Exhibit
10.14


 


ENGINEERING,
PROCUREMENT AND CONSTRUCTION


 


SERVICES


 


FIXED PRICE CONTRACT


 


 


BETWEEN


 


 


GATEWAY BUILDING SYSTEMS


 


 


AND


 


 


OTTER TAIL AG ENTERPRISES, LLC


 


DATED: NOVEMBER 13, 2006


 

















 


EPC
Contract


Otter Tail Ag
Enterprises, LLC


 


INDEX


 


	
  SECTION

  	
   

  	
  PAGE

  NUMBER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  GATEWAY’S
  SCOPE OF WORK

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  INFORMATION, GOODS AND SERVICES TO BE PROVIDED BY OWNER

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  INTERFACE
  AND SITE CONDITIONS

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  SCHEDULE

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  CHANGE
  ORDERS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  SUBSTANTIAL
  COMPLETION AND FINAL ACCEPTANCE

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  PAYMENT

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  STOP
  WORK AND TERMINATION FOR CAUSE

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  SAFETY
  AND SECURITY

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  PROJECT
  EXECUTION

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  WARRANTY

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  TRANSFER
  OF TITLE AND RISK OF LOSS

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  INSURANCE;
  BONDS

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  INDEMNITY

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  DISPUTE
  RESOLUTION

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  FORCE
  MAJEURE

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  GENERAL
  PROVISIONS

  	
   

  	
  39

  



 


 


	
  List of Exhibits

  
	
  A. Gateway Scope of Services and Technical
  Specifications

  
	
  B. Commercial Terms

  
	
  C. Project Schedule

  



 


i

















 


Engineering
Procurement and Construction Services Fixed Price Contract


 


GENERAL
CONDITIONS


 


THIS “CONTRACT”, IS made this 13th day of
November, 2006, 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 Gateway
Building Systems, a corporation organized and acting under and pursuant to the
laws of the State of North Dakota and having its main place of business at 3451
South University Drive, Fargo, ND 58104 (hereinafter called “Gateway”). Owner
and Gateway may sometimes be referred to herein individually as a “Party” or
jointly as the “Parties.”


 


WITNESSETH:


 


WHEREAS, Gateway is engaged in the
performance of design, engineering, procurement and construction services, with
experience in design, engineering procurement and construction of grain
handling and milling systems; and


 


WHEREAS, Owner desires Gateway 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;


 


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:


 


1.1.1 Contract: “Contract” means
this Contract, the attached Exhibits A through C, any attached schedules to
this Contract or the Exhibits, and all additions or modifications thereto made
in accordance with Section 18.2 below.


 


1.1.2 Contract
Sum/Contract Price: “Contract Sum” or “Contract Price” means the fixed
price for which the Work will be completed as 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

















 


1.1.3 Day:
“Day” means calendar
day.


 


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 Gateway, Gateway or Owner on connection with
construction of the Plant.


 


1.1.6 Design
Consultants: “Design
Consultants” shall mean as defined in Section 2.6 below.


 


1.1.7 Effective
Date: “Effective Date”
means November 13, 2006, the date of this Contract.


 


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


 


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


 


1.1.10 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, has been approved by Owner
and its representatives, and all of the items on the Punch List signed by both Owner
and Gateway 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 as documents to be delivered by Gateway to Owner have been
delivered, (v) the Work has been inspected and approved by all applicable
public authorities having jurisdiction over the Work, (vi) a general
release executed by Gateway waiving, upon receipt of final payment


 


2

















 


by Gateway, all claims, except those claims
previously made in writing to Owner and remaining unsettled at the time of
final payment.


 


1.1.11 Gateway:
“Gateway” means
Gateway Contracting Company, a corporation organized and acting under and
pursuant to the laws of the state of North Dakota and having its main place of
business at 3451 South University Drive, Fargo, ND 58104.


 


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


 


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


 


1.1.14 Legal
Requirements: “Legal
Requirements” means 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 involved in the Plant or the Site, or any Work.


 


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


 


1.1.16 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.


 


1.1.17 Plant:
“Plant” means the
name-plate 55 MGPY undenatured ethanol plant to be constructed for Owner near
the city of Fergus Falls, state of Minnesota, in connection with which the Work
under this Contract will be completed.


 


1.1.18 Plant
Substantial Completion: “Plant
Substantial Completion” means the date on which the Plant has successfully
completed performance testing and performs, with permanent equipment, at 90% of
the Plant’s performance guarantees.


 


1.1.19 Project:
“Project” means the
management, design, construction, and equipping of that portion of the Plant
pursuant to the Work to be completed by Gateway under this Contract. The
general description of the portion of the Plant falling within the Work to be
completed by Gateway under this Contract relates to the construction of the
Plant’s grain


 


3

















 


handling and
milling facilities including, without limitation, scales, receiving/load out
buildings, grain receiving and storage system, ground corn and milling system,
and dry DDG handling system, as further described in Exhibit A.


 


1.1.20 Project
Specifications: “Project Specifications” means the specifications
for the Project and the Work as set forth in the attached Exhibit A.


 


1.1.21 Punch
List: “Punch List” means a list of all portions of the Work, if any, which are
incomplete or do not conform to the Contract.


 


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


 


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


 


1.1.24 Site: “Site” means the
land upon which the Plant is to be constructed and located.


 


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


 


1.1.26 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.


 


1.1.27 Substantial
Completion of the Project: “Substantial Completion of the Project”
means the date certified by the Owner or Owner’s representative when
construction of the Project, or a designation portion thereof, is sufficiently
complete, in accordance with the Contract (except for minor adjustments,
cleaning, and repairs), so that the Owner can occupy or utilize the Project, or
a designated portion thereof, for the use for which it is intended.


 


1.1.28 Substantial
Completion of the Work: “Substantial Completion of the Work” means the date
certified by the Owner or Owner’s representative when there has been a


 


4

















 


substantial completion of the entire Work, or
a designation portion thereof, and is suitable to receive subsequent work of
other separate contractors, as applicable, and is acceptable under the
Contract, except for minor adjustments, cleaning, and repairs.


 


1.1.29 Work:
“Work” means all of
Gateway’s design, engineering, procurement, installation, construction, and
other services required by this Contract or necessary to perform the scope of
Gateway’s work and deliverables, and the furnishing of all materials,
equipment, tools, and labor required by the Contract or necessary to perform
the scope of Gateway’s work and deliverables set forth in this Contract, and
that which is reasonably inferable from the Contract or the scope of Gateway’s
work.


 


1.2                  Contract Documents: This Contract shall govern the relationship
of the parties concerning the Project and performance of the Work, and
represents the entire and integrated agreement between the Parties and
supersedes prior negotiations, representations or agreements, either written or
oral.


 


2.    Gateway’s Scope of Work


 


2.1 Description of Work: Gateway 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 in compliance with
the Delta T specifications as set forth in Exhibit A, except as modified
by the parties in writing.


 


2.2 Permits: Gateway shall, at its expense, secure all
permits necessary (if any) for the Work to be performed, except for the
environmental permits and the Fergus Falls Town Building and Special Use
permits which have been procured by Owner. 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 Gateway, shall be secured by Owner
or Owner’s other contractors.


 


5

















 


2.3 Drawings:
Gateway shall deliver
to Owner all construction plans, specifications and drawings required to
perform the Work, including ready for construction design drawings for the
structures, buildings, and other improvements included within the Work.


 


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:
Where a product is
mentioned by the name of a manufacturer or vendor in the Project
Specifications, Gateway will identify to Owner the names of any products to be
used in lieu of the ones named in the documents prior to awarding a purchase
order. Owner shall have the right to reject any substituted product, unless
such product is critical to the successful completion of the Work, the
specified item is no longer manufactured, is unavailable as a result of an act
of government such as declaration of national emergency, or delivery of the
specified item is substantially delayed as a result of labor disputes affecting
the manufacturer, or any other cause beyond control of Gateway, its
Subcontractors, or other persons within its control which Owner will reasonably
determine justifies the delay. Request for substitution will not be approved
where the delay in delivery results from failure to promptly place Subcontracts
or materials and equipment orders. Requests for substitution shall be submitted
in writing to the Owner and shall clearly describe the proposed substitution,
state the reason for the unavailability of the specified item, and to be
accompanied by such additional data and information as may be reasonably
necessary to establish the acceptability of the proposed substitution.


 


2.6 Design
Professional Services. Gateway
shall, consistent with applicable state licensing laws, provide through
qualified, licensed engineers, and other design professionals employed by
Gateway or procured from qualified, independent licensed design professionals
who are not employees of Gateway but are retained by Gateway (the “Design Consultants”),
the professional services required to be delivered by Gateway under the Project
Specifications or necessary to permit Gateway to complete the Work consistent
with the Contract and the Project Specifications. Gateway 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.


 


6

















 


2.7 Standard
of Care for Services The standard of care for all services, including
design professional services, performed by Gateway, 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.
Gateway shall supervise and direct the Work, using Gateway’s best skill and
attention. Gateway shall be solely responsible for and have control over
construction means, methods, techniques, sequences, and procedures, and for
coordinating all the portions of the Work pursuant to the terms and conditions
of this Contract, unless this Contract gives other specific instructions
concerning such matters. Contractor shall be responsible to Owner for acts
and/or omissions of the Contractor’s employees, Subcontractors,
Sub-subcontractors, and their agents and employees, and other persons
performing portions of the Work under a contract or other arrangements with
Gateway.


 


2.8 Design
Development Submissions. Gateway shall submit to Owner construction plans
and specifications for construction and completion of the Work. Neither Owner’s
review nor approval of any design submissions or construction documents shall
be deemed to transfer any design liability from Gateway to Owner.


 


2.9 Legal
Requirements. Gateway 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. Gateway shall provide reasonable assistance to
Owner in obtaining those permits, approvals, and licenses that are Owner’s
responsibility.


 


7

















 


2.11 Gateway’s
Construction Phase Services.


 


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


 


2.11.2 Gateway 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. Gateway shall at all times exercise complete
and exclusive control over the means, methods, sequences and techniques of the
Work. Gateway shall complete the Work within the times prescribed in the
Schedule, or if no time is prescribed, within the time reasonably required to
allow Gateway to perform its obligations under this Contract.


 


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


 


2.11.4 Gateway 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 Gateway 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, Gateway agrees to reasonably
cooperate and coordinate its activities with those of such separate contractors
so that the Plant can be completed in an orderly and coordinated manner without
unreasonable disruption.


 


2.12 Gateway’s Reporting Services: Gateway will provide construction administration
and management services required to perform the Work. Gateway shall meet with
Owner’s consultants and other
contractors jointly schedule and regularly attend meetings with Owner. Gateway shall consult with the Owner
regarding site use and improvements in the selection of materials,  buildings
systems,  and equipment. Gateway
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 for the Work.  Gateway shall schedule and conduct meetings
at which the Owner, Owner’s other


 


8

















 


consultants and service providers, and
appropriate Subcontractors and Sub-subcontractors can discuss the status of the
Work. Gateway shall prepare and promptly distribute minutes of such meetings.
Gateway shall provide monthly written reports to Owner on the progress of the
entire Work.


 


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


 


3.1 Specific Goods and
Services: Owner or
other contractors shall provide the following prior to commencement of any Work
by Gateway: (a) a Plant site suitable for construction of the Work, (b) suitable
access to the Plant site, (c) access to site utilities necessary for
Gateway’s performance of the Work; (d) all permits and licenses necessary
for construction and operation of the Plant other than those to be provided by
Gateway, (e) survey, (f) electrical work necessary to complete the
Work, and (g) evidence reasonably satisfactory to Gateway that it has
secured financing sufficient to permit Owner to pay all its financial
obligations in connection with building of the Plant, including payment of all
amounts due to Gateway. Gateway will cooperate with Owner to provide
arrangements satisfactory to Owner’s lenders to secure first priority mortgage
liens over any claims or liens that Gateway or Subcontractors may claim in the
Site or the Plant.


 


3.2 Other Goods and
Services: Owner shall
also furnish to Gateway, at Owner’s expense, all documents, drawings,
specifications, information and services showing all existing structures,
foundations and undergrounds in or adjacent to the Plant site that may be
relevant to performance of the Work, if any; coordinates, bench marks and base
lines for the land area and locations where all associated items of equipment,
if any, are to be installed; the existence and location of subsurface
obstructions and conditions; soil data and specific criteria for foundation
design relevant to the Work; adequate arrangement drawings, utility
requirements and process connections of all those existing items of machinery
and equipment of existing facilities, if any, with which the Work must
interconnect or accommodate, sufficient for Gateway’s performance of the Work;
and the specific emission, effluent and environmental criteria and requirements
for the Work; and all other documents, drawings, specifications, information
and services, if any, identified as within the Owner’s Scope of Services
described in the Project Specifications. Gateway shall be entitled to rely upon
such data and design criteria in the performance of the Work. Owner shall
provide all such items within the times prescribed in the Schedule, or if no
time is prescribed, within the time reasonably required to allow Gateway to
perform its obligations under this contract.


 


9

















 


Furthermore, Gateway shall have the right to
receive from Owner reasonable written assurance, and evidence reasonably
acceptable to Gateway, that Owner is not aware of any physical, financial or
legal matters that would prevent Owner from fulfilling its obligations
hereunder or impede performance of the Parties obligations under this Contract
in accordance with the Schedule. If Gateway becomes aware of any error in a
document, drawing, specification or other information supplied by Owner it will
promptly notify Owner of the same. Gateway shall, however, have no liability of
any kind with respect to any error of which it is not actually aware. In
addition, Owner shall be fully responsible for providing all goods and
services, if any, that become necessary as a result of the discovery of
hazardous materials or materials with archeological significance, provided that
Gateway shall be responsible for any hazardous materials or hazardous
substances released on the Site by Gateway or its Subcontractors.


 


4.    Interface and Site Conditions


 


4.1 Site Conditions: Gateway 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 Gateway 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 Gateway’s cost of, or time required for, performance of any part
of the Work, or any increase or decrease in any other obligation of Gateway,
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: Gateway will cooperate with Owner’s other
contractors, if any, to facilitate coordination of the Work with the work of
others. Gateway shall not have control over or responsibility for the
construction, methods, techniques, sequences or


 


10

















 


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 therein (the “Contract
Times”) shall form the basis of the time frame for the Work to be completed.
Owner shall give to Gateway a notice to proceed with the work not later than November 17,
2006. The Work shall commence within five (5) days of Gateway’s receipt of
a Notice to Proceed from Owner. Gateway agrees that it will commence
performance of the Work and achieve the Contract Times in accordance with the
Schedule and this Article 5. During construction, Gateway 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: So long as Gateway receives a Notice to
Proceed not later than November 20, 2006, Substantial Completion of the
Project shall be achieved expeditiously as reasonably practicable, but in no
event, later than November 1, 2007. Substantial 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 Project shall be
achieved as expeditiously as reasonably practicable, but in no event, will
Final Completion of the Work be completed later than December 1, 2007.


 


5.1.2 Time
is of the Essence: Owner and Gateway 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: If Gateway is delayed in the performance of the Work due to force
majeure and due to no fault or failure to perform or not perform of its own,
its Design Consultants, Subcontractors, or others of those for whom Gateway is responsible,
the Contract Time(s) for performance shall be reasonably extended by Change
Order. By way of example, events that will entitle Gateway to an extension of the
Contract Time(s) include acts or omissions of Owner or anyone under Owner’s
control (including separate contractors), changes in the Work, Differing Site
Conditions,


 


11

















 


Hazardous Conditions, wars, floods, labor
disputes not directed at Gateway or its Subcontractors or Sub-subcontractors,
epidemics abroad, earthquakes, adverse weather conditions not reasonably
anticipated, and other acts of God.


 


5.2 Compensation to Gateway for
Delay: In the event
any delay in the Work of Gateway caused by Owner, its employees, its contractor’s
or vendors for reasons other than force majeure or events beyond the control of
Owner or such others, exceeds, individually or in the aggregate, thirty (30)
days, Gateway shall be entitled to an appropriate adjustment of the Contract
Sum for its direct incurred costs for delays as substantiated by written
documentation.


 


5.3 Plant Substantial Completion
Delay Liquidated Damages. Gateway understands that if Plant Substantial Completion 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 Gateway) 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. Gateway agrees that if Plant Substantial
Completion is not attained by the Scheduled Plant Substantial Completion Date,
due to the acts or omissions of Gateway, Subcontractors, Sub-subcontractors,
Design Consultants, and other persons for whom Gateway is responsible, Gateway
shall pay to Owner a sum equal to $5,000.00 per day for each day that Plant
Substantial Completion is attained after the Schedule Substantial Completion
Date.


 


5.4 Substantial Completion Delay
Liquidated Damages.
Gateway understands that if Substantial Completion of the Work is not attained
by November 1, 2007, or if any portion of the Work which must be completed
in order for Owner’s other contractors to perform their work is not achieved by
the completion dates set forth in the Schedule, Owner will suffer damages which
are difficult to specify accurately and ascertain. Gateway agrees that if
Substantial Completion of the Work is not attained by November 1, 2007, or
if Gateway fails to meet any deadlines for completion of a portion of the Work
necessary for Owner’s other contractors to complete their work by the time
frame set forth in the Schedule, Gateway shall pay to Owner a sum equal to
$5,000.00 per day for each day that Substantial Completion of the Work is not
attained after November 1, 2007, or per day for each day that a portion of
the Work is not completed within the Schedule.


 


12

















 


6.    Change Orders


 


6.1.1  A
Change Order is a written instrument issued after execution of the Agreement signed
by Owner and Gateway, stating their agreement upon all of the following: (1) The
scope of the change in the Work; (2) the amount of the adjustment to the
Contract Price (If the Change Order is silent as to the amount of the
adjustment to the Contract Price, then the Contract Price shall be deemed to be
unchanged by the Change Order.); and (3) the extent of the adjustment to
the Contract Time(s). If the Change Order is silent as to the adjustments to
the Contract Time(s), then the Contract Time(s) shall be deemed to be
unchanged by the Change Order.


 


6.1.2  All
changes in the Work authorized by applicable Change Order shall be performed
under the applicable conditions of the Contract. Owner and Gateway shall
negotiate in good faith and as expeditiously as possible the appropriate
adjustments for such changes.


 


6.1.3  If
Owner requests a proposal for a change in the Work from Gateway and
subsequently elects not to proceed with the change, a Change Order shall be
issued to reimburse Gateway for reasonable costs incurred for estimating
services, design services and services involved in the preparation of proposed
revisions to the Contract, but not to exceed $1,000.00 per request, or
$5,000.00 in the aggregate, unless authorized by Owner in writing to exceed
this limit.


 


6.1.4  Owner shall not be required to agree to
any Change Order which results in an extension of the Schedule.


 


6.2  Work Change
Directives


 


6.2.1  Owner has the right to order changes
in the Work at any time within the general scope of the Contract. A Work Change
Directive is a written order prepared and signed by Owner, directing a change
in the Work prior to agreement on an adjustment in the Contract Price and/or
the Contract Time(s).


 


6.2.2  Owner
and Gateway shall negotiate in good faith and as expeditiously as possible the
appropriate adjustments for the Work Change Directive. Upon reaching an
agreement, the parties shall prepare and execute an appropriate Change Order
reflecting the terms of the agreement.


 


13

















 


6.2.3  If the amount of the cost of the change order
in dispute exceeds 5% of the Contract Sum, then Gateway shall have no
obligation to proceed with any change until such agreement is reached.
Furthermore, Gateway shall in no case be required to agree to any change
requiring the handling of PCBs, asbestos or any other hazardous material.


 


6.3  Minor Changes in the Work


 


6.3.1  Minor changes in the Work do not involve an
adjustment in the Contract Price and/or Contract Time(s) and do not
materially and adversely affect the Work, including the design, quality,
performance and workmanship required by the Contract. Gateway may make minor
changes in the Work consistent with the intent and requirements of the
Contract, but only if approved by Owner in writing, Gateway shall promptly
inform Owner, in writing, of any such changes and record such changes on the
documents maintained by Gateway.


 


6.4  Contract Price Adjustments


 


6.4.1  The increase or decrease in Contract Price
resulting from a change in the Work shall be determined by one or more of the
following methods: (1) unit prices set forth in the Agreement or as
subsequently agreed to between the parties; (2) a mutually accepted, lump
sum, properly itemized and supported by sufficient substantiating data to
permit evaluation by Owner; (3) costs, fees and any other markups set
forth in the Agreement; and (4) if an increase or decrease cannot be
agreed to as set forth in items 1 through 3 above and Owner issues a Work
Change Directive, the cost of the change of the Work shall be determined by the
reasonable expense and savings in the performance of the Work resulting from
the change, including a reasonable overhead and profit, as may be set forth in
the Agreement. Gateway shall maintain a documented, itemized accounting
evidencing the expenses and savings associated with such changes.


 


6.4.2  If unit prices are set forth in the Contract
or are subsequently agreed to by the parties, but application of such unit
prices will cause substantial inequity to Owner or Gateway because of
differences in the character or quantity of such unit items as originally
contemplated, such unit prices shall be equitably adjusted.


 


14

















 


6.4.3  If Owner and Gateway disagree
upon whether Gateway is entitled to be paid for any services required by Owner,
or if there are any other disagreements over the scope of Work or proposed
changes to the Work, Owner and Gateway shall resolve the disagreement pursuant
to Article 17 hereof. As part of the negotiation process, Gateway shall
furnish Owner with a good faith estimate of the costs to perform the disputed
services in accordance with Owner’s interpretations.


 


6.5 Emergencies


 


6.5.1  In any emergency affecting the
safety of persons and/or property, Gateway shall act, at its discretion, to
prevent threatened damage, injury or loss. Any change in the Contract Price
and/or Contract Time(s) to which Gateway is entitled under other
provisions of the Contract on account of emergency work shall be determined as
provided in this Article 6.


 


7.     Substantial
Completion and Final Acceptance


 


7.1 Completion
According to Schedule:


 


Gateway shall complete the
Work within the time frames set forth on the Schedule.


 


7.2 Substantial
Completion:


 


7.2.1  Gateway shall notify Owner when
it believes the Work, or a portion thereof, has achieved Substantial Completion
and, with or before such notice, Gateway shall prepare and issue a Certificate
of Substantial Completion that will set forth (i) the date of Substantial
Completion of the Work, (ii) the remaining items of Work that have to be
completed before Final Completion (omissions of an item from the list shall not
be a waiver of the right to have such items of Work done or an admission that
it was done), (iii) provisions (to the extent not already provided in the
Contract) establishing Owner’s and Gateway’s responsibility for the Work’s
security, maintenance, utilities and insurance pending final payment. Within
five (5) days of Owner’s receipt of Gateway’s notice, Owner and Gateway
will jointly inspect the Work to verify the Work has achieved Substantial
Completion with permanent equipment installed in operating condition and order
required under the Contract, and verify the additional Work necessary to
complete before Final Completion and to develop a mutually-agreeable Punch
List. Owner shall give notice of objection to the claim of Substantial
Completion within seven (7) days of the joint inspection date. Gateway
shall, within seven calendar days after the inspection


 


15

















 


deliver to Owner its proposed Punch List signed by Owner’s
Representative. Such Punch List shall clearly designate which items, if any,
need to be completed in order to reach Final Completion. Owner shall within six
(6) calendar days of receipt of the Punch List mark the list to show Owner’s
disagreement, if any, with any of the items listed by Gateway or add any
additional items necessary to complete the Work, and return a copy of the list
so marked and signed by Owner to Gateway. In the event that Parties do not
agree on the items that should be included on the Punch List within eight (8) calendar
days thereafter, then either Party may submit the matter to disputes resolution
under Section 17 below.


 


7.2.2 Upon achieving Substantial Completion, Owner
shall release to Gateway a portion of the Retainage as described below in this
Agreement.


 


7.2.3 At Final Completion, care, custody and
control of the Work, shall pass to Owner. Subsequent to Substantial Completion,
Owner will permit Gateway access to the Plant, subject only to restrictions as
necessary for security and safety, so that Gateway may conduct Corrective
Action. After Final Completion, Owner shall be solely responsible for providing
property insurance coverage of the Work.


 


7.3 Failure to Reach Final Completion for Reasons
Beyond Gateway’s Control: If for any reason Owner fails to permit Gateway access to the Plant
after the date of Mechanical Completion in order to permit Gateway to do all
things necessary to achieve Final Completion, and such failure to permit access
continues for an aggregate of thirty (30) days, then Final Completion shall be
deemed to occur on the thirtieth day (in the aggregate) that such access is
denied.


 


8.    Payment


 


8.1 Contract Sum; Adjustments to Contract Sum: Owner will pay Gateway for the full and
satisfactory completion of the Work, the Contract Sum of $5,137,000.00, or such
other sum as may be determined in accordance with Section 6 or Section 5.
The Contract Sum is a guaranteed maximum price, and Owner shall have no
obligation to pay Gateway any sums in excess of the Contract Sum if the Work
cannot be completed within the Contract Sum. The Contract Sum does not include
any sales tax. If Gateway is, now or in the future, required to collect from
Owner or pay any sales tax with respect to all or any part of the


 


16

















 


Work, then that amount shall be
paid by Owner at Gateway’s request, in addition to the Contract sum.


 


8.2 Payment Terms; Retainage: Owner shall pay
the Contract Sum through any required lump sum initial Contract payments set
forth in Exhibit B and through monthly progress payments in accordance
with this Section 8 and Exhibit B. Gateway shall submit Applications
for Payment requesting payment for all Work performed as of the date of the
Application for Payment. The period covered by an Application for Payment shall
be the period represented by the last day of the month immediately proceeding
the month in which the Application is submitted through the second to the last
day of the month in which the Application for Payment is submitted. The
Application for Payment shall be accompanied by all supporting documentation,
including current lien waivers from Gateway and any Subcontractors or
Subsubcontractors, required by the Contract in the form of pay request, and
shall include such other documentation as may be reasonably required by Owner’s
lender(s).


 


Each Application for Payment shall be based
on the Schedule of Values attached at Exhibit B, which shall allocate the
entire Contract Sum among the various portions of the Work. The schedule of
values shall be prepared in such form and supported by such data to
substantiate its accuracy as the Owner, its representatives or lenders may
require. The Schedule of Values shall be used as a basis for reviewing the
Applications for Payment. Each Application for Payment shall indicate the
percentage of completion of each portion of the Work as of the end of the
period covered by the Application.


 


Five percent (5%) will be retained by Owner
from all payments as “Retainage.” The Retainage will be held on all payments
made by the Owner to Gateway until Substantial Completion or Final Acceptance,
as provided in this Contract. The Retainage is held in part by Owner as
security for Gateway’s performance of the Work. Upon achieving Substantial
Completion, and upon receipt of approval from Owner’s lenders, Owner shall
retain from the Retainage an amount equal to 200% of the reasonable value of
all remaining or incomplete items of Work as noted in the Punch List, the
Certificate of Substantial Completion, or as required to cover uncompleted
portions of the Work, and release to Gateway the remaining Retainage. The
entire Retainage is owed to Gateway as the Final Payment once the Work has
achieved Final Acceptance, less any liquidated damages.


 


17
















 


Subject
to other provisions of this Contract, the amount of each progress payment shall
be computed as follows:


 


1.        Take that portion of the Contract Sum properly allocable to completed
Work as determined by multiplying the percentage completion of each portion of
the Work by the share of the Contract Sum allocated to that portion of the Work
in the Schedule of Values, less retainage of Five percent (5.00% );


 


2.        Add that portion of the Contract Sum properly allocable to materials and
equipment delivered and suitably stored at the site for subsequent
incorporation in the completed construction (or, if approved in advance by the
Owner, suitably stored off the site at a location agreed upon in writing), less
retainage of Five percent (5.00%);


 


3.        Subtract the aggregate of previous payments made by the Owner; and


 


4.        Subtract amounts, if any, for which the Owner has withheld or nullified a
Certificate for Payment.


 


The
Application for Payment may request payment for equipment and materials not yet
incorporated into the Plant, provided that (i) Owner is satisfied that the
equipment and materials are suitably stored at the Site (or another acceptable
location if approved in writing in advance by Owner), (ii) the equipment
and materials are fully protected by suitable insurance and (iii) upon
payment, Owner will receive the equipment and materials free and clear of all
liens and encumbrances. Applications for payment may also include the value of
incremental progress payments owed by Gateway to vendors of major items of
equipment, provided substantiation and documentation for such payments are
provided in the Application for Payment.


 


The
Application for Payment shall constitute Gateway’s representation that the Work
has been performed consistent with the Contract, has been incorporated into the
Plant, has progressed to the point indicated in the Application for Payment,
and that title to all Work will pass to Owner free and clear of all claims,
liens, encumbrances, and security interests upon the incorporation of the Work
into the Plant, or upon Gateway’s receipt of payment, whichever occurs earlier.


 


If
required by Owner, the Application for Payment shall be verified as accurate
and notarized and supported by such data substantiating Gateway’s right to
payment as


 


18

















 


Owner
or Owner’s lender may reasonably require. Gateway will cooperate with Owner,
its representatives and its lenders’ representatives in verifying all
Applications for Payment. For each Application for Payment, Gateway shall
provide lien waivers for itself for the current Application for Payment and for
Subcontractors, Sub-subcontractors, and Design Consultants before Gateway has
earned or has the right to receive any payment. All lien waivers shall be
provided on a mutually agreed upon form. With the Final Application for
Payment, Gateway shall furnish final lien waivers to Owner for all Work
furnished by Gateway, Subcontractors, Sub-subcontractors, Design Consultants,
and other persons furnishing labor or materials for the Work, as a precondition
to Final Payment. This Section shall not limit other obligations of
Gateway contained elsewhere to provide lien waivers.


 


Application
for Payment shall not include requests for payment for portions of the Work for
which Gateway does not intend to pay a Design Consultant or Subcontractor,
unless such Work has been performed by others whom Gateway intends to pay from
proceeds received by Gateway.


 


Owner
shall, through Owner’s Representative, sign the Certificate for Payment set
forth on the Application for Payment for the full payment applied for, unless
it believes that all or any part of such amount is not then due or unless
Owners lenders have not approved such payment. If Owner or its lenders believes
all or part of the amount requested in the Application for Payment is not then
due, Owner shall amend the Certificate for Payment contained therein by
indicating the amount, if any, that it believes to be due, and shall sign the
certificate as amended and deliver the certificate, together with written
notice of Owner’s reasons for certifying less than the whole amount of applied
for.


 


Provided
Gateway has properly submitted the Application for Payment to Owner’s
Representative with required documentation received not later than the last day
of a month, and subject to Owner’s rights to withhold, Owner shall make
payments to Gateway not later than the tenth (10th) day of the month
next following for all amounts for which Owner, with the approval of Owner’s
lenders, has approved for payment. Owner’s payment shall constitute a
Certificate for Payment if the Certificate for Payment form is not executed by
Owner. If Owner or Owner’s lenders do not certify payment in the amount of the
Application, and Gateway and Owner cannot agree on a revised amount within five
(5) days of the date of the Certificate for Payment for less than the full
amount, then either Party may request a demand for arbitration in accordance
with Section 16. In any case, when the reasons stated


 


19

















 


by
Owner or Owner’s lenders for withholding payment of any amount for which an
application has been made are removed, in whole or in part, Owner shall
immediately issue a Certificate for Payment for the amount withheld and make
payment of the amount so certified on or before the date that the next payment
is due, but in no case more than thirty (30) days after the date that such
Certificate for Payment was due. Gateway shall pay Design Consultants and
Subcontractors, in accordance with its contractual obligations to such parties,
all the amounts Gateway has received from Owner on account of such parties’
work. Gateway will impose similar requirements on Design Consultants and
Subcontractors to pay those parties with whom they have contracted.


 


8.3 Late
Payment: Owner shall pay interest
at the rate of Wall Street Prime on all sums past due, not to include those
amounts contested in good faith by Owner, which interest shall commence thirty
(30) days after payment is due.


 


8.4 Mechanic’s
Lien Waivers and Indemnity:
Gateway shall pay promptly for all valid amounts due for all materials, labor
and equipment used in or in connection with the performance of this Contract,
including those of its subcontractor’s and vendors, when bills or claims become
due, and shall indemnify and hold harmless Owner from and against all claims of
its subcontractors and vendors for amounts due arising from Gateway’s failure
to make any such payments, provided that Owner gives Gateway prompt notice of
such claim and cooperates with Gateway in defense of such claim.


 


8.5 Mechanic’s
Liens: Gateway shall keep the Site free and clear
of laborer’s, materialmen’s and mechanic’s liens arising out of the performance
of the Work for which Owner has made payment. Owner shall promptly notify
Gateway in writing of any lien so arising of which it has notice or knowledge.
Gateway shall obtain and timely provide to Owner a partial release of lien with
respect to any partial or progress payment made to relevant Subcontractors and
shall also obtain and timely provide a complete release of lien and general
release with respect to any subcontract for which full and final payment is
made. In each case, the release of lien may be for an amount less amounts that
will be paid from the payment for which such release of lien is requested.
Gateway shall promptly pay each Subcontractor upon receipt of payment from
Owner of the amount invoiced that is due to such Subcontractor.


 


8.6 Final
Payment: Gateway shall invoice
Owner for the final amount due to it under this Contract upon reaching Final
Acceptance.  Payment of all of the
Contract Sum remaining


 


20

















 


unpaid,
and any and all other amounts owing to Gateway under the Contract, shall,
unless provided otherwise in Exhibit B, be made within 30 days after Final
Acceptance, subject to adjustment for any liquidated damages.


 


9. Stop
Work and Termination for Cause.


 


9.1 Owner
s Right to Stop Work


 


9.1.1 Owner may, without cause and for its convenience, order Gateway in
writing to stop and suspend the Work. Such suspension shall not exceed ninety
(90) consecutive days or aggregate more than one hundred fifty (150) days
during the duration of the Project.


 


9.1.2 Gateway is entitled to seek an adjustment of the Contract Price
and/or Contract Time(s) if its cost or time to perform the Work has been
adversely impacted by any suspension of stoppage of work by Owner not
resulting from the fault of Gateway or its Design Consultants, Subcontractors,
or others of those for whom Gateway is responsible.


 


9.2 Owner
s Right to Perform and Terminate for Cause


 


9.2.1 If Gateway (i) persistently fails to provide a sufficient
number of skilled workers, (ii) fails to supply the materials required by
the Contract, (iii) fails to comply with applicable Legal Requirements, (iv) fails
to timely pay, without cause, Design Consultants or Subcontractors, (v) fails
to prosecute the Work with promptness and diligence to ensure that the Work is
completed by the Contract Time(s), as such times may be adjusted, or (vi) fails
to perform other obligations under the Contract, then Owner, in addition to any
other rights and remedies provided in the Contract or by law, shall have the
rights set forth in Sections 9.2.2 and 9.2.3 below.


 


9.2.2 Upon the occurrence of an event set forth in Section 9.2.1
above, Owner may provide written notice to Gateway that it intends to terminate
the Agreement unless the problem cited is cured, or commenced to be cured,
within seven (7) days of Gateway’s receipt of such notice. If Gateway
fails to cure, or reasonably commence to cure, such problem then Owner may give
a second written notice to Gateway declaring the Agreement terminated for
default.


 


9.2.3 Upon declaring the Agreement terminated pursuant to Section 9.2.2
above,


 


21

















 


Owner
may enter upon the premises and take possession, for the purpose of completing
the Work, of all materials, equipment, scaffolds, tools, appliances and other
items thereon, which have been purchased or provided for the performance of the
Work, all of which Gateway hereby transfers, assigns and sets over to Owner for
such purpose, and to employ any person or persons to complete the Work and
provide all of the required labor, services, materials, equipment and other
items. In the event of such termination, Gateway shall not be entitled to
receive any further payments under the Contract until the Work shall be finally
completed in accordance with the Contract. At such time, if the unpaid balance
of the Contract Price for Work performed prior to its default exceeds the cost
and expense incurred by Owner in completing the Work, such excess shall be paid
by Owner to Gateway. Gateway will only be entitled to be paid for Work performed
prior to its default. If Owner’s cost and expense of completing the Work
exceeds the unpaid balance of the Contract Price, then Gateway shall be
obligated to pay the difference to Owner. Such costs and expense shall include
not only the cost of completing the Work, but also losses, damages, costs and
expense, including attorneys fees and expenses, incurred by Owner in connection
with the reprocurement and defense of claims arising from Gateway’s default,
subject to the waiver of consequential damages set forth in this Contract.


 


9.3 Owner’s Right to Terminate for
Convenience. Upon written notice to
Gateway, Owner may, for its convenience and without cause, elect to terminate
this Agreement. In such event, Owner shall pay Gateway for the following:


 


1.   all Work executed;


 


2.   the reasonable and documented costs and
expenses attributable to such termination, including demobilization costs and
amounts due in settlement of terminated contracts with Subcontractors and
Design Consultants; and


 


3.   overhead and profit in the amount of ten
percent (10%) on the sum of items 1 above. In no event shall Owner be liable to
Gateway for profit or overhead on Work not executed.


 


9.3.1 If Owner improperly terminates the Agreement for cause, the
termination for cause will be converted to a termination for convenience in
accordance with the provisions of Section 9.3 of the Contract.


 


22

















 


9.4 Gateway’s
Right to Stop Work


 


9.4.1 Gateway may, in
addition to any other rights afforded under the Contract or at law, stop work
for the following reasons: (1) Owner’s failure to provide financial
assurances as required under this Contract; or (2) Owner’s failure to pay
amounts properly due, under Gateway’s Application for Payment.


 


9.4.2 Should any of
the events set forth in Section 9.4.1 above occur, Gateway has the right
to provide Owner with written notice that Gateway will stop work unless said
event is cured within seven (7) days from Owner’s receipt of Gateway’s
notice. If Owner does not cure the problem within such seven (7) day
period, Gateway may stop work. In such case, Gateway shall be entitled to make
a claim for adjustment to the Contract Price and Contract Time(s) to the
extent it has been adversely impacted by such stoppage.


 


9.5 Assignments Upon
Termination


 


9.5.1 Upon any
termination by either party, to the extent Owner elects to take legal
assignment of contracts and purchase orders (including rental agreements) (and
Gateway hereby grants to Owner the right to do so), Gateway shall execute and
deliver all such documents and take all such actions as Owner may require for
the purpose of fully vesting Owner with the rights and benefits of Gateway
under such contracts and purchase orders. Gateway, and not Owner, shall remain liable
for all obligations under those contracts and purchase orders preceding the
later of the date of termination or the effective date of the assignment. The
effective date of the assignment shall be the date designated by Owner as the
effective date of the assignment.


 


9.6 Gateway’s
Right to Terminate for Cause


 


9.6.1  Gateway, in addition to any other rights and remedies provided in the
Contract or by law, may terminate the Agreement for cause for the following
reasons: (1) the Work has been stopped for ninety (90) consecutive days,
or more, because of court order, any government authority having jurisdiction
over the Work, or orders by Owner under Section 9.1.1 hereof, provided
that such stoppages are not due to the acts or omissions of Gateway or
anyone for whose acts Gateway may be responsible; (2) Owner’s failure to
provide Gateway with any information, permits or approvals that are Owner’s


 


23

















 


responsibility
under the Contract which result in the Work being stopped for ninety (90)
consecutive days, or more, even though Owner has not ordered Gateway in writing
to stop and suspend the Work pursuant to Section 9.1.1 hereof; (3) Owner’s
failure to cure the problems set forth in Section 9.4.1 above after Gateway
has stopped the Work.


 


9.6.2 Upon the occurrence of an event set forth in Section 9.6.1 above,
Gateway may provide written notice to Owner that it intends to terminate the
Agreement unless the problem cited is cured, or commenced to be cured, within
seven (7) days of Owner’s receipt of such notice. If Owner fails to cure,
or reasonably commence to cure, such problem, then Gateway may give a second
written notice to Owner of its intent to terminate within an additional seven (7) day
period. If Owner, within such second seven (7) day period, fails to cure,
or reasonably commence to cure, such problem, then Gateway may declare the
Agreement terminated for default by providing written notice to Owner of such
declaration. In such case, Gateway shall be entitled to recover in the same
manner as if Owner had terminated the Agreement for its convenience under Section 9.3.


 


9.7 Bankruptcy of Owner or Gateway


 


9.7.1 If either Owner or Gateway institutes or has instituted against it a case
under the United States Bankruptcy Code (such party being referred to as the
Bankrupt Party), such event may impair or frustrate the Bankrupt Party’s
ability to perform its obligations under the Contract. Accordingly, should such
event occur: (1) the Bankrupt Party, its trustee or other successor, shall
furnish, upon request of the non-Bankrupt Party, adequate assurance of the
ability of the Bankrupt Party to perform all future material obligations under
the Contract, which assurances shall be provided within ten (10) days
after receiving notice of the request; and (2) the Bankrupt Party shall
file an appropriate action within the bankruptcy court to seek assumption or
rejection of the Agreement within sixty (60)days of the institution of the
bankruptcy filing and shall diligently prosecute such action. If the Bankrupt
Party fails to comply with its foregoing obligations, the non-Bankrupt Party
shall be entitled to request the bankruptcy court to reject the Agreement,
declare the Agreement terminated and pursue any other recourse available to the
non-Bankrupt Party under this Article 9.


 


9.7.2 The rights and remedies under Section 9.7.1 above shall not be
deemed to limit the ability of the non-Bankrupt Party to seek any other rights
and remedies provided by the Contract or by law, including its ability to seek
relief from any automatic stays under


 


24

















 


the
United States Bankruptcy Code or the right of Gateway to stop Work under any
applicable provision of this Contract.


 


10. Safety
and Security


 


10.1 Premises: Gateway will keep the premises clean and free from rubbish caused by
performance of the Work and will insure that its Subcontractors do likewise. At
completion of the Work, Gateway shall leave the premises clean of all debris
resulting from performance of the Work. Gateway shall provide dumpsters for
disposal of material and Gateway shall be responsible to insure that the proper
material is placed in the appropriate dumpster. Gateway shall provide the Plant
in a clean condition upon the completion of the Work.


 


10.2 Security: During construction and installation of the Work, Gateway will use
reasonable means to protect the Work and all Equipment and Materials to be used
in connection with the Work and located on the Work site safe from injury or
defacement, within the defined battery limits, and all equipment owned or
leased by Gateway or any of its subcontractors, and all other equipment and
goods of any kind located at the Plant site for the purpose of performing the
Work.


 


10.3 Gateway’s
Responsibility for Plant Safety.


 


10.3.1 Gateway recognizes the importance of performing the Work in a safe
manner so as to prevent damage, injury or loss to (i) all individuals at
the Site, whether working or visiting, (ii) the Work, including materials
and equipment incorporated into the Work or stored on-Site or off-Site, and (iii) all
other property at the Site or adjacent thereto. Gateway assumes responsibility
for implementing and monitoring all safety precautions and programs related to
the performance of the Work. Gateway shall, prior to commencing construction,
designate a Safety Representative with the necessary qualifications and
experience to supervise the implementation and monitoring of all safety
precautions and programs related to the Work. Unless otherwise required by the
Owner, Gateway’s Safety Representative shall be an individual stationed at the
Site who may have responsibilities on the Plant in addition to safety. The
Safety Representative shall make routine daily inspections of the Site and
shall hold weekly safety meetings with Gateway’s personnel, Subcontractors and
others as applicable.


 


25

















 


10.3.2 Gateway and Subcontractors shall comply with all
Legal Requirements relating to safety, as well as any Owner-specific safety
requirements set forth in the Contract, provided that such Owner-specific
requirements do not violate any applicable Legal Requirement. Gateway will
immediately report in writing any safety-related injury, loss, damage or
accident arising from the Work to Owner’s Representative and, to the extent
mandated by Legal Requirements, to all government or quasi-government
authorities having jurisdiction over safety-related matters involving the Plant
or the Work.


 


10.3.3 Gateway’s
responsibility for safety under this Section 10.3 is not intended in any
way to relieve Subcontractors and Sub-Subcontractors, or Owner and its
contractors, of their own contractual and legal obligations and responsibility
for (i) complying with all Legal Requirements, including those related to
health and safety matters, and (ii) taking all necessary measures to
implement and monitor all safety precautions and programs to guard against
injury, losses, damages or accidents resulting from their performance of the
Work.


 


10.3.4 Subsequent to Start-up of the Plant, Gateway shall
comply with Owner’s Safety Policy, Gateway’s safety policy or applicable Legal
Requirements, whichever shall be the more stringent.


 


10.4 Compliance with OSHA and Similar Laws and Regulations:  Owner shall at all times be solely responsible for compliance with the
Occupational Safety and Health Act (“OSHA”), and any similar state laws or
regulations, with respect to its own employees. Gateway shall be solely
responsible for compliance with OSHA, and any similar state laws or
regulations, with respect to its own employees and will require the same of its
Subcontractors. In particular, but without limitation, Gateway shall be
responsible for claims made by any of its or its Subcontractor employees,
whether against Owner or Gateway by reason of any personal injury or death
which results from a violation of any such law or regulation.


 


11. Project
Execution


 


11.1
Gateway’s Representative:  Gateway’s
Project Manager and Gateway’s Site Manager shall be reasonably available to
Owner and shall have the necessary expertise and experience required to
supervise the Work. Gateway’s Project Manager and Gateway’s Site


 


26

















 


Manager
shall communicate regularly with Owner.  Gateway’s
Project Manager shall represent Gateway, and written communications given to
Gateway’s Project Manager shall be as binding as if given to Gateway
itself.  All communications to Gateway’s
Project Manager or Site Manager by Owner shall be confirmed in writing upon
request by Gateway. The name, title, address, telephone numbers, and e-mail
address of Gateway’s Project Manager and Gateway’s Site Manager is as set forth
below:


 


Brian Shuck/Tim Peterson

Gateway Building Systems, Inc.

33424 US Hwy 59

Elbow Lake, MN 56531

Telephone: 218 685-4420

Fax:218 685-9975

E-mail: bshuck@gatewaybuilding.com


              tpeterson@gatewaybuilding.com


 


11.2 Owner
Representative: Owner will have at all
times during the progress of the Work, a competent representative (“Owner’s
Representative”) assigned to the Work. Owner’s Representative shall represent
Owner, and written communications given to Owner’s Representative shall be as
binding as if given to Owner itself. Owner shall have its Owner’s Representative
on site, or available within 24 hours, at all times during the progress of the Work.
Set forth below is the name, title, address, telephone numbers and e-mail
address of Owner’s Representative:


 


Owners
Representative


 


Kelly
Longtin, CEO


Otter Tail Ag
Enterprises, LLC


1220 North
Tower Road, Suite 201


Fergus
Falls, MN 56537


(218)
998-4301 office


(218)
998-4302 fax


Kelly.longtin@yahoo.com


(320)
760-0505 (mobile)


 


11.3 Project
Reviews and Approvals:


 


11.3.1
Reviews: Gateway will, as
appropriate, and additionally upon Owner’s request, issue a Project progress
schedule to Owner. Gateway shall participate in reviews of the progress of the
Work at the site at Owner’s request as set forth in this Contract. Owner may
review and comment on any plan, drawing or specification, that Gateway delivers
to Owner. No review or comment made by Owner shall result in Owner’s being
deemed to have assumed any responsibility for any of the Work.  Gateway shall attempt to


 


27

















 


incorporate
Owner’s comments where it can do so without increasing Gateway’s cost, the time
required for performance, or any of its other obligations, but Gateway shall
have no obligation to suspend work to allow time for review and comment except
as provided in the Schedule, or to incorporate any of Owner’s comments except
as required in order to comply with Gateway’s obligations under the Contract,
or as agreed under Section 6 above.


 


Gateway
shall provide Owner with monthly status reports detailing the progress of the
Work, including whether (i) the Work is proceeding according to schedule, (ii) discrepancies,
conflicts, or ambiguities exist in the Contract that require resolution, (iii) health
and safety issues exist in connection with the Work or the Site, and (iv) other
items require resolution so as to not jeopardize Gateway’s ability to complete
the Work for the Contract Sum and within the Schedule.


 


11.4 Subcontractors
and Vendors:


 


11.4.1
Notice of Subcontractor Selection:
Gateway shall, as soon as practicable after award of the Contract, furnish in
writing to Owner the names of all Subcontractors or Sub-subcontractors
(including those who are to furnish materials or equipment fabricated to a
special design) proposed to complete any portion of the Work. Owner
acknowledges that Gateway, particularly on large or fast-track projects, may
not make final selection of some subcontractor or vendors until later in the
project, and that Gateway has the right to select subcontractors and vendors as
long as the selection would not result in failure to satisfy the requirements
of this Contract. The subcontracting, or sub-subcontracting, of any portion of
the Work shall not relieve Gateway of responsibility for performance of the
Work as provided herein. Notwithstanding the foregoing, Gateway shall have the
right to subcontract such portions of the Work as it shall determine to be
necessary to others which, in turn, shall have the right to subcontract such
portions of the Work assigned to them, if any, as they shall deem necessary.


 


11.5 Cooperation with Owner’s Lender. Gateway 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. Gateway 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


 


28

















 


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 Gateway.


 


12. Warranty


 


12.1 Equipment
Warranties:  Gateway
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.
Gateway’s warranty obligation excludes defects caused by abuse, alterations, or
failure to maintain Work by persons other than Gateway or anyone for whose acts
Gateway may be liable. Gateway 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, Gateway 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: Gateway
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. Gateway 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.


 


12.4 Notice
of Warranty Claim: Owner shall
notify Gateway of any defect covered by the warranties set forth in Section 12,
and shall notify Gateway in writing of any defect covered by any other warranty
within sixty (60) Days after discovering such defect,


 


12.5 Correction
of Defective Work:


 


12.5.1  Gateway agrees to correct any Work that is found not to be in
conformance with the Contract, including that part of the Work subject to Section 12.1
hereof.


 


29

















 


12.5.2 Gateway shall,
within two (2) days of receipt of written notice from Owner that the Work
is not in conformance with the Contract, take meaningful steps to commence
correction of such nonconforming Work, including the correction, removal or
replacement of the nonconforming Work and any damage caused to other parts of
the Work affected by the nonconforming Work. If Gateway fails to commence the
necessary steps within such two (2) day period or to complete the
necessary steps as soon as possible, Owner, in addition to any other remedies
provided under the Contract, may provide Gateway with written notice that Owner
will commence correction of such nonconforming Work with its own forces. If
Owner does perform such corrective Work, Gateway shall be responsible for all
reasonable costs incurred by Owner in performing such correction. If the
nonconforming Work creates an emergency requiring an immediate response, the
two (2) day periods identified herein shall be deemed inapplicable and
Gateway shall commence correction immediately.


 


12.5.3 Section 12.5.1
and 12.5.2 above applies only to Gateway’s obligation to correct nonconforming
Work and is not intended to constitute a limitation for any other rights or
remedies Owner may have regarding Gateway’s other obligations under the
Contract.


 


12.5.4 Gateway shall
be responsible for collecting, identifying and collating the following
materials, and shall deliver four (4) copies to Owner at least sixty (60)
days prior to the date Gateway is required to achieve Substantial Completion: (1) complete
equipment diagrams, operating instructions, maintenance manuals, parts lists,
tests and balance reports, inspection reports, guarantees and warranties, as
applicable, for each piece of fixed equipment furnished under this Contract,
together with specific information regarding manufacturer’s name and address,
nearest distributor, service representative’s name, address, office phone
number, make and model numbers, operating designs and characteristics, and the
like. These materials shall be supplied in a ring binder, hard-cover books,
properly indexed for easy reference (organized according to Construction
Specifications Institute Masterformat); (2) name and address of all
Subcontractors and Sub-Subcontractors (including equipment and material
suppliers), together with their respective areas of work, materials, or
equipment furnished; (3) complete operating instructions for each equipment
system; (4) complete parts lists, together with recommended spare parts
for each type and model of equipment installed; (5) complete list of all
materials and equipment utilized, together with the respective location in the
Work; (6) a complete set of record drawings, in both electronic format
(.dwg files) and black-lined drawings (D-size).


 


30

















 


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


 


14. Insurance;
Bonds


 


14.1 Required
Insurance: Each Party shall carry
the insurance coverage described in this Contract.


 


14.2 Adjustment
of Loss: Any loss insured under
property or builders risk insurance required under this Section 14 shall
be adjusted by the insurance carrier with the insured as fiduciary for the
other party or parties whose interests are insured thereunder as their
interests may appear, and the insured shall pay the proceeds due to them
promptly. The insured shall bear the costs of the deductible, if any, under
such policy.


 


14.3 Certificates
of Insurance: Before commencing the
Work, Gateway and Owner shall each furnish the other with certificates evidencing
the coverage required under this Article 14 from the insurance company or
companies carrying the aforesaid coverage. These certificates will provide that
the policies may not be amended or terminated unless at least thirty (30) days
prior written notice is given to Owner and Gateway. Failure of either Party to demand
any such certificate prior to commencement of the Work shall not, however, be deemed
to relieve any Party of its obligation to carry such insurance.


 


Approval
of the insurance by Owner shall not relieve or decrease the liability of
Gateway. Owner does not in any way represent that the insurance or the limits
of insurance specified in these articles are sufficient or adequate to protect
Gateway’s interests or liabilities, but are minimums.


 


14.4 Insurance
– Miscellaneous:


 


14.4.1 Gateway at its sole cost and expense is responsible for procuring and
maintaining from insurance companies authorized to do business in the state in
which the Plant is located, and with a minimum rating set forth below, the
following insurance coverages:


 


31

















 


Workers
Compensation  - State
Statutory (Policy to include a waiver of subrogation in favor of Owner and its
lender) Employer s Liability - Bodily injury by accident -$1,000,000 each
accident; bodily injury by disease - $1,000,000 contract limit; bodily injury
by disease -$1,000,000 each employee.


 


Commercial
General Liability  - (including, a
waiver of subrogation in favor of Owner and its lender and naming Owner and its
lender as Additional Insured and without limitation, Premises Operations;
Independent Contractors (let or sublet work); Contractual Liability; Products
and Completed Operations; Explosion, Collapse and Underground (“XCU”); Broad Form Property
Personal Injury and Advertising Liability (employment exclusion deleted);
Incidental Medical Malpractice; Amendment of Pollution Exclusion-hostile fire;
Cross-liability and severability of interests) Coverage of $1,000,000 per
Occurrence, $2,000,000 Aggregate with separate Products and Completed
Operations limits of $1,000,000 per Occurrence $2,000,000 Aggregate.


 


Commercial
Auto Coverage  - $1,000,000
C.S.L. (This policy shall cover all Gateway furnished, owned, hired, and
non-owned vehicles, including the loading or unloading thereof, name Owner and
its lender as Additional Insureds and include a waiver of subrogation in favor
of Owner and its lender.)


 


Umbrella
Excess Liability - (following form on all terms and conditions as
indicated above with respect to Employer s Liability, Commercial General
Liability and Automobile Coverages). With limits of liability not less than
$1,000,000 per Occurrence and $2,000,000 Aggregate. Professional Liability
Insurance with a minimum single limit of $2,000,000 per claim insuring Gateway
and all other persons for whose acts Gateway may be liable against any and all
liabilities arising out of or relating to the negligent acts, errors, or
omissions in connection with the carrying out of professional responsibilities
relating to the Work.


 


Gateway shall or shall cause
all applicable Subcontractors to obtain Inland Marine insurance covering
shipments of equipment and materials transported via land and shall provide
evidence of such insurance to Owner prior to the shipment of any such equipment
or materials. Minimum Limits of Liability should be equal to the largest value
shipment.


 


14.4.2  Gateway’s liability insurance required by this Article 14 shall be
written for the coverage amounts set forth in the Agreement and shall include
completed operations


 


32

















 


insurance
for the period of time set forth in the Agreement. Gateway shall provide its
insurance from insurance companies with (i) a Best Insurance Reports
rating of A or better and a financial size category of IX or higher, or (ii) if
not rated by Best, a Standard & Poor financial strength rating of A or
higher, or (iii) other companies approved by Owner in writing signed by
Owner and acknowledging that such insurance companies do not have the foregoing
ratings.


 


14.4.3  Gateway’s liability
insurance shall specifically provide coverage for design-build delivery of the
Plant.


 


14.4.4  Such policies shall be provided to Owner prior to the commencement of any
design services hereunder.


 


14.4.5  Prior to commencing any Work hereunder, Gateway shall provide Owner with
certificates evidencing that (i) all insurance obligations required by the
Contract are in full force and in effect and will remain in effect for at least
two years past Plant completion and (ii) no insurance coverage will be
canceled, allowed to expire, renewal refused, or materially changed unless at
least thirty (30) days prior written notice is given to Owner.


 


The
insurance required by the Agreement
shall be written for not less than limits of liability specified in the
Agreement or required by law, whichever coverage is greater. Coverage, whether
written on an occurrence or claims-made basis, shall be maintained without
interruption from date of commencement of the Work until at least two years
past Plant completion for Products and Completed Operations under the general
liability and umbrella coverage. Coverage shall be on an “occurrence” basis
(except professional liability insurance coverage may be on a “claims made”
basis if that insurance is not reasonably available on an “occurrence” basis).
Gateway is responsible for providing any additional insurance it deems
necessary to protect its interest from other hazards or claims in excess of the
minimum coverage.


 


14.4.6  Gateway shall include Owner and its lenders as additional insureds under Gateway’s
insurance, except Worker’s Compensation and Professional Liability Insurance.
With respect to all insureds, including all additional insureds, Gateway’s insurance
shall be primary and non-contributing with respect to any insurance carried by or
otherwise available to Owner or its lender(s). Gateway’s insurance shall
provide that for all insureds, including all additional Insureds,
cross-liability and severability of interests shall exist for all coverages
provided thereunder. Gateway’s insurance policies


 


33

















 


must all provide a waiver of
subrogation endorsement in favor of Owner and its lender(s).


 


14.4.7  Approval of the insurance by Owner shall not relieve
or decrease the liability of Gateway. Owner does not in any way represent that
the insurance or the limits of insurance specified in these articles are
sufficient or adequate to protect Gateway’s interests or liabilities, but are minimums.


 


14.4.8  Gateway’s
Contractual Liability Insurance shall cover Gateway’s obligations under this
Agreement.


 


14.4.9  In the event
Gateway fails to procure or maintain any insurance coverage required under this
Agreement, Owner may purchase such coverage and deduct the cost thereof from
the Contract Price. Gateway shall require all Subcontractors and design
consultants, to purchase and maintain insurance of types and in amounts consistent
with the Gateway s risk management program. All policies provided by Subcontractors
shall name Owner as an additional insured. Gateway shall obtain insurance
coverage certificates from Subcontractors and shall provide copies to Owner. The
insurance obtained by Gateway shall, subject to the terms and extent of such insurance,
provide coverage to Owner with respect to claims arising from the acts or omissions
of Gateway’s Subcontractors.


 


14.5  Performance
Bond and Payment Bond: Gateway 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 in the amount of $2,500,000.00.


 


14.5.1  At its sole cost and expense, Gateway shall furnish
a Performance Bond and Labor and Material Payment Bond on standard AIA forms,
complying with the following specific requirements:


 


14.5.1.1  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.


 


14.5.1.2  The Performance
Bond and the Labor and Material Payment Bond shall each be in amount equal to
$2,500,000.00.


 


34

















 


14.5.1.3  Gateway 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.


 


14.5.1.4  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 Gateway to the other, shall not
release the Surety of its 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.


 


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


 


14.5.3  Gateway 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 Gateway, 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


 


15.1
Indemnity by Gateway for Personal Injury and Property Damage: Gateway 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 Gateway’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


 


35

















 


omission
of Gateway, Subcontractors, Sub-subcontracts, 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 Gateway 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.


 


Gateway’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 Gateway, its design consultants, Subcontractors or other entity under
any employee 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 Gateway, Gateway 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 Gateway 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 Gateway 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 Gateway does not have an uncured breach),
Gateway shall within 60 days remove any liens filed against Owner or its
property. If Mechanical fails to do so, Owner is authorized by Gateway to
remove or satisfy any such liens, and Gateway 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 Gateway’s indemnification
and other obligations to Owner as stated in this Contract, Gateway shall


 


36

















 


have
the right to contest and dispute any lien which Gateway believes, in good
faith, is unjustified or overstated, provided that Gateway 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 Gateway, 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 Gateway to contest the lien claim.
Gateway shall give prompt notice to Owner of any such contests. Any such
contests shall be prosecuted with due diligence and Gateway must, promptly
after final determination thereof, comply with and pay the result determined,
together with all interest and penalties, if any, which may be payable
therewith and further will indemnify and hold harmless the Owner against all
losses in connection therewith.


 


15.3    Conditions
to Indemnity: The indemnities set forth
in Sections 15.1 and 15.2 above are valid only if (a) Owner gives notice
of any claim or lawsuit for which it claims indemnity within a time reasonable
for Gateway to contest such claim, (b) Owner cooperates fully and promptly
with Gateway in the defense thereof at Owner’s expense for all items related to
such defense for time of witnesses who are employees of Owner, costs related to
travel, production of documents, fees for any counsel it elects to assist it in
addition to counsel appointed by Gateway for defense of the claim, and (c) Gateway
has full authority in defense of such lawsuit or claim and to settle such
claim, provided that, it pays to Owner the cost, if any, of any change in
operations resulting from such settlement.


 


16. Dispute Resolution


 


16.1
Executive Conference or Mediation:
In the event of any controversy or claim arising out of or related to this
Contract, or the interpretation, termination or breach hereof, other than
default in payment due under Section 8 above which shall be subject to the
provisions of this Section at Gateway’s option, the Parties shall, upon
the written request of either of them, attempt to resolve the matter by
agreement of the representatives of the Parties. Such representatives shall be
at least one management level above the individuals who have had direct
responsibility for performance of the Contract, or the highest level of
management of any Party whose highest level of management has had direct
responsibility for such performance. Such representatives shall meet in person
or by telephone or teleconference at least once, and shall attempt to resolve
any matter raised by either of


 


37

















 


them
by the written notice requesting such resolution for a period of at least
thirty (30) Days. In the event that the Parties are unable to resolve the
dispute by agreement of such representatives within such thirty (30) Day
period, then at the written request of either Party, the Parties shall submit
the matter to mediation under the then current rules of mediation and
conciliation of the American Arbitration Association. The mediation shall occur
using a mediator qualified under the laws of the State of Minnesota to be held
at Fergus Falls, Minnesota, or such other place as may be mutually agreed to by
the Parties. The Parties shall attempt to resolve any matter submitted to
mediation under this Section 16.1 within thirty (30) Days after the date
of delivery of the written request for mediation. Except where clearly
prevented by the matter in dispute, the Parties agree to continue performing
their respective obligations under this Contract while the dispute is being
resolved.


 


16.2 Arbitration: Any controversy or claim arising out of or related to this Contract, or
the interpretation, termination or breach hereof, which cannot be resolved by
mutual agreement of the parties or by mediation within the time periods
provided at Section 16.1 above, other than default in payment due under Section 8
above which shall be subject to the provisions of this Section at Gateway’s
option, may be submitted to binding arbitration in accordance with the
applicable rules of the American Arbitration Association. The place of
arbitration shall be Fergus Falls, Minnesota, or such other location as mutually
agreed to by the Parties. Neither Party shall submit any such matter to
arbitration unless the parties have been unable to resolve it by mediation for
a period of at least thirty (30) days after the date of request for mediation.
Any party who files a notice of demand for arbitration must assert in the
demand all claims then known to that party against the other. Judgment upon any
award rendered by an arbitrator or arbitrators under this Contract may be
entered upon it in accordance with applicable law in any court having
jurisdiction thereof, but either party hereto shall have the right to contest
such award on the grounds that it is contrary to applicable law. Except where
clearly prevented by the matter in dispute, the Parties agree to continue performing
their respective obligations under this Contract while the dispute is being
resolved.


 


16.3  Attorney’s
Fees and Costs: All reasonable costs,
expenses and attorney’s fees resulting from the litigation or arbitration of
any claim under this Contract shall be paid by the losing party to the
prevailing party.


 


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17.  Force
Majeure


 


No delay in, or failure of, performance by either
Party under this Contract will constitute default hereunder or give rise to any
claim for damages if and to the extent caused by an occurrence such as acts of
governmental authority, acts of God, strikes or other concerted acts of
workmen, fire, flood, explosions, riots, war, rebellion or sabotage.


 


18.  General
Provisions


 


18.1 Assignment:  Gateway shall not assign or transfer its duties or obligations
hereunder without the prior written consent of the Owner. Gateway 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 assigns of Owner.


 


18.2 Entire
Contract; Waiver; Amendment:  This Contract
and the attached Exhibits constitute the full and complete contract between the
parties hereto with respect to the subject matter hereof. There are no
statements, agreements, understandings, representations or trade customs of any
kind, express or implied, concerning the subject matter which are not merged
herein or superseded hereby. A waiver of any of the terms of this Contract
shall not bind either party unless signed by one of its duly authorized
representatives. Waiver by either Party of any default by the other party
hereunder shall not be deemed a waiver by such Party of any default by the
other which may occur thereafter. This Contract may only be modified or amended
by an agreement in writing executed by both Parties hereto.


 


18.3 Governing
Law; Juridiction; Venue:  The validity,
performance, construction and effect of this Contract shall be governed by the
laws of the state of Minnesota, without regard to choice of law or conflict of
law provisions. Each Party consents to the state courts of Minnesota, Otter
Tail County, as the exclusive jurisdiction and venue to determine any
non-arbitral disputes. The parties waive any argument or objection to such
jurisdiction and venue and hereby agree that such jurisdiction and venue are
mutually convenient.


 


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:


 


39

















 




	
   

  	
  If to Gateway, to:

  	
  Gateway Building Systems, Inc.

  
	
   

  	
  33424 US Hwy 59 

  
	
   

  	
  Elbow Lake, MN 56531

  
	
   

  	
  Attn: Brian Shuck

  
	
   

  	
   

  
	
   

  	
  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: The Parties agree that this Contract is not
intended by either Party to give any benefits, rights, privileges, actions or
remedies to any person, partnership, firm or corporation (other than a Party or
its permitted assignee) as a third party beneficiary under any theory of law.


 


18.7  Equal
Bargain and Representation: The Parties have
participated jointly in the negotiations and drafting of this Contract. In the
event that an ambiguity or question of intent or interpretation arises, this
Contract shall be construed as if drafted jointly by the Parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement. Each of
the Parties acknowledges that it has been represented by legal counsel of its
own choice throughout all negotiations, preparation, review and execution of
this Contract, and that each Party has executed this Contract voluntarily and
with the consent and on the advice of any such legal counsel. In entering into
this Contract, each Party has undertaken such factual inquiry as it has deemed
necessary and has relied solely on that inquiry and not on statements or
representations of the other Party.


 


18.8  Time Bar
to Legal Action: All legal actions by Owner or by Gateway arising
out of or in any way connected with this Contract or the services to be
performed hereunder shall be barred and under no circumstances shall any such
legal action be initiated by Owner or by Gateway three (3) years after the
date of Final Acceptance, unless this Contract shall be terminated earlier, as
provided herein, in which case the date of termination of this Contract shall
be the date on which such period shall commence.


 


40

















 


[This page intentionally
left blank]


 


41

















 


[SIGNATURE PAGE TO OTTER
TAIL AG ENTERPRISES, LLC EQUIPMENT PROCUREMENT AND


CONSTRUCTION SERVICES
CONTRACT]


 


 


IN WITNESS WHEREOF, the parties hereto have executed
this Contract on the 13 day of November, 2006.


 


 


	
   

  	
  Owner:

  
	
   

  	
   

  
	
   

  	
  OTTER TAIL AG ENTERPRISES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Jerry Larson

  	
   

  
	
   

  	
  Jerry Larson

  
	
   

  	
  Its President

  



 


42

















 


[SIGNATURE PAGE TO OTTER
TAIL AG ENTERPRISES, LLC EQUIPMENT PROCUREMENT AND


CONSTRUCTION SERVICES
CONTRACT]


 


 


IN WITNESS WHEREOF, the parties hereto have executed
this Contract on the 13th day of November, 2006.


 


 


	
   

  	
  GATEWAY BUILDING SYSTEMS

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Brian Shuck

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
  Division Manager

  	
   

  
						



 


43
















 


FIRST AMENDMENT TO ENGINEERING, PROCUREMENT

AND CONSTRUCTION FIXED PRICE CONTRACT


 


THIS FIRST AMENDMENT
TO ENGINEERING, PROCUREMENT, AND CONSTRUCTION FIXED PRICE CONTRACT is made this
21st day of November, 2006 (the “Effective Date”), and is for the purpose of
amending that certain Engineering, Procurement, and Construction Fixed Price
Contract between Otter Tail Ag Enterprises, LLC, and Gateway Building Systems
dated November 13, 2006 (hereinafter, the “Contract”).


 


Based upon the
written agreement of the parties hereto, as of the Effective Date, the Contract
is amended as follows:


 


1.      Section 8.1
of the Contract is amended to read, in pertinent part, as follows:


 


“8.1 Contract Sum; Adjustments to Contract
Sum: Owner will pay Gateway for the full and satisfactory
completion of the Work, the Contract Sum of $5,128,000.00...”


 


2.      Section 14.5.1.2
of the Contract shall be amended to provide as follows:


 


“14.5.1.2 The
Performance Bond and the Labor and Material Payment Bond shall be a single
limit of $2,500,000.00 maximum. The bond shall provide, among other things,
performance bonding for dust control milling conveyor, DDG bulk weigher
equipment, scales, weigh screw, cleaning equipment, and bucket elevators and
capacities.”


 


3.       Section B.1 of Exhibit B
to the Contract shall amended as follows:


 


“B.1 PRICE


 


Contract sum
$5,128,000.00, subject to adjustments as set forth in Section 8 of the
Contract.”


 


4.       Section A.1
entitled, “Gateway Scope of Services,” in Exhibit A to the Contract shall
be amended in pertinent part as follows:


 


A.          Section 4
entitled “Ground Com and Mill System” shall delete the “1” 6,000 BPH Tank Plug
Auger from Leg into Processing Plant.


 


Except for the
amendments set forth herein, there are no other modifications to the Contract,
and this agreement shall not be deemed, nor shall it constitute, any
alteration, waiver, annulment, or variation of any term or condition of, or any
rights, powers, or remedies under, the Contract, except as expressly set forth
herein.


 

















 


[Signature Page to First Amendment to Engineering, Procurement,

and Fixed Price Contract]


 


IN WITNESS
WHEREOF, the parties hereto have executed this First Amendment to Engineering,
Procurement, and Fixed Price Contract on the 21st day of November, 2006.


 


	
   

  	
  GATEWAY
  BUILDING SYSTEMS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Brian Shuck

  	
   

  
	
   

  	
  Brian Shuck

  
	
   

  	
  Its Division
  Manager

  



 

















 


[Signature Page to First Amendment to Engineering, Procurement,

and Fixed Price Contract]


 


IN WITNESS
WHEREOF, the parties hereto have executed this First Amendment to Engineering,
Procurement, and Fixed Price Contract on the 21st day of November, 2006.


 


	
   

  	
  OTTER TAIL AG
  ENTERPRISES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Kelly
  Longtin

  	
   

  
	
   

  	
  Kelly
  Longtin

  
	
   

  	
  Its
  CEO/General Manager

  



 

















 


 


	
  ACORD

  	
  CERTIFICATE OF LIABILITY
  INSURANCE

  	
  OP ID BJ

  MNFERG4 

  	
  DATE (MM/DD/YYYY)

  11/09/06

  
	
  PRODUCER

   

  Ag States Group

  Po. Box 64089

  St. Paul MN 55164-0089

  	
  THIS CERTIFICATE IS ISSUED AS A MATTER OF
  INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS
  CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE
  POLICIES BELOW.

  
	
  Phone: 800-548-1494 Fax: 651-355-6359

  	
  INSURERS AFFORDING COVERAGE

  	
  NAIC #

  
	
  INSURED

  	
  INSURER A:    Nationwide Agribusiness

  	
   

  
	
   

  	
  INSURER B:

  	
   

  
	
  Otter
  Tail Ag Enterprises, LLC

  	
  INSURER C:

  	
   

  
	
  Kelly
  Longtin

  	
  INSURER D:

  	
   

  
	
  1220 N
  Tower Road #201

  	
  INSURER E:

  	
   

  
	
  Fergus
  Falls MN 56537

  	
   

  	
   

  
						



 


COVERAGES


	
  THE POLICIES OF INSURANCE LISTED BELOW HAVE
  BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING
  ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH
  RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE
  INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE
  TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE
  BEEN REDUCED BY PAID CLAIMS.

  



 


	
  INSR

  LTR

  	
  ADDL

  INSRD

  	
  TYPE OF INSURANCE

  	
  POLICY
  NUMBER

  	
  POLICY
  EFFECTIVE

  DATE (MM/DD/YY)

  	
  POLICY
  EXPIRATION

  DATE (MM/DD/YY)

  	
  LIMITS

  
	
   

  	
   

  	
    GENERAL LIABILITY

  	
   

  	
   

  	
   

  	
  EACH
  OCCURRENCE

  	
  $

  	
  1,000,000

  
	
  A

  	
   

  	
  x COMMERCIAL GENERAL LIABILITY

   

  	
  CPP124428

  	
  10/24/06

  	
  10/24/07

  	
  DAMAGE
  TO RENTED PREMISES (Es OCCURRENCE)

  	
  $

  	
  100,000

  
	
   

  	
   

  	
  oo CLAIMS MADE

  x OCCUR

  	
   

  	
   

  	
   

  	
  MED
  EXP (Any one person)

  	
  $

  	
  5,000

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  PERSONAL
  & ADV INJURY

  	
  $

  	
   1,000,000

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  GENERAL
  AGGREGATE

  	
  $

  	
  2,000,000

  
	
   

  	
   

  	
    GEN’L AGGREGATE LIMIT APPLIES PER:

  o POLICY o PROJECT

  o LOC

  	
   

  	
   

  	
   

  	
  PRODUCTS - COMP/OP
  AGG

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    AUTOMOBILE LIABILITY

  	
   

  	
   

  	
   

  	
  COMBINED
  SINGLE LIMIT (Ea accident)

  	
  $

  	
  1,000,000

  
	
  A

  	
   

  	
  x ANY AUTO

  	
  CPP124428

  	
  10/24/06

  	
  10/24/07

  	
   

  	
   

  
	
   

  	
   

  	
  o ALL OWNED AUTOS

  	
   

  	
   

  	
   

  	
  BODILY INJURY

  (Per person)

  	
  $

  	
   

  
	
   

  	
   

  	
  o SCHEDULED AUTOS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  x HIRED AUTOS

  	
   

  	
   

  	
   

  	
  BODILY INJURY

  (Per accident)

  	
  $

  	
   

  
	
   

  	
   

  	
  x NON-OWNED AUTOS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  PROPERTY DAMAGE (Per
  accident)

  	
  $

  	
   

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  AUTO
  ONLY - EA ACCIDENT

  	
  $

  	
   

  
	
   

  	
   

  	
    GARAGE LIABILITY

  	
   

  	
   

  	
   

  	
  OTHER THAN 

  	
  EA ACC

  	
  $

  	
   

  
	
   

  	
   

  	
  o ANY AUTO

  	
   

  	
   

  	
   

  	
  AUTO ONLY:

  	
  AGG

  	
  $

  	
   

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   
  EXCESS/UMBRELLA LIABILITY

  	
   

  	
   

  	
   

  	
  EACH OCCURRENCE

  	
  $

  	
  4,000,000

  
	
  A

  	
   

  	
  x OCCUR   
  o CLAIMS MADE

  	
  CU124428

  	
  10/24/06

  	
  10/24/07

  	
  AGGREGATE

  	
  $

  	
  4,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
  o DEDUCTIBLE

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
  x RETENTION   $10,000

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
  WORKERS COMPENSATION AND
  EMPLOYERS’ LIABILITY

  	
   

  	
   

  	
   

  	
   

  	
  WC STATUTORY LIMITS

  	
  OTHER

  	
   

  	
   

  
	
   

  	
   

  	
  ANY
  PROPRIETOR/PARTNER/EXECUTIVE OFFICER/MEMBER EXCLUDED?

  	
   

  	
   

  	
   

  	
  E.L.
  EACH ACCIDENT

  	
  $

  	
   

  
	
   

  	
   

  	
  If yes, describe under

  SPECIAL PROVISIONS below 

  	
   

  	
   

  	
   

  	
  E.L.
  DISEASE - EA EMPLOYEE

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  E.L.
  DISEASE - POLICY LIMIT

  	
  $

  	
   

  
	
   

  	
   

  	
    OTHER

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A

  	
   

  	
    Property/Stock/BI

  	
  COP124428

  	
  10/24/06

  	
  10/24/07

  	
  Property

  on File

  	
   

  
												



 


DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES / EXCLUSIONS ADDED BY
ENDORSEMENT / SPECIAL PROVISIONS


 


EVIDENCE OF INSURANCE


 


	
  CERTIFICATE HOLDER

  	
   

  	
  CANCELLATION

  
	
  GATFAR1

  	
   

  	
  SHOULD ANY OF THE ABOVE DESCRIBED POLICIES
  BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL
  ENDEAVOR TO MAIL 10 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO
  THE LEFT, BUT FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY
  KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES.

  
	
   

  
	
  GATEWAY
  BUILDING SYSTEMS

  
	
  BRIAN
  SHUCK

  
	
  3451
  SOUTH UNIVERSITY DRIVE

  
	
  FARGO ND
  58104

  
	
   

  	
  AUTHORIZED
  REPRESENTATIVE

  
	
   

  	
  /s/ Dale
  Lieb

  
	
   

  	
   

  
	
  ACORD 25 (2001/08)

  	
  © ACORD CORPORATION 1988