TURNKEY ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT FOR ETHANOL PRODUCTION FACILITY

Exhibit 10.10

TURNKEY ENGINEERING, PROCUREMENT AND CONSTRUCTION

AGREEMENT FOR

ETHANOL PRODUCTION FACILITY

BETWEEN

PANDA HEREFORD ETHANOL, LP

A Delaware Limited Partnership

AND

LURGI PSI, INC.

A Tennessee Corporation

Dated as of October 15, 2005

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY PANDA ETHANOL, INC. FOR CERTAIN PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS AGREEMENT WITH “*****”.

TABLE OF CONTENTS

 

 

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EXHIBITS

 

 

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TURNKEY ENGINEERING, PROCUREMENT AND CONSTRUCTION

AGREEMENT FOR

ETHANOL PRODUCTION FACILITY

THIS TURNKEY ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT FOR ETHANOL PRODUCTION FACILITY (this “Agreement”), dated as of October 15, 2005 is by and between Panda Hereford Ethanol, LP, a Delaware Limited Partnership (hereinafter called “Owner”), and Lurgi PSI, Inc., a Tennessee Corporation (hereinafter called “Contractor”).

W I T N E S S E T H:

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Owner and Contractor hereby agree as follows:

ARTICLE I

GENERAL MATTERS

Section 1.01 . Defined Terms . As used in this Agreement, including the exhibits and other attachments hereto, each of the following terms shall have the meaning assigned to such term as set forth below:

“Acceptance Certificate” means a certificate relating to Final Acceptance pursuant to Section 10.06 .

“Affiliate” means, in relation to any Person, any Person: (i) which directly or indirectly controls, or is controlled by, or is under common control with, such other Person; or (ii) which directly or indirectly beneficially owns or holds fifty percent (50%) or more of any class of voting stock of such other Person; or (iii) which has fifty percent (50%) or more of any class of voting stock that is directly or indirectly beneficially owned or held by such other Person, or (iv) who either holds a general partnership interest in such other Person or such other Person holds a general partnership interest in the Person.

“Allocated Contract Price” means (a) for the time period between the Effective Date and the later of the Financial Closing Date and the date the Notice to Proceed is given to Contractor following the Financial Closing Date (the “Full Release Date”), the Ethanol Plant Price paid to Contractor; (b) for the time period after Full Release Date and until the time when *****% of the Ethanol Plant Price has been paid to Contractor, *****% of the Ethanol Plant Price plus the Ethanol Plant Price paid to Contractor to date; or (c) for the time period after *****% of the Ethanol Plant Price has been paid to Contractor, the Ethanol Plant Price paid to Contractor to date, as the case may be.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY PANDA ETHANOL, INC. FOR CERTAIN PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS AGREEMENT WITH “*****”.

 

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“Applicable Laws” means any act, statute, law, regulation, permit, license, ordinance, rule, judgment, order, decree, directive, guideline or policy (to the extent mandatory) or any similar form of decision or determination by, or any interpretation or administration of, any of the foregoing by any Government Authority with jurisdiction over the Facility, the Job Site, the performance of the Work or other services to be performed under this Agreement.

“Applicable Permits” means any and all permits, clearances, licenses, authorizations, consents, filings, exemptions or approvals from or required by any Government Authority that are necessary for the performance of the Work.

“Builder’s Risk Policy” has the meaning set forth in Section 9.09 .

“Business Day” means any day other than a Saturday, Sunday or a legal holiday in Dallas, Texas.

“Change in Law” means any of the following events or circumstances occurring after the date of execution of this Agreement: (i) an amendment, modification, supplement or other change in or repeal of an existing Applicable Law or Applicable Permit; or (ii) an enactment or making of a new Applicable Law or Applicable Permit.

“Change Order” has the meaning set forth in Section 7.01(a) .

“Changes” has the meaning set forth in Section 7.01(a) .

“Contract Amendment” shall mean a written agreement executed by both Parties and, if required, consented to by the Financing Parties, as set forth in Section 18.09 .

“Contractor Bonus” means a Schedule Bonus or Performance Bonus.

“Contractor Equipment” means all of the equipment, materials, apparatus, structures, tools, supplies and other goods provided by Contractor and its Subcontractors and Vendors for performance of the Work other than the Equipment.

“Contractor Event of Default” was the meaning set forth in Section 15.01 .

“Contractor Insurance Policies” means the insurance policies maintained by Contractor as required pursuant to Article IX .

“Contractor Internal Costs” means the internal costs of Contractor in performing the Prefunding Work, including general and administrative costs, labor costs, overhead and out-of-pocket expenses such as travel, telephone and photocopies.

“Contractor Permits” means the Applicable Permits listed on Exhibit L .

 

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“Contractor Project Engineering Manager” means the person designated by Contractor as having the responsibility, authority and supervisory power of Contractor for the Work.

“Contractor Project Manager” means the person designated by Contractor as having the centralized responsibility, authority and supervisory power of Contractor for design, construction, testing and start-up of the Ethanol Plant and the performance of the FBG Work, as well as all matters relating to the administration of the provisions of this Agreement.

“Contractor Site Manager” means an employee of Contractor, working under the supervision of the Contractor Project Manager, located at the Job Site on a daily basis.

“Contractor Taxes” has the meaning set forth in Section 3.24 .

“Contractor’s Guarantor” has the meaning set forth in Section 11.11 .

“Corporate Guaranty” has the meaning set forth in Section 11.11 .

“Cost Plus Formula” has the meaning as set forth in Section 7.02(e) .

“Damages” has the meaning set forth in Section 16.01 .

“Defect” means, any designs, engineering, software, drawings, components, tools, Equipment, installation, construction, or workmanship furnished or performed by or on behalf of Contractor or Work, (i) that does not materially conform to the terms of this Agreement, (ii) that is not of uniform good quality, free from material defects or deficiencies in design, application, manufacture or workmanship, or that contains materially improper or inferior workmanship or (iii) that either would materially and adversely affect (A) the performance of the Ethanol Plant and FBG Work under operating conditions as stated in Exhibit A, the Scope of Work (unless, in the alternative, Performance Liquidated Damages for such defect or deficiencies has been paid) or (B) the continuous safe operation of the Facility, all as determined by reference to Good Engineering Practices. The term “Defect” shall neither be construed to include material damage caused by Owner’s acts or omissions to the extent arising out of abuse, misuse or negligence in operations, maintenance and repair (unless such act or omission was taken or made at the direction of Contractor) or failure to follow Contractor’s or manufacturers’ recommendations and directions and Good Engineering Practices, nor shall the term “Defects” be construed to include ordinary wear and tear, erosion, corrosion, and deterioration (unless as a result of a Defect) or any other defect or deficiency that has no material impact on the Facility’s appearance, operation or useful life as specified in the Scope of Work.

“Denatured Ethanol” means fuel grade ethanol in accordance with and meets the requirements of ASTM D4806-01a dated August 10, 2001.

 

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“Dispute” has the meaning set forth in Section 17.01 .

“Drawings” means (i) all specifications, designs, plans, drawings, engineering and analyses, and other documents which determine, establish, define or otherwise describe the scope, quantity, and relationship of the components of the Ethanol Plant and the FBG Work, including the structure and foundation thereof, prepared by Contractor or any of its Subcontractors or Vendors and (ii) all technical drawings, operating drawings, specifications, shop drawings, diagrams, illustrations, schedules and performance charts, samples, patterns, models, operation and maintenance manuals, piping and instrumentation diagrams, underground structure drawings, conduit and grounding drawings, lighting drawings, conduit and cable drawings, electric one-lines, electric schematics, connection diagrams and technical information of a like nature required to be submitted by Contractor, or any Subcontractor or Vendor, from time to time under this Agreement which illustrates any of the Equipment or any other portion of the Work, either in components or as completed.

“Effective Date” means the date on which all of the following have occurred: (a) this Agreement has been executed and delivered by both Owner and Contractor as set forth on Page 1 hereof, (b) Owner has paid to Contractor all amounts, if any, due under the terms of that certain Term Sheet between the Parties, and (c) Owner has issued to Contractor a Notice to Proceed under Section 5.01 and in the event any such Notice to Proceed requires the payment of any amount due pursuant to Exhibit D, such payments are made. The Parties shall confirm the Effective Date in writing.

“Electric Power Consumption” means the overall electric power consumed by the Ethanol Plant in kWh as measured at the meter for equipment specifically and directly involved in the production of ethanol and wet distiller’s grain in accordance with the Scope of Work. This does not include any CO ₂ processing, grain handling, or FBG or natural gas boiler electrical power consumption.

“Electric Power Consumption Guarantee” has the meaning set forth in Section 11.04(a) .

“Emissions Guarantee” has the meaning set forth in Section 11.04(e) .

“Equipment” means all of the equipment, materials, apparatus, structures, tools, supplies, goods and other items provided by Contractor and its Subcontractors and Vendors that are installed or incorporated into the Ethanol Plant or otherwise form or are intended to form part of the Work (other than Contractor Equipment). For avoidance of doubt, the FBG shall not constitute a part of the Equipment.

“Ethanol Plant” means the Facility, excluding both the Fluidized Bed Gasifier Equipment and the FBG Work.

 

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“Ethanol Plant Price” means the Separated Contract Price less the FBG Work Price.

“Ethanol Plant Reliability Guarantee” has the meaning set forth in Section 11.04(i) .

“Ethanol Production Rate” means the production of Denatured Ethanol measured in gallons per hour.

“Ethanol Production Rate Guarantee” means the production rate of Denatured Ethanol as guaranteed by Contractor pursuant to Section 11.04(c) .

“Ethanol Yield” means the ratio in weight (pounds) of un-denatured ethanol per weight (pounds) of starch, based on Un-denatured Ethanol density of 6.60 pounds per US gallon at 60F, containing a maximum of 0.5% water per weight. The yield is based on a feedstock specification of 56 lb per bushel test weight #2 yellow corn containing a maximum of 15.0%moisture (by weight), a maximum of 1% foreign material (by weight), a minimum of 70% of dry fermentable starch (by weight) and zero aflatoxin tolerance.

“Ethanol Yield Guarantee” has the meaning set forth in Section 11.04(d) .

“Facility” means the nominal 105 million gallon per year design capacity of Denatured Ethanol production facility consisting of all necessary and fully functional systems and equipment, apparatus, accessories, auxiliaries and controls capable of fuel grade ethanol production, and wet distillers grain production, which Facility includes the Ethanol Plant and an auxiliary natural gas boiler to be supplied by Contractor and the FBG to be supplied by the Fluidized Bed Gasifier Supplier, to be located on the Property Site as more particularly described in the Scope of Work.

“FBG Mechanical Completion” means that with respect to the FBG Work (i) the FBG and all Equipment has been installed with the required connections and controls to deliver steam to the Ethanol Plant; (ii) the FBG and all Equipment has been installed in accordance with construction drawings, the Scope of Work and manufacturers recommendations, checked for alignment, lubrication and rotation; (iii) all systems have been checked out, and are ready for safe and proper operation; (iv) all instrumentation (including Continuous Emissions Monitoring Systems) is operational and has been calibrated in accordance with manufacturers’ standards and guidelines and loop checked; and (v) all systems have been tested, flushed and cleaned out as necessary and restored in accordance with the Scope of Work.

“FBG Mechanical Completion Date” means the date when FBG Mechanical Completion is achieved.

“FBG Purchase Agreement” means that separate agreement between Owner and the Fluidized Bed Gasifier Supplier in Appendix A of Exhibit A governing the supply of

 

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the FBG for the Facility, including the design, engineering, procurement, training, commissioning, start-up and testing activities to be performed by the Fluidized Bed Gasifier Supplier directly for Owner.

“FBG Schedule Liquidated Damages” has the meaning set forth in Section 11.06 (a) .

“FBG Work” means Contractor’s design, engineering, procurement and construction for the installation of the FBG and the tie-in of the FBG to the Ethanol Plant in accordance with the Scope of Work.

“FBG Work Price” shall mean the price for the FBG Work, as stated in Exhibit J, as amended from time to time pursuant to the terms hereof.

“Field Milestone Certification” means a duly executed certificate in substantially the form of the Field Milestone Certification in Exhibit E attached hereto, which is submitted by Contractor to Owner with a Request for Payment.

“Final Acceptance” shall mean that all of the following have occurred: (i) Substantial Completion of the Ethanol Plant has been achieved; (ii) the Guaranteed Performance Tests applicable to the Ethanol Plant, mechanical calibrations, have been successfully completed and any Defects found have been corrected; (iii) either (A) the Guaranteed Performance Levels applicable to the Ethanol Plant specified in Section 11.04 have been met or exceeded as determined pursuant to Section 11.09 , or (B) the Ethanol Plant has achieved at a minimum the Minimum Performance Levels as determined pursuant to Section 11.09 and Contractor has paid all Performance Liquidated Damages applicable to the Ethanol Plant as elected or required pursuant to Section 11.05 and Section 11.06 ; (iv) the Ethanol Plant has satisfied the Emissions Guarantee and the Noise Guarantee, as more fully provided herein; (v) the Ethanol Plant has been constructed in accordance with this Agreement and the Drawings; (vi) the Final Plans accurately reflect the Ethanol Plant as constructed; (vii) the Ethanol Plant is capable of being operated in a safe manner in accordance with the terms of this Agreement; (viii) Contractor shall have delivered to Owner all operation and maintenance manuals and Final Plans relating to the Ethanol Plant in accordance with the Scope of Work; (ix) no defective or incomplete portions of the Work exist that have or could reasonably have a material negative impact on the operation or performance of the Ethanol Plant as required under this Agreement; (x) either (A) all items on the Punch List applicable to the Ethanol Plant have been completed or (B) the Parties have reached an agreement pursuant to Section 10.05(c) and Contractor has paid all amounts due to Owner pursuant thereto; (xi) all of Contractor’s cleanup and related obligations have been completed; (xii) any and all Liens in respect to this Agreement, the Equipment, the Job Site or any fixtures, personal property or Equipment included in the Work and related to the Ethanol Plant or the FBG Work created by, through or under, or as a result of any act or omission of, Contractor or any Subcontractor, Vendor or other Person providing labor or materials in connection with the Work shall have been released in accordance with Section 3.25 and in a form

 

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reasonably satisfactory to Owner in accordance with Exhibit R and Exhibit R-1 attached hereto (provided that Contractor’s Final Lien Waiver and Release related to the Ethanol Plant, in substantially the form of Exhibit R attached hereto, shall be given concurrently with Final Acceptance of the Ethanol Plant and payment of amounts due by Owner in connection therewith); (xiii) Contractor shall have paid all Schedule Liquidated Damages and Performance Liquidated Damages related to the Ethanol Plant due under this Agreement, if any; (xiv) all other outstanding obligations of Contractor relating to the Ethanol Plant hereunder that Owner has notified Contractor of shall have been satisfied; (xv) spare parts required under this Agreement with respect to the Ethanol Plant have been delivered by Contractor to the Property Site in accordance with Section 3.26(a); (xvi) Contractor has provided Owner with copies of all Contractor’s Applicable Permits relating to the Ethanol Plant; and (xvii) Owner has approved of and signed the Final Acceptance Certificate pursuant to Section 10.06 . If however, Owner has failed or refused to sign such Certificate after request by Contractor, such matter may be submitted for dispute resolution in accordance with Article XVII.

“Final Acceptance Certificate” means an Acceptance Certificate executed pursuant to Section 10.06 .

“Final Acceptance Date” means the first date on which Final Acceptance has been achieved.

“Final Plans” means final Drawings and final specifications, as revised to reflect the changes during construction, and shall include as-built drawings, piping and instrumentation diagrams, underground structure drawings (including buried piping, all utilities, and critical hidden items), electric one-lines, electric schematics and connection diagrams.

“Financial Closing” shall mean that all of the following events shall have occurred (which events may occur over a period of time) with respect to the Facility: (i) the Financing Documents have been fully executed (which documents may be executed over a period of time) which together provide for financing for the Facility in an amount and on the terms acceptable to Owner; (ii) all conditions precedent to the initial availability of funds under the Financing Documents referred to in the preceding clause (i) have been fulfilled or waived and the first draw thereunder has been made by Owner; and (iii) Owner has received commitments for such equity as is required by Owner and satisfies the requirements of the Financing Parties.

“Financial Closing Date” shall mean the actual date of Financial Closing as specified by Owner to Contractor pursuant to Section 4.08 .

“Financing Documents” means all the loan agreements, notes, indentures, securities, debt instruments, bonds, security agreements, swap agreements, letters of credit, equity purchase agreements and other documents relating to the financing (including refinancing) of the Facility or any part thereof.

 

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“Financing Parties” means the lenders, security holders, investors, export credit agencies, multilateral institutions, equity providers and others providing financing or refinancing to or on behalf of Owner, for the development, construction, ownership, operation and maintenance of the Facility or any portion thereof, or any trustee or agent acting on behalf of any of the foregoing.

“Fluidized Bed Gasifier Equipment” or “Gasifier Equipment” or “FBG” means the fluidized bed gasifier with a fired steam generation unit and all related accessory equipment, including the biomass handling equipment, supplied by the Fluidized Bed Gasifier Supplier pursuant to the terms of the FBG Purchase Agreement.

“Fluidized Bed Gasifier Supplier” means Energy Products of Idaho (EPI). For avoidance of doubt, the Fluidized Bed Gasifier Supplier shall not (in respect of its obligations relating to the design, engineering, manufacture, delivery, commissioning, start-up and testing of the FBG) constitute a Vendor or Subcontractor under this Agreement.

“Force Majeure Event” has the meaning set forth in Section 14.01 .

“Good Engineering Practices” means the practices generally recognized and accepted as guidelines defining the standard of care that documents the engineering practices with respect to design, construction, documentation, operation, and maintenance of industrial facilities (including but not limited to the engineering, operating and safety practices generally applied to ethanol facilities) such as will be constructed in accordance with the terms of this Agreement.

“Government Authority” means any and all federal, state, county, city, municipal, local or regional authorities, departments, bodies, commissions, corporations, branches, directorates, agencies, ministries, courts, tribunals, judicial authorities, legislative bodies, administrative bodies, regulatory bodies, autonomous or quasi-autonomous entities or taxing authorities of the United States of America or any department, municipality or other political subdivision thereof.

“Guaranteed Dates” means Guaranteed Interim Completion Date, Guaranteed Substantial Completion Date, Guaranteed FBG Mechanical Completion Date, and Final Acceptance Date.

“Guarantee Design Conditions” has the meaning assigned to such term in the Scope of Work.

“Guaranteed FBG Mechanical Completion Date” means the date which is 45 calendar days after the latest of the Scheduled FBG Delivery Dates set forth in Exhibit A , as such date may be adjusted by (i) the total number of days more or less, if any, before or after the Scheduled FBG Delivery Dates and the date the applicable deliverable is actually delivered to the Job Site by the Fluidized Bed Gasifier Supplier, (ii) Force Majeure Events under Article XIV, and (iii) Owner Caused Delays under Section 14.04 .

 

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“Guaranteed Interim Completion Date” means January 1, 2007, as such date may be extended under the terms of this Agreement.

“Guaranteed Performance Levels” means the performance levels of the Ethanol Plant as guaranteed by Contractor pursuant to Section 11.04 .

“Guaranteed Performance Tests” means collectively all guaranteed performance tests as described in the Scope of Work.

“Guaranteed Substantial Completion Date” means February 1, 2007, as such date may be extended under the terms of this Agreement.

“Hazardous Material” means any substance deemed as toxic, contaminated or hazardous under any Applicable Law or Applicable Permit.

“Initial Site Mobilization” means the first instance when any of Contractor or its or its Subcontractors’ or Vendors’ Labor or other representatives is present on the Property Site after Owner has granted to Contractor care, custody and control of the portion of the Property Site that is part of the Job Site.

“Interim Completion” shall mean that (i) Mechanical Completion of the Ethanol Plant has occurred; (ii) the Ethanol Plant is Ready for Start-Up; (iii) the Ethanol Plant has achieved, during a minimum continuous production period of 72 hours, on average, not less than 75 percent of the Ethanol Production Rate Guarantee, as set forth in Section 11.04, 11.09 and in the Scope of Work and (iv) the Ethanol Plant is capable to operate continuously, normally and safely, in accordance with the requirements hereunder.

“Interim Completion Date” means the actual date of achieving Interim Completion as determined pursuant to Section 10.02 .

“Interim Completion Test” means the test required to demonstrate Interim Completion, as determined in accordance with the Scope of Work and Section 11.09 .

“Job Site” means the Property Site (identified on the survey provided by Owner pursuant to Section 4.07 ) and any other areas where Contractor may temporarily obtain care, custody and control, use, easement or license for purposes directly, indirectly or incidentally related to performance of, or as an accommodation to, the Work.

“Labor” means the workforce of the relevant Person, including its staff and employee and non-employee and skilled and unskilled workers.

 

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“LC Issuing Bank” means Deutsche Bank, New York Branch, or such other financial institution reasonably acceptable to Owner and Contractor.

“Letter of Credit” has the meaning set forth in Section 11.10 .

“License Agreement” means that certain license agreement between Contractor and Owner, which agreement is an integral part of the transaction evidenced by this Agreement.

“Lien” means any lien, security interest, mortgage, hypothecation, encumbrance or other restriction on title or property interest.

“Major Equipment” means the Equipment listed on Exhibit N .

“Major Manufacturers” means the manufacturers of the Major Equipment.

“Mechanical Completion” means that (i) all Equipment has been installed with the required connections and controls to produce steam, ethanol and wet distillers’ grain; (ii) all Equipment has been installed in accordance with construction drawings, the Scope of Work and manufacturers recommendations, checked for alignment, lubrication and rotation; (iii) all systems for the Ethanol Plant have been checked out, and are ready for safe and proper operation; (iv) all instrumentation (including Continuous Emissions Monitoring Systems) for such Ethanol Plant is operational and has been calibrated in accordance with manufacturers’ standards and guidelines and loop checked; and (v) all systems for the Ethanol Plant have been tested, flushed and cleaned out as necessary and restored in accordance with the Scope of Work.

“Milestone Achievement Certificate” means a duly executed certificate in substantially the form of the Milestone Achievement Certificate in Exhibit E attached hereto, which is submitted by Contractor to Owner with a Request for Payment.

“Milestone Payment Table” means that table of Milestone Payments which is set forth in Exhibit D attached hereto.

“Milestone Payments” has the meaning set forth in Section 6.01 .

“Milestones” means the milestones set forth in Exhibit D attached hereto.

“Minimum Performance Levels” means the Ethanol Plant has achieved, during a minimum continuous production period of 72 hours, on average, not less than ***** percent of the Ethanol Production Rate Guarantee and ***** percent of the Ethanol Yield Guarantee, and no more than ***** percent of the Natural Gas Consumption Guarantee and no more than ***** percent of the Electric Power Consumption Guarantee, as set forth in Section 11.04, 11.09 and in the Scope of Work.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY PANDA ETHANOL, INC. FOR CERTAIN PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS AGREEMENT WITH “*****”.

 

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“Natural Gas Consumption” means the overall natural gas consumed by the Ethanol Plant as measured in British Thermal Units on a higher heating value (HHV) basis at the meter in accordance with the Scope of Work when operating the Facility solely on natural gas boiler for steam production.

“Natural Gas Consumption Guarantee” has the meaning set forth in Section 11.04(b) .

“Noise Guarantee” has the meaning set forth in Section 11.04(f) .

“Notice to Proceed” means one or more notices given from Owner to Contractor from time to time directing Contractor to commence performance of the Work or a portion thereof as specified in such notice.

“O&M Contractor” means the Person selected by Owner for the operation and maintenance of the Facility.

“O&M Personnel” has the meaning set forth in Section 3.22 .

“Owner Caused Delay” has the meaning set forth in Section 14.04 .

“Owner Permits” means the Applicable Permits listed on Exhibit M .

“Owner Taxes” has the meaning set forth in Section 4.09 .

“Owner’s Engineer” shall mean an engineer appointed by Owner as may be changed from time to time, and confirmed in a notice to Contractor.

“Parties” means, collectively, Owner and Contractor.

“Performance Bonus” has the meaning set forth in Section 11.08 .

“Performance Liquidated Damages” has the meaning set forth in Section 11.05 .

“Person” means an individual, partnership, corporation, limited liability company, company, business trust, joint stock company, trust, unincorporated association, joint venture, Government Authority or other entity of whatever nature.

“Pre-Existing Hazardous Material” means Hazardous Material that existed on or in the Job Site and/or the Property Site prior to Initial Site Mobilization by Contractor.

“Prefunding Cancellation Costs” means the actual and demonstrable third party costs and Contractor Internal Costs incurred by Contractor upon termination of this Agreement in accordance with Article XV ; provided that notwithstanding anything contained herein to the contrary, “Prefunding Cancellation Costs” shall not include (A)

 

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any cancellation charges actually incurred under the Prefunding Purchase Orders except to the extent Owner authorizes Contractor to cancel any of such Prefunding Purchase Orders, and (B) any other costs expressly excluded therefrom as provided herein.

“Prefunding Purchase Orders” has the meaning set forth in Section 5.03(b) .

“Prefunding Third Party Costs” means the actual and demonstrable third party costs incurred by Contractor in performing the Prefunding Work (less all amounts refunded, whether through cancellation of Prefunding Purchase Orders or otherwise); provided that notwithstanding anything contained herein to the contrary, “Prefunding Third Party Costs” shall not include (A) any Contractor Internal Costs except as provided for in Section 5.03(a) and (B) any other costs expressly excluded therefrom as provided herein.

“Prefunding Work” has the meaning set forth in Section 5.01 .

“Procedures Manual” has the meaning set forth in Section 3.19(c) .

“Project Schedule” means the schedule for the completion of the Work attached hereto as Exhibit B, as may be amended under the terms of this Agreement.

“Property Site” means that certain piece of property located on Owner’s Property near Hereford, Texas as more particularly described in Exhibit P .

“Punch List” has the meaning set forth in Section 10.05 (b) .

“Qualified Insurer” has the meaning set forth in Section 9.03 .

“Ready for Start-up” means when the activities listed for Mechanical Completion have occurred and the Ethanol Plant has been commissioned and the Ethanol Plant is ready to mill corn at the hammer mills, produce steam, ethanol and wet distiller’s grain.

“Reference Rate” means the lesser of (i) the prime rate of interest for United States of America financial institutions as reported from time to time by The Wall Street Journal (New York Edition) plus two percent (2%) or (ii) the maximum rate permitted by Applicable Law.

“Request for Payment” means the written requests from Contractor to Owner for payment hereunder, which requests shall be in substantially the form of Exhibit F attached hereto.

“Schedule Bonus” has the meaning set forth in Section 11.08 .

“Schedule Liquidated Damages” has the meaning set forth in Section 11.02 and Section 11.03 .

 

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“Scheduled FBG Delivery Dates” mean the dates specified for the Fluidized Bed Gasifier Supplier’s delivery to the Job Site of the components of the FBG and all drawings and documentation supplied in accordance with Appendix A of Exhibit A .

“Scope of Work” means the Scope of Work attached hereto as Exhibit A , as the same may be amended from time to time in accordance with the terms hereof.

“Separated Contract Price” means the price payable by the Owner under this Agreement for the Work (including all labor, all materials, and all equipment comprising the Ethanol Plant and the FBG Work), as stated in Exhibit J, as may be amended from time to time pursuant to the terms hereof

“Steam Output” means the steam output at 125 pounds per square inch gauge saturated as measured in pounds per hour from the natural gas boiler as measured downstream of the first steam shut-off valve in accordance with the methods specified in ASME PTC 46.

“Subcontractor” means any contractor, constructor or materialman who performs any portion of the Work other than Contractor.

“Substantial Completion” shall mean that all of the following have occurred: (i) Interim Completion has been achieved; (ii) the Ethanol Plant is capable of being operated safely, normally and continuously in accordance with the requirements of this Agreement; (iii) the Ethanol Plant has achieved the Minimum Performance Levels as determined pursuant to successfully completing all the requirements of the Guaranteed Performance Tests in accordance with the Scope of Work; (iv) the Ethanol Plant has achieved the Emissions Guarantee; (v) the Ethanol Plant is capable of being operated in a safe manner in accordance with Applicable Laws and Applicable Permits; (vi) the training of O&M Personnel has been completed; and (vii) all Schedule Liquidated Damages then due, if any, under this Agreement have been paid.

“Substantial Completion Date” means the actual date the Guaranteed Performance Tests had successfully been started for achieving Substantial Completion, as determined pursuant to Section 10.04(a) or Section 10.04(b) , as applicable.

“Substantial Subcontractor” means a Subcontractor whose contract or contracts (in the aggregate) with Contractor require payments by Contractor totaling at least $500,000.

“Substantial Vendor” means a Vendor whose contract or purchase orders (in the aggregate) with Contractor require payments by Contractor of at least $250,000.

“Terms Sheet” has the meaning set forth in Section 18.13 .

 

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“Termination Payment” has the meaning set forth in Section 15.03 .

“Test Fuels” means certain fuels, as specified in Appendix H and Appendix J of the Scope of Work, used to complete certain performance testing.

“Test Notice” has the meaning set forth in Section 10.01(b) .

“Tests” means collectively, the Guaranteed Performance Tests and the Interim Completion Test.

“Total Prefunding Costs” means the aggregate of, without duplication, Contractor Internal Costs, Prefunding Third Party Costs and Prefunding Cancellation Costs.

“Un-denatured Ethanol” means anhydrous ethanol containing a maximum of 0.5% water by weight.

“Vendor” means any supplier, manufacturer or vendor of Equipment to Contractor or any Subcontractor.

“Warranty Period” has the meaning set forth in Section 12.01(d) .

“Work” has the meaning set forth in Section 3.01 . The term “Work” shall include all Work performed prior to the date hereof, including the work performed pursuant to the Terms Sheet (as described in Section 18.13 ).

Section 1.02 . Interpretation . Unless the context of this Agreement otherwise requires:

(a) the headings contained in this Agreement are used solely for convenience and do not constitute a part of this Agreement between the Parties, nor should they be used to aid in any manner to construe or interpret this Agreement;

(b) the gender of all words used herein shall include the masculine, feminine and neuter and the number of all words shall include the singular and plural words;

(c) the terms “hereof”, “herein” “hereto” and similar words refer to this entire Agreement and not to any particular Article, Section, Exhibit or any other subdivision of this Agreement;

(d) references to “Article,” “Section” or “Exhibit” are to this Agreement unless specified otherwise;

(e) reference to “this Agreement” (including any Exhibit hereto) or any other agreement, Exhibit, permit or document shall be construed as a reference to such agreement or document as the same may be amended, modified, supplemented or

 

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restated, and shall include a reference to any document which amends, modifies, supplements or restates, or is entered into, made or given pursuant to or in accordance with its terms;

(f) references to any law, statute, rule, regulation, notification or statutory provision (including Applicable Laws and Applicable Permits) shall be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or re-enacted;

(g) references to any Person shall be construed as a reference to such Person’s successors and permitted assigns;

(h) references to “includes,” “including” and similar phrases shall mean “including, without limitation”, and

(i) in the event of a conflict or inconsistency between this Agreement and any of the Exhibits, this Agreement shall control.

Section 1.03 . Exhibits . The following exhibits are attached to and incorporated into and made a part of this Agreement:

 

 

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ARTICLE II

RETENTION OF CONTRACTOR

Section 2.01 . Retention of Contractor . Owner hereby engages Contractor, and Contractor hereby agrees to be engaged by Owner, to perform the Work in accordance with the terms and conditions set forth herein.

Section 2.02 . Status of Contractor; No Partnership . Contractor shall be an independent contractor with respect to any and all Work performed and to be performed under this Agreement. This Agreement shall not be interpreted or construed to create an association, joint venture or partnership relationship among or between the Parties or any similar relationship, obligations or liabilities. Neither Party shall have any right, power or authority to enter into any agreement or undertaking for, act on behalf of, or to act as or be an agent or representative of, or to otherwise bind or obligate the other Party.

Section 2.03 . Subcontractors and Vendors .

(a) Subject to the terms hereof, Contractor shall have the right to have any of the Work performed by a Subcontractor or Vendor, including, as applicable, any Substantial Subcontractors and/or Substantial Vendors, subject to paragraph (b) below, qualified to perform such Work pursuant to written subcontracts or written purchase orders; provided that Contractor shall not be relieved from any liability or obligation under this Agreement. Except as otherwise indicated in this Agreement, Contractor shall be solely responsible for engaging, managing, supervising and paying all such Subcontractors and Vendors. Contractor shall require that all Work performed, and all Equipment provided by Subcontractors and Vendors are received, inspected and otherwise furnished in accordance with this Agreement, and Contractor shall be solely liable for all acts, omissions, liabilities and Work (including Defects therein) of such Subcontractors and Vendors. Owner shall not have any obligation or liability to any Subcontractor or Vendor. Nothing in any contracts, subcontracts and purchase orders with Subcontractors and Vendors shall in any way diminish or relieve Contractor from any duties and obligations under this Agreement; and all such contracts, subcontracts and purchase orders must provide that the rights thereunder are assignable to Owner and the Financing Parties or their designees. Except as otherwise specified herein, no Subcontractor or Vendor is intended to be or shall be deemed a third-party beneficiary of this Agreement.

(b) A list of approved Substantial Subcontractors and Substantial Vendors as of the date hereof, including a brief description of the Work to be performed by such Persons, is attached hereto as Exhibit Q . Contractor may retain those Substantial Subcontractors or Substantial Vendors which are set forth on Exhibit Q without further notice to or approval of Owner. In the event no Substantial Subcontractor or no Substantial Vendor listed on Exhibit Q is available to perform the requested duties, Contractor shall be entitled to request that Owner approve additional Substantial

 

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Subcontractors or Substantial Vendors to be included on a revised Exhibit Q. Upon such request, Contractor shall notify Owner and provide it with such information as necessary to enable Owner to evaluate each such proposed Substantial Subcontractor or Substantial Vendor for the portion of the Work proposed to be performed by it together with all cost information on a comparative basis required for Owner to fully evaluate the proposed additional Substantial Subcontractor or Substantial Vendor. Within five (5) Business Days after receipt of such information, Owner shall advise Contractor if any proposed Substantial Subcontractor and Substantial Vendor is unacceptable. If Owner fails to object to any proposed Substantial Subcontractor or Substantial Vendor within such five (5) Business Day period, Contractor may retain such Substantial Subcontractor or Substantial Vendor for the portion of the Work proposed. If Owner timely objects to such proposed Substantial Subcontractor or Substantial Vendor and states the basis for its objection, Contractor shall not retain such proposed Substantial Subcontractor or Substantial Vendor. Approval of any such additional Substantial Subcontractor or Substantial Vendor under this paragraph shall only be for the portion of the Work so approved and shall not be deemed an amendment or modification to Exhibit Q .

(c) The Contractor shall submit to Owner a copy of each unpriced purchase order or agreement entered into with a Substantial Subcontractor or Substantial Vendor for Equipment. Each purchase order or agreement shall show, where applicable, the Vendor’s or Subcontractor’s name, manufacturer’s name, materials type, model number, size, quantity and lists of the Equipment ordered, and shall be submitted to Owner when issued for purchase.

ARTICLE III

CERTAIN OBLIGATIONS AND RESPONSIBILITIES OF CONTRACTOR

Section 3.01 . Scope of Work; Applicable Standards .

(a) Contractor shall, at its own expense, directly or through its Subcontractors and Vendors, (i) design, engineer, procure, construct, start up, and carry out Tests on the Ethanol Plant, and perform its other obligations hereunder, (ii) perform and provide the FBG Work, and (iii) manage, supervise, inspect and furnish all Labor, Equipment, Contractor Equipment, temporary structures, temporary utilities, products and services for the foregoing, all on a turnkey basis, in accordance with this Agreement, including, without limitation, the Project Schedule and the Scope of Work, as the same may be modified from time to time in accordance with the terms hereof by a Change Order or Contract Amendment (all of the foregoing obligations of Contractor being collectively referred to in this Agreement as the “Work”). Subject to the remedies provided for herein, Contractor shall perform the Work and turn the Ethanol Plant and the FBG Work over to Owner in a manner that is (i) sufficient, complete and adequate in all material respects necessary to successfully achieve Substantial Completion by the applicable Guaranteed Substantial Completion Date, as more fully provided in this Agreement; (ii) in conformance with Good Engineering Practices; and (iii) in compliance with the terms of this Agreement and all Applicable Laws and Applicable Permits.

 

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(b) As more fully provided in Article XII, (i) the Ethanol Plant and the Work shall, at a minimum, comply with Good Engineering Practices (ii) the Ethanol Plant shall be designed, constructed and manufactured to operate, and shall be capable of being operated at all levels and operating modes in accordance with all Applicable Laws and Applicable Permits, and (iii) the Ethanol Plant and all items of Equipment and improvements comprising the Ethanol Plant shall be designed, manufactured, installed, calibrated and tested where applicable in accordance with the published standards of the organizations listed in the Scope of Work.

Section 3.02 . Control and Method of the Work .

(a) Subject to the terms hereof, Contractor shall be solely responsible for performing or causing to be performed the Work in accordance with the terms of this Agreement, and for all means, methods, techniques, sequences, procedures, and safety and security programs in connection with such performance. Contractor shall inform Owner in advance concerning its plans for carrying out the Work.

(b) Whenever the words “as ordered,” “as directed,” “as required,” “as permitted,” “as allowed,” “approved,” “reasonable,” “suitable,” “acceptable,” “properly,” “satisfactory,” or words or phrases of similar effect and import are used, it shall be understood that none of such terms shall imply that Owner has any authority over, right to control or responsibility for supervision of Contractor or its Subcontractors or Vendors, such supervision (including sole control over and responsibility therefor) being strictly reserved for Contractor. Any method of Work suggested by Owner that is used by Contractor will be used at the risk and responsibility of Contractor, and Owner will assume no responsibility therefor. Contractor shall have no obligation to use any method of Work suggested by Owner.

Section 3.03 . Compliance with Law . Contractor shall, and shall cause all of its Subcontractors, Vendors and Persons that it has a right to direct who are engaged in the performance of any of the Work to comply with all Applicable Laws and Applicable Permits. Using commercially reasonable efforts, Contractor shall perform the Work in a manner designed to avoid damage or nuisance to Persons and property of the public or others, including causes arising as a consequence of methods of construction of the Ethanol Plant and FBG Work or operation of the Ethanol Plant. The foregoing shall not be construed as to limit Contractor’s obligations and liabilities under Section 3.15 . Notwithstanding anything stated or implied herein to the contrary, if a Change in Law has a material effect on the cost of the Work or time or performance hereunder, such Change in Law shall entitle Contractor or Owner, as the case may be, to a Change Order to address such effect(s). For the avoidance of doubt, a Change in Law that does not have a material effect on the cost of the Work or time or performance hereunder shall not entitle either Party to a Change Order.

 

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Section 3.04 . Certain Matters Pertaining to Job Site . Contractor shall inspect the Job Site, verify the working conditions and undertake investigations as Contractor deems reasonably necessary before commencing any Work. Except for below ground conditions not reflected in a geotechnical report furnished by Owner to Contractor as Exhibit S, Contractor shall be solely responsible for performing any preliminary Work on the Job Site necessary for the commencement of construction to occur, including removal of all physical impediments to performing Work on the Job Site, above and below ground. Contractor shall cause its, and its Subcontractors’ and Vendors’ vehicles and self-propelled equipment entering on the Job Site to be clearly marked to identify the Contractor, Subcontractor or Vendor which owns the same. Contractor is entitled to rely on the accuracy of Exhibit S.

Section 3.05 . Access to Job Site . Owner shall have the right to have representatives on the Job Site full time. In addition, Contractor shall provide reasonable access at all times, upon request by Owner, to the Job Site and the Work to Owner, Owner’s other contractors, Owner’s Engineer, Financing Parties’ engineer and the Financing Parties and their respective employees, representatives, agents and consultants; provided, however, that in the absence of an emergency or a default by Contractor hereunder, (i) Owner shall give reasonable prior notice to Contractor, and (ii) Contractor may provide, and each such person shall accept, an escort or any safety equipment or measures that Contractor, in its reasonable discretion, deems necessary or advisable.

Section 3.06 . Inspection and Testing of Work in Progress .

(a) Each item of Major Equipment to be supplied by Contractor shall be subject to inspection and testing during and upon completion of its fabrication and installation in accordance with the provisions of the Scope of Work. Without limiting the foregoing, Contractor shall be responsible for inspection and testing of the Equipment in accordance with standard inspection practices and as required by applicable specifications before their shipment.

(b) Prior to any shipment or at the time of fabrication and assembly of the Equipment, Owner may (or require Contractor to) arrange for inspection of such Equipment at the manufacturer’s premises by Owner, and/or its designated agent. Contractor shall give notice of readiness to Owner, Financing Parties’ engineer and the Owner’s Engineer at least seven (7) days prior to the date when the Equipment will be available for inspection. Contractor shall arrange for access to the manufacturer’s facilities to permit any such inspection to be conducted smoothly.

(c) Contractor shall permit Owner and, as authorized by Owner, any party designated by Owner and the Financing Parties to inspect, test and observe the Work from time to time; provided, however, that none of such Person’s shall have any authority or responsibility for such Work. Contractor shall provide Owner each month during performance of the Work with a schedule of all testing proposed for the following three (3) month period in compliance with the requirements of the Scope of Work.

 

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Section 3.07 . No Waiver of Responsibility . No inspection made, acceptance of Work, payment of money or approval given by Owner, the Financing Parties, Financing Parties’ engineer or the Owner’s Engineer shall relieve Contractor of its obligations for the proper performance of the Work in accordance with the terms hereof. Owner may, upon notice to Contractor, reject any Work with Defects, regardless of whether Owner previously accepted any or all of such Work through oversight or otherwise. No approval given by Owner, in and of itself, shall be considered as an assumption of risk or liability by any such Person. Any such approval shall mean that the Person giving the approval has no objection to the adoption or use by Contractor of the matter approved at Contractor’s own risk and responsibility. Contractor shall have no claim relating to any such matter approved, including any claims relating to the failure or inefficiency of any method approved.

Section 3.08 . Intentionally left blank .

Section 3.09 . Clean-Up .

(a) Without limiting the provisions of Section 3.16 , Contractor shall at all times keep the Job Site reasonably free from waste, rubbish and Hazardous Material, other than Pre-Existing Hazardous Material, relating to its Work. Contractor shall maintain the Job Site in a neat and orderly condition throughout the performance of the Work. Contractor shall employ sufficient personnel to clean its site office and work areas each working day and shall cooperate with the other Persons working at the Job Site to keep the Job Site clean.

(b) Prior to the Final Acceptance Date, or as soon as practicable after the termination of this Agreement by Owner in accordance with the provisions of Article XV , Contractor shall (i) remove all Contractor Equipment from the Job Site (other than equipment, supplies and materials necessary or useful to the operation or maintenance of the Facility and Equipment and equipment, supplies and materials directed by Owner to remain at the Job Site until completion of the Ethanol Plant and FBG Work), (ii) have cleaned out all pits, pipes, chambers and conduits, (iii) tear down and remove all temporary structures on the Job Site built by it or its Subcontractors and restore such areas substantially to their original condition, and (iv) remove all waste, rubbish and Hazardous Material from and around the Job Site brought onto, caused or created by Contractor.

Section 3.10 . Obtaining, Maintaining and Identifying Permits . Contractor shall timely obtain and maintain all Contractor Permits. In addition, Contractor shall provide all assistance reasonably requested by Owner in connection with Owner’s efforts to obtain and maintain the Owner Permits, including, without limitation, witnesses testimony, depositions, preparation of exhibits, technical calculations and attending meetings. In the event that any Applicable Permit is required for the Ethanol Plant or to perform the Work that is not identified in this Agreement, at Owner’s request, Contractor

 

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shall obtain and maintain such Applicable Permit at Owner’s expense. All Applicable Permits shall be issued in the name of Owner unless otherwise required by Applicable Law or such Applicable Permit. If any Contractor Permit (or application therefor) is in the name of Owner or otherwise requires action by Owner, Owner shall upon the request of Contractor sign such application or take such action as reasonably appropriate. Owner reserves the right to review any such application of Contractor; provided; however, that Owner’s exercise of such right shall not under any circumstances, be considered an approval of the necessity, effect or contents of such application or related permit. Contractor shall deliver to Owner true and complete copies of all Applicable Permits obtained by Contractor upon its receipt thereof. Contractor shall use best efforts to identify in writing to Owner all requirements for performance of the Work of any Government Authority not identified in this Agreement, or shall confirm in writing prior to Financial Closing that, to the best of Contractor’s knowledge, there are no such requirements of any Government Authority other than as identified in this Agreement.

Section 3.11 . Labor . Contractor shall be responsible for retaining all Labor necessary for it to perform its obligations hereunder and comply with the provisions hereof, all in accordance with Applicable Laws. Contractor shall be responsible for all costs incurred in complying with this Section 3.11 or otherwise associated with its Labor, including, without limitation, costs incurred by any member of its Labor, whether by direct contract or subcontract, for medical treatment, transport and accommodation as a result of injuries or illness arising from engagement or employment in the execution of the Work.

(a) Engagement of Labor. Contractor shall make its own arrangements for the engagement of all Labor in connection with this Agreement and the performance of the Work. Contractor shall employ in the performance of the Work only Labor, whether supervisors, skilled workers or laborers, who are competent to perform their assigned duties and shall cause its Subcontractors and Vendors to adhere to the same standard with respect to their Labor. Contractor agrees, where required by Applicable Law, to employ only licensed personnel in good standing with their respective trades and licensing authorities to perform engineering, design, architectural and other professional services in the performance of the Work. All such professional services shall be performed with the degree of care, skill and responsibility customary among such licensed personnel.

(b) Identification . Contractor shall identify each member of its and its Subcontractor’s and Vendor’s Labor in accordance with the standards and procedures that are mutually acceptable to the Parties.

(c) Supply of Services for Labor . Contractor shall provide and maintain at the Job Site, in accordance with Applicable Laws and Applicable Permits, such accommodations, services and amenities as necessary for all Labor employed for the purpose of or in connection with this Agreement, including all water supply (both for drinking and other purposes), electricity supply, sanitation, fire prevention and fire-fighting equipment, refuse disposal systems and other requirements in connection with such accommodations or amenities.

 

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(d) Alcohol and Drugs . Contractor shall not possess, consume, import, sell, give, barter or otherwise dispose of any alcoholic beverages or drugs (excluding drugs for proper medical purposes and then only in accordance with Applicable Law) at the Job Site, or permit or suffer any such possession, consumption, importation, sale, gift, barter or disposal by its Subcontractors, agents or Labor and shall at all times assure that the Job Site is kept free of all such substances. Contractor shall immediately identify and remove from its or its Subcontractors’ employment at the Job Site any person (whether in the charge of Contractor or any Subcontractor) who is found to be in the possession of, under the influence, or who is a user of any dangerous or controlled drug, alcohol or other such substance or any other person who does or whose actions may create any unsafe condition or other situation that may cause damage or harm to any person or property.

(e) Arms and Ammunition . Except as required for Job Site security, Contractor shall not possess, give, barter or otherwise dispose of, to any person or persons, any arms or ammunition of any kind at the Job Site, or permit or suffer the same as aforesaid and shall at all times assure that the Job Site is kept free from arms and ammunition.

(f) Disorderly Conduct . Contractor shall be responsible for the conduct and deeds of its Labor and its Subcontractors’ Labor relating to this Agreement and the consequences thereof. Contractor shall at all times take all reasonable precautions to prevent any unlawful, riotous or disorderly conduct by or among such Labor and for the preservation of peace and protection of Persons and property in the area of the Job Site against the same. Contractor shall not interfere with any members of any authorized police, military or security force in the execution of their duties.

Section 3.12 . Project Management . Contractor has designated a management team as set forth on Exhibit O , and any future members of the management team must be approved by Owner in writing prior to his/her designation, such approval not to be unreasonably withheld or delayed. During the performance of the Work from the Initial Site Mobilization and thereafter, Contractor shall maintain continuously at the Job Site adequate management, supervisory, administrative, security and technical personnel, including the Contractor Site Manager, to ensure expeditious and competent handling of all matters related to the Work, according to its determination of the staffing required for this purpose. Contractor will not re-assign, remove or replace the Contractor Project Manager, Contractor Project Engineering Manager or Contractor Site Manager without Owner’s prior written consent, which consent shall not be unreasonably withheld or delayed. Contractor shall promptly replace its Contractor Project Manager, Contractor Project Engineering Manager or Contractor Site Manager, upon written request and explanation of Owner, if such individual is disorderly or if such individual is otherwise incompetent for his position and responsibilities.

 

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Section 3.13 . Temporary Office Quarters .

(a) During the performance of the Work from the Initial Site Mobilization and thereafter, Contractor shall maintain a suitable office at the Job Site at or near the site of the Work, which shall be the headquarters of Contractor’s representative designated pursuant to Section 3.34 .

(b) Contractor shall provide Owner’s representatives and the Owner’s Engineer with reasonably adequate office space, including all utilities, heating, ventilation and air conditioning, contemporaneously with the existence of Contractor’s site office specified in paragraph (a) above, which office space shall be subject to the approval of Owner. For purposes of this Section, “reasonably adequate” includes at a minimum the following facilities: (i) adequate offices to accommodate at least six (6) full time personnel and visitors; (ii) a conference room adequate to accommodate twelve (12) people; (iii) a secretary and reception area; (iv) a kitchen with hot and cold running water; (v) restroom facilities with indoor plumbing; and (vi) a minimum of six (6) telephone jacks, including one in each office, the conference room and the reception area. Contractor shall properly maintain such offices and shall employ sufficient personnel to clean such office each working day that such offices are used. Contractor shall be responsible for paying all utility deposits and charges, other than long distance telephone charges related to calls made by Owner and its representatives, related to such offices for Owner.

Section 3.14 . Cooperation with Other Contractors . Contractor shall reasonably cooperate and cause its Subcontractors and Vendors to cooperate with Owner and with other unrelated contractors (including the Fluidized Bed Gasifier Supplier) who may be working at or near the Job Site in order to assure that neither Contractor, nor any of its Subcontractors or Vendors , unreasonably hinders or increases, or makes more difficult than necessary the work being done by Owner and other unrelated contractors.

Section 3.15 . Protection and Safety .

(a) Contractor shall be responsible for the security, protection and safety of all Persons (including members of the public and the employees, agents, contractors, consultants and representatives of Owner, Financing Parties, Contractor and its Subcontractors and Vendors, and other contractors and subcontractors) and all public and private property (including structures, sewers and service facilities above and below ground, along, beneath, above, across or near the Job Site) that are at or near the Job Site or that are in any manner affected by the performance of the Work. Subject to and without limiting Contractor’s obligations with respect to security, protection and safety of the overall Job Site, as of Substantial Completion Date, Owner shall be responsible for the security, protection and safety of all Persons and all public and private property that are within Owner’s operational control; provided, however, Contractor shall remain responsible for the safety of its and its Subcontractors’ and Vendors’ Labor and agents.

 

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(b) Contractor shall initiate and maintain reasonable safety precautions and accident prevention programs for the Job Site and in the performance of the Work, which shall be in compliance with all Applicable Laws and Applicable Permits, to prevent injury to persons or damage to property on, about or adjacent to the Job Site and in the performance of the Work. Without limiting the generality of the foregoing, Contractor shall furnish and maintain all necessary safety equipment such as barriers, signs, warning lights and guards as required to provide adequate protection to persons and property. In addition, Contractor shall give reasonable notice to owners of public and private property and utilities when such property is susceptible to injury or damage through the performance of the Work and shall make all necessary arrangement with such owners relative to the removal and replacement of protection of such property or utilities.

Section 3.16 . Environmental Matters .

(a) Hazardous Material . Contractor shall, and shall cause its Subcontractors and Vendors to, comply with all Applicable Laws relating to Hazardous Material, all Applicable Permits, and all requirements of any Government Authority with respect to Hazardous Material; provided however that neither Contractor nor its Subcontractors or Vendors shall be obligated to perform any remediation measures relating to Pre-Existing Hazardous Material. Without limiting the generality of the foregoing:

(i) Contractor shall, and shall cause its Subcontractors and Vendors to, apply for, obtain, comply with, maintain and renew all Applicable Permits required of Contractor by Applicable Laws regarding Hazardous Material that are necessary, customary or advisable for the performance of the Work. Contractor shall, and shall cause its Subcontractors and Vendors to have an independent Environmental Protection Agency identification number for disposal of Hazardous Material under this Agreement if and as required under Applicable Laws or Applicable Permits.

(ii) Contractor shall conduct its activities under this Agreement, and shall cause each of its Subcontractors and Vendors to conduct its activities, in a manner designed to prevent pollution of the environment or any other release of any Hazardous Material by Contractor and its Subcontractors and Vendors in a manner or at a level requiring remediation pursuant to any Applicable Law.

(iii) Contractor shall not cause or allow the release or disposal of Hazardous Material at the Job Site relating to the Work or the Ethanol Plant, bring Hazardous Material to the Job Site, or transport Hazardous Material from the Job Site, except in accordance with Applicable Law and Applicable Permits. Contractor shall be responsible for the management of and proper disposal of all Hazardous Material brought onto or generated at the Job Site by it or its Subcontractors or Vendors, if any. Contractor shall cause all such Hazardous Material brought onto or generated at the Job Site by it or its Subcontractors or Vendors, if any, (A) to be transported only by carriers maintaining valid permits

 

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and operating in compliance with such permits and laws regarding Hazardous Material pursuant to manifest and shipping documents identifying only Contractor as the generator of waste or person who arranged for waste disposal, and (B) to be treated and disposed of only at treatment, storage and disposal facilities maintaining valid permits operating in compliance with such permits and laws regarding Hazardous Material, from which, to the best of Contractor’s knowledge, there has been and will be no release of Hazardous Material. Contractor shall submit to Owner a list of all Hazardous Material to be brought onto or generated at the Job Site prior to bringing or generating such Hazardous Material onto or at the Job Site. Contractor shall keep Owner informed as to the status of all Hazardous Material on the Job Site and disposal of all Hazardous Material from the Job Site.

(iv) If Contractor or any of its Subcontractors or Vendors releases any Hazardous Material on, at, or from the Job Site, or becomes aware of any Person who has stored, released or disposed of Hazardous Material on, at, or from the Job Site during the Work, Contractor shall immediately notify Owner in writing. If Contractor’s work involved the area where such release occurred, Contractor shall immediately stop any Work affecting the area. Contractor shall, at its sole expense, diligently proceed to take all necessary or desirable remedial action to clean up fully the contamination caused by (A) any knowing or negligent release by Contractor or any of its Subcontractors or Vendors of any Pre-Existing Hazardous Material, and (B) any Hazardous Material that was brought onto or generated at the Job Site by Contractor or any of its Subcontractors or Vendors, whether on or off the Job Site. Notwithstanding anything to the contrary, Contractor shall not be responsible for determining the existence of Pre-Existing Hazardous Material on the Job Site.

(v) If Contractor discovers any Pre-Existing Hazardous Material that has been stored, released or disposed of at the Property Site, Contractor shall immediately notify Owner in writing. If Contractor’s Work involves the area where such a discovery was made, Contractor shall immediately stop any Work affecting the area and Owner shall determine a reasonable course of action. Contractor shall not, and shall cause its Subcontractors and Vendors to not take any action that may exacerbate any such contamination. If Owner desires Contractor to perform all or part of any remediation or evacuation that may become necessary as a result of the discovery of any such Pre-Existing Hazardous Material, it shall request a Change pursuant to Section 7.01(b) . If requested by Owner, Contractor shall cooperate with and assist Owner in making the Property Site available for taking necessary remedial steps to clean up any such contamination at Owner’s expense. Notwithstanding anything contained herein to the contrary, nothing contained herein shall be construed as to obligate Owner or Contractor to take any remedial action to clean up any Pre-Existing Hazardous Material, unless a mutually acceptable Change Order is executed by both Parties or other written agreement is reached by the Parties.

 

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(b) Waste Treatment and Disposal . Without limiting the foregoing:

(i) Toxic Waste and Industrial Hazards : Contractor shall be responsible for the proper management and disposal of all toxic waste and industrial hazards brought onto or generated at the Job Site by it or its Subcontractors or Vendors, if any. Contractor shall, and shall cause its Subcontractors and Vendors to, comply with all Applicable Laws, Applicable Permits and applicable safety standards related to the treatment, storage, disposal, transportation and handling of toxic wastes and industrial hazards. Contractor shall not store or dispose of toxic wastes and industrial hazards near groundwater, surface water or drainage systems. Liquid wastes shall not be dumped onto the ground or in any groundwater, surface water or drainage systems. All waste oil and grease resulting from construction activities shall be collected and disposed of in a manner that prevents contamination to soil, ground water, and surface water, and incinerated if possible. Vehicle maintenance shall be conducted in safe areas away from watercourses and oil or fluid runoff shall be collected in grease traps. Toxic waste and industrial hazard storage containers shall be well-labeled.

(ii) Sanitary and Solid Waste : Contractor shall take appropriate measures in accordance with the Applicable Law and Applicable Permits for the treatment and disposal of sanitary and solid waste, and in particular, Contractor shall give due regard to protecting environmentally sensitive areas and water supplies. Run-off from disposal sites shall be curtailed.

(c) Fuel Storage . The location, facilities, safety measures and environmental and pollution control in connection with storage of fuel or like substances brought on site by Contractor shall comply with all Applicable Laws and Applicable Permits.

(d) Wetland Areas . Contractor acknowledges that portions of the Property Site may be designated as wetlands as indicated on the survey provided by Owner pursuant to Section 4.07 . Certain of these wetland areas, as designated on such survey, do not constitute a part of the Job Site. Contractor shall erect a temporary wall or other blockade to isolate this wetland area from the Job Site and construction area, and shall not, and shall not allow, any Work to be conducted in or other interference with such wetland areas. Except for such wetland areas that do not constitute a part of the Job Site, Owner anticipates obtaining a permit from U.S. Army Corps. of Engineers, allowing construction and other Work activities on the remaining wetland areas on the Property Site. Contractor shall, and shall cause its Subcontractors and Vendors, to comply with all rules, regulations and permits issued by the U.S. Army Corps. of Engineers, and all other Applicable Laws and Applicable Permits in connection with the wetland areas on the Property Site.

 

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Section 3.17 . Fire Prevention .

(a) Contractor shall be responsible for providing adequate fire prevention and protection at the Job Site and shall take all reasonable precautions to minimize the risk of fire at the Job Site. Contractor shall provide instruction to the Labor in fire prevention control and shall provide appropriate fire-fighting and fire protection equipment and systems at the Job Site.

(b) Contractor shall promptly collect and remove combustible debris and waste material from the Job Site in accordance with Applicable Laws and Applicable Permits, and shall not permit such debris and material to accumulate. Contractor shall control the usage of fires for any purpose in the vicinity of the Work and shall agree upon the appropriateness of any such fires with Owner. Any areas of vegetation damaged by fire which are considered by Owner to have been initiated by Contractor’s or its Subcontractors’ or Vendors’ Labor shall be recultivated and otherwise rehabilitated by Contractor, at Contractor’s expense.

(c) Contractor will complete all systems, procedures and Equipment constituting the Facility fire protection system as necessary during construction to protect Work in progress, in particular with regard to fuel and other flammable materials.

Section 3.18 . Religious and Archaeological Resources . In the event any archaeological or religious sites, places, monuments or areas are discovered or identified by Contractor during the performance of this Agreement, Contractor shall leave such sites untouched and protected by fencing and shall immediately stop any Work affecting the area. Contractor shall notify the Owner of any such discovery as soon as practicable, and Contractor shall carry out Owner’s instructions for dealing with the same. All fossils, coins, articles of value or antiquity and structures and other remains or things of geological, archaeological, historical, religious, cultural or similar interest discovered on the Job Site shall, as between Owner and Contractor, be deemed to be the absolute property of Owner. Contractor shall prevent its and its Subcontractors’ and Vendors’ Labor and any other Persons from removing or damaging any such article or thing.

Section 3.19 . Reports, Plans and Manuals .

(a) Status Reports . Within ten (10) days after the beginning of each month, commencing with the second month following execution of this Agreement, Contractor shall prepare and submit to Owner, Financing Parties’ engineer and the Owner’s Engineer written progress reports, in a form reasonably acceptable to Owner, which include a description of the progress and status of the Work, the status of Equipment and other scheduled deliveries, the Subcontractors’ activities, and engineering and construction progress. Photographs shall also be included documenting the construction progress. Each photograph shall show the date, Contractor’s name and description of the view taken.

 

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(b) Reporting of Accidents . Contractor shall report in writing to Owner (and, to the extent required by any Applicable Law or Applicable Permit, the appropriate Government Authority) details of any accident that is on or about the Job Site as soon as possible after its occurrence, but in any event not later than twenty-four (24) hours after such accident occurs. In the case of any fatality or serious injury or accident, Contractor shall, in addition, notify Owner (and, to the extent required by any Applicable Law or Applicable Permit, the appropriate Government Authority) immediately.

(c) Procedures Manual . No later than forty-five (45) days following the date hereof, Contractor shall prepare and submit to Owner a Procedures Manual that describes the administrative procedures to be used by Contractor and Owner for interfacing during the performance of the Work. Contractor shall either promptly make changes to the Procedures Manual suggested by Owner or negotiate and resolve in good faith with Owner such changes. Upon approval of the Procedures Manual by the Parties, the Parties shall comply with the provisions thereof. The Procedures Manual may be changed from time to time with the approval of the Parties.

(d) Health, Safety and Environmental Plan . No later than thirty (30) days from the earlier of the Notice to Proceed or the Financial Closing Date, Contractor shall prepare and submit to Owner a Health, Safety and Environmental Plan that includes: (i) health, first aid and emergency procedures; (ii) a Hazardous Material, waste and industrial hazards management and disposal plan which details the controlled usage and treatment of all Hazardous Material, toxic wastes, industrial hazards, sanitary waste, solid waste and other waste brought onto, used or produced at the Job Site or in relation to the Work and outlines a management structure for carrying out the specific provisions of such plan; (iii) an environmental protection and management plan, including, without limitation, a sediment and erosion control plan; (iv) a revegetation plan and (v) the description, location and drawings of construction facilities and temporary works. The Health, Safety and Environmental Plan shall be consistent with all Applicable Laws and Applicable Permits and shall be submitted to Owner for review and approval. Contractor shall either promptly make changes to the Health, Safety and Environmental Plan suggested by Owner or negotiate and resolve in good faith with Owner such changes. Contractor shall comply with the Health, Safety and Environmental Plan as mutually agreed to by the Parties.

(e) Contractor Not Relieved of Duties or Responsibilities . Neither the submission to or approval by Owner of progress and other reports, plans and manuals, nor the provision of general descriptions shall relieve Contractor of any of its duties or responsibilities under this Agreement.

Section 3.20 . Drawings, Engineering Data and Other Materials .

(a) All Drawings, Final Plans, reports and other information (except financial, accounting and payroll records) furnished by Owner to Contractor, or prepared by

 

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Contractor, its Subcontractors or others in connection with the performance of the Work, whenever provided, shall be kept by Contractor in an orderly and catalogued fashion for reference by Owner during the performance by Contractor of the Work. Contractor shall maintain at the Property Site at least one (1) copy of all Drawings, Final Plans, Change Orders and other modifications in good order and marked to record all changes made during performance of the Work, including, without limitation, all field deviations from the construction drawings. At or prior to the Final Acceptance Date, or the earlier termination of this Agreement, Contractor shall transfer the Final Plans to Owner and they shall become the sole property of Owner, subject to the terms of the License Agreement; provided however that any such transfer shall not, in and of itself, be deemed to convey any ownership interest to Owner in any proprietary technology or information provided as part of the Work (whether by Contractor or its Subcontractors or Vendors). Nothing herein is intended to affect either Party’s rights and obligations under the License Agreement.

(b) Contractor shall furnish Owner with documents that correctly reflect, with substantial completeness, the Ethanol Plant and FBG Work or the portion of the Work against which a Milestone Achievement Certificate is issued at the time the Milestone Achievement Certificate is issued. Final Plans (in both hard copy and magnetic media at no extra charge to Owner), if not furnished earlier, shall be furnished to Owner upon Contractor’s request for a Final Acceptance Certificate or upon the earlier termination of this Agreement. Contractor and any of its Subcontractors, as applicable, may, retain copies all such documents for their records, subject to the confidentiality provisions of this Agreement.

(c) Contractor shall submit Drawings to Owner for review and comment as provided in the Scope of Work. The Contractor shall revise such Drawings from time to time, as required to reflect any changes or actual installation of Equipment and the final installation of any individual Equipment or system or the Ethanol Plant and FBG Work as a whole corrected to provide Final Plans.

(d) The License Agreement sets forth the rights and obligations of Owner and Contractor with respect to proprietary technology or information provided as part of the Work (whether by Contractor or its Subcontractors or Vendors), with the exception of such proprietary technology or information as may be provided by the Fluidized Bed Gasifier Supplier, which shall be governed by the terms of a separate license agreement between the Fluidized Bed Gasifier Supplier and Owner.

Section 3.21 . Operating and Maintenance Manuals . Contractor shall supply Owner with manuals and/or handbooks, which provide, either in a single manual or handbook or collectively, complete operating and maintenance instructions (including inventories of spare parts and tools and parts lists with ordering instructions) for each major piece of Equipment and system of the Ethanol Plant and FBG Work. Each such manual and handbook shall comply with the requirements of the Scope of Work, including with respect to matters such as to quantity, content and the time when such

 

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manuals are to be supplied to Owner, and shall be substantially complete and delivered to Owner prior to Ready for Start-Up in order to support training of personnel and start-up and testing of the Ethanol Plant.

Section 3.22 . Training of O&M Personnel . At least ninety (90) days prior to the scheduled Ready for Start-Up, Contractor shall provide, at its own expense, a training program in operations and maintenance of the Ethanol Plant for Owner’s personnel and the O&M Contractor’s personnel (collectively, “O&M Personnel”). The training program provided by Contractor shall (a) include classroom and field training, (b) include all manuals, drawings, and other educational materials necessary or desirable for the adequate training of O&M Personnel, and (c) establish quality controls so that O&M Personnel are suitably trained and capable of operating and maintaining the Ethanol Plant after Substantial Completion. Representatives of manufacturers of Equipment shall be utilized to provide specialized training for such Equipment where deemed necessary by the Parties. Contractor shall make every reasonable effort to use the O&M Personnel during start-up and initial operation of the Ethanol Plant; however, neither Owner nor O&M Contractor shall be obligated to supply personnel for the construction of the Facility. Contractor shall have complete responsibility for directing, coordinating, monitoring and supervising O&M Personnel during start-up and initial operations of the Ethanol Plant until Substantial Completion, and shall have the right to reject any O&M Personnel due to disorderly conduct or lack of competence (with written explanation therefore furnished to Owner) during training or until Substantial Completion. The cost of the O&M Personnel’s travel, lodging, food and other living expenses shall be borne by Owner.

Section 3.23 . Accounting Information . During the term of this Agreement and continuing for three (3) year(s) after the Final Acceptance Date, Contractor will provide Owner with any reasonably necessary assistance, including providing all documents, cost information and other information that Owner believes necessary, in a form reasonably acceptable to Owner, for Owner’s federal, state or local tax filings, exemptions or positions advocated by Owner relating to the Work, including, without limitation, sales, use and property taxes; provided, however, that such access to cost information not otherwise made available to Owner pursuant to the terms hereof shall be disclosed to an independent auditor of Owner’s choice that agrees to keep secret from Owner, Contractor’s cost and other competitively sensitive information.

Section 3.24 . Contractor Taxes . Contractor shall pay and administer all federal, state and local taxes and duties incurred or payable in connection with the Work, including, without limitation, taxes based on or related to Contractor’s or its Subcontractors’ or Vendors’ Labor or income, except for Owner Taxes (collectively, “Contractor Taxes”); provided, however, that if Contractor is responsible for payment of Owner Taxes under Applicable Law, unless otherwise instructed by Owner or Owner is contesting such taxes, Contractor shall pay such taxes and Owner shall reimburse Contractor therefor upon submission of evidence of payment. Contractor shall promptly provide Owner with reports or other evidence reasonably acceptable to Owner showing

 

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the payment of Contractor Taxes by Contractor. Contractor shall cooperate with Owner to endeavor to minimize any Owner Taxes. Contractor shall make available to Owner and claim all applicable sales and/or use or excise tax exemptions, credits or deductions relating to the Facility and the Equipment available to itself or Owner, including any sale-for-resale exemption under Applicable Law. To the extent Contractor is required by Applicable Law, to collect sales tax from Owner, Contractor shall either collect sales tax from Owner on all materials physically incorporated in the Facility that are not subject to exemption or Owner shall provide Contractor with a direct pay certificate issued to Owner by the appropriate taxing authority. In the event that an assessment for sales and/or use or excise taxes are levied against Contractor, any Subcontractor or Vendor, Contractor shall promptly notify Owner and furnish to Owner a copy of such assessment. In the event that Owner determines that the assessment should be contested and so notifies Contractor in writing, Owner may, at Owner’s sole cost and expense, file such documents as are necessary to contest such assessment. Owner shall exclusively control any contest, assessment or other action regarding any such taxes or assessments, or any penalties or interest in respect thereof. Contractor shall cooperate with and assist Owner, at Owner’s expense, in any contest or proceeding relating to taxes payable by Owner hereunder.

Section 3.25 . Claims and Liens for Labor and Materials . Provided that Owner has fulfilled its payment obligations under this Agreement, Contractor shall, at Contractor’s sole expense, discharge and cause to be released, whether by payment or posting of an appropriate surety bond in accordance with Applicable Law, within ten (10) days after receipt of a written demand from Owner, any Lien in respect to the Ethanol Plant or the FBG Work, this Agreement, the Equipment, the Job Site or any fixtures or personal property included in the Work (whether or not any such Lien is valid or enforceable) created by, through or under, or as a result of any act or omission (or alleged act or omission) of, Contractor or any Subcontractor, Vendor or other Person providing labor or materials within the scope of Contractor’s Work. Notwithstanding the foregoing provision, as long as Owner, in its sole discretion, determines that the Job Site and the improvements thereon will not be subject to any liability, penalty or forfeiture, upon the written request of Contractor, Owner may permit Contractor to contest the validity, enforceability or applicability of any such Lien, in which event Owner shall provide such cooperation as Contractor may reasonably request in connection therewith.

Section 3.26 . Spare Parts Availability .

(a) Start-up Spare Parts . Contractor shall obtain all spare parts required for the Ethanol Plant and the FBG Work in accordance with Exhibit A, Scope of Work.

(b) Operating Spare Parts . Contractor agrees to use all commercially reasonable efforts to obtain from each Major Manufacturer an assignable guaranty that such Major Manufacturer will have available for purchase by Owner for a period of five (5) years after the Final Acceptance Date all spare parts for the Major Equipment supplied by such Major Manufacturer required to keep the Ethanol Plant and the FBG Work in

 

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good operating condition, it being understood that some of such parts are not “shelf items” and will have to be manufactured by the Major Manufacturer after it receives an order for them. In addition, Contractor agrees to use all commercially reasonable efforts to make spare parts (other than spare parts for the Major Equipment) available for purchase by Owner for a period of five (5) years after the Final Acceptance Date to the extent that Contractor is able to obtain them from the manufacturer who supplied them for the Ethanol Plant and the FBG Work as originally built. If Contractor is unable to obtain such spare parts from such manufacturer, it further agrees to use all commercially reasonable efforts to find another source that can supply them. Contractor agrees to use all commercially reasonable efforts to obtain a firm price for such spare parts acceptable to Owner for a period of one (1) year after the Final Acceptance Date. At least one hundred twenty (120) days prior to the Ready for Start-Up date, Contractor shall provide Owner with each manufacturer’s recommended spare parts list for the Equipment.

Section 3.27 . Contractor’s Obligation to Notify . Contractor shall keep Owner advised as to the status of the Equipment and Work and shall promptly provide written report to Owner upon the occurrence of any of the following: (i) any occurrence or event that may be expected to materially impact the schedule for delivery and/or installation of Equipment; (ii) any technical problem not anticipated at the start of the Work and is of significant magnitude that may materially impact the Ethanol Plant, the FBG Work, or any component thereof or the Project Schedule; (iii) upon discovery of any Defect; and (iv) any material changes to previously submitted information. The Owner shall have the right to verify the information provided by Contractor. In connection therewith, Contractor shall identify those items provided to Owner that would enable Owner to verify such information in an expedient manner.

Section 3.28 . Construction Utilities . Contractor shall be responsible for the cost, supply and availability of electric power and distribution requirements for the performance of the Work at the Job Site. Contractor shall provide its own telephone, facsimile, radio, telex and other communication facilities at the Job Site as necessary for the performance of the Work. In addition, Contractor shall provide its own temporary lighting, water and sewer facilities at the Job Site.

Section 3.29 . Lines and Grades . Contractor shall provide for the proper laying out of the construction Work, for making measurements and for establishing temporary or permanent reference marks in connection with the construction Work. Owner may at its sole discretion and cost, check the reference marks, lines, grades and measurements so established. Contractor shall carefully preserve all monuments, bench marks and reference points. In case of its destruction thereof, Contractor will be responsible for all damages, costs and expenses related to their replacement and for any mistake or loss of time that may result therefrom. Permanent monuments or bench marks which must be removed or disturbed shall be protected until they can be properly referenced for relocation. Contractor shall furnish materials and assistance or the proper replacement of such monuments or bench marks.

 

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Section 3.30 . Temporary Structures . Temporary structures for offices, quarters, storage and other uses for Contractor, its Subcontractors and Vendors and Owner shall be constructed only in locations as mutually approved by the Parties. Contractor shall erect temporary walls, bulkheads or fences where required to isolate the construction area from adjacent property in order to increase safety and security and to minimize noise, dust and dirt from contaminating the property surrounding the Job Site.

Section 3.31 . Weatherproof Coverings . Contractor shall provide adequate and sufficient weatherproof and flame resistant coverings for outdoor storage at the Job Site. The cover or sheeting shall be tied down to prevent moisture from damaging the Equipment.

Section 3.32 . Milestone Payment Schedule . Within 30 days of the Effective Date, Contractor shall provide a Milestone Payment Table acceptable to the Owner. the Milestone Payment Table shall reflect the projected monthly cash flow of payments contained in Exhibit D (“Projected Cash Flow”). The Milestone Payment Table shall not, on a cumulative basis, exceed the Projected Cash Flow at any time, and shall reflect specified performance milestones and percentages of Work completion which are to be met as conditions to such payments being made. Such Milestone Payment Table, as so provided and accepted, shall replace the Projected Cash Flow in Exhibit D.

Section 3.33 . Emergencies . In the event of any emergency that endangers or could endanger life or property, Contractor shall take such action as may be reasonable and necessary to prevent, avoid or mitigate injury, damage or loss and shall, as soon as possible, report any such incidents in writing, including Contractor’s response and actions with respect thereto, to Owner.

Section 3.34 . Contractor’s Representative . Contractor shall appoint one individual, with the prior written consent of Owner, which consent shall not be unreasonably withheld, who shall be authorized to act on behalf of Contractor and with whom Owner may consult at all reasonable times, and whose instruction, request and decisions in writing will be binding upon Contractor. Contractor shall not remove or replace such representative without Owner’s prior written consent.

Section 3.35 . Contractor’s Insurances . As more fully provided in Article IX , Contractor shall procure and maintain the insurance coverages required of it under this Agreement.

Section 3.36 . Raw Water, Sewage and Potable Water Line Sizing . Within thirty (30) days after the date hereof, as necessary for operation of the Facility in accordance with the design criteria set forth in the Scope of Work, the Contractor shall provide line sizing and capacity data for: (i) a pipeline sufficient to meet daily capacity requirements for transport of raw water to the Property Site, (ii) a pipeline sufficient to meet hourly capacity requirements for transport of potable water to the Property Site, and (iii) a pipeline sufficient to meet daily capacity requirements for transport of sewage off the Property Site, if applicable.

 

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ARTICLE IV

CERTAIN OBLIGATIONS OF OWNER

Section 4.01 . Permits . Owner shall timely obtain and maintain, at its own expense, all Owner Permits, which are attached hereto as Exhibit M. Prior to commencement of construction at the Job Site, Owner shall deliver to Contractor evidence that Owner Permits necessary to begin construction of the Ethanol Plant and the FBG Work have been received by Owner or, if any such required Owner Permit has not actually been issued, that it has been approved for issuance, or in the opinion of Owner, will be approved for issuance.

Section 4.02 . Gas, Electric, and Water Facilities .

(a) Owner shall furnish or cause to be furnished at the Property Site at the location designated by Owner the natural gas interconnection flange, at least one hundred twenty (120) days prior to Guaranteed Substantial Completion Date. Contractor shall be responsible for all other Work on the natural gas interconnection flange on the Property Site.

(b) Owner shall furnish or cause to be furnished at the Property Site at the locations designated in the Scope of Work, at least one hundred forty (140) days prior to the Guaranteed Substantial Completion Date, a pipeline sufficient to transport raw water to the Property Site up to the daily capacity designated by Contractor.

(c) Owner shall furnish or cause to be furnished at the Property Site at the location designated by Owner the supply and availability of electric power at least one hundred twenty (120) days prior to Guaranteed Substantial Completion Date. Contractor shall be responsible for all other Work related to electric power and distribution on the Property Site.

Section 4.03 . Fuel Supply .

(a) At least forty-five (45) days prior to Ready for Start-Up and including the first Guaranteed Performance Test conducted in accordance with Article X , Owner shall supply or cause to be supplied all natural gas at the Job Site needed by Contractor in connection with the installation, adjustment and testing of the Ethanol Plant.

(b) In the event of failed Guaranteed Performance Test attributable to Contractor, for each subsequent Guaranteed Performance Test conducted in accordance with Article X , Owner shall supply, at Contractor’s expense (which costs shall be offset against Owner’s product revenues), Test Fuels needed by Contractor in connection with the installation, adjustment and testing of the Ethanol Plant.

 

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(c) All Test Fuels supplied by Owner hereunder shall comply in all material respects with the fuel specifications set forth in the Scope of Work.

Section 4.04 . Raw Water Supply . At least one hundred forty (140) days prior to Substantial Completion and through the Final Acceptance Date Owner shall supply or cause to be supplied all raw water.

Section 4.05 . Access to Property Site . From the earlier of the Notice to Proceed or the Financial Closing Date, until the earlier of the termination of this Agreement or the Final Acceptance Date, Owner shall permit the employees and agents of Contractor and its Subcontractors and Vendors to have uninterrupted access to the portions of the Property Site constituting the Job Site. Thereafter, upon reasonable notice and during reasonable times, and subject to such restrictions as may be reasonably imposed by Owner in order to assure that only authorized persons enter the Property Site, Owner shall permit the employees and agents of Contractor and its Subcontractors and Vendors, including any third-party repair personnel retained by Contractor or its Subcontractors and Vendors, to have access to the Property Site as necessary to repair or replace Defects or other Work that is not in compliance with this Agreement. As used above, the references to access contemplate that not only will the individuals referred to be able to enter upon and leave the Property Site but that they also will be able to bring onto and remove from the Property Site any and all kinds of personal property required for performance of the Work.

Section 4.06 . Right of Ways . Owner shall obtain at its own expense any easements and rights of way over the property of others as required, in order that the personnel and construction equipment of Contractor and its Subcontractors and Vendors have ingress to and egress from the Property Site, except for any transportation rights of way, permits or easements. In addition, Owner shall provide reasonable assistance to Contractor, upon its request, in connection with Contractor’s procurement of any easements and rights of way over the property of others that are necessary for the personnel and construction equipment of Contractor and its Subcontractors and Vendors to have ingress to and egress from portions of the Job Site other than the Property Site, except for any transportation rights of way, permits or easements.

Section 4.07 . Survey of Property Site . On or before the execution of this Agreement, Owner shall deliver to Contractor a survey of the Property Site showing, among other things, the location of all easements and rights of way on the Property Site, the location of all means of ingress to and egress from the Property Site which will be available to Contractor.

Section 4.08 . Notice of Financial Closing . Owner shall give Contractor reasonably prompt advance written notice of the scheduled and actual date of Financial Closing.

 

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Section 4.09 . Owner Taxes . Owner shall pay all real property taxes assessed against the Property Site and any permanent use charges or assessments such as water or sewer (but excluding charges and taxes for construction utilities and fuel to be supplied by Contractor as required hereunder, which shall be Contractor’s responsibility), and Owner shall be responsible for the payment of state and local sales and/or use or excise taxes in connection with the purchase of any equipment, including rentals, leases and consumables (collectively, “Owner Taxes”) except for such Owner Taxes as Owner contests in good faith by appropriate proceedings (provided that if Owner is unsuccessful in any such contest Owner shall be responsible for the payment of such Owner Tax). In the event that Owner is required to pay additional state or local taxes because Contractor failed to follow reasonable written instructions of Owner appropriately, Contractor shall be responsible for the cost of such additional taxes.

Section 4.10 . Owner’s Cooperation . Owner shall cooperate in all material respects to permit Contractor to perform its obligations hereunder and shall make reasonable efforts to supply to Contractor, in a timely manner, either directly or indirectly, requested material information and data that is known to Owner and that is required for the performance of the Work.

Section 4.11 . Owner’s Representative . Owner shall designate in writing one or more representatives at the Property Site (at least one of whom shall be at the site during normal business hours) who shall have authority to administer this Agreement on behalf of Owner, approve Contractor’s submissions hereunder and inspect the Work, as reasonably necessary for Contractor’s performance of the Work. Notwithstanding the foregoing, Owner’s Representative shall not have authority to approve Change Orders. Upon execution of this Agreement, and from time to time thereafter, Owner shall give Contractor notice in writing of the individual who does have authority to bind Owner with respect to administration of this Agreement (including Change Orders).

Section 4.12 . Supplies . At least ten (10) days prior to Ready for Start-Up and through Final Acceptance Date, Owner shall supply or cause to be supplied all raw materials, including corn or other feedstocks, chemicals and other supplies necessary to operate the Ethanol Plant in accordance with Exhibit A.

Section 4.13 . Operation and Maintenance . Owner shall timely provide operators having reasonable experience and qualifications for training and for the operation of the Ethanol Plant to support start-up and testing of the Ethanol Plant and to participate in the training of O&M Personnel by Contractor. From and after the Substantial Completion Date, Owner shall provide, or cause to be provided, operation and maintenance of the Ethanol Plant. Owner shall operate and maintain the Facility in accordance with this Agreement.

Section 4.14 . Owner’s Insurances . As more fully provided in Section 9.09 , Owner shall procure and maintain the insurance coverages required of it under this Agreement.

 

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ARTICLE V

PROJECT SCHEDULE

Section 5.01 . Commencement of Work . After the Effective Date, Contractor will commence performance of the Work so as to ensure completion of the Work in accordance with the terms hereof. The Parties agree that any and all Work performed prior to the Financial Closing Date (the “Prefunding Work”), except to the extent Contractor is entitled to payment pursuant to Section 6.02(c) and/or Section 6.02(d) shall be solely at Contractor’s expense and risk, without further right of payment until Financial Closing. At Financial Closing, Contractor shall be entitled to payment pursuant to Section 6.03 . If Financial Closing has not occurred on or before December 15, 2005, Owner shall have the right thereafter to require Contractor to continue performing all or a portion of the Work (as specified by Owner) by giving Contractor a Notice to Proceed. If Owner gives Contractor such a Notice to Proceed, Contractor shall be entitled to payment pursuant to Section 6.02(c) . If Owner gives Contractor such a Notice to Proceed and Financial Closing occurs on or before April 1, 2006, Contractor shall not be entitled to additional compensation, an extension of time for completion of all or any part of the Work or any other amendment to the terms of this Agreement, whether pursuant to a Change Order or otherwise, based on the occurrence of Financial Closing by such date. Unless the Parties agree on the terms under which Contractor will continue performance of the Work, including any equitable adjustment (if appropriate) to the Project Schedule, Contractor may suspend performance of the Work (and the provisions of Section 15.04(b) shall apply) by giving written notice thereof to Owner upon the occurrence and during the continuation of either of the following: (a) if Financial Closing has not occurred on or before December 15, 2005 and Owner has not given Contractor a Notice to Proceed on or before such date which allows for the Work to be performed at the levels and dollar amounts specified in the payment schedule attached as Exhibit D, or (b) Financial Closing has not occurred on or before April 1, 2006. Contractor shall commence full performance of the Work upon receipt from Owner of either (i) a notice under Section 4.08 specifying the actual date that Financial Closing occurred or (ii) a Notice to Proceed issued under this Section 5.01 . Following receipt of a Notice to Proceed given by Owner under this Section 5.01 prior to Financial Closing, Owner shall, at the request of Contractor, furnish to the Contractor reasonable evidence that adequate financial arrangements have been made to fulfill Owner’s obligations hereunder for Work performed after the receipt of such Notice to Proceed and prior to Financial Closing. If Financial Closing has not occurred by December 31, 2006, Contractor shall be entitled to terminate this Agreement upon ten (10) days’ notice to Owner in accordance with Section 15.06(c) .

Section 5.02 . Project Schedule .

(a) Subject to the terms of Article XI, Contractor shall perform the Work in compliance with the Project Schedule, including completing the Work required by the

 

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Guaranteed Dates. Contractor shall provide the reports as required herein, and provide any further information required by Owner as Owner may reasonably request to verify actual progress and forecast future progress of the Work. Contractor shall promptly notify Owner in writing of any occurrence that Contractor has reason to believe will adversely affect the completion of the Work by the Guaranteed Dates or materially adversely affect completion of the Work in accordance with the Project Schedule. Contractor will specify in said notice the corrective action planned by Contractor with respect thereto.

(b) Without limiting the obligations of Contractor under Section 5.02(a) , Contractor shall provide together with its monthly status reports required hereunder any revisions to the Project Schedule that provide for the orderly, practicable and expeditious completion of the Work in accordance with the requirements of this Agreement. Each revised Project Schedule shall be presented in such reasonable detail as Owner may require and shall address all material elements of the Work. Contractor shall consult with Owner in connection with each revision to the Project Schedule provided under this paragraph. Notwithstanding anything contained herein to the contrary, in the absence of a Change Order, no revision to the Project Schedule shall in any way amend, alter or otherwise change the Guaranteed Dates.

(c) If, in the reasonable opinion of the Owner, Contractor will not achieve Ready for Start-Up on or before December 1, 2006, as that date may be extended pursuant to Article VII , Contractor shall, within ten (10) days after notice from Owner, submit a recovery plan, which shall reasonably demonstrate the steps Contractor will take to achieve Ready for Start-Up at the earliest date and otherwise achieve the Guaranteed Dates.

(d) In no event will the Contractor’s failure to complete one or more Milestones by the date required for such Milestone change, delay or otherwise affect the required completion date for any other Milestone. Nothing contained in this Article V shall relieve Contractor from its obligation to pay Schedule Liquidated Damages in the event that Interim Completion is not achieved by the applicable Guaranteed Interim Completion Date and/ or if Substantial Completion is not achieved by the applicable Guaranteed Substantial Completion Date. Specifically, but not by way of limitation, the approval of a recovery plan (even though such recovery plan may include a projected date for Interim Completion that is later than the Guaranteed Interim Completion Date and/or Substantial Completion that is later than the Guaranteed Substantial Completion Date)