration for this limited license is included in the amounts payable
by OWNER to Fagen for the construction of the Plant under the Contract.
8. OWNER may not assign the limited license granted herein, in whole or in
part, without the prior written consent of ICM, which will not be
unreasonably withheld or delayed. Prior to any assignment, OWNER shall
obtain from such assignee a written instrument, in form and substance
reasonably acceptable to ICM, agreeing to be bound by all the terms and
provisions of this License Agreement. Any assignment of this License
Agreement shall not release OWNER from (i) its duties and obligations
hereunder concerning the disclosure and use of the Proprietary Property, or
(ii) damages to ICM resulting from, or arising out of, a breach of such
duties or obligations by OWNER or its Representatives. ICM may assign its
right, title and interest in the Proprietary Property, in whole or part,
subject to the limited license granted herein.
9. The Proprietary Property is confidential and proprietary. OWNER shall
keep the Proprietary Property confidential and shall use all reasonable
efforts to maintain the Proprietary Property as secret and confidential for
the sole use of OWNER and its Representatives for the Purpose. OWNER shall
retain all Proprietary Property at its principal place of business and/or
the Plant. OWNER shall not at any time without ICM's prior written consent,
copy, duplicate, record, or otherwise reproduce the Proprietary Property,
in whole or in part, or otherwise make the same available to any
unauthorized
D-2
person. OWNER shall not disclose the Proprietary Property except to its
Representatives who are directly involved with the Purpose, and even then
only to such extent as is necessary and essential for such Representative's
involvement. OWNER shall inform such Representatives of the confidential
and proprietary nature of such information. OWNER shall make all reasonable
efforts to safeguard the Proprietary Property from disclosure by its
Representatives to anyone other than permitted hereby. In the event that
OWNER or its Representatives are required by law to disclose the
Proprietary Property. OWNER shall provide ICM with prompt written notice of
same so that ICM may seek a protective order or other appropriate remedy.
In the event that such protective order or other appropriate remedy is not
obtained, OWNER or its Representatives will furnish only that portion of
the Proprietary Property which in the reasonable opinion of its or their
legal counsel is legally required and will exercise its reasonable efforts
to obtain reliable assurance that the Proprietary Properly so disclosed
will be accorded confidential treatment.
10. OWNER agrees to indemnify ICM for any and all damages (including,
without limitation, reasonable attorneys' fees) arising out of or resulting
from any unauthorized disclosure or use of the Proprietary Property by
OWNER or its Representatives. OWNER agrees that ICM would be irreparably
damaged by reason of a violation of the provisions contained herein and
that any remedy at law for a breach of such provisions would be inadequate.
Therefore, ICM shall be entitled to seek injunctive or other equitable
relief in a court of competent jurisdiction against OWNER or its
Representatives for any unauthorized disclosure or use of the Proprietary
Property without the necessity of proving actual monetary loss or posting
any bond. It is expressly understood that the remedy described herein shall
not be the exclusive remedy of ICM for any breach of such covenants, and
ICM shall be entitled to seek such other relief or remedy, at law or in
equity, to which it may be entitled as a consequence of any breach of such
duties or obligations.
11. All provisions of this License Agreement shall survive and remain in
full force and effect notwithstanding any termination or expiration of the
Contract or the license granted herein under paragraph 12.
12. ICM may terminate the limited license granted to OWNER herein upon
written notice to OWNER if OWNER willfully or wantonly uses the Proprietary
Property for any purpose, or discloses the Proprietary Property to anyone,
other than permitted herein. Upon termination of the license, OWNER, upon
request by ICM, shall promptly return to ICM all documents in OWNER's or
its Representatives' possession that contain Proprietary Property.
13. The laws of the State of Kansas, United States of America, shall govern
the validity of the provisions contained herein, the construction of such
provisions, and the interpretation of the rights and duties of the parties.
Any legal action brought to enforce or construe the provisions of this
License Agreement shall be brought in the federal or state courts located
in Kansas, and the parties agree to and hereby submit to the exclusive
jurisdiction of such courts and agree that they will not invoke the
doctrine of forum non conveniens or other similar defenses in any such
action brought in such courts. In the event the Plant is located in, or
OWNER is organized under the laws of, a country other than the United
States of America, OWNER hereby specifically agrees that any injunctive or
other equitable relief granted by a court located in the State of Kansas,
United States of America, or any award by a court located in the State of
Kansas, shall be specifically enforceable as a foreign judgment in the
country in which the Plant is located, OWNER is organized or both, as the
case may be, and agrees not to contest the validity of such relief or award
in such foreign jurisdiction, regardless of whether the laws of such
foreign jurisdiction would otherwise authorize such injunctive or other
equitable relief, or award.
D-3
14. OWNER hereby agrees to waive all claims against ICM and ICM's
Representatives for any consequential damages that may arise out of or
relate to this License Agreement, the Contract or the Proprietary Property
whether arising in contract, warranty, tort (including negligence), strict
liability or otherwise, including but not limited to losses of use,
profits, business, reputation or financing.
15. The terms and conditions of this License Agreement constitute the
entire agreement between the parties with respect to the subject matter
hereof and supersede any prior understandings, agreements or
representations by or between the parties, written or oral. Any rule of
construction to the effect that any ambiguity is to be resolved against the
drafting party shall not be applicable in the interpretation of this
License Agreement. This License Agreement may not be modified or amended at
any time without the written consent of the parties.
16. All notices, requests, demands, reports, statements or other
communications (herein referred to collectively as "Notices") required to
be given hereunder or relating to this License Agreement shall be in
writing and shall be deemed to have been duly given if transmitted by
personal delivery or mailed by certified mail, return receipt requested,
postage prepaid, to the address of the party as set forth below. Any such
Notice shall be deemed to be delivered and received as of the date so
delivered, if delivered personally, or as of the second business day
following the day sent, if sent by certified mail. Any party may, at any
time, designate a different address to which Notices shall be directed by
providing written notice in the manner set forth in this paragraph.
17. In the event that any of the terms, conditions, covenants or agreements
contained in this License Agreement, or the application of any thereof,
shall be held by a court of competent jurisdiction to be invalid, illegal
or unenforceable, such term, condition, covenant or agreement shall be
deemed void ab initio and shall be deemed severed from this License
Agreement. In such event, and except if such determination by a court of
competent jurisdiction materially changes the rights, benefits and
obligations of the parties under this License Agreement, the remaining
provisions of this License Agreement shall remain unchanged unaffected and
unimpaired thereby and, to the extent possible, such remaining provisions
shall be construed such that the purpose of this License Agreement and the
intent of the parties can be achieved in a lawful manner.
18. The duties and obligations herein contained shall bind, and the
benefits and advantages shall inure to, the respective successors and
permitted assigns of the parties hereto.
19. The waiver by any party hereto of the breach of any term, covenant,
agreement or condition herein contained shall not be deemed a waiver of any
subsequent breach of the same or any other term, covenant, agreement or
condition herein, nor shall any custom, practice or course of dealings
arising among the parties hereto in the administration hereof be construed
as a waiver or diminution of the right of any party hereto to insist upon
the strict performance by any other party of the terms, covenants,
agreement and conditions herein contained.
20. In this License Agreement, where applicable, (i) references to the
singular shall include the plural and references to the plural shall
include the singular, and (ii) references to the male, female, or neuter
gender shall include references to all other such genders where the context
so requires.
D-4
IN WITNESS WHEREOF, the parties hereto have executed this License Agreement, the
Effective Date of which is indicated on page I of this License Agreement.
OWNER: ICM:
Red Trail Energy, LLC ICM, Inc.
By: /s/ AMBROSE R. HOFF By: /s/ DAVE VANDER GRIEND
--------------------------------- ------------------------------------
Title: President, RTE Title: CEO
Date Signed : 9/9/05 Date Signed: 9-18-05
Address for giving notices: Address for giving notices:
Mick Miller 301 N First Street
Red Trail Energy, LLC Colwich,KS 67030
General Manager
PO Box 11
Rechardton, ND 58652
Mike Maus
Hardy, Maus, Nortsven, PC
PO Box 570
Dickinson, ND 58602
D-5
EXHIBIT E
Schedule of Values
Schedule of Values for
RED TRAIL ENERGY, LLC
PAYMENT REQUEST BREAKDOWN
DESCRIPTION:
- ------------
MOBILIZATION $ [ * ]
ENGINEERING $ [ * ]
GENERAL CONDITIONS (16 MONTHS) $ [ * ]
SITEWORK $ [ * ]
CONCRETE $ [ * ]
MASONRY $ [ * ]
STRUCTURAL STEEL & MISC. METALS $ [ * ]
LUMBER, CARPENTRY & FINISHES $ [ * ]
GIRTS, SIDING & ROOF DECK $ [ * ]
DOORS & WINDOWS $ [ * ]
PAINT $ [ * ]
GRAIN HANDLING SYSTEM $ [ * ]
DDG STORAGE BUILDING $ [ * ]
CORN UNIT CAR UNLOADING $ [ * ]
FIELD ERECTED TANKS $ [ * ]
COAL SYSTEM $ [ * ]
PROCESS TANKS & VESSELS $ [ * ]
MIXERS $ [ * ]
PUMPS $ [ * ]
HEAT EXCHANGERS $ [ * ]
SIEVE BOTTLES & BEADS $ [ * ]
CENTRIFUGES $ [ * ]
AIR COMPRESSORS $ [ * ]
METHANATOR $ [ * ]
COOLING TOWER $ [ * ]
ETHANOL LOADOUT $ [ * ]
VAPOR FLARE SYSTEM $ [ * ]
TRUCK SCALES & PROBE (115') $ [ * ]
PROCESS PIPING & VALVES $ [ * ]
INSULATION $ [ * ]
PLUMBING & HVAC $ [ * ]
ELECTRICAL $ [ * ]
START-UP $ [ * ]
DEMOB $ [ * ]
POLLUTION CONTROL EQUIPMENT $ [ * ]
CHILLER --
-----------
CONTRACT AMOUNT $75,841,740
[ * ] Portions omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.
E-1
EXHIBIT F
Progress Report (Example only; Illustrative purpose only)
A. Project Overview - Brief description of project including plant capacity,
major contractors (if applicable), completion dates (including Substantial
Completion Date, Final Completion Date, estimated performance testing start,
etc.), etc. Should also include progress reporting period.
B. Project Status - Divided into engineering, construction, and Owner
responsibilities as well as a summary describing project status as a whole.
Subsections include:
B1 - Engineering - Current month progress and status as compared to plan,
1-month look ahead/goals, issues being worked, critical path activities, and
statement regarding support of construction activities
B2 - Construction - Current month progress and status as compared to plan,
1-month look ahead/goals, issues being worked, critical path activities,
procurement activities (if applicable), subcontracting activities (if
applicable), and statement regarding completion of owner responsibilities as it
relates to Design-Builder completion of work schedule. In addition, it should
include:
A. Site Work and Utilities - Owner Responsibility
1. Plant Fire Water Loop - 98% Complete.
2. Railroad: Rail ties on tracks A and B are up to Rail Load out; tracks
C and D are installed past DDG building to rail car storage area.
Tracks A and B to be complete when Grains building is complete.
3. Power Company is 100% complete on permanent power.
4. Gas line to plant has commenced, gas to be on site by Oct. 21.
5. City water main from main entrance to tank is installed, awaiting word
from City.
6. Road work has started at main entrance and Admin. Area, final grading
has started in these areas as well.
B. Grains Storage & Handling
1. Grains receiving building is 95% complete.
2. Continuing to installing all miscellaneous ladders and platforms for
collectors and bag houses. Continuing to install dust collection
system for Grains receiving.
3. Electrical is right behind installing conduit and wire to equipment.
4. Pit area 95% complete.
5. Continue to install main legs for Grain to Silos.
6. HVAC equipment on site, yet to be installed.
C. Energy Building
1. 99% of Equipment installed.
2. Electrical nearly 94% complete. Have started bumping motors and
conveyors for rotation.
3. Steel 100% complete.
F-1
4. All end walls are complete with siding. Half of the roof is installed.
5. Mechanical piping is at 30% complete.
6. All RO equipment is installed. All totes are installed. Tubing to
Boiler and DA has started. Electrical completing installation for
power and controls to RO equipment.
D. Process / Fermentation Building
1. 99% of the Equipment is installed.
2. Piping is 98% complete.
3. Vinyl Composite tile 70% complete. Ceramic tile to bathrooms is
complete.
4. HVAC equipment installation is complete. Final tie ins for office
area, server room and maintenance room continuing.
E. Distillation and Evap Area
1. Mechanical is about 98% complete. Complete small bore piping where
needed.
2. Electrical is behind Mechanical installing instruments and wiring.
F. Tank Farm
1. Mechanical is 98% complete, waiting on Specialty items to arrive for
installation.
2. All pumps have been installed and piping is complete to and from.
3. Electrical continuing installation of cable tray, 95% of instruments
are installed, wire is about 85% complete.
G. Chiller Cooling Tower
1. Chiller Building -Overhead doors have been completed.
2. Cooling Tower erection is 100% complete.
3. HVAC unit on site, yet to be installed.
B3 - Commissioning and Start-up - Activities related to commissioning and
start-up including training completed, turnover packages completed,
status of testing procedures, etc.
B4 - Total Project - Overall project status, including critical path
activities.
C - Health and Safety - Summary including number of craft, number of first aid
cases, number of recordable cases, and number of lost time accidents. If
applicable, safety programs implemented at site, etc.
D - Schedule Including most recent updated schedule accompanied with schedule
overview, comparison to baseline, and critical path activities. The schedule
should correspond to application for payment.
E - Financial Including total of invoices submitted to date as well as change
orders submitted and status.
F-2
EXHIBIT G
REQUIRED PERMITS
RESPONSIBILITY FOR ASSISTANCE IN
NO. TYPE OF APPLICATION/PERMIT OBTAINING PERMIT PREPARATION NOTES
- --- ---------------------------- -------------------- -------------- ------------------------
1 Underground Utility Locating Design-Builder/Owner Notification service
Service for underground work.
2 Septic Tank & Drain Field Owner
Permit
3 Railroad Permit/Approval Owner Design-Builder
4 Archeological Survey Owner
5 Highway Access Permit Owner State Department of
Transportation or County
6 Building Permits Design-Builder
Mechanical Design-Builder
Electrical Design-Builder
Structures Design-Builder
7 Construction Air Permit Owner Design-Builder
8 SWPPP Construction Permit Owner Design-Builder
9 SWPPP Operations Permit Owner Design-Builder
10 NPDES Wastewater Permit Owner Design-Builder
11 Water Appropriation Permit Owner Design-Builder
12 Fire Protection Owner Design-Builder
13 Above Ground Storage Tank Design-Builder
Permit
G-1