Document:

Exhibit 10.27

 

GENERAL CONTRACT

 

THIS AGREEMENT, made this 30 day of July, 2008 by and between Highwater Ethanol, LLC, a
corporation organized and existing under the laws of the State of Minnesota,
hereinafter called Owner, party of the first part, and L.A.
Colo. LLC, hereinafter called the Contractor, party
of the second part.

 

WITNESSETH: That, in
consideration of the covenants and agreements herein contained, to be performed
by the parties hereto, and of the payments hereinafter provided, it is mutually
agreed as follows:

 

1.             DESCRIPTION OF
WORK

 

The Contractor agrees to
furnish all labor, services, appliances and material, except as may be
hereinafter otherwise provided for, and to construct, install, complete and
finish in the most thorough workmanlike and substantial manner in every
respect, within the time hereinafter specified, and according to the
specifications and drawings oft his contract, Ethanol Plant Rail Work located
near Lamberton, Minnesota.

 

2.             PERIOD FOR
COMPLETION

 

The starting date of the
Work shall be fixed in a written Notice to Proceed from the Owner to the
Contractor, which notice shall be mailed to or served upon the Contractor not
less than five (5) calendar days before the date fixed herein. Time being
of the essence, the Contractor shall commence the Work on or before the starting date August 15, 2008 and
complete the Work as herein described within 154
calendar days, thereafter; completion date is January 15, 2009. Upon written application of
the Contractor the Owner may, for reasons which in his opinion are beyond the
Contractor’s control, consent, in writing, to an extension of said contract
time.

 

Contractor acknowledges and
understands that if the Work is not completed by January 15, 2009, Owner
will suffer damages which are difficult to determine and accurately specify.
Contractor agrees that if the Work is not completed by January 15, 2009,
Contractor shall pay to Owner, or shall have deducted from final payment, the
sum of $750, as liquidated damages, not as a penalty, for each calendar day
that completion extends beyond January 15, 2009 (“Liquidated Damages”).

 

3.             PRICES

 

In consideration of the
completion of the Work described herein, and the fulfillment of all
stipulations of this contract, the specifications, the plans, and the drawings,
to the satisfaction and acceptance of the Owner and Owners Engineer, the said
Owner shall pay, or cause to be paid, to the Contractor, the lump sum amount of $4,361,615.15 Dollars. Unit
pricing will apply to all additions or force work.

 

 

4.             DEFINITIONS

 

Except where it is clear by
the context that another meaning is intended, the following words and
expressions shall be construed as follows:

 

The word “Owner” shall mean
Highwater Ethanol, LLC or their appointed representative.

 

The word “Engineer” or “Chief
Engineer” shall mean the TranSystems Appointed Engineer acting on behalf of the
Owner to insure compliance with the plans and specifications.

 

The word “Railroad” or “Railway
Company” shall mean the local residing Rail Carrier, in this case the DM&E.

 

The word “Work” shall mean
all or any part of the matters covered by this Agreement or as described by
Technical Specifications, Special Provisions, and other documents provided to
Contractor.

 

The word “Project” shall
mean the entire undertaking to any part of which this contract relates.

 

The word “Contractor” shall
mean the party of the second part or his authorized representatives. If the
Contractor is a corporation, the words “he”, “him,” “his,” wherever they refer
to the Contractor, shall be read as “it” or its.”

 

5.             INDEPENDENT
CONTRACTOR

 

The Owner reserves no
control whatsoever over the employment, discharge, compensation of or services
rendered by the Contractor’s employees, and it is the intention of the parties
to this agreement that the Contractor shall be and remain an Independent
Contractor, and that nothing in this agreement contained shall be construed as
inconsistent with that status.

 

6.             LAWS AND
ORDINANCES

 

The Contractor shall comply
with all laws, ordinances and regulations in any way pertaining to the Work.

 

7.             UNEMPLOYMENT
AND RETIREMENT LEGISLATION

 

The Contractor agrees to
accept and hereby accepts, full and exclusive liability for the payment of any
and all contributions or taxes for unemployment insurance or old age retirement
benefits, pensions or annuities now or hereafter imposed by the Government of
the United States or of any State thereof, which are measured by the wages,
salaries, or other remuneration paid to persons employed by the Contractor on
the Work, and further

 

 

agrees to comply with all administrative regulations
respecting the assumption of liability for the aforesaid contributions, and
further agrees to reimburse the Railway Company for any of the aforesaid taxes
or contributions, which, by law, the Railroad may be required to pay.

 

8.             SALES AND USE
TAXES

 

Unless otherwise provided in
the Special Specifications, the Contractor shall be responsible for and pay all
sales and use taxes properly assessed under all laws in effect at the time
contract is awarded, against any materials, tools, supplies, services and
equipment furnished directly by the contractor and used in the carrying out of
the Work.

 

9.             CONTRACTORS
UNDERSTANDING

 

It is understood and agreed
that the Contractor has, by careful examination, satisfied himself as to the
nature and location of the Work, the character, quality and quantity of the
materials to be encountered, the character of equipment, facilities, and
special protection of building contents or functions needed preliminary to and
during the prosecution of the Work, the general and local conditions, and all
other matters which can in any way affect the Work. No oral agreement or
conversation with any officer, agent, or employee of the Engineer, Owner or
Railway Company, either before or after the execution of this contract shall
affect or modify any of the terms or obligations herein contained.

 

10.           USE OF OWNER’S LAND

 

Owner shall provide the land
upon which the Work under this contract is to be done, and will, so far as it
can conveniently do so, permit the Contractor to use so much of its land as is
required for the erection of temporary construction facilities and storage of
materials, together with the right of access to same, but beyond this, the
Contractor shall provide, at his cost and expense, any additional land
required.

 

11.           USE OF ADJOINING PROPERTY

 

Before entering upon or
making use of any private property adjoining the Work, the Contractor, at his
expense, shall obtain and file with the Owner, the written permission of the
owner of such property, and subsequent to vacation of premises, shall furnish
the Owner a properly executed release of both owner, Railroad and Contractor
from all damages.

 

12.           ASSIGNMENT OF CONTRACT

 

The Contractor shall not
assign this contract or any part thereof without the written consent of the
Owner. Such consent shall not release or relieve the Contractor from any of his
obligations and liabilities under the contract. Owner may assign this contract
and Contractor shall cooperate and assign all documents necessary for the
assignment or contingent assignment of this Contract.

 

 

13.           SUBCONTRACTORS

 

Within ten (10) days of
award of contract, the Contractor shall submit for written approval a list of
Subcontractors showing the work assigned to each, and no subcontract for any p
art o f t he Work s hall b e awarded to any p arty not acceptable t o t he 0
caner and approved by him in writing. Such approvals shall not release or
relieve the Contractor from any of his obligations and liabilities under this
contract. Upon written request of the Owner, the Contractor shall terminate the
employment on this Work of any Subcontractor who shall, in the opinion o f
Owner, fail to perform the work undertaken by him in a satisfactory manner and
appropriate provisions to this effect shall be incorporated in all
subcontracts. The provisions of this contract shall be incorporated, by
reference, in all subcontracts and if so required by the Engineer, the
Contractor shall furnish to the Engineer written statement, properly endorsed
by the Subcontractor in question, that this has been done, before any
Subcontractor shall begin work.

 

14.           CONTRACTOR’S RISKS

 

The work covered by this
contract shall be at the risk of the Contractor in every respect, and he shall
be responsible therefor until it is completed and accepted by the Owner. This
responsibility shall include, but not be limited to, damage to and loss of any
material furnished and delivered by the Contractor, Owner or Railroad.

 

15.           WAIVER

 

It is expressly understood
and agreed that any waiver on the part of Owner, of any term, provision or
covenant of this contract, shall not constitute a precedent, nor bind Owner, to
a waiver of any succeeding breach of the same or any other of the terms,
provisions or covenants of this contract.

 

16.           PERMITS

 

Unless otherwise provided in
the Special Specifications, the Contractor shall procure at his own expense,
and in due time, all permits and licenses, of any description, necessary for
the construction and completion of the Work. The Contractor shall deliver to
the Owner and Engineer all certificates of inspection for any part of the Work
for which a certificate may be required.

 

17.           INDEMNITY

 

The Contractor shall
indemnify and save harmless Owner and Railroad from and against all losses and
all claims, demands, payments, suits, actions, recoveries, legal expenses,
(including any attorney’s fees incurred by Owner and Railroad), and judgments
of every nature and description made, brought or recovered against it, by any
act or

 

 

omission of the Contractor, its agents or employees,
or any other entity for which Contractor is liable, in the execution or
performance of the Work

 

18.           LIEN WAIVERS

 

The Contractor, shall
deliver to Owner satisfactory lien waivers for material used on this contract
before payment is made.

 

19.           INSURANCE

 

The Contractor, at its own
cost and expense, shall procure prior to commencement of any work under this
Agreement and shall maintain in full force and effect until all work has been
completed and accepted, insurance in such form and issued by such insurance
companies as shall be satisfactory to Railroad and Owner.

 

(a)           Workmen’s Compensation
Insurance which fully meets the requirements of any Workmen’s Compensation Law
in force at the place where the Work is to be performed covering all employees
of said Contractor or of any subcontractor employed to perform Work under this
contract. The workers Compensation and Employers Liability shall cover
contractor or any subcontractor employed to perform work on this contract. The
certificate must contain a specific waiver of the insurance company’s
subrogation rights against the Railroad, Owner and Engineer.

 

(b)           Public Liability Insurance
providing for a limit of not less than 1,000,000 Dollars for all damages arising
out of the bodily injuries to or death of one person, and, subject to that
limit for each person, a total limit of 2,000,000 Dollars for all damages
arising out of bodily injuries to or death of two or more persons, in any one
accident, and regular Contractor’s Property Damage Liability Insurance
providing for a limit of not less than 1,000,000 Dollars for all damages to or
destruction of property in any one accident, and subject to that limit, a total
(or aggregate) limit of 2,000,000 Dollars for all damages to or destruction of
property during the policy period.

 

(c)           With respect to the work on
the project, suitable Railroad Protective Liability Insurance in accordance
with and approved by the local Railroad.

 

Within ten (10) days of
the award of this contract the Contractor shall furnish to Engineer and Owner
certificates of insurance as evidence of compliance with (a) and (b) above.
All such insurance shall provide that same shall not be altered or cancelled
without at least 30 days prior notice to Owner.

 

It is understood and agreed
by the Contractor that the furnishing by it of the above insurance and the
acceptance of same by Owner is not intended to and shall not limit, affect or
modify the obligations of the Contractor under any provision of this agreement.

 

 

20.           SUPERINTENDENCE

 

The Contractor shall give
constant and efficient attention to the faithful and diligent prosecution of
the Work and during its progress shall be represented at all times at the site
of the Work by a competent superintendent acceptable to the Engineer.

 

21.           ORDER AND DISCIPLINE

 

The Contractor shall at all
times enforce strict discipline and good order among his employees. The
Contractor, insofar as his authority extends, shall not permit the sale,
distribution or use of any alcoholic beverages or intoxicating liquors upon or
adjacent to the Work.

 

22.           NOTICE - HOW SERVED

 

Any notice to be given by
Engineer or Owner to the Contractor under this contract shall be deemed to be
served if the same be delivered to the person in charge of the office used by
the Contractor, or to his representative at or near the Work, or deposited in
the post office, postpaid, addressed to the Contractor at his last known place
of business.

 

23.           SAFETY REQUIREMENTS

 

The Contractor shall furnish
and maintain, at his own cost and expense and to the satisfaction of the
Engineer, all requisite watchmen, lights, barricades, safeguards, fences,
temporary waterproofing measures and other facilities for the protection of the
Work and the safety of the general public and of employees of Owner, Railroad
and Engineer, of any other Railroad whose tracks, facilities or operations will
be affected by or are near the Work, and of the Contractor. Precaution shall be
exercised at all times for the protection of persons and property. The safety
provisions of applicable laws, building and construction codes shall be
observed. Machinery and equipment and other hazards shall be guarded in
accordance with the safety provisions of the Manual of Accident Prevention
in Construction, published by the Associated General Contractors of
America, to the extent that such provisions are not inconsistent with
applicable law or regulation. Job briefings will be conducted prior to any work
commencing. The job briefing will cover all tasks to be accomplished that day
and the associated risks involved.
All job briefings will be documented and signed by the job site
foreman/superintendent. All personnel shall have current Railroad Contractor
Orientation Course.

 

24.           POSITION AND ELEVATIONS

 

The Contractor will layout
all of the Work and shall make all measurements and elevation determinations
required for all work in this contract at his own expense.

 

 

25.           PRESERVATION OF REFERENCE BENCH MARKS

 

The Contractor shall
carefully preserve any existing benchmarks and reference points, and in case of
willful or careless destruction, he will be charged with the resulting expense
and shall be responsible for any mistakes that may be caused by their
unnecessary loss or disturbance.

 

26.           REPORT ERRORS AND DISCREPANCIES

 

Before starting the Work,
the Contractor shall examine and compare the plans and specifications and shall
report to the Engineer any errors or discrepancies found therein. If the
Contractor, in the course of the Work, finds any discrepancy between the plans
and the physical conditions of the locality or any applicable building code or
ordinance, or any errors or omissions in plans or in the layout as given by
said points and instructions, it shall be his duty to inform the Engineer immediately,
and the Engineer shall promptly verify the same. Any work done after such
discovery, until authorized by the Engineer, will be done at the Contractor’s
risk.

 

27.           AUTHORITY OF ENGINEER

 

The Engineer or Owner is
authorized to reject or condemn all work or material, which does not conform to
this Agreement. If any tools or equipment are unsafe, defective or inadequate
for carrying out the Work, the Engineer may require the removal of such
equipment and Contractor shall, without delay, substitute satisfactory
equipment therefor.

 

28.           INSPECTION

 

All work and material shall
be at all times open to the inspection, acceptance or rejection of the Owner
and Engineer or his authorized representative. The Contractor shall give the
Owner and Engineer reasonable notice of starting any new work and shall provide
reasonable and necessary facilities for inspection even to the extent of taking
out portions of finished work; in case the work is found satisfactory, the cost
of removal and replacement shall be paid by Owner. No work shall be done
outside the agreed regular working hours without previous approval of the
Engineer or Owner.

 

29.           MATERIALS

 

Except by written permission
of the Engineer or Owner in each case, only materials produced or manufactured
in the United States shall be used in the carrying out of this Work. If so
requested by the Engineer, the Contractor shall submit, for tentative approval
(but subject to the provisions of Article 30 of this contract), a list of
all materials to be used in carrying out this Work, giving the names of the
dealers and manufacturers and the anticipated date of delivery.

 

Delivery of the equipment,
materials, or goods shall include all transportation, unloading, and storage
costs. Title shall pass to Owner upon delivery to the site. Risk of loss or
damage shall pass to Owner only upon Owner’s final acceptance of the Work.

 

 

30.           DEFECTIVE WORK OR MATERIAL WARRENTY

 

Contractor warrants to the
Owner that all materials and equipment furnished by Contractor will be of good
quality and new. Contractor further warrants that its labor and workmanship
will be of good quality and conform to the highest construction standards.
Contractor further warrants that all labor, workmanship, materials, and
equipment furnished or supplied by Contractor will be free from defects and
conform to the requirements of this Contract. If defects, due to faulty
material or equipment supplied by Contractor or labor or workmanship performed
by Contractor appear within one year from the date of substantial completion of
the Work, Contractor shall correct the defects at no cost to Owner.

 

Nothing contained in this Article 30 shall be
construed to establish a period of limitation with respect to other obligations
which the Contractor might have under the Contract Documents. Establishment of
the one-year period for correction of Work as described in this Article 30
relates only to the specific obligation of the Contractor to correct the Work,
and has no relationship to the time within which the obligation to comply with
the Contract Documents may be sought to be enforced, nor to the time within
which proceedings may be commenced to establish the Contractor’s liability with
respect to the Contractor’s obligations other than specifically to correct the
Work.

 

The Contractor shall remove,
at his own expense, any work or material condemned by the Engineer or Owner,
and shall rebuild or replace the same without extra charge.

 

Any omissions or failure on
the part of the Engineer to disapprove or reject any work or material shall not
be construed to be an acceptance of any defective work or material.

 

31.           PATENTED DEVICES

 

In case the Contractor shall
make use of or employ any patented devices or appliances either for carrying on
the Work or in connection with the materials supplied, whether the terms of the
specifications require such to be used or not, he shall satisfy all claims or
charges for lease, privilege or royalty, and shall, at his expense, defend
Owner against any and all claims or suits which may arise from any
infringements of patent rights, and indemnify and save harmless Owner against
any judgment of recovery as a result thereof, and notwithstanding any approval
of such devices, appliances or materials under Sections 29 and 30 hereof.

 

32.           PROTECTION OF RAILROAD SERVICES AND FACILITIES

 

The Contractor shall use
special care and vigilance to avoid damage to the trains, tracks, or other
facilities of Owner and Railroad and shall conduct his work so as not to
interfere with the movement of trains or other operations of Railroad. The
Contractor shall not proceed with any work which might endanger or interfere
with the movement of trains, operations or other facilities until protection
satisfactory to the Engineer has been provided. If, in the opinion of the Engineer,
trains, tracks, or other facilities are or may become

 

 

endangered by the operations of the Contractor, he
shall immediately do such work as may be ordered by the Engineer to restore
safety and, upon failure of the Contractor to carry out such order immediately,
Railroad may take whatever steps are necessary to restore safe conditions. The
cost and expense to Railroad of restoring safe conditions or of any damages to
the trains, tracks or other facilities caused by the Contractor’s operations
shall be charged against the Contractor and paid by him or may be deducted from
any amounts due, or which become due him under this contract. The cost of
furnishing watchmen, flagmen, or other personnel required for the protection of
the facilities or operations of Railroad or any other Railroad shall be borne
as provided for in the General Conditions.

 

Contractor is aware of the special requirements and
duties placed on Contractor by this Section 32 and Contractor hereby
expressly acknowledges its duty to perform the Work in such a manner so as to
allow the Railroad’s continued uninterrupted use of and operation from the
mainline tracks. Contractor acknowledges that should Railroad’s use or
operations from the mainline tracks be interrupted that Railroad likely to
experience substantial consequential and incidental damages as well as direct
damages associated with this interrupted use of and operations from the
mainline tracks and that Contractor hereby expressly agrees that Railroad is
entitled to receive and recover from Contractor all of Railroad’s direct,
consequential and incidental damages which Railroad suffers as a result of the
Contractor’s failure to fulfill the provisions of this Section 32.

 

33.           CHANGE OF FACILITIES OF OTHERS

 

If in the conduct of the Work
any temporary changes or alterations in water, oil or gas pipelines, sewers,
drains, conduits, fences, electric line or power lines, telephone or telegraph
or other wires, poles, etc., of others are necessary, either for the
convenience of the Contractor or for the performance of the Work, the
responsibility for making such changes will rest with the Contractor unless
otherwise provided elsewhere in this agreement; and he shall arrange for such
changes to be made at his own expense.

 

If such changes are of a
permanent character and made necessary solely by the improvement itself and not
incident to the performance of the Work, then, in that case, such changes will
be arranged for by the Owner or others without cost to the Contractor.

 

34.           RIGHTS OF VARIOUS INTERESTS

 

Wherever work being done by
Owner or Railroad forces or by other contractor is contiguous to work covered
by this contract, the respective rights of the various interests involved shall
be established by the Engineer or Owner, to secure the completion of the
various portions of the project in general harmony.

 

35.           ORDER OF COMPLETION; USE OF COMPLETED PORTIONS

 

Time is of the essence in
performing this Contract. Contractor shall cooperate with Owner and other
contractors in scheduling and performing Contractor’s Work to avoid conflict,
delay in or interference with the Project. Contractor shall begin work as soon
as

 

 

instructed to do so by Engineer or Owner and shall
perform the work promptly, efficiently, and at a speed so as to not damage,
delay or interfere with others. Contractor understands that it shall coordinate
the scheduling and sequencing of its work to meet the Owner’s requirements.

 

The Contractor shall
complete any portion or portions of the Work in such order of time as the Engineer
or Owner may require. Owner shall have the right to take possession of and use
any completed or partially completed portions of the Work, notwithstanding the
time for completing the entire Work or such portions thereof may not have
expired; but such taking possession and use shall not be deemed an acceptance
of the Work so taken or used or any part thereof. If such prior use increases
the cost of or delays the Work, the Contractor shall be entitled to such extra
compensation or extension of time, or both, as the Engineer or Owner may
determine.

 

Contractor shall promptly
submit Shop Drawings, Product Data, Samples and similar submittals as required
by the Owner so as to not delay the progress of the Work.

 

36.           CHANGES

 

Owner shall have the right
to make any changes that may be hereafter determined upon, in the nature or
dimensions of the Work. If such changes appreciably affect the cost of the Work
to the Contractor, he shall, before proceeding with the Work, so notify the
Owner in writing, and the difference shall be equitably adjusted by the Owner.

 

If such changes so warrant,
the Owner may, at his option, require an increase in the amount of coverage
afforded by the Bond and Insurance under Sections 18 and 19 hereof, but such
changes in the Work shall not affect the validity of such bonds or insurance
and shall not serve to relieve or release any surety of said bonds. Owner
agrees to reimburse the Contractor for any reasonable increase in Contractor’s
Bond or Insurance premiums which result from any such ordered increase in
coverage.

 

37.           EXTRA WORK

 

If, in the opinion of the
Owner, any work should be done or material furnished which is not included,
contemplated or classified in this contract, the Contractor shall, upon written
order of the Owner, do such extra work or furnish such extra material. By
agreement between the Contractor and the Owner, such extra work or material may
be paid for on a lump-sum basis or on the basis of unit prices, or other method
as agreed upon by the Owner and Contractor. No bill or claim for extra work or
material shall be allowed or paid unless done or furnished on written order
from the Owner. Bills or claims for extra work shall be presented to the Owner
at the time of making the first monthly estimate after such work or material
has been done or furnished, and such bills or claims must be accompanied by a
copy of the Owner’s order covering such work or material. Any such extra work
done or material furnished under the provisions of this paragraph shall be
covered, governed and controlled by all the terms and provisions of this
contract, subject to such prices as may be agreed upon or fixed by the Owner.
The Contractor shall furnish the Owner reports in the number, form and detail
prescribed by the Owner of all extra work done or material furnished.

 

 

38.           SUSPENSION OF WORK

 

Owner may at any time
suspend the Work, or any part thereof, by giving not less than seven (7) calendar
days’ written notice to the Contractor, and if such suspension appreciably
affects the cost of the Work to the Contractor, the difference shall be
equitably adjusted by the Owner. The Contractor shall not suspend the Work, nor
any part thereof, without written authority of the Owner. The Work shall be
resumed by the Contractor in seven (7) calendar days after written notice
from Owner to the Contractor to do so and the date fixed for completion shall
be extended by a period equal to the period of suspension. Owner shall not be
held liable for any damages or loss of anticipated profits on account of the
Work being suspended, or for any work done during the interval of suspension.

 

39.           DELAYS IN PERFORMANCE

 

In the event that the Work
to be performed by Contractor is delayed without Contractor’s fault or for
causes beyond Contractor’s control, Contractor, will, within seven calendar
days after commencement of any condition which is causing or may cause delay,
notify Owner in writing of the nature and causes of such delay. Should
Contractor fail to so notify Owner, Contractor shall be deemed to have waived all
rights Contractor may have for an extension in time in the performance of Work.
Contractor agrees that Contractor’s only remedy for delays which notice has
been given as provided above shall be for an extension of time by the number of
days by which Contractor has been delayed as determined in the sole and
absolute discretion of the Owner, and that Contractor shall not be entitled to
any recovery for loss, expense or damage resulting from any such delay.

 

40.           TERMINATION BY OWNER

 

If Contractor persistently
or repeatedly fails or neglects to carry out the Work in accordance with the
requirement of this Contract or otherwise to perform in accordance with this
Contract and fails within three (3) working days after receipt of written
notice to commence and continue correction of such default or neglect with
diligence and promptness, Owner may, terminate this Contract and finish
Contractor’s Work by whatever method Owner may deem expedient. If the unpaid
balance of the Contract Sum exceeds the expense of finishing Contractor’s Work,
such excess shall be paid to the Contractor, but if such expense
exceeds such unpaid balance, Contractor shall pay the difference to Owner.

 

Owner may also terminate this Contract for its
convenience with seven days written notice to Contractor. If Owner terminates
this Contract for its convenience, Contractor shall be paid, in accordance with
the terms and conditions of this Contract, for the work performed up to the
date of termination. Contractor shall not be entitled to profit or overhead on
work not performed.

 

 

41.           REMOVAL OF EQUIPMENT

 

Upon completion of the Work,
or in case of termination of this contract before completion for any cause
whatever, the Contractor, if notified to do so by Owner, shall promptly remove
any part or all of his equipment, materials, tools and supplies from the
property of Owner, failing which Owner shall have the right to move such
equipment, material, tools and supplies at the expense of the Contractor.

 

42.           CHARGES AGAINST CONTRACTOR

 

Owner shall have the right
to apply any sums due or to become due to the Contractor under this contract in
payment of any liabilities of the Contractor, or of any Subcontractor, to
Railroad for freight charges, rental of equipment, furnishing labor, materials
or supplies, or for any other charges originating from this contract.

 

43.           WITHHOLDING OF PAYMENT

 

If the Contractor fails to
meet and pay all of his just obligations outstanding for labor, materials or
supplies at the time when an estimate for payment is due him, or if any liens,
claims or demands arising out of or in connection with the Work or its
performance shall be outstanding at the time any payment may be due or is
likely to be made thereafter, or if any claims arising out of or in connection
with the Contractor’s operations under this contract are made against Owner by
any other person than the Contractor, or, if in the opinion of the Owner, the
Contractor is not proceeding with the Work in accordance with the provisions of
this contract, Owner shall have the right to withhold out of any payments,
final or otherwise, such sums as the Owner may deem ample to protect it against
delay or loss or to assure the payment of just claims of third persons, and at
its option, as agent for the Contractor, to apply such sums in such manner as
the Owner may deem proper to secure such protection or to satisfy such claims.
Such application shall be deemed payments for the Contractor’s account. The
Owner may withhold payment to the Contractor on account of the failure of the Contractor
to fully comply with any requirements of this contract.

 

44.           QUANTITIES

 

Means of measurement and
payment are outlined in the drawings and specifications. All prices listed in
the contract shall constitute full payment for all labor, tools, materials,
equipment and other incidentals necessary to complete the work. Any adjustments
in quantities must be handled as a change in accordance with paragraph 36 of
this agreement.

 

45.           PAYMENT

 

Progress
Payments. Contractor shall submit monthly applications for
payment to Owner on or before the 20th day of each month or as
requested by Owner using the bid tabs from the bid proposal. All quantities for
monthly payments will be measured and

 

 

agreed upon by the field representatives for
Contractor and Owner. Owner shall make monthly progress payments to Contractor
for Work satisfactorily performed and materials suitably stored and protected
at the Project site less ten percent (10%) retainage. Contractor shall submit a
release of liens and claims with each monthly payment request. Owner shall pay
Contractor within thirty days after receipt of a properly submitted application
for payment.

 

Contractor represents and agrees that payments
received for the performance of this Contract shall be used first to pay labor,
material, equipment, supplies and services related to the Work and such
payments shall not be diverted to satisfy obligations of the Contractor on
other contracts until all obligations under or in connection with this Contract
are satisfied in full.

 

When Contractor’s Work is substantially complete and
upon application by Contractor, Owner shall pay Contractor the full Contract
Price less 150% of the amount necessary to cover costs of items to be completed
or corrected by Contractor or such other sums as may be withheld by Owner.

 

Final Payment. Final payment,
constituting the entire unpaid balance of the Contract Price, shall be made by
Owner to Contractor when Contractor’s Work is fully performed and accepted by
Owner and Geotechnical Engineer. Final payment shall not become due until
Contractor has submitted to Owner the following: (1) final application for
payment, (2) releases of liens and claims in a form acceptable to Owner, (3) all
guarantees and warranties applicable to Contractor’s Work, (4) “as-built”
or “as-constructed” drawings, and (5) completion and acceptance of
required tests.

 

46.           EQUAL OPPPORTUNITY EMPLOYER

 

Contractor is an Equal
Opportunity Employer in compliance with Executive Order 11246; the
Rehabilitation Act of 1973, Section 503, the regulations at 41 C.F.R.
60-741.4 and Executive Order 11758; the Vietnam Era Veterans Readjustment
Assistance Act of 1974, Section 402 and the regulations at 41 C.F.R.
60-250.4; and Title 38 of the United States Code, Section 2012, and
Executive Order 11701; all as amended. Unless this Contract is exempted under Section 201
of Executive Order 11246, as amended, paragraphs (1) through (7) of the Equal
Opportunity Clause in Section 202 of Executive Order 11246, as amended,
are incorporated herein by reference. Contractor shall comply with all similar
requirements and obligations imposed by Iowa law.

 

47.           BINDING ARBITRATION

 

All claims or disputes
between Owner and Contractor arising out of or relating to this Contract or any
or a breach of this Contract, shall be decided by arbitration in accordance
with the Construction Industry Arbitration Rules of the American
Arbitration Association. The parties designate Lamberton, Minnesota as the
Hearing locale.

 

 

Any arbitration arising out
of or relating to this Contract may include, by consolidation, joinder or in
any other manner, an additional person or entity not a party to this Contract,
so long as such additional person or entity is an architect/engineer,
contractor/subcontractor, construction manager, supplier or laborer, or any
agent paid directly by Owner, or is a party to a contract to furnish goods or
perform work or services on the Project or at the site.

 

Owner shall be entitled to a court order staying any
legal proceedings brought by Contractor to enforce any rights or remedies
Contractor may have under federal or state law, including but not limited to
state mechanic’s lien laws, pending the final completion of any arbitration
proceeding.

 

The Arbitrator’s decision, judgment, or award shall
be consistent with the remedies provided herein; provided, however, the
Arbitrator may not award punitive damages. The award rendered by the arbitrator
shall be final and binding, and judgment may be entered upon it in accordance
with applicable law in any Court having jurisdiction. This agreement to
arbitrate shall be specifically enforceable in accordance with applicable law
in any court having jurisdiction.

 

48.           CONFIDENTIALITY

 

Contractor will consider all
information furnished by Owner to be confidential and will not disclose any
such information to any other person without Owner’s prior written consent. All
plans, specifications, and other data furnished by Owner will remain the
property of Owner and will be used by Contractor only in performing this
Contract. These duties of confidentiality and nondisclosure also extend to
drawings, specifications, and other documents prepared by Contractor
specifically in connection with this Contract. All these obligations will
survive the termination of this Contract. Owner shall be entitled to specific
enforcement, including injunctive relief, of this provision in any court of
competent jurisdiction.

 

49.           CLEANING UP

 

The Contractor shall, as
directed by the Owner, remove from Owner’s property and from all public and
private property, at his own expense, all temporary structures, rubbish and
waste materials resulting from his operations. Floors and sidewalks or loading
docks of structures shall be left broom clean. Prior to final acceptance, all
work done by the Contractor shall be cleaned up and the premises occupied by
the Work left in a neat and orderly condition satisfactory to the Owner.

 

50.           DAILY REPORTS AND ACCOUNTING INFORMATION

 

If required by the Owner,
the Contractor shall furnish a daily statement of labor and equipment,
distributed as to each item of work performed, showing hours worked and rates
for the various classes of labor. At the completion of the Work, the Contractor
shall furnish to the Owner, a complete list of unit quantities, unit costs and
such other information as

 

 

may be required by Owner to comply with the
accounting requirements of the Interstate Commerce Commission. Contractor shall
furnish Owner “as built” drawings of the Work.

 

51.           ACCEPTANCE

 

The work shall be inspected
for acceptance by the Railway Company promptly upon receipt of written notice
that the Work is ready for such inspection.

 

52.           FINAL ESTIMATE

 

Upon the completion and
acceptance of the Work, the Owner will make a final determination of the value
of the Work completed to his satisfaction and shall determine the Final Payment
due the Contractor. The amount so determined shall be paid to the Contractor as
soon thereafter as practicable, provided, however, before such final payment
shall be made, the Contractor shall furnish, if requested by the Owner,
satisfactory evidence that all payrolls, bills for material and other
indebtedness in connection with the Work have been paid and that all liens,
claims or suits for labor performed or material furnished in connection with
the Work covered by this contract have been made. The Contractor expressly
agrees to reimburse Owner for any amounts that the latter may be compelled to
pay in satisfying such actions, including any attorney’s fees incurred by the
Owner in satisfying such claims or actions.

 

53.           RELEASE

 

The Contractor at final
payment will execute, acknowledge and deliver to Owner under his hand and seal
a valid discharge from all claims and demands growing out of or connected with
this contract.

 

THIS AGREEMENT shall inure
to the benefit of and be binding upon the legal representatives and successors
of the parties respectively.

 

IN WITNESS WHEREOF, The said
Contractor and Owner, have executed this agreement as of the day and year first
above written.

 

 

Highwater Ethanol, LLC

 

	
  By:

  	
  /s/ Brian Kletscher

  	
   

  
	
  Brian D. Kletscher

  	
   

  
	
  President, Highwater Ethanol, LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  L.A. Colo, LLC

  	
   

  
	
  By:

  	
  /s/ Terry Benton

  	
   

  
	
  Terry Benton

  	
   

  
	
  General Manager

  	
  9/8/08Exhibit 10.28

 

[McC
Inc. Logo]

 

7900 69th Avenue ~
Greenfield, Minnesota 55373 ~ Phone: (763) 477-4774 ~ Fax: (763) 477-5174

 

July 18, 2008

 

Mr. Robin Spaude

Highwater Ethanol, LLC

24500 US Highway 14

Lamberton, MN, 56125

Phone: 507-752-7173

Fax: 507-752-7171

Email:
rspaude@centurytel.net

 

RE:         Auger Cast-In Place Piling required for support of (2)-60’ diameter
Grain Silos

 

Dear Mr. Spaude,

 

McC Inc. is please to
submit this proposal for construction services required to install ACIP piling
for support of grain silos.  Our proposal
is based on recommendations provided by us by Terracon’s Getechnical report,
Project#41065029-01, dated 3/6/2007. 
Details of our proposed services follow below.

 

INCLUSIONS/SCOPE OF WORK

 

1.     Structural engineering and production pile drawings.

2.     ACIP piling required for support of the Grain slipform
storage silos.

3.     Earthwork for spoil removal (equipment and labor) to
an on-site disposal location.

4.     Supply, unloading and installation of steel
reinforcement required for the ACIP piling.

5.     Field layout and staking of pile
locations.  This is on a continual basis
as the crane and spoil piles will impede laying out too many at one time.

6.     Final grading and cleanup after
installation is complete.

7.     McC Inc. will provide all tools, labor,
cranes, restrooms and equipment necessary to complete this project.

8.     All work is to be completed in a safe and
efficient manner in coordination with plant rules and regulations set
forth by Highwater Ethanol, OSHA and McC Inc.

 

SPECIFIC EXCLUSIONS

 

Permitting fees
(building, inspections, etc.), excise tax, builders risk insurance, electrical,
(temporary construction power, lighting protection), geo-technical
investigation(s) and/or costs for further geotechnical design criteria and
evaluations, geo-technical and construction material field observations and
testing for production piling, pile load testing, soil correction(s), export of
soil from jobsite, mass grading, finish grading, any costs for time and/or
materials associated with soil and water conservation, any type of special
administrative costs associated with sales tax tracking, itemized auditing,
etc., underground and above ground utilities, provisions for closed shop
execution of work, additional engineering, piling quantity or aggregate pile
length due to refusal or unexpected sub-surface conditions, any site
stabilization materials that may be required for the piling equipment due to
unexpected rainfall, any associated costs for overtime labor worked beyond a
normal 45 hour work week, bonding and liquidated damages

 

CLARIFICATIONS

 

·      Owner to provide full time geo-technical
and construction material field observation for production piling contact:
Terracon, Mr. John Haupt P.E. @ 651-894-6626.  If full time observation is not performed
then a ACIP load test will need to be performed at an additional cost.

·      McC Inc has assumed 18” diameter 12,247 LF of ACIP
required.

 

McCormick
Construction Company, Inc.

 

1

 

PRICING

 

Our base price of Four Hundred Twenty Eight Thousand Three Hundred
Ninety Five ($428,395.00) Dollars includes materials and labor
to complete the above listed Scope of Work. 
This quote is good for fifteen days.

 

ALTERNATE PRICING

 

	
  1.

  	
   

  	
  Additional pile length
  required is an additional cost: (ADD to Base)

  	
   

  	
  $22.00/LF

  
	
  2.

  	
   

  	
  Deduction of pile
  length required: (Deduct from Base)

  	
   

  	
  $8.50/LF

  
	
  3.

  	
   

  	
  To conduct
  (1) pile load test: (Add to Base)

  	
   

  	
  $23,800/EA

  

 

	
  Terms of Payment:

  	
   

  	
  10% down at signing of
  contract; progressive payments every month on the 15th during
  construction. Net 30

  

 

McC Inc.’s proposal dated
the above date and all terms and conditions upon it shall be considered a part
of this contract and shall supersede all conflicting terms and conditions.

 

Pricing of this project
is based on current and committed costs for raw construction materials and
services.  If committed prices are
increased as a result of natural disasters, material hoarding, monopolization
or any other events beyond the reasonable control of McC, we reserve the right
to adjust our contract price to reflect and be compensated for any net
increased prices.

 

If issues arise which
cause safety or property concerns at the jobsite during construction McC Inc.
may halt construction and leave the jobsite until these issues can be resolved.

 

We appreciate the
opportunity to provide you with this estimate and look forward to working with
you on this project.  If you have any
questions regarding this proposal, please call.

 

Sincerely,

 

 

	
  Terry Stangl

  	
  Dan Shefland

  
	
  Project Manager

  	
  VP of
  Operations/Engineering

  
	
  763-477-4774 ext 3863

  	
   

  

 

Proposal #08130

 

Cc: Jeremy LaBlanc –
Fagen Inc.

 

	
   

  	
  ACCEPTANCE OF PROPOSAL – The above prices,

  	
   

  	
   

  
	
   

  	
  specifications and
  conditions are satisfactory and are hereby

  	
  Signature:

  	
  /s/
  Brian Kletscher

  	
   

  
	
   

  	
  accepted. You are
  authorized to do the work as specified.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date of Acceptance:

  	
  7/24/08

  	
   

  	
  Cust PO#:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

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