Exhibit 10.16


 


ENGINEERING, PROCUREMENT AND CONSTRUCTION


 


SERVICES


 


FIXED PRICE CONTRACT


 


 


BETWEEN


 


 


WOESSNER CONSTRUCTION, INC.


 


 


AND


 


 


OTTER TAIL AG ENTERPRISES, LLC


 


DATED: JANUARY 9, 2007


 

















Construction Services
Contract


Otter Tail Ag Enterprises, LLC


 


List of Exhibits


 


A.  Scope of Services


B.  Knutson Contract


 


i

















Construction Services
Contract


Otter Tail Ag Enterprises, LLC


 


Engineering, Procurement, and Construction Services Fixed
Price Contract


 


GENERAL CONDITIONS


 


THIS “CONTRACT”, IS made this 9th day of
January, 2007, by and between Otter Tail Ag Enterprises, LLC, a Minnesota
limited liability company organized and acting under and pursuant to the laws
of Minnesota and having its main place of business at 1220 North Tower Road, Suite 201,
Fergus Falls, Minnesota 56537 (hereinafter called the “Owner”) and Woessner
Construction, Inc., a corporation organized and acting under and pursuant
to the laws of the State of Minnesota and having its main place of business at
216 East Junius Avenue, Fergus Falls, MN 56537 (hereinafter called “Woessner”).
Owner and Knutson may sometimes be referred to herein individually as a “Party”
or jointly as the “Parties.”


 


WITNESSETH:


 


WHEREAS, Woessner is engaged in the performance
of design, engineering, procurement and construction services, with experience
in design, engineering procurement and construction of buildings; and


 


WHEREAS, Owner desires Knutson to furnish and to
perform, or cause to be performed, certain design, engineering, procurement,
construction and other services, and provide, or cause to be provided, certain
material, equipment, tools, and labor, necessary to complete the Work (as that
term is defined herein) and reasonably inferable from this Contract;


 


WHEREAS, Owner entered into a Construction
Management Services Contract dated November 3, 2006 (the “Knutson Contract”)
with Knutson Construction Services, a corporation organized and acting under
and pursuant to the laws of the State of Minnesota and having its main place of
business at 1907 2nd Street Southwest, Rochester, MN 55902
(hereinafter called “Knutson”) to furnish and perform certain construction
management services, and to perform, or cause to be performed, certain design,
engineering, procurement, construction and other services, and provide, or
cause to be provided, certain material, equipment, tools, and labor, necessary
to complete the Work described in the Knutson Contract.


 


WHEREAS, Woessner had previously agreed to
perform certain of the Work described in the Knutson Contract pursuant to
contract arrangements with Knutson, and the Parties have agreed that Owner will
contract directly with Woessner for the performance of the Work described in
the Knutson Contract that is to be performed and delivered by Woessner.


 


WHEREAS, the Parties agree that this Contract
shall incorporate the terms and conditions set forth in the Knutson Contract,
except that matters relating to the contract sum payable to


 


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Woessner shall be as set forth herein, and the work to
be performed by Woessner shall be as described herein.


 


NOW, THEREFORE, in consideration of the premises
and the mutual covenants and conditions herein contained, it is agreed as
follows:


 


1. Defined Terms and Contract
Documents


 


1.1 Defined
Terms: The following words, when capitalized, shall have the meanings set forth
below or as set forth in the Knutson contract:


 


1.1.1 Contract:
“Contract”
means this Contract and the attached Exhibits A and B, to specifically include,
and incorporate by reference, the Knutson Contract and the General Conditions,
the Exhibits A through D attached to the Knutson Contract, any attached
schedules or other Exhibits to the Knutson Contract, and all additions or modifications
hereto or thereto made in accordance with Section 18.2 below.


 


1.1.2 Contract
Sum/Contract Price: “Contract Sum” or “Contract Price” means the sum set
forth in Section 8.1 below, subject to adjustment as provided in Section 8,
or such greater or lesser amount as may be determined in accordance with this
Contract.


 


1.1.3 Effective Date: “Effective Date” means
January 9, 2007, the date of this Contract.


 


1.1.4 Delta-T: “Delta-T” means
Delta-T Corporation, a corporation organized and acting under and pursuant to
the laws of the Commonwealth of Virginia and having its main place of business
at 323 Alexander Lee Parkway, Williamsburg, VA 23185.


 


1.1.5 Delta-T Technology: “Delta-T Technology” shall mean all data, technical information, trade secrets, inventions
(whether patented or not and whether issued before
or after the Effective Date), know-how, procedures, processes, drawings,

designs, methodology, models, inventions, specifications, plant or equipment
test and/or operating data, or other technical information and copyrights
embodied in the Plant, used in the operation of the Plant, in equipment or in
drawings, or included in any documents, drawings or other materials delivered
electronically or otherwise by Delta-T to Harris Mechanical, Knutson or Owner
on connection with construction of the Plant.


 


1.1.6 Equipment:
“Equipment”
means the equipment to be procured by Woessner to fulfill Woessner’s scope of
work as set forth in this Contract.


 


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1.1.7 Final
Acceptance: “Final Acceptance” means compliance with the terms to
meet Final Completion, to the reasonable satisfaction of Owner.


 


1.1.8 Final
Completion: “Final Completion” means that (i) a certificate of
occupancy has been issued as applicable for all buildings within the Work; (ii) all
Work has been completed as required by and incompliance with the Contract and
all of the items on the Punch List signed by both Owner and Woessner have been
corrected and completed to the reasonable satisfaction of Owner, (iii) all
lien waivers, or affidavits, required under the Contract have been delivered, (iv) all
drawings and other documents identified in this Contract or the General
Conditions as documents to be delivered by Woessner to Owner have been
delivered, (v) the Work has been inspected and approved by all applicable
public authorities having jurisdiction over the Work, (vi) all conditions
to Final Completion described in the General Conditions shall have been met,
and (vii) a general release executed by Woessner waiving, upon receipt of
final payment by Woessner, all claims, except those claims previously made in
writing to Owner and remaining unsettled at the time of final payment.


 


1.1.9 General
Conditions: “General Conditions” means the “General Conditions of
the Contract for Construction,” American Institute of Architects Document
A201TM, 1987 Edition, including, and as modified by, the supplementary
conditions described in Exhibit A (Section C-02) to the Knutson
Contract. The General Conditions are attached as Exhibit D to the Knutson
Contract.


 


1.1.10 Woessner’s
Project Manager: “Woessner’s Project Manager” means the individual
designated from time to time by Knutson in writing as having the responsibilities
described at Section 11.1 below.


 


1.1.11 Woessner’s
Site Manager: “Woessner’s Site Manager” means the individual
designated from time to time in writing by Knutson under Section 11.1
below.


 


1.1.12 Materials:
“Materials”
means the materials to be procured by Woessner to fulfill Woessner’s scope of
work as set forth in this Contract.


 


1.1.13 Owner’s
Representative: “Owner’s Representative” means the individual designated
from time to time by Owner in writing as having the responsibilities described at
Section 11.2 below.


 


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1.1.14 Project:
“Project”
means the management, design, construction, and equipping of that portion of
the Plant pursuant to the Work to be completed by Knutson under the Knutson
Contract and by Woessner under this Contract. The general description of the
Plant falling within the Work to be completed by Woessner relates to the
construction of one (1) administration building (referred to as Building 7),
excluding excavation and procurement of rebar, but including installation of
rebar, the technical specifications and requirements of which building and the
Work are set forth in the Project Specifications attached hereto as Exhibit A
and the attachments to this Contract.


 


1.1.15 Project
Specifications/Project Manual: “Project Specifications” or “Project Manual”
means the complete specifications for the Project and the Work as set forth in
the “PROPOSAL FOR PROPOSED ETHANOL FACILITY, FERGUS FALLS TOWNSHIP, MINNESOTA,”
DATED AUGUST, 2006, and addenda thereto issued prior to the Commencement Date,
along with drawings, and specifications, as prepared by Engineer and Architect
for Owner, a copy of which is attached as Exhibit A to the Knutson
Contract.


 


1.1.16 Schedule:
“Schedule”
means the schedule set forth in Exhibit C to the Knutson Contract, as
amended from time to time by mutual agreement of the Parties in accordance with
this Contract.


 


1.1.17 Services:
“Services”
means the services to be provided by Woessner to fulfill Woessner’s scope of
work as set forth in this Contract, including without limitation the services
described in Section 2 below.


 


1.1.18 Subcontractor:
“Subcontractor”
means any person or entity contracted, hired, retained or otherwise engaged by
Woessner as a contractor to perform a portion of the Work and shall include
materialmen and suppliers.


 


1.1.19 Sub-Subcontractor:
“Sub-subcontractor”
means any person or entity contracted, hired, retained or otherwise engaged by
a Subcontractor as a contractor to perform any portion of a Subcontractor’s
Work which shall include materialmen and suppliers.


 


1.1.20 Work:
“Work”
means all of Woessner’s design, engineering, procurement, installation,
construction, and other services required by the Contract or necessary to perform
the scope of Woessner’s Work and the deliverables set forth in the


 


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specifications described in the Project
Specifications and the attachments thereto, and the furnishing of all
materials, equipment, tools, and labor required by the Contract or necessary to
perform the scope of Woessner’s work and deliverables set forth in the
specifications described in the Project Specifications and the attachments
thereto, and that which is reasonably inferable from the Contract or the scope
of Knutson’s work.


 


1.2 Order
of Precedence: In the event of a conflict between the express terms
set forth in this Contract, the Knutson Contract or the General Conditions, the
rule of interpretation shall be that the express terms of this Contract
shall take precedence over the Knutson Contract or the General Condition terms
and conditions where an issue is specifically addressed; provided, that the
Knutson Contract and the General Conditions are intended to provide, among
other things, further specificity to areas not otherwise covered by, or in
conflict with, the express terms of this Contract.


 


1.3 Contract
Documents: This Contract, as supplemented by the Knutson Contract, the Project
Specifications, the General Conditions, and the other exhibits and schedules to
the Knutson Contract (collectively the “Knutson Contract Documents”), which
Knutson Contract Documents are incorporated herein by reference and made a part
hereof as if fully set forth herein, constitute the “Contract Documents” and
shall govern the relationship of the Parties concerning the Project and
performance of the Work, and represent the entire and integrated agreement
between the Parties and supersedes prior negotiations, representations or
agreements, either written or oral.


 


2. Woessner’s Scope of Work


 


2.1 Description
of Work: Woessner shall perform, or cause to be performed, the Work and shall
furnish and perform all construction services, design, engineering, procurement
and other services, and provide all material, equipment, tools, and labor,
necessary to complete the Work and the Project, as described in and reasonably
inferable from this Contract and the Project Specifications.


 


2.2 Permits:
Woessner
shall, at its expense, secure electrical and plumbing permits for the
administration building. All other permits required by applicable law or
regulation, including without limitation, permits related to environmental
protection, to operation of the Plant, or activities of Owner or any of its
contractors, if any, other than Woessner, shall be secured by


 


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Owner or Owner’s other
contractors.


 


2.3 Drawings:
Woessner
shall deliver to Owner, the Engineer and the Architect the construction plans,
specifications and drawings required to perform the Work, as set forth in the
Project Specifications.


 


2.4 License
of Certain Documents and Drawings: Except as provided in the License Agreement
dated October 24, 2006 between Delta-T and Owner (the “License” or “License
Agreement”), Delta-T shall retain ownership of the copyright in, and any and
all inventions and trade secrets embodied in, the documents and drawings
delivered to Owner under this Contract and in all of the Delta-T Technology.


 


2.5 Substitutions:
To
be handled as set forth in the Knutson Contract Documents.


 


2.6 Design
Professional Services. Woessner shall, consistent with applicable state licensing
laws, provide through qualified, licensed engineers, and other design
professionals employed by Woessner or procured from qualified, independent
licensed design professionals who are not employees of Woessner but are
retained by Woessner (the “Design Consultants”), the professional services
required to be delivered by Woessner under the Project Specifications or
necessary to permit Woessner to complete the Work consistent with the Project
Specifications. Woessner shall provide in its contracts with any Subcontractors,
Design Consultants, or other retained consultants that Owner is an intended third
party beneficiary of the services and contracts with the right to enforce them.


 


2.7 Standard
of Care for Services The standard of care for all services, including design
professional services, performed by Woessner, its Subcontractors, its Design
Consultants, or others retained to execute the Work shall be the care and skill
ordinarily used by members of the profession or applicable industry practicing
under similar conditions at the same time and locality of the Plant.
Notwithstanding the preceding sentence, if the parties agree upon specific
performance standards for any aspect of the Work as set forth in the Project
Specifications, the Services shall be performed to achieve such standards.


 


2.8 Design
Development Submissions. To be handled as set forth in the Knutson
Contract Documents.


 


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2.9 Legal
Requirements. Woessner shall perform, or cause to be performed, the
Work with reasonable care, in accordance with all Legal Requirements and
prudent industry practices and shall provide all notices applicable to the Work
as required by all applicable federal, state, and local laws, codes,
ordinances, rules, regulations, orders, and decrees of any government or
quasi-government entity having jurisdiction over the Plant or the Site, the
practices involving the Plant or the Site, or any Work.


 


2.10 Government
Approvals and Permits. To be handled as set forth in the Knutson Contract
Documents.


 


2.11 Woessner’s
Construction Phase Services.


 


2.11.1 Unless otherwise
clearly provided in the Project Specifications to be the responsibility of
Owner or a separate contractor, Woessner shall provide through itself, its
Design Consultants, or Subcontractors the services, supervision, labor,
inspections, material, equipment, machinery, and other facilities necessary to
permit Woessner to complete the Work consistent with the Contract.


 


2.11.2 Woessner shall
perform, or cause to be performed, all Work activities efficiently, with
reasonable care, in a workman like manner, and with the requisite expertise,
skill and competence to satisfy the requirements of the Contract. Woessner
shall at all times exercise complete and exclusive control over the means,
methods, sequences and techniques of the Work. Woessner shall complete the Work
within the times prescribed in the Schedule, or if no time is prescribed,
within the time reasonably required to allow Woessner to perform its
obligations under this Contract.


 


2.11.3 Woessner shall employ
only Subcontractors who are duly licensed and qualified to perform the Work
consistent with the Contract.


 


2.11.4 Woessner assumes
responsibility to Owner for the proper performance of the Work of Subcontractors,
Subsubcontractors, and Design Consultants and any acts and omissions in
connection with such performance.


 


2.11.5 Woessner shall
coordinate the activities of all Subcontractors. If Owner performs other work
on the Plant or at the Site with separate contractors under Owner’s control, Woessner
agrees to reasonably cooperate and coordinate its activities with those of


 


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such separate contractors so
that the Plant can be completed in an orderly and coordinated manner without
unreasonable disruption.


 


2.12 Knutson’s
Construction Management Services: Knutson will provide construction administration
and management services required to perform the Work. Woessner shall with
Knutson’s and Owner’s other consultants and contractors jointly schedule and
regularly attend meetings with Owner. Knutson and Woessner shall consult with
the Owner regarding site use and improvements in the selection of materials,
buildings systems, and equipment. Knutson and Woessner shall provide
recommendations on construction feasibility, actions designed to minimize
adverse effects of labor or material shortages, time requirements for
procurement, installation, and construction completion, and factors related to
construction costs, including estimates of alternative designs and materials,
preliminary budgets, and possible economies. Knutson and Woessner shall
schedule and conduct meetings at which the Owner, Owner’s other consultants and
service providers, and appropriate Subcontractors and Sub-subcontractors can
discuss the status of the Work. Knutson and Woessner shall prepare and promptly
distribute minutes of such meetings. Knutson and Woessner shall provide monthly
written reports to Owner on the progress of the entire Work. Knutson and
Woessner shall maintain a daily log containing a record of weather,
Subcontractors, and Sub-subcontractors working on the Site, the number of
workers, Work accomplished, problems accounted and other similar relevant data
as Owner may reasonably require. The log shall be available to Owner and its
other consultants and service providers. Knutson and Woessner shall develop a
system of cost control for the Work, including regular monitoring of actual
costs for activities in progress and estimates for uncompleted tasks and
proposed changes. Knutson and Woessner shall identify variances between actual
and estimated costs and report variances to the Owner at regular intervals.


 


3. Information, Goods and Services to
Be Provided by Owner


 


3.1 Specific
Goods and Services: To be handled as set forth in the Knutson Contract
Documents. Woessner will cooperate with Owner to provide arrangements
satisfactory to Owner’s lenders to secure first priority mortgage liens over
any claims or liens that Woessner or Subcontractors may claim in the Site or
the Plant.


 


3.2 Other
Goods and Services: To be handled as set forth in the Knutson Contract
Documents, provided that references therein to “Knutson” shall be deemed
references to


 


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Woessner. If Woessner becomes
aware of any error in a document, drawing, specification or other information
supplied by Owner it will promptly notify Owner of the same.


 


4. Interface and Site Conditions


 


4.1 Site
Conditions: Woessner has visited the Site and has had the
opportunity to become familiar with the condition of the Site as it applies to
performance of the Work. If conditions are encountered at the Site which (1) are
unknown physical conditions of an unusual nature, which differ materially from
those ordinarily found to exist and generally recognized as inherent in
construction activities of the character provided for in this Contract, or (2) differ
from conditions shown in any drawing, document or other information, if any,
that Owner is required to deliver to Woessner under Section 3 above, then
notice by the observing Party shall be given to the other Party promptly before
such conditions are further disturbed and in no event later than 14 days after
first observance of the conditions. If any such condition causes any increase
or decrease in Woessner’s cost of, or time required for, performance of any
part of the Work, or any increase or decrease in any other obligation of Woessner,
Owner shall within 14 days of issuance or receipt of notice, as the case may
be, under this Section 4.1, issue a change order in accordance with Section 6
below, covering only such costs incurred and time lost for properly documented
cost and time.


 


4.2 Cooperation
with Others: Woessner will cooperate with Owner’s other contractors,
if any, to facilitate coordination of the Work with the work of others.
Woessner shall not be required to check the quality or quantity of work
performed by Owner or Owner’s contractors or subcontractors, except as may be
required under the Project Specifications. Woessner shall not have control over
or responsibility for the construction, methods, techniques, sequences or
procedures or for safety precautions and programs used by Owner or Owner’s
contractors or subcontractors in connection with the Owner’s work or work of
others and shall have no liability thereon.


 


5. Schedule


 


5.1
Schedule: The Schedule and the dates for performance set forth in this Section 5.1
(the “Contract Times”) shall form the basis of the time frame for the Work to
be completed. The Work shall commence immediately. Woessner agrees that it will
commence


 


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performance of the Work and
achieve the Contract Times in accordance with this Article 5. During
construction, Knutson and Woessner shall revise the progress schedule as
necessary to conform to the current status of the Work, distributing copies to
the Owner.


 


5.1.1 Substantial
Completion and Final Completion: Substantial Completion of the Work shall be
achieved expeditiously as reasonably practicable, but in no event, later than May 15,
2007. Completion of the portions of the Work shall be achieved according to the
completion dates for portions of the Work as set forth in the Schedule and in
order to receive subsequent work of other separate contractors. Final
Completion of the Work shall be achieved as expeditiously as reasonably
practicable, but in no event, will Final Completion of the Work be completed
later than June 1, 2007.


 


5.1.2 Time
is of  the Essence: Owner
and Woessner mutually agree that time is of the essence with regard to
completion of the Work, both substantial and final completion.


 


5.1.3 Delays
to Work: To be handled as set forth in the Knutson Contract Documents, provided
that references therein to “Knutson” shall be deemed references to Woessner.


 


5.2 Compensation
to Woessner for Delay: To be handled as set forth in the Knutson Contract
Documents, provided that references therein to “Knutson” shall be deemed
references to Woessner.


 


5.3 Plant
Substantial Completion Delay Liquidated Damages. Woessner understands
that if Plant Substantial Completion Substantial Completion is not attained by
the earlier of April 1, 2008 or the date that is thirty (30) days from the
date Mechanical Completion (as defined in Owner’s Agreement with Harris
Mechanical) is attained (the first date to occur being the “Scheduled
Substantial Completion Date”), Owner will suffer damages which are difficult to
specify accurately and ascertain. Woessner agrees that if Plant Substantial
Completion is not attained by the Scheduled Plant Substantial Completion Date,
due to the acts or omissions of Woessner, Subcontractors, Sub-subcontractors,
Design Consultants, and other persons for whom Woessner is responsible,
Woessner shall pay to Owner a  sum equal to $3,000.00 per day for
each day that Plant Substantial Completion is attained after the Schedule
Substantial Completion Date.


 


5.4 Substantial
Completion Delay Liquidated Damages. Woessner understands that if Substantial
Completion of the Work is not attained by May 15, 2007 Owner will suffer
damages which are difficult to specify accurately and ascertain. Woessner
agrees that if


 


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Substantial Completion of the
Work is not attained by May 15, 2007, Woessner shall pay to Owner a sum
equal to $3,000.00 per day for each day that Substantial Completion of the Work
is attained after May 15, 2007.


 


6. Change Orders


 


To be handled
as set forth in the Knutson Contract Documents, provided that references
therein to “Knutson” shall be deemed references to Woessner.


 


7. Substantial Completion and
Final Acceptance


 


To be handled as set forth in the Knutson Contract
Documents, provided that references therein to “Knutson” shall be deemed
references to Woessner.


 


8. Payment


 


8.1 Contract
Sum; Adjustments to Contract Sum: Owner will pay Woessner for the full and
satisfactory completion of the Work, the Contract Sum of Five Hundred Thirteen
Thousand Two Hundred Fifty-six and No/100 Dollars ($513,256.00), or such other
sum as may be determined in accordance with Section 6 or Section 5.
The Contract Sum is a guaranteed maximum price, subject to adjust as set forth
in this Section 8.1 or otherwise as provided in this Contract. The
Contract Sum does not include any sales or other tax. If Woessner is, now or in
the future, required to collect from Owner or pay any federal, state, local or
other tax with respect to all or any part of the Work, then that amount shall
be paid by Owner at Woessner’s request, in addition to the Contract sum.


 


The Parties shall proceed
under this Contract in an “open book” manner, meaning that Woessner shall
provide Owner with full and complete access and disclosure to its costs of the
Work in order for Owner and Woessner to implement and adjustments to the
Contract Sum.


 


Costs of the Work that would
cause the Contract Sum to be exceeded shall be paid by Woessner without
reimbursement by Owner. Cost savings which would cause the cost of the Work to
be less than the Contract Sum shall be split equally between Woessner and Owner
on a 50/50 basis.


 


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8.2 Payment
Terms; Retainage: To be handled as set forth in the Knutson Contract
Documents, including 5% retainage, provided that references therein to “Knutson”
shall be deemed references to Woessner.


 


8.3 Late
Payment: To be handled as set forth in the Knutson Contract Documents, provided
that references therein to “Knutson” shall be deemed references to Woessner.


 


8.4 Mechanic’s
Lien Waivers and Indemnity: To be handled as set forth in the Knutson
Contract Documents, provided that references therein to “Knutson” shall be
deemed references to Woessner.


 


8.5 Mechanic’s
Liens: To be handled as set forth in the Knutson Contract Documents, provided
that references therein to “Knutson” shall be deemed references to Woessner.


 


8.6 Final Payment: To be handled as set
forth in the Knutson Contract Documents, provided that references therein to “Knutson”
shall be deemed references to Woessner.


 


9. Stop Work
and Termination for Cause.


 


To be handled as set forth in the Knutson Contract
Documents, provided that references therein to “Knutson” shall be deemed
references to Woessner.


 


10. Safety and Security


 


To be handled as set forth in the Knutson Contract
Documents, provided that references therein to “Knutson” shall be deemed
references to Woessner.


 


11. Project
Execution


 


To be handled as set forth in the Knutson Contract
Documents, provided that references therein to “Knutson” shall be deemed
references to Woessner. Woessner agrees to cooperate at all times as reasonably
requested by Owner and any lender or assignee of Owner and their respective
agents and representatives in performance of this Contract. Woessner shall sign
any document reasonably required by Owner in order to satisfy all lenders or
investors providing sources of funds for construction of the Plant. Owner may
assign its interest to one or more lenders or financial institutions or
investors, providing sources of funds for construction of the Plant, at any
time, provided that the party taking the assignment can supply payment
assurances acceptable to Woessner.


 


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12. Warranty


 


12.1 Equipment
Warranties: Woessner warrants to Owner that the Work, including all
materials and equipment furnished as part of the Work, will be completed in
compliance with the Project Specifications, shall be new (unless otherwise
specified in the Project Specifications), of good quality, in conformance with
the Contract, fit for their intended purpose, and free of defects in materials
and workmanship. Woessner’s warranty obligation excludes defects caused by
abuse, alterations, or failure to maintain Work by persons other than Woessner
or anyone for whose acts Woessner may be liable. Woessner shall, for the
protection of Owner, assign to Owner all warranties and guarantees supplied by
all vendors and subcontractors from who it procured goods or services incorporated
into the Project. In addition, Woessner warrants to Owner that the Equipment
will be free from mechanical defects, structural defects and defects in
material and workmanship. Nothing in this warranty is intended to limit any
manufacturer’s warranty which provides Owner with greater warranty rights than
set forth in this Section 12.1 or the Contract.


 


12.2 Services:
Woessner
warrants that the services provided in connection with the Work will be
provided with reasonable skill and care of the type normally exercised by other
providers of such services under similar circumstances. Woessner shall not have
any obligation or liability for failures or defects due to ordinary wear and
tear, corrosion or erosion, or as a result of improper operation, improper
maintenance or operating conditions more severe than, or different from, those
contemplated in the original design of the Work.


 


12.3 Notice
of Warranty Claim: To be handled as set forth in the Knutson Contract
Documents, provided that references therein to “Knutson” shall be deemed
references to Woessner.


 


12.4 Correction
of Defective Work:


 


To be handled as set forth in the Knutson Contract
Documents, provided that references therein to “Knutson” shall be deemed
references to Woessner.


 


13. Transfer of Title and Risk
of Loss


 


Title to, and risk of loss of, the Work or any part
thereof and all materials and components used, or to be used in the Plant,
shall pass to Owner upon acceptance of Substantial Completion. This provision,
however, shall in no case be deemed to alter any of the rights or obligations
of


 


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any party under any insurance policy provided under
this Contract, or any waiver of subrogation set forth in Section 14 below.


 


14. Insurance; Bonds


 


To be handled as set forth in the Knutson Contract
Documents (except as set forth in this Section 14 otherwise), provided
that references therein to “Knutson” shall be deemed references to Woessner.


 


14.1
Performance Bond and Payment Bond: Woessner shall provide the following performance
bond and labor and material payment bond or other performance security: A
Performance Bond and Labor and Material Payment Bond as procured by Knutson in
the amount of the Contract Sum.


 


14.1.1 At their sole cost and
expense, Woessner and Knutson shall furnish a Performance Bond and Labor and
Material Payment Bond on standard AIA forms, complying with the following
specific requirements:


 


14.1.1.1 Bond shall be executed
by a surety, licensed in the State of Minnesota, with a rating of no less than
A/XII in the Best s Insurance Guide, and
shall remain in effect for a period of not less than one (1) years
following the date of Substantial Completion or the time required to resolve
any items of incomplete Work and the payment of any disputed amounts, whichever
time period is longer.


 


14.1.1.2 The Performance Bond
and the Labor and Material Payment Bond shall each be in amount equal to the
Woessner Contract Sum and the Knutson Contract Sum and all subsequent
increases.


 


14.1.1.3 Woessner and Knutson
shall require the attorney in fact who executes the required bonds on behalf of
the Surety to affix thereto a certified and current copy of his power of
attorney indicating the monetary limit of such power.


 


14.1.1.4 Every Bond must display
the surety’s bond number. A rider including the following provisions shall be
attached to each bond: (i) The Surety hereby agrees that it consents to
and waives notice of any addition, alteration, omission, change, or other
modifications of the Contract. Any addition, alteration, change, extension of
time, or other modification of the Contract, or a forbearance on the part of
either Owner or Knutson/Woessner to the other, shall not release the Surety of
its


 


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obligations hereunder, and
notice to the Surety of such matters is hereby waived; and (ii) The Surety
agrees that it is obligated under the bonds to any successor, grantee, or
assignee of Owner.


 


14.1.2 Upon the request of
any person or entity appearing to be a potential beneficiary of bonds covering
payment of obligations arising under the Agreement, Woessner shall promptly
furnish a copy of the bonds or shall permit a copy to be made.


 


14.1.3 Knutson and Woessner
shall keep the surety informed of the progress of the Work and, where
necessary, obtain the surety s consent to, or waiver of, (i) notice of
changes in the Work; (ii) request for reduction or release of retention; (iii) request
for final payment; and (iv) any other item required by the surety. Owner
shall be notified by Woessner, in writing, of all communications with the
surety. Owner may, in Owner s sole discretion, inform the surety of the
progress of the Work and obtain consents as necessary to protect Owner’s
rights, interests, privileges, and benefits under and pursuant to any bond
issued in connection with the Work.


 


15. Indemnity (Section 3.18.1
of the General Conditions is superseded by Section 15.1 below)


 


15.1
Indemnity by Woessner for Personal Injury and Property Damage: Woessner shall
indemnify and hold harmless Owner and its agents and employees from and against
all claims made by a third party for any, damages, losses and expenses,
including, but not limited to attorney’s fees, arising out of or resulting from
Woessner’s conduct, performance of the Work, or failure to perform the Work,
provided that any such damage, loss or expense is attributable to bodily
injury, sickness, disease or death, or to injury to or destruction of tangible
property (other than the Plant, Equipment or the Work itself) including loss of
use, and is caused in whole or in part by any act or omission of Woessner,
Subcontractors, Subsubcontracts, Design Consultants, or anyone for whose acts
any of them may be liable. In the event that any such damage, loss or expense
was caused in part by Owner or by any other person or entity, however, then
Woessner shall be obliged to pay only the portion of the damage, loss or
expense, including reasonable attorney’s fees as is attributable to its
relative share of the negligence or omission which caused such damage, loss or
expense.


 


Woessner’s indemnity
obligations set forth in this Section 15.1 shall not be limited by any
limitation in the amount of damages, compensation, or benefits payable by or
for Woessner, its design consultants, Subcontractors or other entity under any
employee


 


15

















 


benefit acts, including
Worker’s Compensation and disability acts in instances where an employee of any
of them, or anyone for whose acts may be liable, has a claim against Owner, its
lenders, officers, directors, employees, or agents.


 


15.2 To the fullest extent
permitted by law and without limiting any other indemnification obligations of
Woessner, Woessner shall indemnify and defend Owner, its officers, directors,
assigns, lenders, agents, and employees from any claims, liens, charges
(including attorneys fees) or encumbrances (including but not limited to
mechanic’s and materialmen’s liens or bond claims) arising out of or in
connection with the performance of the Work except to the extent caused by the
uncured failure of Owner to make payment when required by the Contract or Owner’s
misconduct or breach of contract. Owner shall be entitled to recover from
Woessner all costs and expenses incurred in enforcing this provision, including
attorneys fees. In the event that any such damage, loss or expense was caused
in part by Owner or by any other person or entity, however, then Woessner shall
be obliged to pay only the portion of the damage, loss or expense, including
reasonable attorney’s fees as is attributable to its relative share of the
negligence or omission which caused such damage, loss or expense.


 


Upon request of Owner
(provided that Woessner does not have an uncured breach), Woessner shall within
60 days remove any liens filed against Owner or its property. If Mechanical
fails to do so, Owner is authorized by Woessner to remove or satisfy any such
liens, and Woessner shall pay to Owner all costs and damages incurred by Owner
to do so, including attorneys fees.


 


Notwithstanding anything in
this Contract to the contrary, but without limiting Woessner’s indemnification
and other obligations to Owner as stated in this Contract, Woessner shall have
the right to contest and dispute any lien which Woessner believes, in good
faith, is unjustified or overstated, provided that Woessner contests the same
or the validity thereof by appropriate and expeditious legal proceedings which
operate to prevent the imposition or foreclosure of the lien so contested,
provided that Woessner, prior to the date of any such contest, has given such
security as may be required by law, including the provision for removing a
contested lien as set forth in Minn. Stat. § 514.10 to remove a contested lien
from the Owner’s property and to permit Woessner to contest the lien claim.
Woessner shall give prompt notice to Owner of any such contests. Any such
contests shall be prosecuted with due diligence and Woessner must, promptly
after final determination thereof, comply with and pay the result determined,
together with all interest and penalties, if any, which may


 


16

















 


be payable therewith and
further will indemnify and hold harmless the Owner against all losses in
connection therewith.


 


15.3
Conditions to Indemnity: To be handled as set forth in the Knutson
Contract Documents, provided that references therein to “Knutson” shall be
deemed references to Woessner.


 


16. Dispute Resolution


 


To be handled as set forth in the Knutson Contract
Documents, provided that references therein to “Knutson” shall be deemed
references to Woessner.


 


17. Force Majeure


 


To be handled as set forth in the Knutson Contract
Documents


 


18. General Provisions


 


18.1 Assignment:
Neither
Woessner nor Owner shall assign or transfer its duties or obligations hereunder
without the prior written consent of the other. Woessner hereby consents to
Owner collaterally assigning this Contract and its rights hereunder to one or more
lenders or other sources of financing as necessary for Owner to obtain and
secure financing to construct and operate the Plant. This Contract shall be
binding upon and shall inure to the benefit of the Parties and the successors
and permitted assigns of Owner and Woessner.


 


18.2 Entire
Contract; Waiver; Amendment: To be handled as set forth in the Knutson
Contract Documents,.


 


18.3 Governing
Law; Juridiction; Venue: To be handled as set forth in the Knutson
Contract Documents.


 


18.4 Notices:
All
notices provided for herein will be considered as properly given if in writing
and delivered personally or, by fax or sent properly addressed, postage
pre-paid:


 


	
  If to Woessner, to:

  	
   

  	
  Woessner Construction, Inc.

  216 East Junius

  Fergus Falls, MN 56537

  Attn: Darold Woessner 

  
	
   

  	
   

  



 


17

















 


	
  If to Owner, to:

  	
   

  	
  Otter Tail Ag Enterprises, LLC

  1220 North Tower Road, Suite 201

  Fergus Falls, MN 56537

  Attn: Jerry Larson, President

  
	
   

  	
   

  



 


Notices shall be deemed
effective upon actual receipt, or in the case of posting in the U. S. mail, on
the fourth Day after mailing.


 


18.5 Survival:
All
warranties and representations of the parties, and those provisions of this
Contract necessary to implement such, shall survive termination of this
Contract.


 


18.6 Third
Parties: To be handled as set forth in the Knutson Contract Documents.


 


18.7 Equal
Bargain and Representation: To be handled as set forth in the Knutson
Contract Documents.


 


18.8 Time Bar to Legal
Action: To be handled as set forth in the Knutson Contract Documents, provided
that references therein to “Knutson” shall be deemed references to Woessner.


 


18

















 


[SIGNATURE
PAGE TO OTTER TAIL AG ENTERPRISES, LLC CONSTRUCTION


SERVICES CONTRACT]


 


IN WITNESS WHEREOF, the parties hereto have
executed this Contract effective on the 9th day of January, 2007.


 


 


	
   

  	
  Owner:

  
	
   

  	
   

  
	
   

  	
  OTTER TAIL AG ENTERPRISES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jerry Larson

  	
   

  
	
   

  	
  Jerry Larson

  
	
   

  	
  Its President

  



 


19

















 


[SIGNATURE
PAGE TO OTTER TAIL AG ENTERPRISES, LLC CONSTRUCTION


SERVICES CONTRACT]


 


IN WITNESS WHEREOF, the parties hereto have
executed this Contract effective on the 9th day of January, 2007.


 


 


	
   

  	
  WOESSNER CONSTRUCTION SERVICES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Darold Woessner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
  President

  	
   

  
					



 


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