Standard Form of Design-build Agreement - Cost Plus

EXHIBIT 10.1


THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA - --------------------------------------------------------------------------------


AGC DOCUMENT NO. 410
STANDARD FORM OF DESIGN-BUILD
AGREEMENT AND GENERAL CONDITIONS
BETWEEN OWNER AND DESIGN-BUILDER
(WHERE THE BASIS OF PAYMENT IS THE COST OF THE WORK
PLUS A FEE WITH A GUARANTEED MAXIMUM PRICE)


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THIS STANDARD FORM AGREEMENT WAS DEVELOPED WITH THE ADVISE AND COOPERATION OF THE AGC PRIVATE INDUSTRY ADVISORY COUNCIL, A NUMBER OF FORTUNE 500 OWNERS' DESIGN AND CONSTRUCTION MANAGERS WHO HAVE BEEN MEETING WITH AGC CONTRACTORS TO DISCUSS ISSUES OF MUTUAL CONCERN. AGC GRATEFULLY ACKNOWLEDGES THE CONTRIBUTIONS OF THESE OWNERS' STAFF WHO PARTICIPATED IN THIS EFFORT TO PRODUCE A BASIC AGREEMENT FOR CONSTRUCTION.


TABLE OF ARTICLES
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1. AGREEMENT
2. GENERAL PROVISIONS
3. DESIGN-BUILDER'S RESPONSIBILITIES
4. OWNER'S RESPONSIBILITIES
5. SUBCONTRACTS
6. TIME
7. COMPENSATION
8. COST OF THE WORK
9. CHANGES IN THE WORK
10. PAYMENT FOR CONSTRUCTION PHASE SERVICES
11. INDEMNITY, INSURANCE, BONDS, AND WAIVER OF SUBROGATION
12. SUSPENSION AND TERMINATION OF THE AGREEMENT AND OWNER'S
RIGHT TO PERFORM DESIGN-BUILDER'S RESPONSIBILITIES
13. DISPUTE RESOLUTION
14. MISCELLANEOUS PROVISIONS
15. EXISTING CONTRACT DOCUMENTS


AMENDMENT NO. I
Owners Program
AMENDMENT NO. 2
Technology Transfer Agreement between Owner, Engineer and
Design-Builder


- -------------------------------------------------------------------------------- This Agreement has important legal and insurance consequences. Consultation with an attorney and insurance consultant is encouraged with respect to its completion or modification. - --------------------------------------------------------------------------------


- -------------------------------------------------------------------------------- AGC DOCUMENT NO.410 o STANDARD FORM OF DESIGN-BUILD AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DESIGN-BUILDER (Where the Basis of Payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price) 2001 The Associated General Contractors of America


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AGC DOCUMENT NO. 410
STANDARD FORM OF DESIGN-BUILD
AGREEMENT AND GENERAL CONDITIONS
BETWEEN OWNER.AND DESIGN-BUILDER
(Where the Basis of Payment is the Cost of the Work
Plus A FEE with a Guaranteed Maximum Price) - --------------------------------------------------------------------------------


ARTICLE 1


AGREEMENT


This Agreement is made the............7TH..............day of...........JULY..............in the YEAR......2003, by and between the


OWNER


PACIFIC ETHANOL, INC. 440 W. FALLBROOK SUITE 210 FRESNO, CA 93711


and the DESIGN-BUILDER


W.M. LYLES CO. (A CALIFORNIA CORPORATION) P.O. BOX 4377 FRESNO, CA 93744-4377


for services in connection with the following PROJECT


ETHANOL PLANT - CONSTRUCTION ETHANOL PRODUCTION AT THE MADERA SITE


Notice to the parties shall be given at the above addresses.


ARTICLE 2 - GENERAL PROVISIONS


2.1 TEAM RELATIONSHIP THE OWNER AND THE Design-Builder AGREE TO PROCEED WITH THE Project ON the basis of trust, good faith and fair dealing and shall take all actions reasonably necessary to perform THIS AGREEMENT IN AN ECONOMICAL and timely MANNER, including consideration OF DESIGN MODIFICATIONS AND alternative materials or equipment that will permit the Work to be constructed within the Guaranteed Maximum Price (GMP) AND by THE DATES OF Substantial COMPLETION AND Final Completion AS established by Amendment No. 1. The Design-Builder agrees to procure, as permitted by the law of the state where the project is located, the design phase services and furnish construction phase services as set forth below.


2.1.1 The Design-Builder represents that it is an independent contractor and that it is familiar with the type of work it is undertaking.


2.1.2 Neither the Design-Builder nor any of its agents or employees shall act on behalf of or in the name of the Owner unless authorized in writing by the Owner's Representative.


2.2 ENGINEER Engineering services shall be procured from licensed, independent design professionals retained by the Design-Builder with consultation from Owner as permitted by the law of the state where the Project is located. The standard of care for engineering services performed under this Agreement shall be the care and skill ordinarily used by members of the engineering professions practicing under similar conditions at the same time and locality. The entity providing engineering services shall be referred to as the Engineer and provide separate and exclusive Professional Liability Insurance as required. The engineering services shall be procured pursuant to a separate agreement between the Design-Builder and the Engineer.


2.2.1 THE Engineer FOR THE Project shall BE DELTA-T CORPORATION,


2.3 EXTENT OF AGREEMENT This Agreement is solely for the benefit of the parties, represents the entire and integrated agreement between the parties, and supersedes all prior negotiations, representations or agreements, either written or oral, except for the signed and dated Lyles Diversified, Inc. Agreement titled "Summary of Terms for Secured Debt With Equity." The Owner and the Design-Builder AGREE TO LOOK SOLELY TO EACH other with RESPECT TO THE PERFORMANCE OF THE AGREEMENT. THE Agreement and each and every provision is for the exclusive benefit of the Owner and the Design-Builder and not for the benefit of any third party or any third party beneficiary, except to the extent expressly provided in the Agreement.


2.4 DEFINITIONS


.1 The Contract DOCUMENTS consist of:


a. Change Orders and written amendments to this Agreement
including exhibits and appendices, signed by both the Owner
and the Design-Builder, including Amendment No. 1 if executed;


b. this Agreement except for the existing Contract Documents
set forth in item e. below;


c. the most current documents approved by the Owner pursuant
to Paragraph 3.1;


d. the information provided by the Owner pursuant to Clause
4.1.2.1;


e. the Contract Documents in existence at the time of
execution of this Agreement which are set forth in Article 15.
Additional Exhibits may be added to this document with proper
signature of the Owner and design-Builder;


f. the Owner's Program provided pursuant to Subparagraph 4.1.;


In case of any inconsistency, conflict or ambiguity among the Contract
Documents, the documents shall govern in the order in which they are
listed above.


.2 The term day shall mean calendar day unless otherwise specifically
defined.


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.3 DESIGN-BUILDER'S FEE means the compensation paid to the
Design-Builder for salaries and other mandatory or customary
compensation of the Design-Builder's employees at its principle and
branch offices except employees listed in Subparagraph 8.2.2, general
and administrative expenses of the Design-Builder's principal and
branch offices other than the field office, and the Design-Builder's
capital expenses, including interest on the Design-Builder's capital
employed FOR the WORK, AND PROFIT.


.4 DEFECTIVE WORK IS ANY portion of the Work not in conformance with
the Contract Documents as more fully described in Paragraph 3.8.


.5 The term Fast-track means accelerated scheduling which involves
commencing construction prior to the completion of drawings and
specifications and then using means such as bid PACKAGES AND EFFICIENT
COORDINATION TO COMPRESS THE overall schedule.


.6 FINAL COMPLETION occurs on the date when the Design-Builder's
obligations under this Agreement are complete and accepted by the Owner
and final payment becomes due and payable.


.7 A MATERIAL SUPPLIER is a party or entity retained by the
Design-Builder to provide material and equipment for the Work.


.8 Others means other contractors and all persons at the Worksite who
are not employed by Design-Builder, its Subcontractors or Material
Suppliers.


.9 The OWNER is the person or entity identified as such in this
Agreement and includes the Owner's Representative.


.10 The OWNER'S PROGRAM IS an initial description of the Owner's
objectives, that may include budget and time criteria, space
requirements and relationships, flexibility and expandability
requirements, special equipment and systems, and site requirements
completed by the Design-Builder and Engineer as described in Exhibit
No. C; Project Development Agreement.


.11 The PROJECT, as identified in Article 1, is the building, facility
and/or other improvements for which the Design-Builder is to perform
the Work under this Agreement It may also include improvements to be
undertaken by the Owner or Others.


.12 A SUBCONTRACTOR IS A party or entity retained by the Design-Builder
as. an independent contractor to provide the on-site labor, materials,
equipment and/or services necessary to complete a specific portion of
the Work. The term Subcontractor does not include the Engineer or any
separate contractor employed by the Owner or any separate contractor's
subcontractors.


.13 SUBSTANTIAL COMPLETION OF THE WORK, OF a designated portion, occurs
on the date when the Design-Builder's obligations are sufficiently
complete in accordance with the Contract Documents so that the Owner
can or does occupy or utilize the Project, or a designated portion, for
the use for which it is intended, in accordance with Paragraph 10.4.
The issuance of a Certificate of Occupancy is not a prerequisite for
Substantial Completion if the Certificate of Occupancy cannot be
obtained due to factors. beyond the Design-Builder's control. This date
shall be confirmed by a Certificate of Substantial Completion signed by
the Owner and the Design-Builder. The Certificate shall state the
respective responsibilities of the Owner and the Design-Builder for
security, maintenance, heat, utilities, damage to the Work, and
insurance. The Certificate shall also list the items to be completed or
corrected, and establish the time for their completion and correction,
within the time frame, if any, established in Amendment No. I for the
Date of Final Completion.


.14 A SUB-SUBCONTRACTOR IS a party or entity who has an agreement with
a Subcontractor to perform any portion of the Subcontractor's work.


.15 The WORK is the Design Development and Design Phase Services
procured or furnished in accordance with Paragraph 3.1, the GMP
Proposal provided in accordance with Paragraph 3.2, the Construction
Phase Services provided in accordance with Paragraph 3.3, Additional
Services that may be provided in accordance with paragraph 3.10, and
other services which are necessary to complete the Project in
accordance with and reasonably inferable from the Contract Documents.


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.16 WORKSITE means the geographical area at the location mentioned in
Article where the Work is to be performed.


ARTICLE 3 -DESIGN-BUILDER'S RESPONSIBILITIES


THE Design-Builder shall be responsible for procuring the design and for furnishing the construction of the Work consistent with the Owner's Program; as such the Owner may modify the Program during the course of the work up to twenty-five (25)-percent design complete. The Design-Builder shall exercise reasonable skill and judgment in the performance of its services consistent with the team relationship described in Paragraph 2.1, but does not warrant nor guarantee schedules and estimates other than those that are part of the GMP proposal.


3.1 DESIGN PHASE SERVICES


3.1.1 PRELIMINARY EVALUATION - OWNER'S PROGRAM The Design-Builder shall review the Owner's Program to ascertain the requirements of the Project and shall verify' such requirements with the Owner. The Design-Builder's review shall also provide to the Owner a preliminary evaluation of the site with regard to access, traffic, drainage, parking, building placement and other considerations affecting the plant, the environment and energy use, as well as information regarding applicable governmental laws, regulations and requirements based on the requirements of Exhibit No. C. The Design-Builder shall also propose, as necessary, alternative architectural, civil, structural, mechanical, electrical and other systems for review by the Owner, to determine the most desirable approach on the basis of cost, technology, quality and speed of delivery. The Design-Builder will also review existing test reports but will not undertake any independent testing nor be required to furnish types of information derived from. such testing in its Preliminary Evaluation. Based upon its review and verification of the Owner's Program and other relevant information the Design-Builder shall provide a Preliminary Evaluation of the Project's feasibility for the Owner's acceptance. The Design-Builder's Preliminary Evaluation shall specifically identify any deviations from the Owner's Program.


3.1.2 PRELIMINARY SCHEDULE - OWNER"S PROGRAM The Design-Builder shall prepare a preliminary schedule of the Work as established by the information provide by the Engineer in Exhibit No. C. The Owner shall provide written approval of milestone dates established in the preliminary schedule of the Work. The schedule shall show the activities of the Owner, the Engineer and the Design-Builder necessary to meet the Owner's completion requirements. The schedule shall be updated periodically with the level of detail for each schedule update reflecting the information then available. If an update indicates that a previously approved schedule will not be met, the Design-Builder shall recommend corrective action to the Owner in writing.


3.1.3 PRELIMINARY ESTIMATE -- OWNER'S PROGRAM ' When sufficient Project information has been identified, the Design-Builder shall prepare for the Owner's acceptance a preliminary estimate established by the information provided by the Engineer in Exhibit No. C utilizing typical W.M. LYLES CO. estimating techniques. The estimate shall be updated periodically with the level of detail for each estimate update reflecting the information then available. If the preliminary estimate or any update exceeds the Owner's budget, the Design-Builder shall make recommendations to the Owner.


3.1.4 DESIGN DEVELOPMENT DOCUMENTS - OWNER'S PROGRAM The Design-Builder shall submit for the Owner's written approval the Design Development Documents as submitted by the Engineer and required in Exhibit No. C signed by the Design-Builder and Engineer based on the approved Schematic Design Documents. The Design Development Documents shall further define the Project including drawings and outline specifications fixing and describing the Project size and character as to site utilization, and other appropriate elements incorporating the structural, architectural, mechanical and electrical systems. One set of these documents shall be furnished to the Owner. When the Design-Builder submits the Design Development Documents, the Design-Builder shall identify in writing all material changes and deviations that have taken place from the Schematic Design Documents. The Design-Builder shall update the schedule and estimate based on the Design Development Documents.


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3.1.5 TECHNOLOGY TRANSFER AGREEMENT AND FUTURE DESIGN SERVICES AGREEMENT Upon execution of Exhibit No. C, the Owner, Engineer and Design-Builder shall enter into good-faith negotiations for the Technology Transfer Agreement and the Design-Builder and Engineer shall enter into good-faith negotiations for the Design Services Agreement. Upon confirmation that the Owner has obtained the necessary Project Financing, the Technology Transfer Agreement and Design Services agreement shall be fully executed so as to not delay the project.


3.1.6 CONSTRUCTION DOCUMENTS Upon confirmation that the Owner has obtained the necessary Project Financing, the Design-Builder shall submit for the Owner's written approval Construction Documents based on the approved Design Development Documents. The Construction Documents shall set forth in detail the requirements for construction of the Work, and shall consist of drawings and specifications based upon codes, laws and regulations enacted at the time of their preparation. When the Design-Builder submits the Construction Documents, the Design-Builder shall identify in writing all material changes and deviations that have taken place from the Design Development Documents. Construction shall be in accordance with these approved Construction Documents. One set of these documents shall be furnished to the Owner prior to commencement of construction.


3.1.7 OWNERSHIP OF DOCUMENTS Upon the making of payment pursuant to Paragraph 10.5, the Owner shall receive ownership of the property rights, except for copyrights and other limited license information provided and required by the Engineer, of all documents, drawings, specifications, electronic data and information prepared, provided OR PROCURED by the Design-Builder, its Engineer, Subcontractors and Consultants and distributed to the Owner for this Project. ("Design-Build Documents")


.1 If this Agreement is terminated pursuant to Paragraph 12.1, the
Owner shall receive ownership of the property rights, except for
copyrights and other limited license information provide by the
Engineer, of the Design-Build Documents upon payment for all work
performed in accordance with this Agreement, at which time the Owner
shall have the right to use, reproduce and make derivative works from
the Design-Build Documents to complete the Work.


.2 If this Agreement is terminated pursuant to Paragraph 12.2, the
Owner shall receive ownership of the property rights, except for
copyrights and other limited license information provide by the
Engineer, of the Design-Build Documents upon payment of all sums
provided in Paragraph 12.2, at which time the Owner shall have the
right to use, reproduce and make derivative works from the Design-Build
Documents to complete the Work.


.3 The Owner may use, reproduce and make derivative works from the
Design-Build documents for subsequent renovation and remodeling of the
work, but shall not use, reproduce or make derivative works from the
Design-Build Documents for other projects without the written
authorization of the Design-Builder and Engineer, who shall not
unreasonably withhold consent.


.4 The Owner's use of the Design-Build Documents without the
Design-Builder's involvement or on other projects is at the Owner's
sole risk, except for the Design-Builder's indemnification obligation
pursuant to Paragraph 3.7, and the Owner shall defend, indemnify and
hold harmless the Design-Builder, its Engineer, Subcontractors, and
consultants, and the agents; officers, directors and employees of each
of them from and against any and all claims, damages, losses, costs
'and expenses, including but not limited to attorney's fees, costs and
expenses incurred in connection with any dispute resolution process,
arising out of or resulting from the Owner's use of the Design-Build
Documents.


.5 The Design-Builder shall obtain from its Engineer, Subcontractors
and consultants property rights and rights of use that correspond to
the rights given by the Design-Builder to the Owner in this Agreement.


3.2 GUARANTEED MAXIUM PRICE (GMP)


3.2.1 GMP PROPOSAL The GMP shall be the sum of the estimated Design-Builder's Time and Material Cost of the work as defined in Article 8 and listed in Exhibit No. B, Design-Builder's Fee as defined in Article land the Design-Builder's Contingency as defined in Article 3.2.7. The GMP is subject to modification as provided in Article 9.


3.2.1.1 The Design-Development Documents shall be sufficiently complete at the time the GMP Proposal is submitted to the Owner. The Design-Builder shall


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provide in the GMP for further development of the Design-Build Documents consistent with the Owner's Program. Such further development does not include changes in scope, systems, kinds and quality of materials, finishes or equipment, all of which if required, shall be incorporated by Change Order.


3.2.2 BASIS OF GUARANTEED MAXIMUM PRICE The Design-Builder shall include with the GMP Proposal a written statement of its scope of work and basis, which shall include:


.1 A list of the drawings and specifications, including all addenda,
which were used in preparation of the GMP Proposal;


.2 current Time and Material worksheet (Exhibit No. B);


.3 a list of the assumptions and clarifications made by the
Design-Builder in the preparation of the GMP Proposal to supplement the
information contained in the drawings and specifications;


.4 The Date of Substantial Completion and/or the Date of Final
Completion upon which the proposed GMP is based, and the Schedule of
Work upon which the Date of Substantial Completion and/or the Date of
Final Completion is based;


.5 a schedule of applicable alternate prices and unit prices if
necessary;


.6 Additional Services if any;


.7 the time limit for acceptance of the GMP proposal;


.8 the Design-Builder's Contingency as provided in Subparagraph 3.2.6;


.9 a statement of any work to be self performed by the Design-Builder;
and


.10 A statement identifying all patented or copyrighted materials,
methods or systems selected by the Design-Builder and incorporated in
the Work that are likely to require the payment of royalties or license
fees.


3.2.3 REVIEW AND ADJUSTMENT TO GMP PROPOSAL The Design-Builder shall meet with the Owner to review the GMP Proposal. In the event that the Owner has any comments relative to the GMP Proposal, or finds any inconsistencies or inaccuracies in the information presented, it shall give prompt written notice of such comments or findings to the Design-Builder, who shall make appropriate adjustments to the GMP, its basis or both.


3.2.4 ACCEPTANCE OF GMP PROPOSAL Upon acceptance by the Owner of the GMP Proposal, as MAY be amended by the Design-Builder in accordance with Subparagraph 3.2.3, THE GMP AND ITS BASIS shall be set forth in Amendment No. 1. The GMP and the date of Substantial Completion and/or the date of Final Completion shall be subject to modification in Article 9.


3.2.5 FAILURE TO ACCEPT THE GMP PROPOSAL Unless the Owner accepts the GMP Proposal in writing on or before the date specified in the GMP Proposal for such acceptance and so notifies the Design-Builder, the GMP Proposal shall not be effective. If the Owner fails to accept the GMP Proposal, or rejects the GMP Proposal, the Owner shall have the right to:


.1 Suggest modifications to the GMP Proposal. If such modifications are
accepted in writing by Design-Builder, the GMP Proposal shall be deemed
accepted in accordance with Subparagraph 3.2.4;


.2 Direct the Design-Builder to proceed on the basis of reimbursement
as provided in Articles 7 and 8 without A GMP, in which case all
references in this agreement to the GMP shall not be applicable; or


In the absence of a GMP the parties may establish a Date of Substantial Completion and/or a Date of Final Completion.


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3.2.6 DESIGN-BUILDER'S CONTINGENCY The GMP Proposal will contain, as part of the estimated Cost of the Work, the Design-Builder's Contingency, a sum mutually agreed upon and monitored by the Design-Builder and the Owner for use at the Design-Builder's discretion to cover costs which are properly reimbursable as a Cost of the Work but are not the basis for a Change Order. Any contingency amount remaining after Owner's start=up and use of the project shall be equitably split between the Design-Builder and Owner on a 50/50 basis.


3.2.7 CONSTRUCTION PHASE SERVICES The Construction. Phase will commence upon the confirmation that the Owner has obtained the necessary Project Financing and issuance by the Owner of a written notice to proceed with construction.


32.8 In order to complete the Work, the Design-Builder shall provide all necessary construction supervision, construction equipment, labor, materials, tools, and subcontracted items.


3.2.9 The Design-Builder shall give all notices and comply with all laws and ordinances legally enacted at the date of execution of the Agreement which govern the proper performance of the Work.


3.2.10 The Design-Builder shall keep such full and detailed accounts as are necessary for proper financial management under this Agreement. The Owner shall be afforded access to all the Design-Builder's records, books, correspondence, instructions, drawings, receipts, vouchers., memoranda and similar data relating to this Agreement. The Design-Builder shall preserve all such records for a period of three years after the final payment or longer where required by law.


3,2.11 The. Design-Builder shall provide periodic written reports to the Owner on the progress of the Work in such detail as agreed to by the Owner and the Design-Builder.


3.2.12 The Design-Builder shall develop a system of cost reporting for the Work, including regular monitoring of actual costs for activities in progress and estimates for uncompleted tasks and proposed changes in the Work. The reports shall be presented to the Owner at mutually agreeable intervals.


3.2.13 The Design-Builder shall regularly remove debris and waste materials at. the Worksite resulting from the Work. Prior to discontinuing Work in an area, the Design-Builder shall clean the area ...