Exhibit
10.5


	
  

  	
   

  	
  

  



 


CONTINUOUS SERVICES AGREEMENT


FOR


ENGINEERING
SERVICES


THIS
CONTINUOUS SERVICES AGREEMENT is made this 25th day of April, 2006, between Highwater Ethanol (“OWNER”) and TranSystems
Corporation (“TRANSYSTEMS”).


WITNESSETH:


WHEREAS,
OWNER desires to engage TRANSYSTEMS on a non-exclusive basis to provide
engineering, design and other professional services for OWNER in connection
with a variety of projects at various job sites, the general scope of work,
duties and responsibilities for which will be described in separate “Request
for Services” for each project; and


WHEREAS,
TRANSYSTEMS desires to provide OWNER with such design, engineering and other
professional services as may be requested by Owner in connection with the
various Owner’s projects, all in accordance with the terms and conditions of
this Agreement; and


WHEREAS,
the parties hereto desire to enter into this Agreement to set forth the general
terms and conditions applicable to OWNER’s overall relationship with
TRANSYSTEMS with respect to each project on which OWNER may engage TRANSYSTEMS;
and


WHEREAS,
the parties hereto intend that OWNER shall issue a separate “Request for
Services” for each project for which OWNER desires to engage TRANSYSTEMS to
provide services pursuant to this Agreement and each such Request for Services
shall describe and define the exact scope of the project, the scope of work and
the exact services to be performed by TRANSYSTEMS on the particular project;
the respective duties of Owner and TRANSYSTEMS on the particular project, any
special pricing or special fees applicable to the particular project, the time
for completion of the particular project and any other special or unique terms
and conditions with respect to the particular project;


NOW,
THEREFORE, in consideration of the premises and the covenants hereinafter
contained, the parties hereto agree as follows:


 


Highwater Ethanol


April 25, 2006



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SECTION 1


DESCRIPTION
OF AGREEMENT


Section 1.1                                   Continuous
Services agreement. This Agreement consists of this contract document that
stipulates the general terms and conditions that will govern the services the
OWNER has engaged TRANSYSTEMS to perform as defined in a separate “Request for
Services” document.


Section 1.2                                                           Entire
Agreement. This Agreement, as defined in Section 1.1 and as adopted by the
particular Request for Services Agreement, sets forth the full and complete
understanding of the parties responsibilities as of the date first stated
above.


Section 1.3                                                           Conflicting
Provisions. Unless expressly agreed to the contrary, in the Request For
Services Agreement, In the event of any conflict between this Agreement and any
Requests for Services issued pursuant to Section 2.1, the Request for Service
Agreement shall control.


SECTION 2


SCOPE OF WORK


Section 2.1                                                           Description
of Work; Requests for Services. TRANSYSTEMS shall perform on an “on call”
basis, engineering, design, master planning or other professional services
(including, but not limited to, civil, structural, mechanical, electrical, industrial
and railroad engineering services and architectural design services) in
connection with various of OWNER’s projects at various of OWNER’s facilities
all as specified in particular written Requests for Services issued by OWNER
from time to time during the term of this Agreement (the “Services”).  Each Request for Services shall make specific
reference to this Agreement and shall not be effective or binding upon
TRANSYSTEMS until such Request for Services has been accepted by TRANSYSTEMS in
writing under the signature of its authorized representative.  Requests for Services shall not amend or add
to the general terms and conditions set forth in this Agreement in any respect
except to define and describe: i) the particular project on which TRANSYSTEMS is
being engaged to perform Services (the “Project”); ii) the scope of work and
the exact Services to be performed by TRANSYSTEMS on the particular Project;
iii) the respective special or unique responsibilities or duties of OWNER and
TRANSYSTEMS, if any, on the particular Project; iv) any special pricing or
special fees, if any, applicable to the particular Project; v) the time for
completion of the particular Project, if any; and, vi) any other special or
unique terms and conditions which are necessary to describe the particular
Project or the Services to be performed by TRANSYSTEMS on the particular
Project. Additional or conflicting contractual terms or conditions may be added
only by formal amendment to this Agreement and not through Requests for Services;
any such terms and conditions contained in Requests for Services shall be of no
force or effect.



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In
addition, the OWNER agrees, to the fullest extent permitted by law, to
indemnify and hold harmless TRANSYSTEMS, its officers, directors, employees and
subconsultants (collectively, Consultant) against all damages, liabilities or
costs, including reasonable attorneys’ fees and defense costs, arising out of
or in any way connected with the performance of such services by other persons
or entities and from any and all claims arising from modifications,
clarifications, interpretations, adjustments or changes made to the Contract
Documents to reflect changed field or other conditions, except for claims, to
the extent caused by the negligence or willful misconduct of TRANSYSTEMS.


Section 2.2                                                           Agreed
Upon Changes in the Services.  It is
the desire of the parties to keep changes in the scope of the Services under
each approved Request for Services at a minimum, but the parties recognize that
such changes may become necessary and agree that OWNER may initiate deletions,
additions, modifications or changes to the Services by advising TRANSYSTEMS in
writing of the change believed to be necessary. 
As soon thereafter as practical, TRANSYSTEMS shall prepare a cost
estimate of the change and shall inform OWNER of the adjustment in the
compensation due TRANSYSTEMS under Section 5 hereof (“TRANSYSTEMS’ Compensation”)
and/or the Completion Date set forth in Section 4 hereof, if any, applicable to
the Request for Service for which the change is requested. OWNER shall then
advise TRANSYSTEMS in writing of its approval or disapproval of the
change.  If OWNER approves the change, a
written Contract Amendment shall be executed by both parties and TRANSYSTEMS
shall perform the Services as changed and the adjustment in TRANSYSTEMS’
Compensation and/or the Completion Date set forth in the executed Contract
Amendment shall become effective. 
TRANSYSTEMS may initiate changes in the Services by advising OWNER in
writing that in its opinion a change is necessary.  If OWNER approves, it shall so advise
TRANSYSTEMS and, thereafter, the change shall be handled as if initiated by
OWNER.  If a change is not approved, or
if a written Contract Amendment is not executed, by both OWNER and TRANSYSTEMS,
the change shall not become effective and TRANSYSTEMS shall not be obligated to
perform the change.



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Section 2.3                                                           Constructive
Changes and Other Additional Costs. 
In the event of (1) the OWNER’s addition to, modification or change of
or deletion from the Services to be performed by TRANSYSTEMS (other than
additions, modifications, changes or deletions handled through the provisions
of Section 2.2 above); (2) a request for or approval from OWNER of performance
of Services in excess of TRANSYSTEMS’ standard work day or work week or such
shorter times as are provided by applicable collective bargaining agreements,
or on a holiday customarily observed by TRANSYSTEMS; (3) the discovery of any
subsurface or other conditions, which differ materially from those shown in or
reasonably inferable from the documents or other information on which this
Agreement is based and/or those ordinarily encountered and generally recognized
as inherent in the locality of the Project; (4) a modification of applicable
law by which TRANSYSTEMS is required to pay increased or additional taxes,
government-regulated transportation costs, insurance or other amounts which are
not required as of the date of this Agreement; (5) delay, suspension of,
acceleration of or interference with, TRANSYSTEMS’ performance of the Services
by OWNER or by any other person or entity including, but not limited to
national, state or local governments; (6) wage, benefit or payroll tax
increases due to governmental action or area agreements; (7) modification to or
delay in furnishing design criteria or other information supplied by any person
or entity, other than TRANSYSTEMS, if TRANSYSTEMS’ performance of the Services
under this Agreement depends upon such criteria or information; and/or (8) any
other increase in TRANSYSTEMS’ costs, or the time required for completion of
the Services due to “Force Majeure Event” as set forth in Section 4 hereof, a
change in applicable law or any other cause beyond TRANSYSTEMS’ reasonable
control, then the TRANSYSTEMS’ Compensation and/or the Completion Date, if any,
applicable to that particular Request for Services effected by said change,
shall be equitably adjusted and TRANSYSTEMS shall be paid, and TRANSYSTEMS’
Compensation under that particular Request for Services shall be adjusted by,
an amount equal to the additional costs to TRANSYSTEMS resulting therefrom.


SECTION 3


DUTIES
AND RESPONSIBILITIES


Section 3.1                                   TRANSYSTEMS’
Responsibilities. TRANSYSTEMS, 
subject to the terms and provisions of this Agreement and each specific
Request for Services, shall:


Section 3.1.1                                                 Furnish
the services of all necessary supervisors, engineers, designers, draftsmen, and
other personnel (including independent professional associates and consultants)
which TRANSYSTEMS deems reasonably necessary to provide or perform the Services
set forth in an approved Request for Services;


Section 3.1.2                                                 Obtain
all process and other licenses required to be obtained by TRANSYSTEMS pursuant
to an approved Request for Services;



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Section 3.1.3                                                 Perform
or provide the Services to be performed or provided by TRANSYSTEMS pursuant to
an approved Request for Services and perform any other specific
responsibilities and duties, if any, set forth in an approved Request for
Services,


Section 3.1.4                                                 Appoint
one or more individuals who shall be authorized to act on behalf of TRANSYSTEMS
and with whom OWNER may consult at all reasonable times, and whose
instructions, requests, and decisions will be binding upon TRANSYSTEMS as to
all matters pertaining to this Agreement and the performance of the parties
hereunder.


Section 3.1.5                                                 Upon
request by the OWNER, TRANSYSTEMS shall evaluate and make recommendations
regarding substitutions of materials, products or equipment proposed by the
OWNER’s consultants or contractors. 
TRANSYSTEMS shall be compensated for these services, as well as any
services required to modify and coordinate the construction documents prepared
by TRANSYSTEMS with those of TRANSYSTEMS’s subconsultants and the OWNER’s
consultants, as Additional Services. 
TRANSYSTEMS also shall be entitled to an adjustment in schedule caused
by this additional effort.


Section 3.1.6                                                 TRANSYSTEMS
shall not supervise, direct or have control over the Contractor’s work nor have
any responsibility for the construction means, methods, techniques, sequences
or procedures selected by the Contractor nor for the Contractor’s safety
precautions or programs in connection with the Work.  These rights and responsibilities are solely
those of the Contractor in accordance with the Contract Documents.


TRANSYSTEMS
shall not be responsible for any acts or omissions of the Contractor,
subcontractor, any entity performing any portions of the Work, or any agents or
employees of any of them.  TRANSYSTEMS
does not guarantee the performance of the Contractor and shall not be
responsible for the Contractor’s failure to perform its Work in accordance with
the Contract Documents or any applicable laws, codes, rules or regulations.


Section 3.1.7                                                 The
Contractor may, after exercising due diligence to locate required information,
request from TRANSYSTEMS clarification or interpretation of the requirements of
the Contract Documents.  TRANSYSTEMS
shall, with reasonable promptness, respond to such Contractor’s requests for
clarification or interpretation. 
However, if the information requested by the Contractor is apparent from
field observations, is contained in the Contract Documents or is reasonably
inferable from them, the Contractor shall be responsible to the OWNER for all
reasonable costs charged by TRANSYSTEMS to the OWNER for the work required to
provide such information.



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Section 3.1.8                                                 If,
during the term of this Agreement, circumstances or conditions that were not
originally contemplated by or known to TRANSYSTEMS are revealed, to the extent
that they affect the scope of services, compensation, schedule, allocation of
risks or other material terms of this Agreement, TRANSYSTEMS may call for
renegotiation of appropriate portions of this Agreement.  TRANSYSTEMS shall notify the OWNER of the
changed conditions necessitating renegotiation, and TRANSYSTEMS and the OWNER
shall promptly and in good faith enter into renegotiation of this Agreement to
address the changed conditions.  If terms
cannot be agreed to, the parties agree that either party has the absolute right
to terminate this Agreement, in accordance with the Termination provision
hereof.


Section 3.2                                                        Owner’s
Responsibilities.  OWNER, subject to
the terms and provisions of this Agreement and each specific Request for
Services, shall do the following in a timely manner so as to not delay the
Services of TRANSYSTEMS:


Section 3.2.1                                                 Designate
a person to act as OWNER’s representative with respect to the Services to be
rendered under this Agreement.  Such
person shall have complete authority to transmit instructions, receive
information, interpret, and define OWNER’S policies and decisions with respect
to TRANSYSTEMS’ Services for the particular Project;


Section
3.2.2                                                 Provide
all criteria, all available information pertinent to each Project, and full
information as to OWNER’S requirements for each Project.  OWNER agrees that TRANSYSTEMS shall be
entitled to rely upon the accuracy and completeness of all such information;


Section 3.2.3                                                 Arrange
for access to and make all provisions for TRANSYSTEMS to enter upon public and
private property as required for TRANSYSTEMS to perform services under this
Agreement.  All such access shall be
provided without condition or restriction unacceptable to TRANSYSTEMS nor shall
TRANSYSTEMS be required to indemnify or insure any third party as a condition
to such access.


Section 3.2.4                                                 Examine
all studies, reports, sketches, drawings, specifications, proposals, and other
documents presented by TRANSYSTEMS, obtain advice of an attorney, insurance
counselor and other consultants as OWNER deems appropriate for such examination
and render in writing decisions pertaining thereto within a reasonable time so
as not to delay the Services of TRANSYSTEMS;


Section 3.2.5                                                 Give
prompt written notice to TRANSYSTEMS whenever OWNER observes or otherwise
becomes aware of any development that affects the scope or timing of
TRANSYSTEMS’ Services, or any defect or non-conformance in the Services by
TRANSYSTEMS 



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(or
its independent professional associates or consultants) or in the work of any
other party performing or providing work or services in connection with the
Project;


Section 3.2.6                                                 When
OWNER deems it necessary or appropriate for services in addition to the
Services to be performed in connection with a particular Request for
Services,  OWNER shall furnish such additional
services or direct TRANSYSTEMS to provide such additional services either by
the issuance of a new and additional Request for Services or by following the
provisions set forth in Section 2.2 of this Agreement;


Section 3.2.7                                                 Provide
TRANSYSTEMS with any necessary governmental allocations or priorities, obtain
all permits and licenses required to be taken out in the name of OWNER which
are necessary for the performance of the Services and, except where such
permits, processes or licenses are by the terms of a particular approved
Request for Services the responsibility of TRANSYSTEMS, obtain any permits,
processes and other licenses which are required for the Project or the
Services;


Section 3.2.8                                                 Perform
any other duties, obligations or responsibilities of the OWNER set forth
elsewhere in this Agreement, including, but not limited to, the obligation to
make the payments called for under Section 5 hereof and perform any
responsibilities and duties of the OWNER which may be identified on a
particular Request for Services, if any;


Section 3.2.9                                                 Pay
for and be responsible for all taxes incurred in connection with each Project,
regardless of whether such taxes are assessed against OWNER, TRANSYSTEMS or
others.


Section 3.2.10                                          Bear
all costs incident to compliance with the requirements of this Section 3.2.


Section
3.2.11                                          The
OWNER shall promptly report to TRANSYSTEMS any defects or suspected defects in
TRANSYSTEMS’s services of which the OWNER becomes aware, so that TRANSYSTEMS
may take measures to minimize the consequences of such a defect.  The OWNER further agrees to impose a similar
notification requirement on all Contractors in its OWNER/Contractor contract
and shall require all subcontracts at any level to contain a like
requirement.  Failure by the OWNER and
the OWNER’s contractors or subcontractors to notify TRANSYSTEMS shall relieve
TRANSYSTEMS of the costs of remedying the defects above the sum such remedy
would have cost had prompt notification been given when such defects were first
discovered;


Section 3.2.12                                          In
the event OWNER, OWNER’s contractors or subcontractors, or 



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anyone
for whom OWNER is legally liable makes or permits to be made any changes to any
reports, plans, specifications or other construction documents prepared by
TRANSYSTEMS without obtaining TRANSYSTEMS’s prior written consent, OWNER shall
assume full responsibility for the results of such changes;  therefore, OWNER agrees to waive any claim
against TRANSYSTEMS and to release TRANSYSTEMS from any liability arising directly
or indirectly from such changes.


In
addition, OWNER agrees, to the fullest extent permitted by law, to indemnify
and hold harmless TRANSYSTEMS from any damages, liabilities or costs, including
reasonable attorneys’ fees and costs of defense, arising from such changes.


In
addition, OWNER agrees to include in any contracts for construction appropriate
language that prohibits the Contractor or any subcontractors of any tier from
making any changes or modifications to TRANSYSTEMS’s construction documents
without the prior written approval of TRANSYSTEMS and that further requires the
Contractor to indemnify both TRANSYSTEMS and OWNER from any liability or cost
arising from such changes made without such proper authorization.


SECTION 4


PERIODS
OF SERVICE, COMPLETION DATE, FORCE MAJEURE


Section 4.1                                   Period
of Service.  This Agreement shall
continue until this Agreement is terminated pursuant to Section 7.1 and all
Services under those Requests for Services which are pending at the time of
said termination are completed.


Section 4.2                                   Completion
Date.  Unless a specific Completion
Date is expressly set forth in a particular Request for Services as the date
the Services under that Request for Services must be completed, any date set
forth in a Request for Service shall be an estimated, but not guaranteed, date
for the completion of the Services under that particular Request for
Services.  If any such Completion Date is
exceeded through no fault of TRANSYSTEMS, all rates, measures and compensation
provided herein shall be subject to equitable adjustment. The Completion Date
(and TRANSYSTEMS’ obligation to complete the Services by such date, if any) is
subject to reasonable extensions for the performance of additional Services,
constructive changes or other extra work and is subject to reasonable
extensions for a Force Majeure Event.


The
OWNER and Consultant are aware that many factors outside TRANSYSTEMS’s control
may affect TRANSYSTEMS’ ability to complete the services to be provided under
this Agreement.  TRANSYSTEMS will perform
these services with reasonable diligence and expediency consistent with sound
professional practices.



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If
TRANSYSTEMS becomes aware of delays due to time allowances for review and
approval being exceeded, delay by the Contractor, the OWNER, the OWNER’s consultants
or any other cause beyond the control of TRANSYSTEMS, which will result in the
schedule for performance of TRANSYSTEMS’s services not being met, TRANSYSTEMS
shall promptly notify the OWNER.  If the
OWNER becomes aware of any delays or other causes that will affect TRANSYSTEMS’s
schedule, the OWNER shall promptly notify TRANSYSTEMS.  In either event, TRANSYSTEMS’s schedule for
performance of its services shall be equitably adjusted.


Section 4.3                                                        Force
Majeure.   For purposes hereof, a “Force
Majeure Event” shall mean the occurrence of a failure or delay due to
circumstances beyond TRANSYSTEMS’ control including, without limitation, acts
of God, acts of a public enemy, fires, floods, earthquakes, wars, civil
disturbances, sabotage, accidents, insurrection, blockages, embargoes, storms,
explosions, catastrophes, epidemics, damage to a particular Project, lack of
access to a particular Project, unavailable utilities and power, water, labor
disputes, OWNER’s failure to timely perform its obligations under this
Agreement or other causes beyond TRANSYSTEMS’ control.


SECTION 5


TRANSYSTEMS’
COMPENSATION


Section 5.1                                                           Compensation
for Services and Expenses of TRANSYSTEMS. 
Unless other compensation or fee arrangements are expressly set
forth in a particular approved Request for Services (in which case OWNER shall
pay TRANSYSTEMS in accordance with any such compensation or fee arrangements),
OWNER shall compensate TRANSYSTEMS for its Services performed or furnished
under a particular Request for Service as follows:


Section 5.1.1                                                 For
Services. As compensation for the performance of the Services rendered by
TRANSYSTEMS under a particular Request for Services, OWNER shall pay
TRANSYSTEMS, in accordance with the provisions of Section 5.3.


Section 5.1.2                                                 For
Reimbursable Expenses.  In addition
to payments provided for in paragraphs 5.1.1. OWNER shall also pay TRANSYSTEMS
for all Reimbursable Expenses incurred in connection with all Services provided
pursuant to a particular Request for Service. 
For purposes hereof, “Reimbursable Expenses” are those costs and
expenses incurred by TRANSYSTEMS in connection with the performance of the
Services under this Agreement or a particular Request for Service, including,
but not limited to, the costs and expenses incurred by TRANSYSTEMS for travel,
reproduction, mailing costs, computer time, supplies and materials, taxes,
transportation, telephone and communications, independent professional
associates and consultants and subconsultants and any other expense items which
are described on TRANSYSTEMS’ Schedule of Rates and Expenses in effect at the
time the Services are provided 



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and
the Reimbursable Expenses are incurred.


Section 5.2                                                           Monthly
Invoices.  TRANSYSTEMS shall submit
monthly statements for Services rendered and for Reimbursable Expenses incurred
under each Request for Services.  The
statements will be based upon TRANSYSTEMS’ estimate of the proportion of the
total Services actually completed at the time of billing or upon the time spent
and costs incurred by TRANSYSTEMS during the period covered by such
statement.  OWNER shall make prompt
monthly payments in response to TRANSYSTEMS’ monthly statements.


Section 5.3                                                           Other
Provisions Concerning Payments.


Section 5.3.1                                                 Interest,
Suspension of Services.  If OWNER
fails to make any payment due TRANSYSTEMS for services and expenses within
thirty (30) days after receipt of TRANSYSTEMS’ statement therefor, TRANSYSTEMS
shall be entitled interest on the unpaid amounts due TRANSYSTEMS at the lesser
of: i) 1.5 % per month; or, ii) the highest rate of interest allowed under
applicable law.   The entire unpaid
balance due TRANSYSTEMS shall bear said rate of interest from the thirtieth day
after OWNER’s receipt of TRANSYSTEMS’ statement,  until the entire unpaid balance has been paid
to TRANSYSTEMS.  In addition to being
entitled to interest, TRANSYSTEMS may, after giving seven (7) days written
notice to OWNER, suspend services under this Agreement until TRANSYSTEMS has
been paid in full all amounts due for Services, expenses, and charges.


Section 5.3.2                                                 Payments
after Termination by OWNER.  In the
event of termination under Section 7.1, TRANSYSTEMS will be paid for Services
rendered and Reimbursable Expenses incurred to the date of termination on those
particular Requests for Services terminated, on the basis of TRANSYSTEMS’
Invoiced Services and Expenses then in effect. 
TRANSYSTEMS shall also be reimbursed for the charges of independent
professional associates and consultants employed by TRANSYSTEMS to render
Services and all reasonable demobilization costs incurred by TRANSYSTEMS,
including any cancellation charges by independent professional associates,
consultants and others performing or furnishing Services through TRANSYSTEMS
under those particular Request for Services terminated, and TRANSYSTEMS shall
be paid all other amounts due it under this Agreement which are earned through
the date of the termination.


Section 5.3.3                                                 Records.  Records of TRANSYSTEMS’ salary costs
pertinent to TRANSYSTEMS’ compensation under this Agreement will be kept in
accordance with generally accepted accounting practices.  If OWNER desires to have copies of such
records, copies will be made available to OWNER upon OWNER’s request prior to
final payment for TRANSYSTEMS’ Services under a particular Request for
Services.  TRANSYSTEMS shall be
reimbursed the cost of any such copies by OWNER.



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Section 5.3.4                                                 Cost
Factors.  Whenever a factor is
applied to salary costs or other expenses in determining compensation payable
to TRANSYSTEMS that factor will be adjusted periodically and equitably to
reflect changes in the various elements that comprise such factor.  All such adjustments will be in accordance
with generally accepted accounting practices as applied on a consistent basis
by TRANSYSTEMS and consistent with TRANSYSTEMS’ overall compensation practices
and procedures.


SECTION 6


OPINIONS
OF COST AND SCHEDULE


Section 6.1                                                           Opinions
of Cost and Schedule.  Since
TRANSYSTEMS has no control over the cost of labor, materials, equipment or
services furnished by others, or over the resources provided by others to meet
construction or other Project schedules, or over the methods of others in
determining prices, or over competitive bidding or market conditions,  TRANSYSTEMS’ opinions of probable costs
(including probable Total Project Costs and Construction Cost) and of Project
Schedules shall be made on the basis of TRANSYSTEMS’ experience and
qualifications and represent TRANSYSTEMS’ best judgment as an experienced and
qualified professional engineer, familiar with the construction industry; but
TRANSYSTEMS cannot and does not guarantee that proposals, bids or actual
Project Costs (including Total Project Costs or Construction Costs) will not
vary from opinions of probable cost prepared by TRANSYSTEMS or that actual
schedules will not vary from the projected schedules prepared by TRANSYSTEMS.  TRANSYSTEMS
makes no warranty, express or implied, that the bids or the negotiated cost of
the work will not vary from TRANSYSTEMS’ opinion of probable construction cost.



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SECTION 7


GENERAL
CONSIDERATIONS


Section 7.1                                                           Termination.  The obligation to provide further Services
under this Agreement may be terminated by either party upon thirty (30) days
written notice to the other party.  In
the event such a termination is of a particular Request for Services, then this
Agreement shall remain in effect for all other outstanding requests for
services and any future approved Requests for Services.  In the event said termination is for the entire
Agreement, then the termination shall effect and terminate this Agreement and
all outstanding Requests for Services.


If
TRANSYSTEMS for any reason is not allowed to complete all the services called
for by this Agreement, TRANSYSTEMS shall not be held responsible for the
accuracy, completeness or constructability of the construction documents
prepared by TRANSYSTEMS if used, changed or completed by the OWNER or by
another party.  Accordingly, the OWNER
agrees, to the fullest extent permitted by law, to indemnify and hold harmless
TRANSYSTEMS, its officers, directors, employees and subconsultants
(collectively, Consultant) from any damages, liabilities or costs, including
reasonable attorneys’ fees and defense costs, arising or allegedly arising from
such use, change or completion by any other party of any construction documents
prepared by TRANSYSTEMS.


Section 7.2                                                           Reuse
of Documents.  All documents,
drawings, sketches, studies, analysis, information, schedules, estimates,
reports and other items prepared or furnished by TRANSYSTEMS (or TRANSYSTEMS’
independent professional associates and consultants) pursuant to this
Agreement,  including, but not limited to
Drawings and Specifications,  are
instruments of service in respect of the particular Project for which they were
prepared and TRANSYSTEMS shall retain an ownership and property interest
therein whether or not the particular Project is completed.  Provided, however, that such documents,
drawings, sketches, studies, analysis, information, schedules, estimates,
reports and other items are not intended or represented to be suitable for
reuse by OWNER or others on extensions of the particular Project or on any
other project.  Any reuse without written
verification or adaptation by TRANSYSTEMS for the specific purpose intended
will be at OWNER’s sole risk and without liability or legal exposure to
TRANSYSTEMS, or to TRANSYSTEMS’ independent professional associates or
consultants, and OWNER does hereby, to the fullest extent permitted by law,
indemnify and hold harmless TRANSYSTEMS, TRANSYSTEMS’ officers, employees and
agents and TRANSYSTEMS’ independent professional associates and consultants
from all claims, suits, demands, damages, liabilities, losses, expenses and
costs, including but not limited to reasonable attorney’s fees and other costs
of defense, arising out of or resulting therefrom.  The provisions of this Section 7.2 shall
survive the termination of this Agreement.



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Section 7.3                                                           Use
of Electronic Media.


In
the event that OWNER requests any electronic deliverables under this agreement,
TRANSYSTEMS and OWNER shall execute a separate CADD agreement.  Otherwise, in accepting and utilizing any
drawings, reports and data on any form of electronic media generated and
furnished by TRANSYSTEMS, the OWNER agrees that all such electronic files are
instruments of service of TRANSYSTEMS, who shall be deemed the author, and
shall retain all common law, statutory law and other rights, including
copyrights.


The
OWNER agrees not to reuse these electronic files, in whole or in part, for any
purpose other than for the Project.  The
OWNER agrees not to transfer these electronic files to others without the prior
written consent of TRANSYSTEMS.  The
OWNER further agrees to waive all claims against TRANSYSTEMS resulting in any
way from any unauthorized changes to or reuse of the electronic files for any
other project by anyone other than TRANSYSTEMS.


Electronic
files furnished by either party shall be subject to an acceptance period of
sixty (60) days during which the receiving party agrees to perform appropriate
acceptance tests.  The party furnishing
the electronic file shall correct any discrepancies or errors detected and
reported within the acceptance period. 
After the acceptance period, the electronic files shall be deemed to be
accepted and neither party shall have any obligation to correct errors or
maintain electronic files.


The
OWNER is aware that differences may exist between the electronic files
delivered and the printed hard-copy construction documents.  In the event of a conflict between the signed
construction documents prepared by TRANSYSTEMS and electronic files, the signed
or sealed hard-copy construction documents shall govern.


In
addition, the OWNER agrees, to the fullest extent permitted by law, to
indemnify and hold harmless TRANSYSTEMS, its officers, directors, employees and
subconsultants (collectively, Consultant) against all damages, liabilities or
costs, including reasonable attorneys’ fees and defense costs, arising from any
changes made by anyone other than TRANSYSTEMS or from any reuse of the
electronic files without the prior written consent of TRANSYSTEMS.


Under
no circumstances shall delivery of electronic files for use by the OWNER be
deemed a sale by TRANSYSTEMS, and TRANSYSTEMS makes no warranties, either
express or implied, of merchantability and fitness for any particular
purpose.  In no event shall TRANSYSTEMS
be liable for indirect or consequential damages as a result of the OWNER’s use
or reuse of the electronic files.



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Section 7.4                                                           Standard
of Practice, Warranties.  Services
performed by TRANSYSTEMS under this Agreement will be conducted in a manner
consistent with the level of care, diligence and skill ordinarily possessed and
exercised by members of the profession currently practicing in the same
locality under similar conditions.  Except as expressly set forth above, no other
representations, expressed or implied, and no warranty or guarantee, express or
implied, is included in this Agreement, or in any document, drawing, sketch,
study, analysis, schedule, estimate, report, opinion, specification and other
item prepared or furnished by TRANSYSTEMS (or TRANSYSTEMS’ independent
professional associates and consultants) pursuant to this Agreement.


Section 7.5                                                           Limitation
of Responsibility, Job Site Safety/Techniques. 
Neither the professional activities of TRANSYSTEMS, nor the presence
of TRANSYSTEMS or its employees and subconsultants at a construction/project
site, shall relieve the Contractor of its obligations, duties and
responsibilities including, but not limited to, construction means, methods,
sequence, techniques or procedures necessary for performing, superintending and
coordinating the Work in accordance with the Contract Documents and any health
or safety precautions required by any regulatory agencies.  TRANSYSTEMS and its personnel have no
authority to exercise any control over any construction contractor or its
employees in connection with their work or any health or safety programs or
procedures.  The OWNER agrees that the
Contractor shall be solely responsible for job site safety, and warrants that
this intent shall be carried out in the OWNER’s contract with the
Contractor.  The OWNER also agrees that
the OWNER, TRANSYSTEMS and TRANSYSTEMS’ subconsultants shall be indemnified by
the Contractor and shall be made additional insureds under the Contractor’s
policies of general liability insurance. 
In addition, TranSystems shall not be responsible for (i) the failure of
any other project party to fulfill their respective contractual
responsibilities and obligations to OWNER or to comply with Federal, State or
local laws, rules, regulations or codes; (ii) the schedules of any of the other
project parties or the failure of any of the other project parties to carry out
their work in accordance with their respective agreements.  TranSystems shall not have control over or
charge of and shall not be responsible for acts or omissions of the other
project parties, or their agents or employees, or of any other persons
performing portions of the work on the project.


Section 7.6                                                           Insurance.


Section 7.6.1                                                 TRANSYSTEMS
Insurance.  TRANSYSTEMS shall
maintain throughout the duration of this Agreement insurance in the following
amounts and will, upon request of the OWNER furnish a copy of certification
thereof:


(a)                               Worker’s
Compensation and Employer’s Liability


Worker’s Compensation
Statutory


Employer’s Liability
$500,000/$500,000/$500,000



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(b)                                 Comprehensive
Automobile Liability


$1,000,000
combined single limit Bodily Injury and Property Damage


(c)                                  Comprehensive
General Liability


$1,000,000 - per occurrence


$2,000,000 - annual
aggregate


$2,000,000 product /
completed operations per occurrence


$1,000,000
- personal injury / advertising liability


(d)                                 Umbrella/Excess
Liability


$1,000,000 -per
occurrence


$1,000,000
-annual aggregate


(e)                                  Professional
Liability Insurance in an amount of $1,000,000 per claim and annual aggregate.


Section 7.6.2                                                 If,
pursuant to the provisions of Exhibit A, OWNER is required to obtain certain
insurance coverages, OWNER agrees to obtain and maintain throughout the
duration of this Agreement (or, as applicable, cause its contractors to obtain
and maintain) such insurance in the coverages and the amounts specified on
Exhibit A.  OWNER will furnish
TRANSYSTEMS with a copy of certification of such insurance.  TRANSYSTEMS’ interests shall be covered under
any such insurance coverage. [Note: Deletion of Section 7.6.2 was agreed to
and initialed by Brian Kletscher, President of Highwater Ethanol, LLC and
Timothy P. Rock, Assistant Vice President of TranSystems Corporation on
November 16, 2006.]


Section 7.7                                                           Liability
and Indemnification.


Section 7.7.1                                                 General.  Having considered the potential liabilities
that may exist during the performance of the Services, the benefits of the
Project, and TRANSYSTEMS’ Compensation for the performance of the Services, and
in consideration of the promises contained in this Agreement, OWNER and
TRANSYSTEMS agree to allocate and limit such liabilities in accordance with the
provisions of this Section 7.7.


Section 7.7.2                                                 TRANSYSTEMS
Indemnification. TRANSYSTEMS agrees, to the fullest extent permitted by
law, to indemnify and hold the OWNER harmless from any damage, liability or
cost (including reasonable attorney’s fees and costs of defense) to the extent
caused by TRANSYSTEMS’ negligent acts, errors or omissions in the performance
of professional services under this Agreement and those of its subconsultants
or anyone for whom TRANSYSTEMS is legally liable.  TRANSYSTEMS is not obligated to indemnify the
OWNER in any manner whatsoever for the OWNER’S own negligence.



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Section 7.7.3                                                 OWNER
Indemnification.   The OWNER agrees,
to the fullest extent permitted by law, to indemnify and hold TRANSYSTEMS
harmless from any damage, liability or cost (including reasonable attorney’s
fees and costs of defense) to the extent caused by the OWNER’S negligent acts,
errors or omissions and those of its contractors, subcontractors or consultants
or anyone for whom the OWNER is legally liable, and arising from the Project
that is the subject of this Agreement.  The
OWNER is not obligated to indemnify TRANSYSTEMS in any manner whatsoever for
TRANSYSTEMS’ own negligence.


Section 7.7.4                                                 Contractor
Indemnification. OWNER agrees to cause each of its other contractors on
each particular Project to include an indemnification provision in OWNER’s
contract with each such contractor that indemnifies and holds harmless
TRANSYSTEMS and any of its officers or employees from all loss, damage, cost or
expense to the extent caused by such contractors (or its employees or
subcontractors) negligence or willful misconduct.


Section 7.7.5                                                 Employee
Claims.  TRANSYSTEMS shall indemnify
OWNER against any loss, damage, cost or expense arising out of claims by
TRANSYSTEMS’ employees (unless such claim arises out of or as a result of the
negligence of OWNER, its employees, agents or contractors). OWNER shall
indemnify TRANSYSTEMS against any loss, damage, cost or expense arising out of
claims by OWNER’S employees (unless such claim arises out of or as a result of
the negligence of TRANSYSTEMS, its employees, agents or subcontractors).


Section 7.7.6                                                 Consequential
Damages.  To the fullest extent
permitted by law, TRANSYSTEMS shall not, in any event,  be liable to OWNER for any special, indirect,
incidental or consequential damages, including, but not limited to,  damages from delay, distribution, loss of
product, loss of use, loss of profits or revenue or increased cost of
operation, the cost of capital or the cost of purchased or replacement
equipment, systems or power.


Section 7.7.7                                                 Limitation
of Liability.  To the fullest extent
permitted by law, TRANSYSTEMS’ total liability to OWNER for all claims, losses,
damages and expenses resulting or arising in any way from the performance of
the Services (including TRANSYSTEMS’ indemnity obligations hereunder) shall not
exceed the total compensation received by TRANSYSTEMS under this Agreement or
the limits of any professional liability insurance requirements outlined in
Section 7.6.1(e), whichever is greater. 
BK


Section 7.7.8                                                 Survival.  The terms and conditions of this Section 7.7
shall survive the termination of this Agreement and/or the completion of the
Services.



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Section 7.7.9                                                 Betterment.
If, due to TRANSYSTEMS’ negligence, a required item or component of the
Project is omitted from TRANSYSTEMS’ construction documents, TRANSYSTEMS shall
not be responsible for paying the cost required to add such item or component
to the extent that such item or component would have been required and included
in the original construction documents. 
In no event will TRANSYSTEMS be responsible for any cost or expense that
provides betterment or upgrades or enhances the value of the Project.


Section 7.7.10                                          Protection
of Supplanting Consultant.  In
consideration of the risks and rewards involved in this Project, the OWNER
agrees, to the maximum extent permitted by law, to indemnify and hold harmless
TRANSYSTEMS from any damages, liabilities or costs, including reasonable
attorneys’ fees and defense costs, arising or allegedly arising from any
negligent acts, errors or omissions by any prior consultant employed by the
OWNER on this project and from any claims of copyright or patent infringement
by TRANSYSTEMS arising from the use of any documents prepared or provided by
the OWNER or any prior consultant of the OWNER’s.  The OWNER warrants that any documents
provided to TRANSYSTEMS by the OWNER or by the prior consultant may be relied
upon as to their accuracy and completeness without independent investigation by
TRANSYSTEMS and that the OWNER has the right to provide such documents to
TRANSYSTEMS free of any claims of copyright or patent infringement or violation
of any other party’s rights in intellectual property.


SECTION 8


SPECIAL
PROVISIONS, EXHIBITS AND SCHEDULES


Section 8.1                                                           Special
Provisions.  This Agreement is subject to
no special provisions.


Section 8.2                                                           Entire
Agreement.  This Agreement together
with all approved Requests for Services constitute the entire agreement between
OWNER and TRANSYSTEMS and supersede all prior written or oral
understandings.  This Agreement may only
be amended, supplemented, modified, or canceled by a duly executed written
instrument.


Nothing
contained in this Agreement shall create a contractual relationship with or a
cause of action in favor of a third party against either the OWNER or
TRANSYSTEMS.  TRANSYSTEMS’ services under
this Agreement are being performed solely for the OWNER’s benefit, and no other
party or entity shall have any claim against TRANSYSTEMS because of this
Agreement or the performance or nonperformance of services hereunder.  The OWNER and Consultant agree to require a
similar provision in all contracts with contractors, subcontractors,
subconsultants, vendors and other entities involved in this Project to carry
out the intent of this provision.



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TRANSYSTEMS
shall not be required to execute any documents subsequent to the signing of
this Agreement that in any way might, in the sole judgment of TRANSYSTEMS,
increase TRANSYSTEMS’ contractual or legal obligations or risks, or adversely
affect the availability or cost of its professional or general liability
insurance.


Section 8.3                                                           Hazardous Materials.  Unless otherwise provided in this Agreement,
TRANSYSTEMS shall have no responsibility for the discovery, presence, handling,
removal or disposal of or exposure of persons to hazardous materials in any
form at the Project site.  However,
TRANSYSTEMS shall report to OWNER the presence and location of any hazardous
material which it notices or which an engineer of similar skill and experience
should have noticed.


Section 8.4                                                           Attorneys
Fees.  In the event that either party
hereto employs an attorney to enforce any provision of this Agreement or to
collect damages for default or breach of this Agreement, or pursue claims in
litigation or arbitration, the prevailing party in any such action shall be
entitled to recover from the other such attorneys’ fees and costs of collection
as the prevailing party may expend or incur with respect thereto.  In the event that a settlement is reached
between the parties before a final decision in any such litigation or arbitration,
then neither party shall be entitled to recover its attorneys fees or costs
from the other and neither party shall be responsible for the other party’s
attorney’s fees or costs, unless otherwise agreed by the parties.


Section 8.5                                                           Disputes.  In the event a dispute arises between
TRANSYSTEMS and OWNER regarding the application or interpretation of any
provision of this Agreement, or quality of Services by TRANSYSTEMS, the
aggrieved party shall promptly notify the other party to this Agreement of the
dispute, but in no event more than 20 days after such dispute arises.  If the parties fail to resolve the dispute
within 20 days after receipt of such notice, each party shall, within five days
thereafter, proceed to non-binding mediation, with each party to bear its
own costs and attorneys’ fees (except as otherwise provided in Section 8.4
above) and the parties shall share equally in the cost of the mediator.  In the event that the mediation is
unsuccessful, the aggrieved party may elect to litigate its dispute with the
other party.  All disputes shall be
governed by the laws of the State of Missouri and the jurisdiction and venue
for litigation between the parties shall be solely and exclusively in Jackson
County, Missouri, or the United States District Court for the Western District
of Missouri.


It
is intended by the parties to this Agreement that TRANSYSTEMS’ services in
connection with the Project shall not subject TRANSYSTEMS’ individual
employees, officers or directors to any personal legal exposure for the risks
associated with this Project.  Therefore,
and notwithstanding anything to the contrary contained herein, the OWNER agrees
that as the OWNER’s sole and exclusive remedy, any claim, demand or suit shall
be directed and/or asserted only against TRANSYSTEMS, a Missouri corporation,
and not against any of TRANSYSTEMS’ individual employees, officers or
directors.



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Section 8.6                                                           Independent
Contractor. TRANSYSTEMS shall be an independent contractor with respect to
the Services to be performed hereunder. 
Neither TRANSYSTEMS, nor its independent professional associates,
consultants or subcontractors, nor the employees of any of the foregoing, shall
be deemed to be the servants, employees or agents of OWNER.


Section 8.7                                                           Representations
and Remedies.  TRANSYSTEMS makes no
representations, covenants, warranties or guarantees, express or implied, other
than those expressly set forth herein. 
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE ARE SPECIFICALLY EXCLUDED.  The
parties’ rights, liabilities, responsibilities and remedies with respect to the
Services, whether in contract or otherwise, shall be exclusively those
expressly set forth in this Agreement.


Section 8.8                                                           Assignment,
Subcontractors. This Agreement shall not be assignable by either party
without the prior written consent of the other party hereto, except that it may
be assigned without such consent to the successor of either party, or to a
person, firm or corporation acquiring all or substantially all of the business
assets of such party or to a wholly owned subsidiary of either party, but such
assignment shall not relieve the assigning party of any of its obligations
under this Agreement.  No assignment of
this Agreement shall be valid until this Agreement shall have been assumed by
the assignee.  This Agreement shall be
binding upon and shall inure to the benefit of TRANSYSTEMS’ and OWNER’s
respective successors and assigns. Nothing in this Section 8.9 shall prevent or
be deemed to prevent TRANSYSTEMS from employing, contracting with or engaging
independent professional associates, consultants and other subcontractors to
perform or assist in the performance of the Services.


Section 8.9                                                           Interpretation.


(a)                                  This
Agreement shall be governed by and interpreted in accordance with the laws of
Missouri.


(b)                                 Headings
and titles of sections, paragraphs and other subparts of this Agreement are for
convenience of reference only and shall not be considered in interpreting the
text of this Agreement.  Modifications or
amendments to this Agreement must be in writing and executed by duly authorized
representatives of each party.


(c)                                  Unless
specifically stated to the contrary therein, indemnities against, releases from
and limitations on liability expressed in this Agreement shall apply even in
the event of the fault, negligence or strict liability of the party indemnified
or released or whose liability is limited and shall extend to the officers,
directors, employees, agents, licensors and related entities of such party.



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(d)                                 In
the event that any portion or all of this Agreement is held to be void or
unenforceable, the parties agree to negotiate in good faith to reach an
equitable agreement which shall effect the intent of the parties as set forth
in this Agreement.


(e)                                  No
failure by either party to insist on performance of any term, condition, or
instruction, or to exercise any right or privilege included in this Agreement,
and no waiver of any breach shall constitute a waiver of any other or
subsequent term, condition, instruction, breach, right or privilege.


(f)                                    The
parties acknowledge and agree that the terms and conditions of this Agreement,
including but not limited to those relating to allocations and assumptions of,
releases from, exclusions against and limitations of liability, have been freely
and fairly negotiated.  Each party
acknowledges that in executing this Agreement they have relied solely on their
own judgment, belief, and knowledge, and such advice as they may have received
from their own counsel, and they have not been influenced by any representation
or statements made by any other party or its counsel.  No provision in this Agreement is to be
interpreted for or against any party because that party or its counsel drafted
such provision.



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Section 8.11                                                    Certifications,
Guarantees and Warranties.  TRANSYSTEMS
shall not be required to sign any documents, no matter by whom requested, that
would result in TRANSYSTEMS’ having to certify, guarantee or warrant the
existence of conditions whose existence TRANSYSTEMS cannot ascertain.  The OWNER also agrees not to make resolution
of any dispute with TRANSYSTEMS or payment of any amount due to TRANSYSTEMS in
any way contingent upon TRANSYSTEMS’ signing any such certification.


As
used herein, the word “certify” shall mean an expression of TRANSYSTEMS’
professional opinion to the best of its information, knowledge and belief, and
does not constitute a warranty or guarantee by TRANSYSTEMS.


IN
WITNESS WHEREOF, the parties hereto have made and executed this Agreement as of
the 4th day of May 2006


	
   

  	
   

  	
   

  	
   

  
	
  Highwater Ethanol

  	
   

  	
   

  	
  TranSystems Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Brian Kletscher

  	
   

  	
  By:

  	
   

  	
  /s/ Timothy P. Rock

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Printed Name: 

  	
   

  	
  Brian Kletscher

  	
   

  	
  Printed Name:

  	
   

  	
  Timothy P. Rock

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  President

  	
   

  	
  Title: 

  	
   

  	
  Assistant Vice President

  	
   

  
																		



 



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