EXHIBIT 10.58

ENGINEERING, PROCUREMENT, AND CONSTRUCTION AGREEMENT

This ENGINEERING, PROCUREMENT, AND CONSTRUCTION AGREEMENT ("Agreement") is dated
on or as of the 26th day of November, 2002 by and between the following parties:

THE OWNER:                             Embrex, Inc.
                                       1040 Swabia Court
                                       P.O. Box 13989
                                       Research Triangle Park, North Carolina
                                       27709-3989

THE CONTRACTOR:                        Lockwood Greene E & C, L.L.C.
                                       5520 Dillard Road
                                       Suite 260
                                       Cary, North Carolina 27511

FOR THE FOLLOWING PROJECT:             Approximately 25,000 square foot facility
                                       for production of poultry vaccine in
                                       Laurinburg, North Carolina




                                TABLE OF CONTENTS
                                                                                                           
TABLE OF CONTENTS.............................................................................................2 - 6

ARTICLE 1:  DEFINITION........................................................................................    7
         1.1      OWNER AND CONTRACTOR........................................................................    7
         1.2      PROJECT.....................................................................................    7
         1.3      WORK........................................................................................    7
         1.4      SUBCONTRACTOR...............................................................................    7
         1.5      SUB-SUBCONTRACTOR...........................................................................    7
         1.6      DAY.........................................................................................    7
         1.7      SITE........................................................................................    7
         1.8      CONTRACT TIMES..............................................................................    7
         1.9      MILESTONE...................................................................................    7
         1.10     SUBSTANTIAL COMPLETION......................................................................    7
         1.11     CONSTRUCTION................................................................................    8
         1.12     DESIGN SERVICES.............................................................................    8
         1.13     CHANGE ORDER................................................................................    8
         1.14     START-UP AND COMMISSIONING..................................................................    8
ARTICLE 2:  THE CONTRACT DOCUMENTS............................................................................    8
         2.1      CONTRACT DOCUMENTS..........................................................................    8
                   2.1.1   AGREEMENT..........................................................................    8
                   2.1.2   DOCUMENTS RELATING TO THE CONTRACTOR'S SCOPE OF WORK...............................    8
                   2.1.3   DRAWINGS AND SPECIFICATIONS........................................................    8
                   2.1.4   MODIFICATIONS......................................................................    9
         2.2      INTENT OF CONTRACT DOCUMENTS................................................................    9
         2.3      CONTRACT DOCUMENTS ARE COMPLEMENTARY........................................................    9
         2.4      PRECEDENCE OF CONTRACT DOCUMENTS............................................................    9
         2.5      MODIFICATION OF CONTRACT DOCUMENTS..........................................................    9
ARTICLE 3:  CONTRACTOR'S RESPONSIBILITIES.....................................................................    9
         3.1      GENERAL SERVICES OF CONTRACTOR..............................................................    9
                   3.1.1   CONTRACTOR SHALL COMPLETE THE WORK.................................................    9
                   3.1.2   PERSONNEL AND MATERIALS............................................................   10
                   3.1.3   SUBCONTRACTS.......................................................................   10
                   3.1.4   CONTRACTOR'S REPRESENTATIVE........................................................   11
                   3.1.5   COMPLIANCE.........................................................................   11
                   3.1.6   PERMITS............................................................................   11
                   3.1.7   LAWS AND REGULATIONS...............................................................   11
                   3.1.8   TAXES..............................................................................   11
                   3.1.9   SAFETY.............................................................................   11
                   3.1.10  MAINTENANCE OF BOOKS AND RECORDS...................................................   12
         3.2      RESPONSIBILITIES WITH RESPECT TO DESIGN.....................................................   12
                   3.2.1   DRAWINGS AND SPECIFICATIONS........................................................   12
                   3.2.2   STANDARD OF CARE...................................................................   12
                   3.2.3   NO WARRANTY FOR PERFORMANCE BY OTHERS..............................................   12
                   3.2.4   BREACH OF DUTY OF CARE.............................................................   12
         3.3      RESPONSIBILITIES WITH RESPECT TO CONSTRUCTION...............................................   12
                   3.3.1   CONTRACTOR'S RESPONSIBILITIES......................................................   12
                   3.3.2   MAINTENANCE OF THE SITE............................................................   12
                   3.3.3   CONSTRUCTION WARRANTY..............................................................   13
                   3.3.4   CERTIFICATES.......................................................................   13
                   3.3.5   DELIVERY OF WARRANTIES.............................................................   13
                   3.3.6   INITIAL START-UP...................................................................   13
         3.4      RESPONSIBILITY WITH RESPECT TO MANUFACTURING EQUIPMENT......................................   13



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                   3.4.1   PROCUREMENT........................................................................   13
                   3.4.2   ORDERING OF MANUFACTURING EQUIPMENT................................................   13
                   3.4.3   CERTIFICATES.......................................................................   14
                   3.4.4   DELIVERY OF WARRANTIES.............................................................   14
                   3.4.5   MANUFACTURING EQUIPMENT WARRANTY...................................................   14
ARTICLE 4.  OWNER'S RESPONSIBILITIES..........................................................................   14
         4.1      PROJECT INFORMATION.........................................................................   14
                   4.1.1   ENVIRONMENTAL ASSESSMENT...........................................................   14
                   4.1.2   SURVEYS............................................................................   14
                   4.1.3   DESCRIPTIONS.......................................................................   14
                   4.1.4   LAND USE RESTRICTIONS..............................................................   14
                   4.1.5   SUBSURFACE INVESTIGATIONS..........................................................   14
                   4.1.6   ENGINEERING SURVEYS................................................................   14
                   4.1.7   ASSISTANCE WITH APPROVALS..........................................................   14
                   4.1.8   INFORMATION CONCERNING HAZARDS.....................................................   14
                   4.1.9   AVAILABILITY OF LANDS..............................................................   15
         4.2      OWNER REVIEW................................................................................   15
         4.3      PROFESSIONAL SERVICES.......................................................................   15
         4.4      OWNER'S REPRESENTATIVE......................................................................   15
         4.5      SUFFICIENCY OF FUNDS........................................................................   15
         4.6      PAYMENTS TO CONTRACTOR......................................................................   15
         4.7      NOTICE OF FAULTS OR DEFECTS.................................................................   15
         4.8      OWNER-FURNISHED EQUIPMENT AND MATERIALS.....................................................   15
         4.9      PROMPTNESS; RELIANCE........................................................................   15
         4.10     CAPABILITY TO PRODUCE FINISHED PRODUCT......................................................   15
         4.11     REVIEW OF DRAWINGS AND SPECIFICATIONS.......................................................   16
         4.12     NON-WAIVER..................................................................................   16
ARTICLE 5.  SUBCONTRACTS......................................................................................   16
         5.1      SUBCONTRACTED WORK..........................................................................   16
         5.2      RESPONSIBILITY FOR SUBCONTRACTORS...........................................................   16
ARTICLE 6.  TIMING OF WORK....................................................................................   16
         6.1      CONTRACT TIME SCHEDULE......................................................................   16
         6.2      DATE OF SUBSTANTIAL COMPLETION..............................................................   17
         6.3      DELAYS......................................................................................   17
         6.4      EARLY OCCUPANCY.............................................................................   17
         6.5      ACCEPTANCE OF WORK..........................................................................   17
         6.6      INSTALLED EQUIPMENT.........................................................................   18
                   6.6.1   EQUIPMENT PRIOR TO START-UP........................................................   18
                   6.6.2   JOINT INSPECTION...................................................................   18
                   6.6.3   RESPONSIBILITY FOR EQUIPMENT.......................................................   18
ARTICLE 7.  CONTRACT PRICE....................................................................................   18
         7.1      LUMP SUM PRICE..............................................................................   18
         7.2      ALLOWANCES..................................................................................   18
         7.3      [RESERVED]..................................................................................   18
         7.4      COST OF THE WORK............................................................................   18
ARTICLE 8.  CHANGES IN THE WORK...............................................................................   18
         8.1      OWNER MAY REQUEST CHANGES...................................................................   18
         8.2      REQUEST FOR ADDITIONAL COST OR TIME.........................................................   18
         8.3      CHANGE ORDER................................................................................   19
         8.4      CHANGES TO THE CONTRACT PRICE...............................................................   19
                   8.4.1   LUMP SUM...........................................................................   19
                   8.4.2   UNIT PRICES........................................................................   19
                   8.4.3   COST PLUS A FEE....................................................................   19
                   8.4.4   COST OF THE WORK...................................................................   19
                   8.4.5   FEE................................................................................   21



                                                                    Page 3 of 41



                                                                                                              
                   8.4.6   DOCUMENTATION......................................................................   21
                   8.4.7   UNKNOWN OR CONCEALED CONDITIONS....................................................   21
         8.5      NOTICE OF INTENT TO MAKE CLAIM..............................................................   22
                   8.5.1   CLAIM..............................................................................   22
                   8.5.2   CLAIM DOCUMENTATION................................................................   22
                   8.5.3   DECISION...........................................................................   22
                   8.5.4   TIME LIMIT EXTENSION...............................................................   22
         8.6      EMERGENCIES.................................................................................   22
ARTICLE 9:  UNCOVERING AND CORRECTION OF WORK.................................................................   22
         9.1      ACCESS TO CONSTRUCTION......................................................................   22
         9.2      UNCOVERING OF WORK..........................................................................   22
         9.3      CORRECTION OF WORK..........................................................................   23
                   9.3.1   WORK REJECTED BY OWNER.............................................................   23
                   9.3.2   AFTER FINAL COMPLETION.............................................................   23
                   9.3.3   REMOVAL OF WORK....................................................................   23
                   9.3.4   FAILURE TO CORRECT NON-CONFORMING WORK.............................................   23
         9.4      ACCEPTANCE OF NONCONFORMING WORK............................................................   23
ARTICLE 10. PAYMENTS TO CONTRACTOR............................................................................   23
         10.1     APPLICATION FOR PAYMENT.....................................................................   23
         10.2     PAYMENT PROCEDURE...........................................................................   24
                   10.2.1  SUBMITTAL BY CONTRACTOR............................................................   24
                   10.2.2  PAYMENT BY OWNER...................................................................   25
                   10.2.3  FAILURE TO MAKE PAYMENT............................................................   25
                   10.2.4  INTEREST...........................................................................   25
         10.3     TITLE TO WORK...............................................................................   25
         10.4     NOT ACCEPTANCE OF WORK......................................................................   25
         10.5     FINAL PAYMENT...............................................................................   25
         10.6     EVIDENCE OF PAYMENT.........................................................................   26
         10.7     WAIVER UPON MAKING FINAL PAYMENT............................................................   26
                   10.7.1  LIENS..............................................................................   26
                   10.7.2  IMPROPER WORKMANSHIP...............................................................   26
                   10.7.3  LATENT FAILURE TO COMPLY...........................................................   26
                   10.7.4  SPECIAL GUARANTEES.................................................................   26
         10.8     WAIVER UPON ACCEPTING FINAL PAYMENT.........................................................   26
ARTICLE 11: INDEMNITY, INSURANCE AND WAIVER OF SUBROGATION....................................................   26
         11.1     INDEMNITY...................................................................................   26
                   11.1.1  INDEMNITY BY PARTIES...............................................................   26
                   11.1.2  INDEMNITY BY OTHERS................................................................   27
                   11.1.3  APPLICATION OF INDEMNITIES.........................................................   27
         11.2     CONTRACTOR'S LIABILITY INSURANCE............................................................   27
                   11.2.1  WORKMEN'S COMPENSATION.............................................................   27
                   11.2.2  CLAIMS FOR EMPLOYEE INJURY.........................................................   27
                   11.2.3  CLAIMS FOR INJURY TO OTHERS........................................................   27
                   11.2.4  OTHER CLAIMS.......................................................................   27
                   11.2.5  DAMAGE TO PROPERTY.................................................................   27
                   11.2.6  OPERATION OF MOTOR VEHICLE.........................................................   28
                   11.2.7  CONTRACTUAL LIABILITY..............................................................   28
                   11.2.8  PROFESSIONAL LIABILITY.............................................................   28
         11.3     INSURANCE LIMITS............................................................................   28
         11.4     CANCELLATION OF INSURANCE...................................................................   28
         11.5     OWNER'S LIABILITY INSURANCE.................................................................   28
         11.6     INSURANCE TO PROTECT THE PROJECT............................................................   28
                   11.6.1  PROPERTY INSURANCE.................................................................   28
                   11.6.2  OFF-SITE MATERIALS OR EQUIPMENT....................................................   28
                   11.6.3  OTHER PROPERTY INSURANCE...........................................................   28



                                                                    Page 4 of 41



                                                                                                              
                   11.6.4  INSURANCE UPON OCCUPANCY...........................................................   29
                   11.6.5  BOILER AND MACHINERY INSURANCE.....................................................   29
                   11.6.6  LOSS OF USE OF PROPERTY............................................................   29
                   11.6.7  ADDITIONAL INSUREDS................................................................   29
         11.7     OWNER'S POLICIES - CERTIFICATE OF INSURANCE.................................................   29
         11.8     PROPERTY INSURANCE LOSS ADJUSTMENT..........................................................   30
                   11.8.1  PAYMENT OF AN INSURED LOSS.........................................................   30
                   11.8.2  DISTRIBUTION OF MONIES.............................................................   30
         11.9     WAIVER OF RIGHTS............................................................................   30
                   11.9.1  WAIVER FOR PERILS COVERED BY INSURANCE.............................................   30
                   11.9.2  WAIVER FOR DAMAGE TO EQUIPMENT.....................................................   30
                   11.9.3  WAIVER OF SUBROGATION BY CONTRACTOR'S INSURERS.....................................   30
                   11.9.4  WAIVER OF SUBROGATION BY OWNER'S INSURERS..........................................   30
                   11.9.5  EFFECT OF ENDORSEMENTS.............................................................   30
         11.10    HAZARDOUS MATERIALS.........................................................................   31
                   11.10.1 PRESENCE OF HAZARDOUS MATERIALS....................................................   31
                   11.10.2 HAZARDOUS/TOXIC/RADIOLOGIC WASTE INDEMNIFICATION...................................   31
                   11.10.3 HAZARDOUS MATERIALS DEFINITION.....................................................   32
ARTICLE 12: SUSPENSION OR TERMINATION OF THE AGREEMENT........................................................   32
         12.1     TERMINATION BY CONTRACTOR...................................................................   32
         12.2     OWNER'S RIGHT TO PERFORM CONTRACTOR'S OBLIGATIONS AND TERMINATION BY OWNER FOR CAUSE........   32
                   12.2.1  CONTRACTOR'S FAILURE TO PERFORM....................................................   32
                   12.2.2  INSOLVENCY OF CONTRACTOR...........................................................   32
         12.3     TERMINATION BY OWNER FOR CONVENIENCE........................................................   33
                   12.3.1  COMPLETED AND ACCEPTED WORK........................................................   33
                   12.3.2  EXPENSES...........................................................................   33
                   12.3.3  SETTLEMENTS........................................................................   33
                   12.3.4  EXPENSES...........................................................................   33
         12.4     SUSPENSION OF THE WORK......................................................................   33
ARTICLE 13: DISPUTE RESOLUTION................................................................................   33
         13.1     DISPUTE RESOLUTION..........................................................................   33
                   13.1.1  DIRECT NEGOTIATION.................................................................   33
                   13.1.2  MEDIATION..........................................................................   34
                   13.1.3  JUDICIAL REMEDIES..................................................................   34
ARTICLE 14: ASSIGNMENT AND GOVERNING LAW......................................................................   34
         14.1     ASSIGNMENT OF AGREEMENT.....................................................................   34
         14.2     CHOICE OF LAW AND FORUM.....................................................................   34
ARTICLE 15: MISCELLANEOUS PROVISIONS..........................................................................   34
         15.1     EXTENT OF AGREEMENT.........................................................................   34
         15.2     INFORMATION AND DOCUMENTS...................................................................   34
                   15.2.1  PROPRIETARY INFORMATION............................................................   34
                   15.2.2  OWNERSHIP OF DOCUMENTS.............................................................   34
                   15.2.3  DOCUMENTS UPON TERMINATION.........................................................   35
                   15.2.4  PATENT RIGHTS......................................................................   35
         15.3     ELECTRONIC MEDIA............................................................................   35
                   15.3.1  FORMAT.............................................................................   35
                   15.3.2  ACKNOWLEDGEMENT....................................................................   35
                   15.3.3  RESPONSIBILITY FOR ACCURACY........................................................   35
                   15.3.4  OWNER SPECIFICATION................................................................   35
                   15.3.5  COMPUTER VIRUSES...................................................................   36
         15.4     ENVIRONMENTAL MATTERS.......................................................................   36
                   15.4.1  ENVIRONMENTAL SERVICES.............................................................   36
                   15.4.2  ASBESTOS OR PCB....................................................................   36



                                                                    Page 5 of 41



                                                                                                     
                   15.4.3  WORK WITH HAZARDOUS, TOXIC, AND RADIOLOGIC WASTE AND SUBSTANCES....................   36
                   15.4.4  CESSATION OF WORK..................................................................   36
                   15.4.5  SITE RESPONSIBILITY................................................................   37
                   15.4.6  UNKNOWN CONDITIONS.................................................................   37
                   15.4.7  SUBSURFACE CONSTRUCTION ACTIVITIES.................................................   37
                   15.4.8  HEALTH & SAFETY PRECAUTIONS........................................................   37
                   15.4.9  LABORATORY VERIFICATION............................................................   38
         15.5     EXCLUSION OF WARRANTIES AND DAMAGES.........................................................   38
         15.6     WAIVER......................................................................................   38
         15.7     EFFECT OF AGREEMENT.........................................................................   38
         15.8     NOTICES.....................................................................................   38
         15.9     ADDITIONAL CONTRACTOR'S REPRESENTATIONS AND WARRANTIES......................................   39

         

                                                                    Page 6 of 41



In consideration of the mutual covenants and agreements contained herein,
Embrex, Inc. (hereinafter "OWNER") and Lockwood Greene E & C, L.L.C.
(hereinafter "CONTRACTOR") agree as follows:

                              ARTICLE 1: DEFINITION

1.1       OWNER AND CONTRACTOR.

Contractor is an independent contractor and is not an agent of Owner. This
Agreement shall not be construed as establishing an employment agreement, a
partnership, a general agency, or a joint venture, and neither party shall have
any authority to incur or commit for expenditures on behalf of the other party
or to obligate that party except as expressly authorized by that party in
writing.

1.2       PROJECT.

The term "Project" is (a) the total design, engineering, and construction of
which the Work performed under the Contract Documents (as hereinafter defined)
may be a whole or a part and which may include construction by other contractors
and by Owner's own forces and (b) the procurement, installation, connection,
testing, and start up of the equipment listed on Exhibit F attached hereto and
incorporated herein by reference (the "Manufacturing Equipment").

1.3       WORK.

The term "Work" shall mean the various parts of the total Project to be
performed by Contractor under this Agreement and includes all services, labor,
materials, supplies, equipment, and tests for design, engineering, and
construction (and procurement, installation, connection, testing, and start up
with respect to the Manufacturing Equipment) provided or to be provided to
fulfill Contractor's obligations under this Agreement.

1.4       SUBCONTRACTOR.

The term "Subcontractor" shall mean a person or entity who has a direct contract
with Contractor to perform a portion of the Work at the Site. Subcontractor
shall include an authorized representative of the Subcontractor. The term
Subcontractor does not include any separate contractor employed by Owner.

1.5       SUB-SUBCONTRACTOR.

A Sub-subcontractor is a person or entity who has an agreement with a
Subcontractor to perform any portion of the Subcontractor's work.

1.6       DAY.

The term "Day" or "day" shall mean a calendar day unless otherwise specifically
designated.

1.7       SITE.

Lands or other areas designated in the Contract Documents as being furnished by
Owner for the performance of construction, storage, lay down, or access.

1.8       CONTRACT TIMES.

The number of days or the dates stated in this Agreement or the other Contract
Documents (i) to achieve Substantial Completion, and (ii) to complete the Work
so that it is ready for final payment in accord with paragraph 10.5 of this
Agreement.

1.9       MILESTONE.

A principal event specified in the Contract Documents relating to an
intermediate completion date or time prior to Substantial Completion of all the
Work.

1.10      SUBSTANTIAL COMPLETION.

The time at which the Work (or a specified part) has progressed to the point
where it is sufficiently complete, in accord with the Contract Documents, so
that the Project (or a specified part) can be utilized for the purposes for
which it is intended pursuant to a validly issued certificate of occupancy or

                                                                    Page 7 of 41



compliance. The terms "substantially complete" and "substantially completed" as
applied to all or part of the Project refer to Substantial Completion thereof.

1.11      CONSTRUCTION.

That portion of the Work relating to the performing or furnishing of labor, the
furnishing and incorporating of materials and equipment into the Work, and the
furnishing of services and documents, other than Design Services (as described
in paragraph 3.2), as required by the Contract Documents.

1.12      DESIGN SERVICES.

That portion of the Work relating to the preparation of Drawings, and
Specifications (as described in paragraph 3.2.1) and other design documents
specified in the Contract Documents and required to be performed by licensed
architects, engineers, and other design professionals.

1.13      CHANGE ORDER.

A Change Order is a written instrument prepared by the Contractor and signed by
both the Owner and Contractor, stating their agreement upon all of the
following:

     1)   Definition of the specific adjustments in the base scope of work, and
     2)   The amount of the adjustment in the Contract Price, if any; and
     3)   The extent of the adjustment in the Contract Time, if any.

1.14      START-UP AND COMMISSIONING.

The process of validating all building and process support systems are
installed, functionally tested, and capable of operation in conformance with the
design intent. Commissioning process steps include system documentation;
commissioning plan development; test protocol preparation; equipment startup;
control system calibration, testing and balancing; functional performance
testing; vendor led startup/basic operator training (as applicable); punch list
preparation; and formal system turnover to Owner. The functional testing will be
performed using the system utility medium (water, air, natural gas) for utility
systems and water for wet process systems. The functional testing will not
include Startup and Commissioning of the actual process systems, those involved
with the creation of the vaccine, using the animals and materials involved with
the process.

                        ARTICLE 2: THE CONTRACT DOCUMENTS

2.1       CONTRACT DOCUMENTS.

The Contract Documents comprise the entire agreement between Owner and
Contractor. The Contract Documents are as follows:

          2.1.1     AGREEMENT.

          This Agreement including the following attached Exhibits:

                    Exhibit A:         Contractor's Scope of Work
                    Exhibit B:         List of Drawings and Specifications
                    Exhibit C:         Contractor's Time Schedule
                    Exhibit D:         Contractor's Rate Classification Schedule
                    Exhibit E:         Schedule of Insurance
                    Exhibit F:         Schedule of Equipment and Instrumentation

          2.1.2     DOCUMENTS RELATING TO THE CONTRACTOR'S SCOPE OF WORK.

          The Contractor's Scope of Work as listed in Exhibit A.

          2.1.3     DRAWINGS AND SPECIFICATIONS.

          The Drawings and Specifications prepared by Contractor and approved by
          Owner as listed on Exhibit B together with all additions and revisions
          thereto. Contractor and Owner acknowledge

                                                                    Page 8 of 41



          that the Drawings and Specifications listed on Exhibit B as of the
          date of execution of this Agreement are the preliminary design
          documents and do not constitute the final Drawings and Specifications.
          Exhibit B shall be amended to list the final Drawings and
          Specifications promptly after approval by Owner.

          2.1.4     MODIFICATIONS.

          A modification is (1) an amendment to this Agreement signed by both
          parties, (2) a Change Order, or (3) a written order for a minor change
          in the Work issued by Owner.

2.2       INTENT OF CONTRACT DOCUMENTS.

The Contract Documents are intended to describe a functionally complete Project
(or part thereof) to be designed and constructed in accord with the Contract
Documents. Any work, services, materials, supplies, or equipment that may
reasonably be inferred from prevailing custom or trade usage as being required
to complete the Project in accord with the Contract Documents will be furnished
and performed whether or not specifically called for. When words or phrases
which have a well-known technical, construction industry, or trade meaning are
used to describe work, materials, supplies, or equipment, such words or phrases
shall be interpreted in accord with that meaning. Except as otherwise specified
in this Agreement with respect to the Manufacturing Equipment, Contractor shall
have no responsibility for design, installation, start-up, or function of
process/production equipment or equipment supplied by Owner.

2.3       CONTRACT DOCUMENTS ARE COMPLEMENTARY.

The Contract Documents are complementary; what is called for by one is as
binding as if called for by all. In the event of a discrepancy in the Contract
Documents, the more specific and detailed description will take precedence over
the general and less detailed description.

2.4       PRECEDENCE OF CONTRACT DOCUMENTS.

The precedence of the Contract Documents for interpretation shall be in the
following sequences:

          1.        This Agreement;
          2.        Supplementary General Conditions, if any;
          3.        Technical Specifications; and
          4.        Drawings, wherein precedence shall be large scale plans,
                    over small scale, figured dimensions over scaled dimensions
                    and noted materials over graphic indications.

2.5       MODIFICATION OF CONTRACT DOCUMENTS.

Except where specifically provided by the Contract Documents, the Contract
Documents may be amended, altered, or changed only by written agreement signed
by both Owner and Contractor.

                    ARTICLE 3: CONTRACTOR'S RESPONSIBILITIES

3.1       GENERAL SERVICES OF CONTRACTOR.

          3.1.1     CONTRACTOR SHALL COMPLETE THE WORK.

          Contractor shall complete or cause to be completed all of the Work in
          accord with the Contract Documents. Contractor shall commence the Work
          upon execution of this Agreement by Owner and Contractor and shall
          thereafter diligently prosecute the Work in accordance with the
          Contract Documents. Execution of this Agreement by Contractor is a
          representation to Owner that Contractor has visited the Site, become
          familiar with local conditions under which the Work is to be
          performed, and correlated personal observations with requirements of
          the Contract Documents. Before commencing any construction on the
          Site, Contractor shall carefully study and compare the Contract
          Documents with Contractor's personal observations of conditions on the
          Site. Contractor shall thereafter (1) take all appropriate and
          necessary field measurements and verify field conditions; (2)
          carefully compare these measurements and other information known to
          Contractor about the Site with the Contract Documents; and (3)
          promptly report errors or discrepancies, inconsistencies, or omissions
          in writing to Owner. Except as otherwise specified

                                                                    Page 9 of 41



          herein, Contractor shall cause the Work to be performed in accord with
          all federal, state, and local laws, and regulations that are
          applicable and in effect as of the date of this Agreement. Contractor
          shall assume full responsibility for any portion of the Work that is
          not performed in accord with such laws and regulations. Contractor
          shall also promptly notify Owner in writing of any known
          inconsistencies in the Contract Documents with applicable laws and
          regulations.

          3.1.2     PERSONNEL AND MATERIALS.

                    3.1.2.1   ADEQUATE PERSONNEL.

                    Contractor shall furnish necessary and qualified engineers,
                    architects, technicians, draftsmen, supervisors, labor,
                    equipment, tools, materials, supplies, incidentals, and
                    other things to perform the Work in accord with the Contract
                    Documents. Contractor shall be responsible for proper
                    staffing of the Work to be performed under this Agreement.

                    3.1.2.2   RESPONSIBILITY FOR PERSONNEL.

                    Contractor shall be fully responsible to Owner for all acts
                    and omissions of Subcontractors and other personnel hired or
                    retained by Contractor to perform or furnish any of the Work
                    required by the Contract Documents. Contractor, however,
                    shall not be responsible for any acts or omissions of
                    personnel hired or retained by Owner in connection with the
                    Project. Nothing in the Contract Documents shall create for
                    the benefit of any personnel hired or retained by Owner any
                    contractual relationship with Contractor nor shall it create
                    any obligation on the part of Contractor to make payment to
                    personnel hired by or retained by Owner.

                    3.1.2.3   RESPONSIBILITY FOR SCHEDULING.

                    Contractor shall be responsible for scheduling and
                    coordinating Subcontractors and other personnel retained or
                    hired by Contractor to perform the Work or any portion
                    thereof. Contractor shall require Subcontractors and other
                    personnel hired or retained by Contractor to perform or
                    furnish any of the Work to communicate with Owner only
                    through Contractor. Owner and Contractor shall cooperate in
                    connection with scheduling of work to be done at the Site by
                    Owner or others engaged by Owner other than Contractor.

          3.1.3     SUBCONTRACTS.

          Contractor shall assure that all Subcontractors who are engaged or
          retained by Contractor to perform Work on the Project do so under the
          terms of an appropriate subcontract which is consistent with the
          applicable provisions of this Agreement and which binds Subcontractor
          to the applicable terms and conditions of the Contract Documents. With
          respect to portions of the Work to be performed by Subcontractors,
          Contractor shall obtain competitive bids from at least two (2)
          qualified, reputable subcontractors with respect to the relevant
          portions of the Work to be performed by such subcontractors. All
          subcontracts shall be in writing. Contractor shall cause
          Subcontractors to take necessary precautions for the safety of their
          employees performing any part of the Work and shall require
          Subcontractors to comply with all applicable provisions of federal,
          state, and municipal safety laws to prevent accidents or injury to
          persons on, about, or adjacent to the Site. By appropriate agreement,
          Contractor shall require each Subcontractor, to the extent of the
          portion of the Work to be performed by such Subcontractor, to be bound
          to Contractor by terms of the applicable Contract Documents and to
          assume toward Contractor all the obligations and responsibilities
          which Contractor assumes toward Owner. Each Subcontractor shall
          preserve and protect the rights of Owner under the Contract Documents
          with respect to the Work to be performed by such Subcontractor so that
          subcontracting thereof will not prejudice any rights of Owner against
          Contractor under the Contract Documents. Where appropriate, Contractor
          may require each Subcontractor to enter into similar agreements with
          Sub-subcontractors.

                                                                   Page 10 of 41



          3.1.4     CONTRACTOR'S REPRESENTATIVE.

          Contractor shall designate a representative. The name of Contractor's
          representative shall be given to Owner in writing. Owner shall be
          notified of any change in Contractor's representative in writing. If
          Owner is reasonably dissatisfied with the performance of Contractor's
          representative, such as lack of timeliness in communicating with
          Owner's representative or the development of personality conflicts
          with Owner's representative, Contractor, promptly after receipt of
          written notice from Owner of such dissatisfaction, shall, after
          discussion with Owner's representative of a replacement Contractor's
          representative, designate a replacement Contractor's representative
          acceptable to Owner.

          3.1.5     COMPLIANCE.

          Contractor shall pay all payroll taxes, including taxes of any kind
          assessed against, deducted, or deductible from wages or salaries and
          shall comply with all applicable federal, state, and local laws,
          ordinances, orders, rules, and regulations including but not limited
          to those relating to equal employment opportunity and affirmative
          action for disabled veterans, veterans of the Vietnam Era, handicapped
          persons and all other legally protected classes, the Americans with
          Disabilities Act, the Fair Labor Standards Act as amended, Title VII
          of the Civil Rights Act of 1964, and the Occupational Safety and
          Health Act.

          3.1.6     PERMITS.

          Unless otherwise provided in the Contract Documents, Contractor shall
          directly or through one or more of its Subcontractors obtain and pay
          for all construction permits, licenses, and inspections, other than
          those relating to environmental issues and those related to Owner's
          process (but including those relating to installation, connection,
          testing, and start up of the Manufacturing Equipment), which are
          necessary for the prosecution of the Work. Contractor shall pay all
          governmental charges and inspection fees necessary for the prosecution
          and completion of the Work.

          3.1.7     LAWS AND REGULATIONS.

          Contractor shall give all notices and comply with all laws and
          regulations which are applicable to furnishing and performing the
          Work. Changes in laws or regulations not known or foreseeable on the
          date of this Agreement which have an effect on the cost or the time of
          performance of the Work may be the subject of a request for a Change
          Order under Article 8.

          3.1.8     TAXES.

          Contractor shall pay all sales, consumer, use, gross receipts, and
          other similar taxes required to be paid by Contractor in accord with
          the laws and regulations of the place of the Project which are
          applicable during the performance of the Work. Contractor shall also
          provide Owner reasonable assistance to establish tax exemptions where
          applicable.

          3.1.9     SAFETY.

          Contractor shall be responsible for initiating, maintaining, and
          supervising all safety precautions and programs in connection with
          performance of the Work. Contractor shall designate a representative
          of Contractor, which may be Contractor's representative designated
          pursuant to paragraph 3.1.4, whose duties shall be to prevent
          accidents on Site. Contractor shall take necessary precautions for the
          safety of its employees performing the Work and shall comply with all
          applicable provisions of federal, state, and municipal safety laws to
          prevent accidents or injury to person on, about, or adjacent to the
          Site. Contractor shall implement a Site safety program based upon the
          Lockwood Greene Engineers, Inc. Corporate Safety Program. Contractor
          shall erect or shall cause to be erected and maintained, as required
          by the conditions and progress of the Work, necessary safeguards for
          the protection of workmen and the public. It is understood and agreed,
          however, that Contractor shall have no responsibility for the
          elimination or abatement of safety hazards created or otherwise
          resulting from work at the Site carried on by other persons or firms
          directly employed by Owner as separate contractors or by Owner's
          tenants, and Owner agrees to cause any such separate contractors and
          tenants to abide by and

                                                                   Page 11 of 41



          fully adhere to all applicable provisions of federal, state, and
          municipal laws and regulations and to comply with all reasonable
          requests and directions of Contractor for the elimination or abatement
          of any such safety hazards at the Site.

          3.1.10    MAINTENANCE OF BOOKS AND RECORDS.

          As to any time and material work, Contractor's books and records shall
          include time cards and other records relating to the time of
          Contractor and Subcontractor personnel spent on the Work and any
          expenditures made by Contractor for which Contractor will request
          reimbursement from Owner hereunder.

3.2       RESPONSIBILITIES WITH RESPECT TO DESIGN.

          3.2.1     DRAWINGS AND SPECIFICATIONS.

          Contractor shall prepare final Drawings and Specifications based on
          Owner-approved preliminary documents listed in Exhibit B. The final
          Drawings and Specifications shall set forth the requirements for the
          construction of the Work in sufficient detail to enable Contractor and
          its Subcontractors to construct the Work. The final Drawings and
          Specifications shall be submitted to Owner for its written approval.

          3.2.2     STANDARD OF CARE.

          The standard of care for all design services performed or furnished by
          Contractor under this Agreement will be the care and skill ordinarily
          used by members of the architectural and engineering profession
          practicing under similar conditions in the same locality. In the event
          that design services furnished by Contractor do not meet the foregoing
          standard of care, Contractor will re-perform such design services at
          no cost to Owner and will re-perform construction of the Work
          constructed pursuant to such design deficiency promptly at no cost to
          Owner, provided, however, that Owner notifies Contractor, in writing,
          of such design deficiency within a period of one (1) year from the
          date of Substantial Completion of the Work or any separable portion of
          the Work containing a design deficiency.

          3.2.3     NO WARRANTY FOR PERFORMANCE BY OTHERS.

          Contractor does not warrant any process, or the designs connected
          therewith, or any design services to be furnished by others, including
          but not limited to, processes and designs furnished by Owner and any
          contractors retained by Owner. Owner shall compensate Contractor for
          remedying or making changes in the Work or portions thereof requested
          by Owner which result from deficiencies or changes in such processes
          and designs by others.

          3.2.4     BREACH OF DUTY OF CARE.

          In the event Contractor fails to meet the standard of care specified
          in paragraph 3.2.2, Contractor shall re-perform any negligently
          designed portions of the Work at no cost to Owner and shall re-perform
          the construction of the portions of the Work negligently designed at
          no cost to Owner. Such obligations of Contractor in the event of
          breach of the duty of care specified in paragraph 3.2.2 shall not
          limit Owner's other remedies as a result of Contractor's breach of the
          duty of care.

3.3       RESPONSIBILITIES WITH RESPECT TO CONSTRUCTION.

          3.3.1     CONTRACTOR'S RESPONSIBILITIES.

          Contractor shall provide all construction supervision, inspection,
          labor, materials, supplies, tools, construction equipment, and
          subcontracted items necessary for execution and completion of the
          Work. Contractor shall be solely responsible for the means, methods,
          techniques, sequences, and procedures employed for execution and
          completion of the Work.

          3.3.2     MAINTENANCE OF THE SITE.

          Contractor shall confine its operations in performance of the Work at
          the Site to areas permitted by law, ordinances, permits, and the
          Contract Documents and shall not unreasonably encumber

                                                                   Page 12 of 41



          the Site with materials or equipment. Contractor shall keep the Site
          reasonably free from the accumulation of waste materials or rubbish
          caused by its operations. If Contractor directly or indirectly impacts
          any road, street, or vehicle movement or storage area on or adjacent
          to the Site, contractor shall be responsible for the orderly
          maintenance of traffic over the roads, streets, or areas involved in
          or adjacent to the Site. Contractor shall keep the roads and streets
          in or adjacent to the Site free from obstructions which might present
          a hazard or interference to traffic and in such conditions the traffic
          will be adequately accommodated. At the completion of the Work,
          Contractor shall remove all of its waste materials and rubbish from
          and around the Project as well as all of its tools, construction
          equipment, machinery, and surplus materials. Contractor shall also be
          responsible for keeping roads and streets adjacent to the Site
          reasonably free of dirt or mud.

          3.3.3     CONSTRUCTION WARRANTY.

          Contractor warrants to Owner that all materials and equipment
          furnished under this Agreement shall be new, unless otherwise
          specified in the Contract Documents, and that all Work shall be of
          good quality, free from improper workmanship and defective materials,
          and in conformance with the Contract Documents. Contractor agrees to
          correct all Work performed by it or Subcontractors under this
          Agreement which proves to be defective in design, material, or
          workmanship within a period of one (1) year from the Date of
          Substantial Completion as defined in Article 6 or which proves to be
          defective within such longer periods of time as may be set forth with
          respect to specific warranties contained in the Specifications.

          3.3.4     CERTIFICATES.

          Contractor shall secure required certificates of inspection, testing,
          approval, or occupancy or compliance and deliver them to Owner.

          3.3.5     DELIVERY OF WARRANTIES.

          Contractor shall collect all written warranties and equipment manuals
          and deliver them to Owner.

          3.3.6     INITIAL START-UP.

          With the assistance of Owner's personnel, Contractor shall direct the
          checkout of utilities and operation of systems and equipment
          (including the Manufacturing Equipment) supplied or procured by
          Contractor under this Agreement for readiness and shall assist in
          their initial start-up and testing and balancing to the end that such
          systems and equipment (including the Manufacturing Equipment) shall
          operate in accordance with their specifications.

          Start up assistance does not include performance testing or initial
          operations of the equipment to demonstrate process capability.
          Contractor's services relative to this area are based on support
          staffing to assist Owner's personnel, the cost of which is predicted
          on an allowance in Contractor's pricing. Should Owner require
          additional time and effort from Contractor, a change order for that
          additional effort will be drafted and approved by Owner.

3.4       RESPONSIBILITY WITH RESPECT TO MANUFACTURING EQUIPMENT.

          3.4.1     PROCUREMENT.

          Promptly after execution of this Agreement by Owner and Contractor,
          Contractor shall schedule ordering of the Manufacturing Equipment in
          the proper sequence to support its delivery to the Site for timely
          incorporation into the Project. In connection therewith, Contractor
          shall be responsible for installing, connecting, starting up, and
          testing the Manufacturing Equipment so that the Manufacturing
          Equipment functions as intended and in accordance with the
          Manufacturer's specifications.

          3.4.2     ORDERING OF MANUFACTURING EQUIPMENT.

          Contractor shall procure the Manufacturing Equipment pursuant to a
          purchase order from Contractor to the vendors of the Manufacturing
          Equipment.

                                                                   Page 13 of 41



          3.4.3     CERTIFICATES.

          Contractors shall secure any required certificates of inspection,
          testing, or approval with respect to the Manufacturing Equipment and
          shall deliver them to Owner.

          3.4.4     DELIVERY OF WARRANTIES.

          Contractor shall collect all written warranties from the vendors or
          manufacturers of the Manufacturing Equipment and equipment manuals and
          deliver them to Owner.

          3.4.5     MANUFACTURING EQUIPMENT WARRANTY.

          Contractors only warranty with respect to Manufacturing Equipment is
          that Contractor shall install, connect, start up, and test the
          Manufacturing Equipment in accordance with the Contract Documents.
          Contractor does not warrant that the Manufacturing Equipment will be
          free from improper workmanship or defects in materials and Owner
          expressly acknowledges that Contractor disclaims any warranty or
          guarantee of any type in connection with the Manufacturing Equipment
          other than Contractor's warranty that Contractor shall install,
          connect, start up, and test the Manufacturing Equipment in a timely
          and workmanlike manner and in accordance with the Contract Documents
          and manufacturer recommendations.

                      ARTICLE 4. OWNER'S RESPONSIBILITIES.

4.1       PROJECT INFORMATION.

Except to the extent previously obtained by Contractor, Owner shall provide
Contractor with the following:

          4.1.1     ENVIRONMENTAL ASSESSMENT.

          Environmental assessment and impact statements;

          4.1.2     SURVEYS.

          Property, boundary, easement, right-of-way, topographic, and utility
          surveys;

          4.1.3     DESCRIPTIONS.

          Property Descriptions;

          4.1.4     LAND USE RESTRICTIONS.

          Zoning, deed, and other land use restrictions;

          4.1.5     SUBSURFACE INVESTIGATIONS.

          Subsurface investigations performed by or on behalf of Owner relating
          to the Site;

          4.1.6     ENGINEERING SURVEYS.

          Engineering surveys to establish reference points for design and
          construction which in Contractor's judgment are necessary to enable
          Contractor to proceed with the Work;

          4.1.7     ASSISTANCE WITH APPROVALS.

          Assistance in filing documents required to obtain necessary approvals
          of governmental authorities having jurisdiction over the Project;

          4.1.8     INFORMATION CONCERNING HAZARDS.

          Information known to or in the possession of Owner relating to the
          presence of hazardous materials and substances at the Site; and

          4.1.9     AVAILABILITY OF LANDS.

          The lands upon which the construction is to be performed,
          rights-of-way and easements for access thereto and, upon written
          request of Contractor, a statement of record legal title and a legal

                                                                   Page 14 of 41



          description of such lands. Owner shall identify any encumbrances or
          restrictions which specifically relate to the use of such lands so
          furnished with which Contractor will have to comply in performing the
          Work. Easements for permanent structures or permanent changes in
          existing facilities will be obtained and paid for by Owner.

4.2       OWNER REVIEW.

Owner shall give thorough and timely consideration to all sketches, plans,
drawings, specifications, proposals, contracts, and other documents submitted by
Contractor and shall inform Contractor promptly of its approval and/or comments.

4.3       PROFESSIONAL SERVICES.

Owner shall furnish such United States Department of Agriculture ("USDA")
compliance consulting, legal, accounting, and insurance counseling services as
Owner may require.

4.4       OWNER'S REPRESENTATIVE.

Owner shall, in writing, designate a person to act as Owner's representative
with respect to the services Contractor is to perform under this Agreement. The
initial Owner's representative is Dr. Alison Martin. Such person shall have
complete authority from Owner to transmit instructions, receive information, and
to interpret and define Owner's policies and decisions with respect to such
services.

4.5       SUFFICIENCY OF FUNDS.

If requested in writing by Contractor, Owner shall furnish evidence reasonably
satisfactory to Contractor that sufficient funds are available and committed for
the entire cost of the Project. Unless such reasonable evidence is furnished,
Contractor shall not be required to commence or continue any Work, or may, if
such evidence is not presented within a reasonable time, stop Work upon fifteen
(15) days notice to Owner.

4.6       PAYMENTS TO CONTRACTOR.

Owner shall make payments to Contractor promptly when they are due as provided
in this Agreement.

4.7       NOTICE OF FAULTS OR DEFECTS.

If Owner becomes aware of any fault or defect in the Project or non-conformance
with the Contract Documents, Owner shall give prompt written notice thereof to
Contractor.

4.8       OWNER-FURNISHED EQUIPMENT AND MATERIALS.

Owner will assure that any equipment or materials to be furnished by Owner for
the Project is furnished in accord with the Project schedule prepared by
Contractor. This paragraph 4.8 does not apply to Contractor's obligation to
procure, install, connect, test, and start up the Manufacturing Equipment on a
timely basis in accordance with the Contract Documents.

4.9       PROMPTNESS; RELIANCE.

The services and information required by the above paragraphs shall be furnished
with reasonable promptness at Owner's expense. In performing services under this
Agreement, Contractor shall be entitled to rely on all information provided by
Owner hereunder not erroneous on its face. Contractor shall not be responsible
or liable in any manner for any defect or deficiency in the information supplied
or for defects or deficiencies in Contractor's performance or services to the
extent they result from Contractor's reasonable reliance on such information.

4.10      CAPABILITY TO PRODUCE FINISHED PRODUCT.

Contractor shall not be responsible for Owner's capability to produce finished
product from the Project. This provision is not intended to conflict, impair, or
diminish the Contractor's indemnity obligations under Section 11.1. Owner shall
be solely responsible for final specifications and selection of all process
equipment, for definition of all equipment performance guarantees, for the
quality and quantity of product, for the rate of production of the Project, and
for the accuracy and completeness of all design criteria, data, or information
furnished to Contractor by Owner or others on behalf of Owner. In addition,

                                                                   Page 15 of 41



Owner will have full responsibility for obtaining from its insurance
underwriters any required final approval of all documents prepared by
Contractor. Contractor shall not communicate directly with the underwriters
unless, and to the specific extent that, it should expressly agree in writing to
do so.

4.11      REVIEW OF DRAWINGS AND SPECIFICATIONS.

Owner shall promptly review all Drawings and Specifications prepared by
Contractor that are submitted to Owner in accord with paragraph 3.2.1 and
indicate thereon that such drawings are "APPROVED FOR CONSTRUCTION" prior to
their release for construction.

4.12      NON-WAIVER.

Any approvals by Owner of the Work, the Contract Documents, or any changes,
alterations, revisions, or modifications thereto as required or allowed by this
Agreement, or otherwise, at any time, shall not waive, release, or diminish
Contractor's professional responsibilities hereunder.

                             ARTICLE 5. SUBCONTRACTS

5.1       SUBCONTRACTED WORK.

All portions of the Work that Contractor does not perform with its own forces
shall be performed under written subcontracts.

5.2       RESPONSIBILITY FOR SUBCONTRACTORS.

No contractual relationship shall exist between Owner and any Subcontractor.
Contractor shall be responsible for the management of Subcontractors in the
performance of their Work. Owner shall communicate with Subcontractors through
Contractor.

                            ARTICLE 6. TIMING OF WORK

6.1       CONTRACT TIME SCHEDULE.

Design and construction of the Work will be prosecuted by Contractor in accord
with the Contract Time Schedule set forth in Exhibit C hereto and upon Progress
Schedules mutually agreed upon with Owner. Subject to the other provisions of
this agreement, time is of the essence in the design and construction of the
Work, Contractor acknowledging and agreeing that Owner is on a critical path
toward commencement of production of vaccine at the Site. Contractor and Owner
acknowledge and agree that if Substantial Completion of the entire Work is not
timely achieved, Owner's actual delay damages will be difficult, impractical, or
impossible to determine. Accordingly, after negotiation, Contractor and Owner
have agreed that if Substantial Completion of the Work is not achieved by the
date set forth in the Contract Time Schedule, due to any reason other than a
delay described in paragraph 6.3, Contractor shall pay to Owner as liquidated
damages the total of the following sums:

          1.        The first thirty (30) calendar days of delay, the sum of One
                    Thousand Dollars ($1,000.00) per day;

          2.        The second thirty (30) calendar days of delay, the sum of
                    Two Thousand Five Hundred Dollars ($2,500.00) per day;

          3.        For the next thirty (30) calendar days of delay and each
                    subsequent day of delay, the sum of Four Thousand Dollars
                    ($4,000.00) per day.

Contractor and Owner agree that the payment of liquidated damages pursuant to
this paragraph 6.1 shall be in lieu of actual delay damages caused by the delay
in achieving Substantial Completion, that such payment is not intended as a
penalty or a forfeiture, and that the amount of such liquidated damages to be so
paid is reasonable in comparison to the approximate scope of actual delay
damages that the parties anticipate as of the time of execution of this
Agreement. Liquidated damages under this section shall not exceed Two Million
Dollars ($2,000,000.00).

                                                                   Page 16 of 41



6.2       DATE OF SUBSTANTIAL COMPLETION.

The date or dates for Substantial Completion of the Work or a designated portion
thereof are set forth in the Contract Time Schedule.

6.3       DELAYS.

If Contractor is delayed at any time in the progress of the Work by: (1) any act
or omission of Owner or by any separate contractor employed by Owner; (2)
changes ordered in the Project; (3) labor disputes, fire, or unusual delay in
transportation; (4) adverse weather conditions not reasonably anticipatable; (5)
unavoidable casualties; (6) any act or omission of the federal, state, county,
or municipal government; (7) any shortages of equipment, materials, fuels, or
other supplies not due to the failure of Contractor timely to schedule and order
such equipment, materials, fuels, or other supplies; (8) any causes beyond
Contractor's reasonable control; or (9) a delay authorized by Owner, then
Contractor shall be entitled to a Change Order extending the date for
Substantial Completion and/or increasing the Contract Price for the period of
time and for such increase in the Costs of the Work as are caused by such delay.
If the Work is delayed due to the fault of Contractor, Contractor shall be
responsible for additional Costs of the Work directly resulting from such delay
and for the liquidated damages specified in paragraph 6.1, but shall not
otherwise be liable for any direct, indirect, incidental, consequential, or
other damages which may be suffered or incurred by Owner or others resulting
from any interruption or delay in start-up or use of, or production from, any of
Owner's existing facilities or those to be designed and constructed hereunder.
Contractor shall keep such records as shall substantiate the events described in
this paragraph 6.3. Contractor shall give Owner written contemporaneous notice
of the occurrence of any events specified above that might reasonably be
expected to cause an actual delay in Substantial Completion of the Work.

6.4       EARLY OCCUPANCY.

Owner may occupy or use any completed or partially completed portion of the
Project at any stage when such portion is designated by separate agreement with
Contractor and Owner, provided such occupancy or use is consented to by the
insurer required under paragraph 11.6.4 and authorized by public authorities
having jurisdiction over the Work. In the event Owner elects to enter into use
or occupancy of a portion or portions of the Project prior to Substantial
Completion, Owner and Contractor shall make a joint inspection prior to such use
or occupancy of the portion or portions to be used or occupied and prepare and
sign a list with respect thereto of items of the Work remaining to be completed
or the Work to be replaced or repaired. Contractor shall thereafter have no
further responsibility for the care or maintenance of the portion of the Project
so used or occupied, and it shall be deemed accepted by Owner except with
respect to the Work remaining to be completed or necessary repair or replacement
of the Work as indicated on said list. The construction warranty period referred
to in paragraph 3.3 with respect to the Work accepted in accord with this
paragraph shall be deemed to begin on the date of such acceptance.

6.5       ACCEPTANCE OF WORK.

When the Work shall have achieved Substantial Completion, Owner and Contractor
shall make a joint inspection thereof, or such portion or portions thereof as
have theretofore not been jointly inspected as provided in paragraph 6.4 hereof,
and shall prepare and sign a list of items of the Work remaining to be completed
or the Work to be replaced or repaired (something referred to herein as
"punchwork items"). Contractor shall thereafter have no further responsibility
for the care or maintenance of the Project regardless of whether Owner shall
actually enter into occupancy, and it shall be deemed accepted by Owner except
with respect to the Work remaining to be completed or necessary replacement or
repair Work as indicated on said list. The construction warranty period referred
to in paragraph 3.3 hereof with respect to the Work so accepted shall be deemed
to begin on the date of such acceptance, except that nothing in this paragraph
6.5 shall be deemed to extend any warranty period previously begun in accordance
with the provision of paragraph 6.4.

                                                                   Page 17 of 41



6.6       INSTALLED EQUIPMENT.

          6.6.1     EQUIPMENT PRIOR TO START-UP.

          Absent Owner's written approval to do otherwise, any equipment
          installed by Contractor other than the Manufacturing Equipment shall
          be operated solely for mechanical adjustment prior to start-up and
          subsequent testing and balancing.

          6.6.2     JOINT INSPECTION.

          When each item of equipment installed by Contractor is ready for
          start-up, Owner and Contractor shall make a joint inspection of such
          equipment. Upon satisfactory demonstration that each such item has
          been properly installed in accordance with the Contract Documents and
          manufacturer recommendations and is functioning as intended, Owner
          shall furnish Contractor with a signed acceptance thereof and release
          of responsibility therefor except for Contractor's warranties with
          respect to the Manufacturing Equipment and Contractor's warranty that
          any other equipment shall have been installed in a workmanlike manner
          and in accordance with the Contract Documents and manufacturer
          recommendations.

          6.6.3     RESPONSIBILITY FOR EQUIPMENT.

          Under no circumstances shall Contractor be responsible for the
          capacity, productivity, or suitability for its intended use of any
          equipment not supplied by Contractor.

                            ARTICLE 7. CONTRACT PRICE

7.1       LUMP SUM PRICE.

Owner agrees to pay Contractor the lump sum of Ten Million One Hundred Thirty
Two Thousand Dollars ($10,132,000.00) for design, engineering, and construction
of the Project including Contractor's overhead and profit, which sum shall be
called the Contract Price. The Contract Price includes the cost of procuring the
Manufacturing Equipment (as referenced in Exhibit F) as well as the cost of
installing, connecting, inspecting, testing, and starting up the Manufacturing
Equipment in accordance with the relevant specifications and design.

7.2       ALLOWANCES.

An allowance of One Hundred and Fifty Thousand Dollars ($150,000.00) for
start-up and commissioning support services is included in the Contract Price
identified in paragraph 7.1. Whenever the cost is more or less than the
Allowance, the Contract Price shall be adjusted by Change Order.

7.3       [RESERVED]

7.4       COST OF THE WORK.

The Contract Price includes, without limitation, the Cost of the Work for the
Project as such costs are set forth in paragraph 8.4.4 plus the cost of
utilities such as water and electricity.

                         ARTICLE 8. CHANGES IN THE WORK

8.1       OWNER MAY REQUEST CHANGES.

Owner, without invalidating this Agreement, may order changes in the Work within
the general scope of this Agreement consisting of additions, deletions, or other
revisions. If changes are ordered, the Contract Price and the Contract Time
Schedule shall be adjusted accordingly. All such changes in the Work shall be
authorized by Change Order.

8.2       REQUEST FOR ADDITIONAL COST OR TIME.

If Contractor wishes to make a request for an increase in the Contract Price or
for an extension of the Contract Time Schedule due to delay, changes in the
Work, or other changes requested by Owner, Contractor shall give Owner written
notice thereof within a reasonable time after the occurrence of the event giving
rise to such request. This notice shall be given by Contractor before proceeding
to execute

                                                                   Page 18 of 41



the Work, except in an emergency endangering life or property in which case
Contractor shall act, at its discretion, to prevent threatened damage, injury,
or loss. Requests arising from delay shall be made within a reasonable time
after the delay. Increases based upon design services and estimating costs
incurred as a result of possible changes requested by Owner shall be made within
a reasonable time after the decision is made by Owner to proceed with the
change. A Change Order mutually agreed to by Contractor and Owner shall
authorize any change in the Contract Price or the Contract Time Schedule
resulting from such request.

8.3       CHANGE ORDER.

A Change Order is a written order signed by Owner or its authorized agent and by
Contractor or its authorized agent which is issued after the execution of this
Agreement and which authorizes a change in the Work and/or an adjustment in the
Contract Price and/or the Contract Time Schedule.

8.4       CHANGES TO THE CONTRACT PRICE.

The value of any Work covered by a Change Order or of any request for an
adjustment in the Contract Price will be determined as follows:

          8.4.1     LUMP SUM.

          By a mutually agreed lump sum properly itemized and supported by
          sufficient, substantiating data to permit evaluation.

          8.4.2     UNIT PRICES.

          Where the Work involved is covered by unit prices contained in the
          Contract Documents, by application of such unit prices to the
          quantities of the items involved.

          8.4.3     COST PLUS A FEE.

          Where the Work involved is not covered by unit prices contained in the
          Contract Documents and agreement to a lump sum is not reached under
          paragraph 8.4.1, the value of the Change Order will be determined by
          the Cost of the Work (determined as provided in paragraph 8.4.4) plus
          a Contractor's fee for overhead and profit (determined as provided in
          paragraph 8.4.5).

          8.4.4     COST OF THE WORK.

          The Cost of the Work covered by a Change Order shall mean costs
          necessarily incurred by Contractor in the proper performance of Design
          Services and Construction on the Project. Such costs shall include the
          following items:

                    8.4.4.1   DESIGN SERVICES.

                    Contractor shall be compensated for Preliminary Design
                    Services in accordance with Contractor's Rate Classification
                    Schedule attached as Exhibit D to this Agreement.

                    8.4.4.2   WAGES.

                    Wages paid for labor in the direct employ of Contractor in
                    the performance of the Work under a salary or wage schedule
                    agreed upon by Owner and Contractor, and including such
                    welfare or other benefits, if any, as may be payable with
                    respect thereto.

                    8.4.4.3   SALARIES.

                    Salaries of Contractor's employees when stationed at the
                    field office at the Site, in whatever capacity employed,
                    employees engaged on the road expediting the production or
                    transportation of materials and equipment in connection with
                    the Project, and employees from the main or branch offices
                    performing the functions listed below: Accounting,
                    purchasing, estimating, cost control, scheduling or other
                    direct Project support functions.

                                                                   Page 19 of 41



                    8.4.4.4   ENGINEERING COSTS.

                    Cost of engineering labor and expense.

                    8.4.4.5   COST OF EMPLOYMENT.

                    Cost of all employee benefits and taxes for such items as
                    unemployment compensation and social security, insofar as
                    such cost is based on wages, salaries, or other remuneration
                    paid to employees of Contractor and included in the Cost of
                    the Work, all as reasonably apportioned to the Project.

                    8.4.4.6   EXPENSES.

                    Reasonable and actual transportation, traveling and hotel
                    and moving expenses of Contractor or of its officers or
                    employees incurred in discharge of duties connected with the
                    Project.

                    8.4.4.7   MATERIALS, EQUIPMENT AND SUPPLIES.

                    Cost of all materials, supplies, and equipment incorporated
                    in the Work, including costs of transportation and storage
                    thereof.

                    8.4.4.8   PAYMENTS TO SUBCONTRACTORS.

                    Payments made by Contractor to Subcontractors for Work
                    performed pursuant to subcontracts under this Agreement.

                    8.4.4.9   TOOLS AND EQUIPMENT.

                    Costs, including transportation, maintenance, and insurance,
                    of all materials, supplies, equipment, temporary facilities,
                    and small tools which initial cost is less than $100 not
                    owned by the workmen, which are employed or consumed in the
                    performance of the Work, and cost less the reasonable fair
                    market value of such items used, but not consumed, which
                    remain the property of Contractor.

                    8.4.4.10  RENTAL CHARGES.

                    Rental charges of all machinery and equipment, exclusive of
                    small tools, used at the Site of the Work, whether rented
                    from Contractor or others, including installations, repairs,
                    and replacements, dismantling, removal, costs of
                    lubrication, transportation, and delivery costs thereof, at
                    rental charges consistent with those prevailing in the area
                    of the Site.

                    8.4.4.11  PREMIUMS.

                    Cost of the premiums for all insurance which Contractor is
                    required to procure by this Agreement or which is reasonably
                    necessary for the Work, with the cost of Contractor's
                    general policies being allocated pro-rata among all of
                    Contractor's projects.

                                                                   Page 20 of 41



                    8.4.4.12  TAXES.

                    Sales, use, gross receipts, or similar taxes related to the
                    Project, imposed by any governmental authority, and for
                    which Contractor is liable.

                    8.4.4.13  FEES.

                    Permit fees, licenses, tests, and deposits lost for causes
                    other than Contractor's negligence.

                    8.4.4.14  UNCOMPENSATED LOSS.

                    Losses, expenses or damages to the extent not compensated by
                    insurance or otherwise (including settlements made with the
                    written approval of Owner), and the cost of corrective Work.

                    8.4.4.15  MINOR EXPENSES.

                    Minor expenses such as telegrams, long distance telephone
                    calls, telephone service at the Site, express mail services,
                    facsimile transmission, and similar petty cash items in
                    connection with the Project.

                    8.4.4.16  REMOVAL OF DEBRIS.

                    Cost of removal of all debris and cleaning and maintenance
                    of the Site in an orderly condition.

                    8.4.4.17  PROGRAMS.

                    Costs incurred in complying with the Lockwood Greene
                    Engineers, Inc. Corporate Safety Program (Modules B and C)
                    or any other program which is reasonably required by Owner.

                    8.4.4.18  [INTENTIONALLY DELETED].

                    8.4.4.19  LEGAL COSTS.

                    Costs of attorneys' fees, expenses, etc., for reviewing
                    contracts, subcontracts, claims, claims administration, or
                    other items requiring legal assistance.

          8.4.5     FEE.

          Contractor's fee allowed to Contractor for overhead and profit on
          Change Orders priced by paragraph 8.4.3 shall be determined as
          follows:

                    8.4.5.1   FIXED FEE.

                    A mutually acceptable fixed fee; or

                    8.4.5.2   PERCENTAGE FEE.

                    If a fixed fee is not agreed upon, then a fee based on
                    fifteen (15%) percent of the Cost of the Work associated
                    with the Change Order.

          8.4.6     DOCUMENTATION.

          Whenever the Cost of the Work is to be determined pursuant to
          paragraph 8.4.3, Contractor will establish and maintain records
          thereof in accord with generally accepted accounting practices and
          submit in a form acceptable to Owner an itemized cost breakdown
          together with supporting data.

          8.4.7     UNKNOWN OR CONCEALED CONDITIONS.

          Should concealed or unknown conditions encountered in the performance
          of the Work pursuant to a Change Order be at variance with the
          conditions indicated by the Drawings, Specifications, or
          Owner-furnished information, or should concealed or unknown conditions
          of an unusual nature, differing materially from those ordinarily
          encountered and generally recognized as inherent in work of the
          character provided for in this Agreement be encountered and such
          concealed or unknown conditions were not discoverable by Contractor in
          the exercise of ordinary

                                                                   Page 21 of 41



          care, the Contract Price and the Contract Time Schedule shall be
          equitably adjusted by Change Order upon claim by either party within a
          reasonable time after the first observance of the conditions.
          Contractor shall have the burden of proving that any concealed or
          unknown conditions for which Contractor is requesting an adjustment to
          the Contract Price and the Contract Time Schedule by Change Order
          differs materially from those ordinarily encountered and generally
          recognized as inherent in work of the character provided for in this
          Agreement and were not discoverable by Contractor in the exercise of
          ordinary care during inspection at the Site before commencement of the
          Work.

8.5       NOTICE OF INTENT TO MAKE CLAIM.

          8.5.1     CLAIM.

          If Owner and Contractor are unable to agree as to the extent, if any,
          of an adjustment in the Contract Price or an adjustment of the
          Contract Time Schedule that should be allowed as a result of any
          Change Order or other occurrence for which the Contract Documents
          provide that such adjustment(s) may be made, a claim may be made
          therefor. Written notice of intent to make such a claim shall be
          submitted to the other party promptly and in no event more than
          fifteen (15) days after the start of the occurrence or event giving
          rise to the claim.

          8.5.2     CLAIM DOCUMENTATION.

          Substantiating documentation shall be submitted by the claiming party
          within fifteen (15) days after delivery of the notice required by
          paragraph 8.5.1.

          8.5.3     DECISION.

          The other party shall render a decision on the claim no more than
          fifteen (15) days after its receipt of the substantiating
          documentation required by paragraph 8.5.2. This decision will be final
          and binding unless the claiming party gives notice of intention to
          exercise its rights under Article 13 within fifteen (15) days of
          giving the notice of intent.

          8.5.4     TIME LIMIT EXTENSION.

          The time limits of paragraphs 8.5.2 and 8.5.3 may be extended by
          mutual agreement.

8.6       EMERGENCIES.

In any emergency affecting the safety of persons or property, Contractor shall
act, at its discretion, to prevent threatened damage, injury, or loss. Any
increase in the Contract Price or extension of the Contract Time Schedule
claimed by Contractor on account of emergency work shall be determined as
provided in this Article.

                  ARTICLE 9: UNCOVERING AND CORRECTION OF WORK.

9.1       ACCESS TO CONSTRUCTION.

Owner, Owner's consultants, other representatives and personnel of Owner,
independent testing laboratories, and governmental agencies with jurisdictional
interests will have access to construction at the Site at reasonable times for
their observation, inspection, and testing. Contractor shall provide them proper
access to the Site and advise them of Contractor's Site safety procedures so
that they comply therewith.

9.2       UNCOVERING OF WORK.

If a portion of the Work is covered contrary to Owner's written request, it
must, if required by Owner, be uncovered for Owner's observation and be replaced
at the expense of Contractor without change in the time for Substantial
Completion. If a portion of the Work has been covered which Owner has not
specifically requested to observe prior to its being covered, Owner may request
to see such Work and it shall be uncovered by Contractor. If such Work is in
accord with the Contract Documents, the costs of uncovering and replacement
shall, by appropriate Change Order, be charged to Owner. If such Work is

                                                                   Page 22 of 41



not in accord with the Contract Documents, Contractor shall pay such costs
unless the condition was caused by Owner, its employees, consultants, or agents.

9.3       CORRECTION OF WORK.

          9.3.1     WORK REJECTED BY OWNER.

          Contractor shall promptly correct Work rejected by Owner which fails
          to conform to the requirements of the Contract Documents, whether
          observed before or after Substantial Completion and whether or not
          fabricated, installed, or completed. Contractor shall bear the costs
          of correcting such non-conforming Work.

          9.3.2     AFTER FINAL COMPLETION.

          If, within one (1) year after the date of Substantial Completion of
          the Work or a designated portion thereof, or any longer period
          prescribed by any special guarantee required by the Contract
          Documents, any of the Work is found to be not in accord with the
          requirements of the Contract Documents, Contractor, at no expense to
          Owner, shall cause the Work to be corrected promptly after receipt of
          written notice from Owner to do so unless Owner has previously given
          Contractor a written acceptance of such condition. This obligation
          under this paragraph shall survive acceptance of and payment for the
          Work under this Agreement. The obligation under this paragraph shall
          also survive termination of this Agreement for cause. Owner shall give
          such notice promptly after discovery of the condition.

          9.3.3     REMOVAL OF WORK.

          Contractor shall remove from the Site portions of the Work which are
          not in accord with the requirement of the Contract Documents and are
          neither corrected by Contractor nor accepted by Owner.

          9.3.4     FAILURE TO CORRECT NON-CONFORMING WORK.

          If Contractor fails to correct non-conforming Work within a reasonable
          time, Owner may correct it in accord with paragraph 12.2.1. If the
          Contract Price has already been paid in full, Contractor shall pay to
          Owner upon demand the actual and reasonable costs of correcting such
          non-conforming Work upon receipt of a reasonably itemized invoice for
          such correction. If Contractor shall not pay the invoice sum to Owner
          within fifteen (15) days of receipt, interest shall accrue on the
          amount due from the overdue date to the date actually paid and
          received by Owner at the annual rate of eighteen percent (18%) or one
          and a half percent (1.5%) per month.

9.4       ACCEPTANCE OF NONCONFORMING WORK.

If Owner prefers to accept Work which is not in accord with the requirements of
the Contract Documents, Owner may do so instead of requiring its removal and
correction, in which case the Contract Price will be adjusted as appropriate and
equitable. Such adjustment shall be effected whether or not Final Payment has
been made.

                       ARTICLE 10. PAYMENTS TO CONTRACTOR.

10.1      APPLICATION FOR PAYMENT.

Promptly after execution of this Agreement and at least twenty-five (25) days
before submittal of the first Application for Payment, Contractor shall prepare
a Schedule of Values acceptable to Owner indicating the portion of the Contract
Price to be paid for various components of the Work. The Schedule of Values will
serve as the basis for progress payments and will be incorporated into a form of
Application for Payment acceptable to Owner and Contractor. Progress payments on
account of Unit Price Work will be based on the number of units completed.

                                                                   Page 23 of 41



Each Application for Payment shall be accompanied by the following, all in form
and substance reasonably satisfactory to Owner:

          (i)       A current statement from Contractor setting forth all
                    Subcontractors and any material suppliers with whom
                    Contractor has subcontracted, the amount of each such
                    subcontract, the amount requested for any Subcontractor or
                    material supplier in the Application for Payment and the
                    amount to be paid to Contractor from such progress payment,
                    together with a current, duly executed waiver of mechanics'
                    and material suppliers' liens from Contractor establishing
                    receipt of payment or satisfaction of the payment requested
                    by Contractor in the current Application for Payment; and

          (ii)      Commencing with the second Application for Payment submitted
                    by Contractor, duly executed so-called "after-the-fact"
                    waivers of mechanics' and material suppliers' liens from all
                    Subcontractors, material suppliers, and where appropriate,
                    Sub-subcontractors, establishing receipt of payment or
                    satisfaction of payment of all amounts requested on behalf
                    of such entities and disbursed prior to submittal by
                    Contractor of the current Application for Payment, plus
                    sworn statements from all Subcontractors, materials
                    suppliers, and where, appropriate, Sub-subcontractors,
                    covering all amounts described in this clause.

No Application for Payment may include requests for payment of amounts
Contractor does not intend to pay to a Subcontractor or material supplier
because of a dispute or other reason.

Each Application for Payment shall include a statement certifying that all items
for which the previous Application for Payment was submitted and paid by Owner
have been paid by Contractor to the appropriate parties or a statement
satisfactory to Owner setting forth the reasons for Contractor's failure to make
such payments.

Contractor shall comply with the filing and posting requirements of N.C. Gen.
Stat. Section 44A-23(b).

10.2      PAYMENT PROCEDURE.

Payments shall be made by Owner to Contractor according to the following
procedure:

          10.2.1    SUBMITTAL BY CONTRACTOR.

          Once each month, on or before the 15th day of each month, Contractor
          shall submit to Owner an Application for Payment covering the Work
          completed during the preceding month. The amount of retainage with
          respect to progress payments, which will be reflected on the
          Application for Payment, will be:

                    No retainage on design, engineering, equipment purchased by
                    Contractor, permits, fees, soil tests, construction testing,
                    dumpsters, and miscellaneous costs;

                    Ten percent (10%) retainage on all construction management
                    and construction costs until fifty percent (50%) of the Work
                    is complete and five percent (5%) retainage thereafter; and

                    Ninety percent (90%) of retainage previously withheld to be
                    paid upon Substantial Completion of the Project; provided,
                    however if the estimated cost of completing punchwork items
                    exceeds ten percent (10%) of withheld retainage, then the
                    amount of retainage to be paid upon Substantial Completion
                    shall be reduced so that the amount of retainage withheld
                    equals 125% of the cost of completing punchwork items, which
                    portion of the retainage withheld for punchwork items shall
                    not be paid

                                                                   Page 24 of 41



                    to Contractor until Contractor has completed all punchwork
                    items to Owner's reasonable satisfaction.

          If payment is requested on the basis of materials and equipment not
          incorporated in the Work but delivered and suitably stored at the Site
          or at another location agreed to in writing, the Application for
          Payment shall also be accompanied by a bill of sale, invoice, or other
          documentation warranting that Owner has received the materials and
          equipment free and clear of all liens and evidence that the materials
          and equipment are covered by appropriate property insurance and other
          arrangements to protect Owner's interest therein.

          10.2.2    PAYMENT BY OWNER.

          No later than the twenty-fifth (25th) day of each month after Owner's
          receipt of an undisputed Application for Payment, Owner shall pay to
          Contractor by wire transfer to such account as may be designated by
          Contractor in writing the appropriate amounts for which Application
          for Payment is made therein. Contractor shall pay all applicable
          suppliers and Subcontractors the amounts due them with respect to the
          relevant Application for Payment no later than the last day of the
          month in which the Application for Payment is received. In the event
          of a dispute between Owner and Contractor with respect to amounts
          owing under an Application for Payment, Owner shall pay to Contractor
          all undisputed amounts of the Application for Payment.

          10.2.3    FAILURE TO MAKE PAYMENT.

          If Owner should fail to pay Contractor at the time the payment of any
          undisputed amount becomes due, Contractor may, at its option, upon
          giving written notice that it will stop Work within ten (10) days
          after receipt of the notice by Owner, and after such ten (10) day
          period, stop the Work until payment of the undisputed amount owing has
          been received. Owner, however, shall have the right to credit against
          payments due Contractor amounts due Owner from Contractor for
          liquidated damages, and in such event Contractor shall not have the
          right to stop Work.

          10.2.4    INTEREST.

          Payments due but unpaid more than five (5) days after their due date
          shall bear interest at an annual rate equal to eighteen percent (18%)
          until paid or one and a half percent (1.5%) per month.

10.3      TITLE TO WORK.

Contractor warrants and guarantees that title to all Work, materials and
equipment covered by an Application for Payment, whether incorporated in the
Project or not, will upon receipt of such payment by Contractor pass to Owner
free and clear of all liens, claims, security interests, or encumbrances
(hereinafter referred to as "Liens"). Contractor further warrants that upon
submittal of an Application for Payment, all Work for which an Application for
Payment has been previously issued and payments received from Owner shall be
free and clear of liens, claims, security interests, or encumbrances in favor of
Contractor, Subcontractors, material suppliers, or other persons or entities
making a claim by reason of having provided labor, materials, and equipment
relating to the Work.

10.4      NOT ACCEPTANCE OF WORK.

No progress payment shall constitute an acceptance of any Work not in accord
with the Final Plans and Specifications and the Contract Documents.

10.5      FINAL PAYMENT.

Final Payment constituting the unpaid balance of the Contract Price (but subject
to retainage as set forth in paragraph 10.2.1 pending completion of all
punchwork items) shall be due and payable when the Work is delivered to Owner,
ready for beneficial occupancy, or when Owner occupies the Work, whichever event
first occurs, provided that the Work be then substantially completed and this
Agreement substantially performed and an unconditional certificate of occupancy
or compliance has been issued. If there should remain minor items to be
completed, Contractor and Owner shall list such items, and Contractor shall
deliver, in writing, its guarantee to complete said items within sixty (60) days
thereafter.

                                                                   Page 25 of 41



Owner may retain from retainage a sum equal to 125% of the estimated cost of
completing any unfinished items, provided that said unfinished items are listed
separately and the estimated cost of completing any unfinished items is likewise
listed separately. Thereafter, Owner shall pay to Contractor, monthly, the
amount retained for incomplete items as each of said items is completed to
Owner's reasonable satisfaction.

10.6      EVIDENCE OF PAYMENT.

Before issuance of Final Payment, Owner may request satisfactory evidence that
all payrolls, materials bills, and other indebtedness connected with the Work
have been paid or otherwise satisfied. In connection with Final Payment made to
any supplier or Subcontractor, Contractor shall obtain customary form lien
waivers. Contractor shall pay suppliers and Subcontractors within five (5) days
after receipt of Final Payment from Owner upon receipt of final executed lien
waivers from all such suppliers and Subcontractors.

10.7      WAIVER UPON MAKING FINAL PAYMENT.

The making of Final Payment shall constitute a waiver of all claims by Owner
except those arising from:

          10.7.1    LIENS.

          Unsettled Liens.

          10.7.2    IMPROPER WORKMANSHIP.

          Improper workmanship or defective materials appearing within one (1)
          year after the date of Substantial Completion.

          10.7.3    LATENT FAILURE TO COMPLY.

          Latent failure of the Work to comply with the Final Plans and
          Specifications.

          10.7.4    SPECIAL GUARANTEES.

          Terms of any special guarantees required by the Final Plans and
          Specifications.

10.8      WAIVER UPON ACCEPTING FINAL PAYMENT.

The acceptance of Final Payment shall constitute a waiver of all claims by
Contractor except those which have previously been made in writing and remain
unsettled.

           ARTICLE 11: INDEMNITY, INSURANCE AND WAIVER OF SUBROGATION

11.1      INDEMNITY.

          11.1.1    INDEMNITY BY PARTIES.

          Contractor shall defend, indemnify, and hold harmless Owner and its
          agents, representatives, officers, employees, and contractors (other
          than Contractor) from and against any and all liens, claims, suits,
          demands, liabilities, losses, damages, costs, and expenses Owner may
          suffer or pay as a consequence of the negligent acts, errors, or
          omissions of Contractor, its agents, officers, employees,
          representatives, or Subcontractors in the performance of this
          Agreement.

          Owner shall defend, indemnify, and hold Contractor harmless from and
          against any and all claims, suits, demands, liabilities, losses,
          damages, costs, and expense Contractor may suffer or pay out as a
          consequence of the negligent, acts, errors, or omissions of Owner, its
          agents, employees, or contractors (other than Contractor). The
          foregoing indemnities shall not include damages sustained by either
          party for losses of income, profits, or production or damages
          sustained by either party on account of closure or shut-down of one or
          more of its facilities, but shall include reasonable and actual costs
          and reasonable and actual attorneys' fees incurred by the party
          indemnified in defending itself against a claim as to which the other
          party owes a duty of indemnification. Each indemnitor shall be
          entitled to (a) prompt written notice of the occurrence that gives
          rise to a claim for indemnification hereunder, and (b) an opportunity
          to
                                                                   Page 26 of 41



          defend the claim, suit, or demand through counsel of its choosing.
          Indemnitor shall have the right to control the defense and to be the
          sole judge of the acceptability of any compromise or settlement.

          11.1.2    INDEMNITY BY OTHERS.

          If, after the date of this Agreement, Owner enters into or amends any
          contract between Owner and any other contractor for the performance of
          work in the areas where the Work will be performed under this
          Agreement, Owner shall cause such contractor to agree to indemnify
          Owner and Contractor and hold them harmless from all claims for bodily
          injury and property damage (other than property insured under
          paragraph 11.6.1) that may arise from that contractor's operations.
          Such provisions shall be in a form reasonably satisfactory to
          Contractor. With respect to any similar contract between Owner and any
          other contractor entered into before the date of this Agreement, Owner
          shall use reasonable efforts to cause any such contract to be amended
          to provide the aforementioned indemnity to Owner and Contractor.

          11.1.3    APPLICATION OF INDEMNITIES.

          Owner and Contractor intend that the indemnity obligations set forth
          in paragraphs 11.1.1 and 11.1.2 above shall apply even if a claim or
          loss in part arises from the negligence, strict liability, statutory
          liability, or other wrongful act or omission of the indemnified party.
          In such event the indemnifying party's obligation shall be reduced in
          proportion to the indemnified party's contributing negligence or
          fault.

11.2      CONTRACTOR'S LIABILITY INSURANCE.

Contractor shall purchase and maintain such insurance as will protect it from
the claims set forth below which may arise out of or result from Contractor's
performance and furnishing of the Work under this Agreement whether such
operations be by Contractor or by any Subcontractor or by anyone directly or
indirectly employed by any of them, or by anyone for whose acts any of them may
be liable. Such policies shall name Owner as an additional insured and shall be
reasonably acceptable to Owner. Contractor shall furnish Owner a Certificate of
Insurance as to the policies provided by Contractor pursuant to this Agreement
promptly following execution of this Agreement but in no event later than the
day when an exposure to loss may occur. Owner will be given thirty (30) days
notice of cancellation or non-renewal or any endorsements reducing coverage.

          11.2.1    WORKMEN'S COMPENSATION.

          Claims under workers' compensation, disability benefit, and other
          similar employee benefit acts which are applicable to the Work to be
          performed.

          11.2.2    CLAIMS FOR EMPLOYEE INJURY.

          Claims for damages because of bodily injury, occupational sickness or
          disease, or death of Contractor's employees under any applicable
          employer's liability law.

          11.2.3    CLAIMS FOR INJURY TO OTHERS.

          Claims for damages because of bodily injury or death of any person
          other than Contractor's employees.

          11.2.4    OTHER CLAIMS.

          Claims for damages insured by customary personal injury liability
          coverage which are sustained (1) by any person as a result of an
          offense directly or indirectly related to the employment of such
          person by Contractor or (2) by any other person.

          11.2.5    DAMAGE TO PROPERTY.

          Claims for damages, other than to the Work itself, because of injury
          to or destruction of tangible property, including loss of use
          therefrom.

                                                                   Page 27 of 41



          11.2.6    OPERATION OF MOTOR VEHICLE.

          Claims for damages because of bodily injury or death of any person or
          property damage arising out of the ownership, maintenance, or use of
          any motor vehicle.

          11.2.7    CONTRACTUAL LIABILITY.

          Claims arising out of the indemnity obligation assumed by Contractor
          under paragraph 11.1 of this Agreement.

          11.2.8    PROFESSIONAL LIABILITY.

          Claims for professional negligence arising out of architectural and
          engineering services rendered by Contractor.

11.3      INSURANCE LIMITS.

Contractor's Comprehensive General Liability, Workers' Compensation, Automobile
Liability insurance, and Professional Liability Insurance, as required by
paragraph 11.2, shall be written for not less than the limits of liability or
amounts of coverage set forth in the Schedule of Insurance attached hereto as
Exhibit E. Contractor insurance may be arranged under a single policy for the
full limits required or by a combination of underlying policies with the balance
provided by Excess or Umbrella Liability policies.

11.4      CANCELLATION OF INSURANCE.

The foregoing policies shall contain a provision that the coverages afforded
under the policies will not be cancelled, that renewal will not be refused, and
that the amount of coverage will not be reduced below the limits specified in
Exhibit E until at least thirty (30) days after prior written notice has been
given to Owner. A Certificate of Insurance showing such coverages to be in force
shall be filed with Owner prior to commencement of the Work.

11.5      OWNER'S LIABILITY INSURANCE.

Owner shall be responsible for purchasing and maintaining at its expense its own
liability insurance and, at its option, may purchase and maintain such insurance
as will protect it against claims which may arise from operations under this
Agreement.

11.6      INSURANCE TO PROTECT THE PROJECT.

          11.6.1    PROPERTY INSURANCE.

          Owner (or Contractor upon written request of Owner and on Owner's
          behalf and at Owner's expense) shall purchase and maintain property
          insurance in a form reasonably acceptable to Contractor upon the
          entire Project for the full cost of replacement at the time of any
          loss. This insurance shall be on an "all-risk" policy form and shall
          insure against loss from the perils of Fire and Extended Coverage
          physical loss or damage including, without duplication of coverage, at
          least theft, vandalism, malicious mischief, transit, off-site storage,
          collapse, flood, testing, [and damage resulting from defective design,
          workmanship, or material.] Owner will increase the limits of coverage,
          if necessary, to reflect estimated replacement cost. Owner will be
          responsible for any co-insurance penalties or losses falling within
          the deductible limits of any policies.

          11.6.2    OFF-SITE MATERIALS OR EQUIPMENT.

          Owner (or Contractor upon written request of Owner and on Owner's
          behalf and at Owner's expense) shall purchase and maintain property
          insurance in a form reasonably acceptable to Contractor to cover
          materials and equipment stored at the Site or at another location
          prior to being incorporated into the Work, provided that such
          materials or equipment have been included in an Application for
          Payment submitted to and approved by Owner.

          11.6.3    OTHER PROPERTY INSURANCE.

          If during the Project construction period Owner insures properties,
          real or personal or both, adjoining, adjacent to, on, or in the Site
          by property insurance under policies separate from those insuring the
          Project, or if after Final Payment property insurance is to be
          provided on the

                                                                   Page 28 of 41



          completed Project through a policy or policies other than those
          insuring the Project during construction, Owner and its insurers shall
          waive all rights in accordance with the terms of paragraph 11.9 for
          damages caused by fire or other perils covered by this separate
          property insurance. All separate policies shall provide this waiver of
          subrogation by endorsement or otherwise.

          11.6.4    INSURANCE UPON OCCUPANCY.

          If Owner finds it necessary to occupy or use a portion or portions of
          the Project prior to Substantial Completion thereof, such occupancy
          shall not commence prior to a time mutually agreed to by Owner and
          Contractor and to which the insurance company or companies providing
          the property insurance have consented by endorsement to any applicable
          policy or otherwise. Consent of Contractor and of the insurance
          company or companies to such occupancy or use shall not be
          unreasonably withheld. Owner shall take no action with respect to
          partial occupancy or use that would cause cancellation, lapse, or
          reduction of applicable insurance.

          11.6.5    BOILER AND MACHINERY INSURANCE.

          Owner (or Contractor upon written request of Owner and on Owner's
          behalf and at Owner's expense) shall purchase and maintain such boiler
          and machinery insurance as may be required or necessary. This
          insurance shall include the interests of Owner, Contractor, and
          Subcontractors in the Work and Owner and Contractor shall be named
          insureds under such insurance.

          11.6.6    LOSS OF USE OF PROPERTY.

          Owner (or Contractor upon written request of Owner and on Owner's
          behalf and at Owner's expense) shall purchase and maintain such
          insurance as will protect Owner and Contractor against loss of use of
          Owner's property due to those perils insured pursuant to paragraph
          11.6.1. Such policy will provide coverage for expenses of expediting
          materials, continuing overhead of Owner and Contractor, necessary
          labor expense including overtime, loss of income by Owner, and other
          determined exposures. Exposures of Owner and Contractor shall be
          determined by mutual agreement and separate limits of coverage fixed
          for each item. Owner and its insurers waive all rights of actions
          against Contractor for loss of use of Owner's property including
          consequential losses due to the perils insured pursuant to paragraph
          11.6.1. Contractor agrees that it shall properly secure equipment and
          materials on the Site to protect the equipment and materials from
          theft or other loss not due to casualty. Contractor acknowledges that
          Owner's insurance with respect to loss of equipment and materials will
          contain a deductible payable by Owner until certain limits of loss are
          reached. If the experience of loss of equipment and materials exceeds
          that which Owner's insurer believes customary for a project of the
          size and complexity of the Project, Owner shall so inform Contractor
          in writing. Promptly thereafter, Owner and Contractor shall meet to
          discuss additional security actions to be taken by Contractor at no
          cost to Owner to prevent further loss of equipment and materials,
          which additional steps Contractor shall implement promptly.

          11.6.7    ADDITIONAL INSUREDS.

          Contractor and its Subcontractors shall be named as additional
          insureds under all of the policies of insurance required by this
          paragraph 11.6.

11.7      OWNER'S POLICIES - CERTIFICATE OF INSURANCE.

Owner shall furnish Contractor a Certificate of Insurance as to all policies
provided by Owner pursuant to this Agreement promptly following execution of
this Agreement but in no event later than the day when an exposure to loss may
occur. Contractor will be given thirty (30) days notice of cancellation,
non-renewal, or any endorsements restricting or reducing coverage. If Owner does
not intend to purchase the insurance specified in paragraph 11.6 (or to have
Contractor purchase such insurance on Owner's behalf and at Owner's expense), it
shall inform Contractor in writing prior to the commencement of the Work.
Contractor may then effect insurance which will protect the interest of
Contractor and the Subcontractors, and the Contract Price shall be increased by
Change Order. If Contractor is damaged by failure of Owner

                                                                   Page 29 of 41



to purchase or maintain such insurance or to so notify Contractor, Owner shall
bear all reasonable costs properly attributable thereto.

11.8      PROPERTY INSURANCE LOSS ADJUSTMENT

          11.8.1    PAYMENT OF AN INSURED LOSS.

          Any insured loss shall be adjusted with Owner and Contractor and made
          payable to Owner and Contractor as trustees for the insureds, as their
          interests may appear, subject to any applicable mortgage clause.

          11.8.2    DISTRIBUTION OF MONIES.

          Upon the occurrence of an insured loss, monies received will be
          deposited in a separate account and the trustees shall make
          distribution in accord with the agreement of the parties in interest.
          In the absence of such agreement, any dispute between the parties as
          to the distribution of the monies received shall be determined in
          accord with the provisions of Article 13.

11.9      WAIVER OF RIGHTS.

          11.9.1    WAIVER FOR PERILS COVERED BY INSURANCE.

          Owner and Contractor and their insurers waive all rights against each
          other and Subcontractors for damages caused by perils covered by
          insurance provided under paragraph 11.6, except such rights as they
          may have to the proceeds of such insurance held by Owner and
          Contractor as trustees. Contractor shall require similar waivers from
          all Subcontractors and their insurers in favor of Owner and
          Contractor.

          11.9.2    WAIVER FOR DAMAGE TO EQUIPMENT.

          Owner and Contractor and their insurers waive all rights against each
          other and Subcontractors for loss or damage to any equipment used in
          connection with the Project which loss is covered by any property
          insurance. Contractor shall require similar waivers from all
          Subcontractors and their insurers in favor of Owner and Contractor.

          11.9.3    WAIVER OF SUBROGATION BY CONTRACTOR'S INSURERS.

          Contractor shall obtain a waiver of subrogation consistent with this
          paragraph 11.9 by endorsement or otherwise from any insurer who issues
          any policy of insurance required of Contractor pursuant to the
          provisions of paragraph 11.6 above. Provided, however, Contractor
          shall not be required to obtain a waiver of subrogation under its
          professional liability policy required by paragraph 11.2.8 above.
          Contractor will obtain similar waivers of rights and waivers of
          subrogation interests from its Subcontractors and their insurers in
          favor of Contractor and Owner.

          11.9.4    WAIVER OF SUBROGATION BY OWNER'S INSURERS.

          Owner shall obtain a waiver of subrogation consistent with this
          paragraph 11.9 by endorsement or otherwise, from any insurer who
          issues any policy of insurance required to be obtained by Owner
          pursuant to the provisions of paragraph 11.6 above. Owner will obtain
          a waiver of subrogation in favor of Contractor and Subcontractors on
          property and consequential loss policies purchased for the Project
          after its completion. Owner will obtain similar waivers of rights and
          waivers of subrogation interests from its separate contractors or
          consultants and their insurers in favor of Contractor and
          Subcontractors.

          11.9.5    EFFECT OF ENDORSEMENTS.

          If the policies of insurance referred to in this Article 11 require an
          endorsement to provide for continued coverage where there is a waiver
          of subrogation, Owner and Contractor will cause them to be endorsed.

                                                                   Page 30 of 41



11.10     HAZARDOUS MATERIALS.

          11.10.1   PRESENCE OF HAZARDOUS MATERIALS.

          Owner agrees to indemnify, defend, and hold harmless Contractor, its
          directors, officers, employees, agents or Subcontractor(s) (the
          "Contractor Indemnified Parties") against all liabilities, claims and
          demands from losses, property damage, and bodily injury (including
          death) (including reasonable and actual attorneys' fees and related
          costs and expenses) arising out of the actual, potential, or suspected
          presence of Hazardous Materials as defined in paragraph 11.10.3 of
          this Agreement not created, stored, released, transported, or
          generated by the Contractor Indemnified Parties. Owner further agrees
          to indemnify, defend and hold harmless Contractor, its directors,
          officers, employees, agents, or Subcontractor(s) from any and all
          liability, claims, or demands from losses due to the release or threat
          of release, or any disposal or treatment or transport of Hazardous
          Materials not created, stored, released, transported, or generated by
          the Contractor Indemnified Parties. All such liability shall rest
          solely with Owner and/or the generator(s) of the Hazardous Materials,
          the property owner(s), and/or their selected contractor(s) for
          treatment, transport and/or disposal, as appropriate. Conversely,
          Contractor shall indemnify, defend, and hold harmless Owner, its
          directors, officers, employees, agents, or Subcontractor(s) (the
          "Owner Indemnified Parties") against all liabilities, claims, and
          demands from losses, property damage, and bodily injury (including
          death) (including reasonable and actual attorneys' fees and related
          cost and expenses) arising out of the actual, potential, or suspected
          presence of Hazardous Materials as defined in paragraph 11.10.3 of
          this Agreement created, stored, released, transported, or generated by
          Contractor Indemnified Parties. Contractor further agrees to
          indemnify, defend, and hold harmless the Owner Indemnified Parties
          from any and all liability, claims, or demands from losses due to the
          release or threat of release, or any disposal or treatment or
          transport of Hazardous Materials by Contractor Indemnified Parties not
          existing, created, stored, released, transported, or generated by
          Owner.

          11.10.2   HAZARDOUS/TOXIC/RADIOLOGIC WASTE INDEMNIFICATION.

          Owner understands and agrees that the Project may involve Hazardous
          Materials and that in ordering the Work, Owner is requesting
          Contractor to undertake for Owner's benefit potentially uninsurable
          obligations involving the presence or potential presence of
          environmental hazards. Owner acknowledges that services rendered by
          Contractor under this Agreement may or will involve or be affected by
          Hazardous Materials. Owner agrees to indemnify, defend, and hold
          harmless the Indemnified Parties from any and all liabilities, losses
          and damages of any nature, including reasonable and actual attorneys'
          fees and related costs and expenses, arising out of any and all claims
          of any nature made against Contractor which relate in any way to both:

          a.        Hazardous Materials or pollution or contamination due to the
                    presence of Hazardous Materials, including their
                    transportation or release from Owner's property but not
                    created, stored, released, transported, or generated by the
                    Contractor Indemnified Parties; and

          b.        The performance by Contractor of its obligations under this
                    Agreement, whether or not such performance by Contractor is
                    claimed to have been, was or may have been negligent,
                    grossly negligent, reckless, or intentional, provided,
                    however, Owner shall not be liable to Contractor for any
                    liabilities, losses, or damages of any nature that could
                    have reasonably been avoided by Contractor in the exercise
                    of ordinary care.

                                                                   Page 31 of 41



          11.10.3   HAZARDOUS MATERIALS DEFINITION

          As used in this Agreement, "Hazardous Materials" means any substances,
          materials, or waste that are:

          a.        Defined as a "hazardous substance" in paragraph 101(14) of
                    CERCLA, 42 U.S.C. Section 9601(14), and any regulations or
                    interpretations issued thereunder as well as any additions,
                    amendments or modifications thereto;

          b.        Defined as a "pollutant or contaminant" in Section 101(33)
                    of CERCLA, 42 U.S.C. Section 9601(33), and any regulations
                    or interpretations issued thereunder, as well as any
                    additions, amendments, or modifications thereto;

          c.        Petroleum, including crude oil or any fraction thereof,
                    including, but not limited to, spent cutting, lubricating,
                    and hydraulic oils, diesel fuel, heating oil, gasoline, and
                    #6 fuel oil;

          d.        Asbestos;

          e.        Polychlorinated biphenyls (PCB's);

          f.        Any mixture of hazardous materials listed in items (a)
                    through (e) above and any substance or materials derived
                    from any of the hazardous materials listed above;

          g.        Radiological or nuclear waste, substances or materials; or

          h.        Other materials, wastes, or substances that are toxic or
                    suspected to be harmful or toxic to human health.

             ARTICLE 12: SUSPENSION OR TERMINATION OF THE AGREEMENT.

12.1      TERMINATION BY CONTRACTOR.

If the Project is suspended or stopped for a period of more than sixty (60) days
by Owner or under an order of any court or other public authority having
jurisdiction, or as a result of any act of government, such as a declaration of
a national emergency making materials unavailable, through no act or fault of
Contractor, or if Owner fails for a period of thirty (30) days to pay Contractor
any amount properly due under this Agreement, then Contractor may, upon seven
(7) days' written notice to Owner and provided Owner does not remedy such
suspension, stoppage, or failure within that time, terminate this Agreement and
recover from Owner payment for all Work executed by Contractor together with any
loss sustained by Contractor (whether expense, damage, or profits for the
portion of the Work completed to the date of suspension, stoppage, or failure)
as a result of such suspension, stoppage, or failure.

12.2      OWNER'S RIGHT TO PERFORM CONTRACTOR'S OBLIGATIONS AND TERMINATION BY
OWNER FOR CAUSE.

          12.2.1    CONTRACTOR'S FAILURE TO PERFORM.

          If Contractor fails to perform any of its obligations under this
          Agreement, Owner, without prejudice to any other right or remedy, may,
          after seven (7) days written notice during which period Contractor
          fails to initiate the performance of such obligation, make good such
          deficiencies. The Contract Price, if any, shall be reduced by the cost
          to Owner of making good such deficiencies.

          12.2.2    INSOLVENCY OF CONTRACTOR.

          If Contractor is adjudged bankrupt, or if it makes a general
          assignment for the benefit of its creditors, or if a receiver is
          appointed on account of its insolvency, or if it persistently or
          repeatedly refuses or fails, except in cases for which an extension of
          time is provided, to supply enough properly skilled workmen or proper
          materials, or if it fails to make proper payment to

                                                                   Page 32 of 41



          Subcontractors or for materials or labor, or persistently disregards
          laws, ordinances, rules, regulations, or orders of any public
          authority having jurisdiction, or otherwise is guilty of a substantial
          violation of this Agreement, then Owner may, without prejudice to any
          other right or remedy and after giving Contractor and its surety, if
          any, seven (7) days written notice, during which period Contractor
          fails to cure the violation, terminate the employment of Contractor
          and take possession of the Site and of all materials, equipment,
          tools, construction equipment, and machinery thereon owned by
          Contractor and may finish the Work by whatever reasonable method it
          may deem expedient. In such case, Contractor shall not be entitled to
          receive any further payment with respect to portions of the Work
          conforming to the Contract Documents completed by Contractor before
          the date of termination of the Agreement by Owner until the Work is
          finished.

12.3      TERMINATION BY OWNER FOR CONVENIENCE.

Upon seven (7) days written notice to Contractor, Owner may, without cause and
without prejudice to any other right or remedy of Owner, elect to terminate the
Agreement. In such case, Contractor shall be paid for:

          12.3.1    COMPLETED AND ACCEPTED WORK.

          Completed and accepted Work executed in accord with the Contract
          Documents prior to the effective date of termination, including fair
          and reasonable sums for overhead and profit on such Work;

          12.3.2    EXPENSES.

          Expenses sustained prior to the effective date of termination in
          performing services and furnishing labor, materials, or equipment as
          required by the Contract Documents in connection with uncompleted
          Work, plus fair and reasonable sums for overhead and profit on such
          expenses;

          12.3.3    SETTLEMENTS.

          Contract amounts owed in relation to work performed under terminated
          contracts with Subcontractors plus all reasonable costs and fees
          incurred in connection with termination of contracts with
          Subcontractors and material or equipment suppliers; and

          12.3.4    EXPENSES.

          Reasonable expenses incurred by Contractor directly attributable to
          termination.

12.4      SUSPENSION OF THE WORK.

At any time and without cause, Owner may suspend the Work or any portion thereof
for a period of not more than ninety (90) days by notice in writing to
Contractor which will fix the date on which the Work will be resumed. Contractor
shall resume the Work on the date so fixed. Contractor shall be allowed an
adjustment in the Contract Price or an extension of the Contract Time Schedule,
or both, directly attributable to any such suspension if Contractor makes a
claim therefor as provided in Article 8.

                         ARTICLE 13: DISPUTE RESOLUTION

13.1      DISPUTE RESOLUTION.

If any controversy or claim arises out of or relates to this Agreement, or
breach thereof, the parties agree to the following procedure:

          13.1.1    DIRECT NEGOTIATION.

          The parties shall initially attempt to resolve the dispute by direct
          negotiation in an amicable manner.

                                                                   Page 33 of 41



          13.1.2    MEDIATION.

          If the parties fail to reach agreement by direct negotiation within
          sixty (60) days from the commencement of negotiation, the parties will
          submit the dispute to non-binding mediation under the Construction
          Industry Mediation Rules of the American Arbitration Association or
          other mediation rules as agreed by the parties.

          13.1.3    JUDICIAL REMEDIES.

          If the parties cannot settle the dispute by non-binding mediation
          within sixty (60) days from the commencement of mediation, the parties
          shall then be free to pursue their rights and remedies before a court
          of competent jurisdiction.

                    ARTICLE 14: ASSIGNMENT AND GOVERNING LAW.

14.1      ASSIGNMENT OF AGREEMENT.

Neither Owner nor Contractor shall assign its interest in this Agreement without
the written consent of the other except as to the assignment of proceeds.

14.2      CHOICE OF LAW AND FORUM.

This Agreement shall be governed by the laws of the State of North Carolina and
any legal action or proceeding under or interpreting this Agreement shall be
brought in the courts of the State of North Carolina.

                      ARTICLE 15: MISCELLANEOUS PROVISIONS.

15.1      EXTENT OF AGREEMENT.

This Agreement represents the entire agreement between Owner and Contractor
relating to the Project and supersedes all prior negotiations, representations,
or agreements pertaining to the subject matter hereof. This Agreement may be
amended only by written instrument signed by both Owner and Contractor.

15.2      INFORMATION AND DOCUMENTS.

          15.2.1    PROPRIETARY INFORMATION.

          All information disclosed to Contractor by Owner or acquired by
          Contractor solely in connection with the Project or the performance of
          the Work shall be held in confidence by Contractor and shall not be
          disclosed to third parties (other than Subcontractors or
          Sub-subcontractors to the extent necessary) without Owner's prior
          written consent unless Contractor can show to Owner's satisfaction
          that said information (a) is generally known to the public without
          breach hereof, (b) was known to Contractor or in its possession prior
          to disclosure by Owner, (c) was disclosed to Contractor, after
          disclosure by Owner, by a third party having the unrestricted legal
          rights to disclose the same, or (d) is required by law to be
          disclosed.

          15.2.2    OWNERSHIP OF DOCUMENTS.

          All documents prepared by Contractor, including but not limited to
          sketches, drawings, plans, specifications, models, calculations,
          computer software, and electronic media are instruments of service for
          the Project and are the property of Contractor. Contractor shall
          transfer to Owner's custody at completion of the Work or upon
          termination of this Agreement hard copies of the items described in
          the preceding sentence. The use of any documents prepared or furnished
          by Contractor for any purpose other than as set forth in this
          Agreement or modifications to such documents by anyone other than
          Contractor shall be at Owner's sole risk and without liability or
          legal exposure to Contractor. Owner shall indemnify and hold harmless
          Contractor from all claims, damages, losses, and expenses, including
          reasonable and actual attorneys' fees, arising out of or resulting
          from such other use or modification. Contractor reserves the right to
          retain reproducible media of all documents. Subject to the preceding
          sentence, Owner shall have an

                                                                   Page 34 of 41



          ownership interest in all drawings, specifications, and other
          documents and electronic data furnished by Contractor to Owner in
          connection with this Agreement.

          15.2.3    DOCUMENTS UPON TERMINATION.

          Upon notice of termination of this Agreement, Contractor shall clearly
          describe in writing to Owner all documents produced under this
          Agreement which then exist and the location of each. Subject to the
          provisions of paragraph 15.2.2 above, Contractor shall promptly comply
          with any directions from Owner regarding the disposition of the
          materials for which directions are delivered to Contractor by Owner
          within sixty (60) days after notice of termination.

          15.2.4    PATENT RIGHTS.

          With regard to any patent rights granted and assigned to Owner under
          this Agreement, Contractor agrees to cooperate with Owner in keeping
          complete and accurate records pertaining thereto and in the
          prosecution of patents.

15.3      ELECTRONIC MEDIA.

          15.3.1    FORMAT.

          Electronic media, including magnetic and optical disks and magnetic
          tapes, submitted by Contractor to Owner under this Agreement are
          intended to operate on a system of hardware and software identical to
          that utilized by Contractor to produce such media. Contractor makes no
          warranty or representation as to the capability of such media to
          operate on any other system of hardware or software. Owner
          acknowledges that, with the passage of time, the system on which the
          electronic media was produced may be changed and updated and agrees
          that Contractor is under no obligation to maintain electronic media
          for this Project to operate on these systems. At Owner's request,
          Contractor shall deliver to Owner hard copies of any data or
          information stored in electronic media at no additional cost to Owner
          provided such request is made by Owner to Contractor no later than one
          (1) year after Substantial Completion.

          15.3.2    ACKNOWLEDGEMENT.

          Owner acknowledges that:

          1.        The information stored by Contractor on electronic media is
                    subject to deterioration with time;

          2.        Electronic media, after delivery by Contractor, may be
                    subjected to unintentional physical abuse; and

          3.        Electronic media, after delivery by Contractor, may be
                    changed by others without authorization by Contractor.

          Owner agrees that Contractor shall not be responsible for the effects
          of the above.

          15.3.3    RESPONSIBILITY FOR ACCURACY.

          Owner is responsible for the accuracy of any information it furnishes
          to Contractor on electronic media for use under this Agreement. If
          such information is found to be unusable as a result of data format,
          media deterioration, or software incompatibility, Contractor shall be
          compensated for costs incurred to make the information usable.

          15.3.4    OWNER SPECIFICATION.

          Contractor shall not be required to produce electronic media to
          Owner's specifications unless Owner's specifications are made
          available to Contractor for review and comment prior to execution of
          this Agreement and such specifications are specifically identified
          herein and made a part of this Agreement. Owner's specifications
          pertaining to electronic media which are

                                                                   Page 35 of 41



          applicable to Contractor's services under this Agreement and which are
          incorporated as part of this Agreement include the following: NONE.

          15.3.5    COMPUTER VIRUSES.

          Neither party shall be responsible to the other for the effects of
          computer viruses transmitted through the exchange of electronic media,
          but each party shall maintain appropriate virus detection programs.

15.4      ENVIRONMENTAL MATTERS.

          15.4.1    ENVIRONMENTAL SERVICES.

          Contractor states and Owner acknowledges that Contractor does not
          specialize in and has not been trained in the discovery, abatement,
          handling, removal, packaging, transport, or disposal of hazardous,
          toxic, and/or radiologic waste or substances in any form which may be
          present at the Site excluding any such substances used by Contractor
          or Subcontractors in performing the Work. Any services necessary in
          connection with such hazardous substances and/or waste shall be
          contracted for by Owner directly with consultants, and properly
          licensed contractors, transporters, treatment, storage, and disposal
          facilities specializing in hazardous, toxic, and/or radiologic waste
          and/or substances encountered during the performance of this
          Agreement.

          15.4.2    ASBESTOS OR PCB.

          In the event Contractor encounters on the Site material(s) suspected
          or reasonably believed to be hazardous, toxic, and/or radiologic waste
          and/or substances, including asbestos or polychlorinated biphenyl
          (PCB) materials which were not known at the time of this Agreement and
          have not been rendered safe relative to accomplishing the Work but
          excluding any such substances used by Contractor or Subcontractors in
          performing the Work, Contractor shall immediately stop the Work in the
          area affected and report the condition to Owner in writing. The Work
          in the affected area shall be resumed when documentation reasonably
          satisfactory to Contractor assures the absence or proper control or
          management of hazardous, toxic, and/or radiologic waste and/or
          substances, or when it has been investigated and determined to be
          safe, remediated, or abated as approved by the regulatory agency(ies)
          having jurisdiction. Should the investigations, remedies, regulatory
          agency approval, or other activities related to releasing the affected
          Work area back to Contractor delay or otherwise affect the Work,
          Contractor shall be compensated for its costs and delays in accordance
          with paragraph 6.3.

          15.4.3    WORK WITH HAZARDOUS, TOXIC, AND RADIOLOGIC WASTE AND
          SUBSTANCES.

          Contractor shall not be required to perform any Work without its
          consent relating to hazardous, toxic, and/or radiologic waste and/or
          substances, including asbestos or polychlorinated biphenyl (PCB) but
          excluding any such substances used by Contractor or Subcontractors in
          performing the Work.

          15.4.4    CESSATION OF WORK.

          If reasonable precautions will be inadequate to prevent or mitigate
          known or foreseeable impacts to human health and the environment,
          bodily injury, or death to persons resulting from a material or
          substance encountered on the Site by Contractor, Contractor shall,
          upon recognizing or suspecting the condition, immediately stop the
          Work in the affected area and report the condition to Owner in
          writing. Contractor shall have no responsibility for searching for or
          identifying any hazardous or toxic materials, wastes or substances,
          pollution, or contamination due to the presence of hazardous or toxic
          materials, wastes, or substances. In the event that Contractor
          discovers or suspects the presence of any such materials, wastes,
          substances, pollution, or contamination, Contractor may at its sole
          discretion stop work and, if Owner and Contractor cannot jointly
          establish criteria and compensation, if any, for the resumption of the
          Work, terminate this Agreement. In event of Work stoppage, Owner and
          Contractor shall jointly establish criteria and compensation, if any,
          for the resumption of the Work. In the event of

                                                                   Page 36 of 41



          termination, Contractor, its directors, officers, employees, agents,
          or Subcontractor(s) shall have no further liability to Owner for
          performance under this Agreement, and Owner shall make the payments to
          Contractor required in paragraph 12.1.

          15.4.5    SITE RESPONSIBILITY.

          Because Contractor is constructing the Work on sites owned or
          controlled by others, Contractor does not, nor shall it, assume
          responsibility or liability for any on-going or past on-site or
          off-site activities, nor the reporting of any conditions at the Site,
          that may present a potential danger to public health, safety, or the
          environment according to regulations of any federal, state or local
          government agency provided such activities or conditions are not
          created by Contractor or Subcontractors. Owner, generator, property
          owner, and/or operator shall be solely responsible for compliance with
          proper notification, record keeping, reporting, storage, handling,
          manifesting, transport, disposal, and all other regulatory
          requirements for regulated and hazardous materials, waste, or
          substances existing on the Site other than hazardous materials,
          wastes, or substances used by Contractor or Subcontractors in
          performing the Work.

          15.4.6    UNKNOWN CONDITIONS.

          Owner recognizes that when hazardous waste and/or substances are
          known, assumed, or suspected to exist on or beneath the surface of the
          Site, statutes and standard practices require the handling of certain
          materials as contaminated waste and/or substances. Owner waives any
          and all claims against Contractor, its directors, officers, employees,
          agents, or Subcontractor(s) and holds them harmless from any and all
          claims or liability for injury or loss which may arise as a result of
          the hazardous waste and/or substances remaining on the Site. Owner
          also agrees to compensate Contractor for any time spent and expenses
          incurred by Contractor or its Subcontractor(s) in defense of any such
          claim. Owner assumes all responsibility for all activities associated
          with such waste.

          15.4.7    SUBSURFACE CONSTRUCTION ACTIVITIES.

          As knowledge of subsurface conditions is limited to the interpretation
          of discreet data derived from specific investigation points and such
          conditions may change over time, unknown conditions may be encountered
          during subsurface construction activities. These construction
          activities may contribute to unavoidable impacts or contamination of
          certain subsurface strata or area(s), as when excavation, pile
          driving, caisson boring, auger, drill bit, or other constructed Work
          or equipment moves through an impacted or contaminated zone or area,
          linking the impacted or contaminated zone or area to an unimpacted or
          uncontaminated zone, area, aquifer, underground stream, or other
          hydrous body not previously impacted or contaminated and capable of
          spreading constituents to other areas both on-site and off-site.
          Therefore, since the nature of subsurface conditions is not fully
          known, the elimination of the risk or potential risk of
          cross-contamination is not possible. Owner waives any and all claims
          against Contractor or its Subcontractor(s) and agrees to defend,
          indemnify and hold Contractor, its directors, officers, employees,
          agents, and/or Subcontractor(s) harmless from any and all claim or
          liability for injury or loss which may arise as a result of an alleged
          cross-contamination caused by installation of the Work that could not
          be avoided with the exercise of reasonable diligence. Owner further
          agrees to compensate Contractor or its Subcontractor(s) in defense of
          any such claim.

          15.4.8    HEALTH & SAFETY PRECAUTIONS.

          When hazardous substances, waste, or materials are known, assumed, or
          suspected to exist at a site, Contractor and its Subcontractor(s) are
          required to take appropriate precautions to protect the health and
          safety of personnel, to comply with applicable laws and regulations,
          and to follow procedures that are deemed prudent to minimize physical
          and health risks to employees, the public, and the environment. Owner
          hereby warrants that if it knows or has any reason to assume or
          suspect that hazardous, toxic or radiologic substances, waste, or
          materials may exist at the Site or adjacent thereto it has so informed
          Contractor.

                                                                   Page 37 of 41



          15.4.9    LABORATORY VERIFICATION.

          Owner shall be responsible for obtaining the services of a qualified,
          licensed laboratory to verify the presence or absence of hazardous,
          toxic, or radiologic substances, waste, or materials reported by
          Contractor. In the event such substances, waste, or material is found
          to be present, Owner shall notify appropriate regulatory agencies
          and/or verify that it has been rendered safe relative to accomplishing
          the Work. Unless otherwise required by the Contract Documents, Owner
          shall furnish in writing to Contractor the names and qualifications of
          persons or entities who are to perform investigations and tests
          verifying the presence or absence of such hazardous, toxic, or
          radiologic substances, waste, or materials or the names and
          qualifications of properly licensed contractors, transporters,
          treatment, storage, and disposal facilities specializing in hazardous,
          toxic, and/or radiologic waste and/or substances encountered during
          the execution of the Work. who are to perform the tasks of removal or
          safe containment of such hazardous, toxic, or radiologic substances,
          waste, or materials. Contractor will promptly reply to Owner in
          writing stating whether it has a reasonable objection to persons or
          entities proposed by Owner. If Contractor has an objection to a person
          or entities proposed by Owner, Owner shall propose another to whom
          Contractor has no reasonable objection.

15.5      EXCLUSION OF WARRANTIES AND DAMAGES.

Contractor makes no warranty or guarantee of any kind in connection with
performance of the Work under this Agreement other than those expressly provided
under this Agreement. ALL IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE EXCLUDED. IN NO
EVENT SHALL CONTRACTOR'S LIABILITY TO OWNER ARISING OUT OF CONTRACTOR'S BREACH
OF ITS OBLIGATIONS UNDER THIS AGREEMENT, FOR ANY REASON, EXCEED THE CONTRACT
PRICE PLUS ANY ASSESSED LIQUIDATED DAMAGES. LIQUIDATED DAMAGES SHALL NOT EXCEED
TWO MILLION DOLLARS ($2,000,000.00). UNDER NO CIRCUMSTANCES SHALL CONTRACTOR BE
LIABLE TO OWNER OR ANY THIRD PARTY FOR ANY SPECIAL, COLLATERAL, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY TYPE.

15.6      WAIVER.

The failure of either party to enforce any of the provisions of this Agreement
at any time, or from time to time, shall not operate as a waiver with respect to
future actions.

15.7      EFFECT OF AGREEMENT.

The rights and obligations of the parties under this Agreement shall be binding
upon and shall inure to the benefit of the parties, their successors and
permitted assigns.

15.8      NOTICES.

All notices, requests, demands, and other communications under this Agreement
shall be deemed to have been duly given if delivered in person or if mailed in
the United States mail, certified mail, return receipt requested; and properly
addressed as follows:

                    If to Owner, to:
                    Embrex, Inc.
                    1040 Swabia Court
                    P.O. Box 13989
                    Research Triangle Park, North Carolina  27709-3989
                    Attention:  Alison Martin

                                                                   Page 38 of 41



                    If to Contractor, to:
                    Lockwood Greene E&C, L.L.C.
                    1500 International Drive
                    P.O. Box 491
                    Spartanburg, South Carolina  29304
                    Attention:  Perry Holcombe

If mailed, any such notice, request, demand, or other communication is effective
on the date shown on the return receipt; provided, however, if any such notice,
request, demand, or other communication sent by certified mail, return receipt
requested, is refused or cannot be delivered due to a change of address notice
of which was not given in accordance with this paragraph 15.8, then such notice,
request, demand, or other communication shall be deemed to have been received on
the fifth (5th) calendar day after mailing. From time to time either party may
designate another person or address for all purposes of this Agreement by giving
to the other party not fewer than fifteen (15) days' advance written notice of
such change of person or address in accord with the provisions hereof.

15.9      ADDITIONAL CONTRACTOR'S REPRESENTATIONS AND WARRANTIES.

Contractor represents and warrants the following to Owner (in addition to any
other representations and warranties contained in the Contract Documents), as an
inducement to Owner to execute this Agreement, which representations and
warranties shall survive the execution and delivery of this Agreement, any
termination of this Agreement, and the final completion of the Work:

          (i)       that it and its Subcontractors are financially solvent, able
                    to pay all debts as they mature, and possessed of sufficient
                    working capital to complete the Work and perform all
                    obligations hereunder;

          (ii)      that it is able to furnish the plant, tools, materials,
                    supplies, equipment, and labor required to complete the Work
                    and perform its obligations hereunder;

          (iii)     that it is authorized to do business in the State of North
                    Carolina and properly licensed by all necessary governmental
                    and public and quasi-public authorities having jurisdiction
                    over it and over the Work and the Project;

          (iv)      that its execution of this Agreement and its performance
                    thereof is within its duly authorized powers; and

          (v)       that it possesses the level of experience and expertise as
                    that of other nationally recognized contractors experienced
                    in the business administration, construction, construction
                    management, and superintendence of projects of the size,
                    complexity, and nature of the Project, and it will perform
                    the Work with the care, skill, and diligence of such a
                    contractor.

                                                                   Page 39 of 41



The foregoing warranties are in addition to, and not in lieu of, any and all
other liability imposed upon Contractor by law with respect to Contractor's
duties, obligations, and performance hereunder. Contractor acknowledges that
Owner is relying upon Contractor's skill and experience in connection with the
Work called for hereunder.

                                                                   Page 40 of 41



          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                             Lockwood Greene E&C, L.L.C.
                                             (Contractor)

                                             By:  /s/ Mike McKelvy
                                                 ------------------------
                                                    Mike McKelvy

                                             Its:  Vice President

                                             Embrex, Inc.
                                             (Owner)

                                             By:  /s/ Randall L. Marcuson
                                                 ------------------------
                                                    Randall L. Marcuson

                                             Its:  President and CEO

                                                                   Page 41 of 41



              ENGINEERING, PROCUREMENT, AND CONSTRUCTION AGREEMENT

                                    EXHIBIT A

                           CONTRACTOR'S SCOPE OF WORK

PROJECT DEFINITION:

Embrex intends to build a new vaccine production facility for control of four
strains of coccidia that adversely affect chicken growth and development. This
facility is to be constructed on the western portion of a nominal 50-acre site
in Laurinburg, NC and in general consists of the following structures:

     .    18,000 GSF Main Building

     .    5,600 GSF Master Seed Building

     .    1,800 GSF Separation Building

     .    800 GSF Brooder Office Building

     .    Two (2) Brooder Houses

     .    Five (5) Challenge Huts

These structures, associated equipment and infrastructure are further defined in
the documentation referenced in the Appendix.

LOCKWOOD GREENE SCOPE OF SERVICES:

In connection with the above project definition, LG proposes to provide EPC
services as outlined below:

     .    Finalize the specifications, pricing and delivery for the equipment as
          listed on the equipment list that is referenced in the Appendix.

     .    Complete the design drawings that presently represent an average 65%
          completion and are referenced in the Appendix.

     .    Supplement the above drawings with additional details, sketches or
          drawings as may be required for construction.

     .    Finalize construction specifications and supplement as may be required
          for construction.

     .    Finalize construction subcontractors, pricing and schedule.

     .    Issue purchase orders for suppliers of equipment and contracts to LG's
          construction subcontractors for materials and labor for construction.

     .    Monitor and expedite equipment shop drawings and equipment deliveries.

     .    Monitor and manage construction subcontractors.

     .    Receive and process invoices from suppliers and subcontractors.

     .    Develop, monitor, update and manage the design and construction
          schedule.

     .    Provide to a "mechanically complete" status the facilities and
          infrastructure depicted on the LG drawings including the equipment
          listed on the equipment list.

     .    Provide start-up and commissioning support services.

     .    Within a reasonable time period after startup and commissioning,
          furnish Embrex project close out documentation, which includes:

               .    Record drawings developed from redlined drawings prepared by
                    LG's subcontractors



               .    Equipment operating and maintenance manuals

               .    HVAC test and balance reports

               .    List of subcontractors and contact information, etc.

               .    Copies of subcontractor submittals