Document:

Exhibit 10.13

 

CONSTRUCTION
MANAGEMENT SERVICES CONTRACT

 

BETWEEN

 

KNUTSON
CONSTRUCTION SERVICES

 

AND

 

OTTER TAIL
AG ENTERPRISES, LLC

 

DATED:
NOVEMBER 3, 2006

 

 

Construction Management Services Contract 

Otter Tail Ag Enterprises, LLC

 

INDEX

 

	
  SECTION

  	
   

  	
  PAGE

  NUMBER

  
	
   

  	
   

  
	
    1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
    2.

  	
  KNUTSON’S
  SCOPE OF WORK

  	
  6

  
	
   

  	
   

  	
   

  
	
    3.

  	
  INFORMATION,
  GOODS AND SERVICES TO BE PROVIDED BY OWNER

  	
  9

  
	
   

  	
   

  	
   

  
	
    4.

  	
  INTERFACE
  AND SITE CONDITIONS

  	
  11

  
	
   

  	
   

  	
   

  
	
    5.

  	
  SCHEDULE

  	
  11

  
	
   

  	
   

  	
   

  
	
    6.

  	
  CHANGE
  ORDERS

  	
  13

  
	
   

  	
   

  	
   

  
	
    7.

  	
  SUBSTANTIAL
  COMPLETION AND FINAL ACCEPTANCE

  	
  13

  
	
   

  	
   

  	
   

  
	
    8.

  	
  PAYMENT

  	
  13

  
	
   

  	
   

  	
   

  
	
    9.

  	
  STOP
  WORK AND TERMINATION FOR CAUSE

  	
  18

  
	
   

  	
   

  	
   

  
	
   10.

  	
  SAFETY
  AND SECURITY

  	
  22

  
	
   

  	
   

  	
   

  
	
   11.

  	
  PROJECT
  EXECUTION

  	
  24

  
	
   

  	
   

  	
   

  
	
   12.

  	
  WARRANTY

  	
  26

  
	
   

  	
   

  	
   

  
	
   13.

  	
  TRANSFER
  OF TITLE AND RISK OF LOSS

  	
  28

  
	
   

  	
   

  	
   

  
	
   14.

  	
  INSURANCE;
  BONDS

  	
  28

  
	
   

  	
   

  	
   

  
	
   15.

  	
  INDEMNITY

  	
  30

  
	
   

  	
   

  	
   

  
	
   16.

  	
  DISPUTE
  RESOLUTION

  	
  32

  
	
   

  	
   

  	
   

  
	
   17.

  	
  FORCE
  MAJEURE

  	
  32

  
	
   

  	
   

  	
   

  
	
   18.

  	
  GENERAL
  PROVISIONS

  	
  32

  
				

 

List of Exhibits

A.  Knutson
Scope of Services and Technical Specifications

B.  Commercial
Terms

C.  Project
Schedule

D.  General
Conditions

 

i

 

Construction
Management Services Contract

 

GENERAL
CONDITIONS

 

THIS “CONTRACT”, IS made
this 3rd day of November, 2006, by and between Otter Tail Ag Enterprises, LLC,
a Minnesota limited liability company organized and acting under and pursuant
to the laws of Minnesota and having its main place of business at 1220 North
Tower Road, Suite 201, Fergus Falls, Minnesota 56537 (hereinafter called
the “Owner”) and Knutson Construction Services, a corporation organized and
acting under and pursuant to the laws of the State of Minnesota and having its
main place of business at 1907 2nd Street Southwest, Rochester, MN
55902 (hereinafter called “Knutson”). Owner and Knutson may sometimes be
referred to herein individually as a “Party” or jointly as the “Parties.”

 

WITNESSETH:

 

WHEREAS, Knutson is engaged
in the performance of construction management services, with experience in
construction management service of ethanol plant construction projects; and

WHEREAS, Owner desires
Knutson to furnish and perform certain construction management services, and to
perform, or cause to be performed, certain design, engineering, procurement,
construction and other services, and provide, or cause to be provided, certain
material, equipment, tools, and labor, necessary to complete the Work described
and reasonably inferable from this Contract;

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

 

1. 
Defined Terms and Contract Documents

 

1.1  Defined Terms: The following words, when capitalized, shall
have the meanings set forth below:

 

1.1.1  Architect: “Architect” means, for purposes of the entire
Contract, including the General Conditions, Interstate Engineering, Inc.,
116 East Washington, Fergus Falls, MN, 56537.

 

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

 

1

 

1.1.3  [INTENTIONALLY OMITTED]

 

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

 

1.1.5  Effective Date:    “Effective Date” means November 2, 2006,
the date of this Contract.

 

1.1.6  Day: “Day-means calendar day.

 

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

 

1.1.8  Delta-T Technology: “Delta-T Technology” shall mean all data,
technical information, trade secrets, inventions (whether patented or not and
whether issued before or after the Effective Date), know-how, procedures,
processes, drawings, designs, methodology, models, inventions, specifications,
plant or equipment test and/or operating data, or other technical information
and copyrights embodied in the Plant, used in the operation of the Plant, in
equipment or in drawings, or included in any documents, drawings or other
materials delivered electronically or otherwise by Delta-T to Harris
Mechanical, Knutson or Owner on connection with construction of the Plant.

 

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

 

1.1.10  Engineer. “Engineer” means Interstate Engineering, Inc.,
116 East Washington, Fergus Falls, MN, 56537.

 

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

 

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

 

1.1.13  Final Completion: “Final Completion” means that (i) a
certificate of occupancy has been issued as applicable for all buildings within
the Work; (ii) all Work has been completed as required by and incompliance
with the Contract and all of the items on the

 

2

 

Punch List signed by both Owner and Knutson
have been corrected and completed to the reasonable satisfaction of Owner, (iii) all
lien waivers, or affidavits, required under the Contract have been delivered, (iv) all
drawings and other documents identified in this Contract or the General Conditions
as documents to be delivered by Knutson to Owner have been delivered, (v) the
Work has been inspected and approved by all applicable public authorities
having jurisdiction over the Work, (vi) all conditions to Final Completion
described in the General Conditions shall have been met, and (vii) a
general release executed by Knutson waiving, upon receipt of final payment by
Knutson, all claims, except those claims previously made in writing to Owner
and remaining unsettled at the time of final payment.

 

1.1.14  General Conditions: “General Conditions” means the “General
Conditions of the Contract for Construction,” American Institute of Architects
Document A201 TM, 1987 Edition, including, and as modified by, the supplementary
conditions described in Exhibit A (Section C-02). The General
Conditions are attached as Exhibit D.

 

1.1.15  Harris Mechanical Contracting Company: “Harris Mechanical” means Harris Mechanical
Contracting Company, a corporation organized and acting under and pursuant to
the laws of the state of Minnesota and having its main place of business at 909
Montreal Circle, St. Paul, MN 55102.

 

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

 

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

 

1.1.18  Legal Requirements: “Legal Requirements” means all applicable federal, state, and local laws, codes, ordinances, rules, regulations,
orders and decrees of any government or quasi-government entity having
jurisdiction over the Plant or the Site, the practices involved in the Plant or
the Site, or any Work.

 

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

 

1.1.20  [INTENTIONALLY OMITTED]

 

3

 

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

 

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

 

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

 

1.1.24  Project: “Project” means the management, design,
construction, and equipping of that portion of the Plant pursuant to the Work
to be completed by Knutson under this Contract. The general description of the
Plant falling within the Work to be completed by Knutson under this Contract
relates to the construction of one (1) administration building, ten (10) process
buildings, and foundations for fifteen (15) tanks, the technical specifications
and requirements of which facilities and the Work are set forth in the Project
Specifications and the attachments thereto.

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

1.1.33  Substantial Completion of the Work: “Substantial Completion of the Work” means
the date certified by the Owner or Owner’s representative when there has been a
substantial completion of the entire Work, or a designation portion thereof,
and is suitable to receive subsequent work of other separate contractors, as
applicable, and is acceptable under the Contract, except for minor adjustments,
cleaning, and repairs.

 

1.1.34  Work: “Work” means all of Knutson’s management,
design, engineering, procurement, installation, construction, and other
services required by the Contract or necessary to perform the scope of Knutson’s
work and deliverables set forth in the specifications described in the Project
Specifications and the attachments thereto, and the furnishing of all
materials, equipment, tools, and labor required by the Contract or necessary to
perform the scope of Knutson’s work and deliverables set forth in the specifications
described in the Project Specifications and the attachments thereto, and that
which is reasonably inferable from the Contract or the scope of Knutson’s work.

 

1.2  Order of Precedence: In the event of a conflict between the
express terms set forth in this Contract and the General Conditions, the rule of
interpretation shall be that the express terms of this Contract shall take
precedence over the General Condition terms and

 

5

 

conditions where an issue is specifically
addressed; provided, that the General Conditions are intended to provide, among
other things, further specificity to areas not otherwise covered by, or in
conflict with, the express terms of this Contract.

 

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

 

2.  Knutson’s Scope of Work

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

7

 

2.8  Design Development Submissions. Knutson shall submit to Owner, Engineer, and
Architect construction plans and specifications for construction and completion
of the Work as set forth in the General Conditions or the Project
Specifications. Neither Owner’s, Engineer’s, nor Architect’s review nor
approval of any design submissions or construction documents shall be deemed to
transfer any design liability from Knutson to Owner.

 

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

 

2.10  Government Approvals and Permits. Knutson shall provide reasonable assistance
to Owner in obtaining those permits, approvals, and licenses that are Owner’s
responsibility.

 

2.11  Knutson’s Construction Phase Services.

 

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

 

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

 

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

 

8

 

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

 

2.11.5  Knutson shall coordinate the activities of all Subcontractors. If Owner
performs other work on the Plant or at the Site with separate contractors under
Owner’s control, Knutson agrees to reasonably cooperate and coordinate its
activities with those of such separate contractors so that the Plant can be
completed in an orderly and coordinated manner without unreasonable disruption.

 

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

 

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

 

3.1  Specific Goods and Services: Owner or other contractors shall provide the
following prior to commencement of any Work by Knutson: (a) a  Plant
site suitable for construction of

 

9

 

the Plant, (b) suitable
access of the Plant site, (c) access to utilities necessary for Knutson’s
performance of the Work, to include general site temporary conditions such as
set forth in the Harris Mechanical agreement with Owner; (d) all permits
and licenses necessary for construction and operation of the Plant other than
those to be provided by Knutson as listed in the Project Specifications, (e) building
lay-out, location and survey, and (f) evidence reasonably satisfactory to
Knutson that it has secured financing sufficient to permit Owner to pay all its
financial obligations in connection with building of the Plant, including
payment of all amounts due to Knutson. Knutson will cooperate with Owner to
provide arrangements satisfactory to Owner’s lenders to secure first priority
mortgage liens over any claims or liens that Knutson or Subcontractors may
claim in the Site or the Plant.

 

3.2  Other Goods and Services: Owner shall also furnish to Knutson, at Owner’s
expense, all documents, drawings, specifications, information and services
showing all existing structures, foundations and undergrounds in or adjacent to
the Plant site that may be relevant to performance of the Work, if any;
coordinates, bench marks and base lines for the land area and locations where
all associated items of equipment, if any, are to be installed; the existence
and location of subsurface obstructions and conditions; soil data and specific
criteria for foundation design relevant to the Work; adequate arrangement
drawings, utility requirements and process connections of all those existing
items of machinery and equipment of existing facilities, if any, with which the
Work must interconnect or accommodate, sufficient for Knutson’s performance of
the Work; and the specific emission, effluent and environmental criteria and
requirements for the Work; and all other documents, drawings, specifications,
information and services, if any, identified as within the Owner’s Scope of
Services described in the Project Specifications. Knutson shall be entitled to
rely upon such data and design criteria in the performance of the Work. Owner
shall provide all such items within the times prescribed in the Schedule, or if
no time is prescribed, within the time reasonably required to allow Knutson to
perform its obligations under this contract. Furthermore, Knutson shall have
the right to receive from Owner reasonable written assurance, and evidence
reasonably acceptable to Knutson, that Owner is not aware of any physical,
financial or legal matters that would prevent Owner from fulfilling its
obligations hereunder or impede performance of the Parties obligations under
this Contract in accordance with the Schedule. If Knutson becomes aware of any
error in a  document, drawing, specification or other information
supplied by Owner it will promptly notify Owner of the same. Knutson shall,
however, have no liability of any kind with respect to any error of which it is
not actually aware.  In addition, Owner
shall be fully responsible for providing all

 

10

 

goods and services, if any, that become
necessary as a result of the discovery of hazardous materials or materials with
archeological significance, provided that Knutson shall be responsible for any
hazardous materials or hazardous substances released on the Site by Knutson or
its Subcontractors.

 

4.     Interface and Site
Conditions

 

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

 

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

 

5.     Schedule

 

5.1  Schedule: The
Schedule and the dates for performance set forth therein (the “Contract Times”)
shall form the basis of the time frame for the Work to be completed.  Owner shall

 

11

 

give to Knutson a notice to proceed with the
work not later than November 11, 2006. The Work shall commence within five
(5) days of Knutson’s receipt of a Notice to Proceed from Owner. Knutson
agrees that it will commence performance of the Work and achieve the Contract
Times in accordance with the Schedule and this Article 5. Knutson shall
prepare an estimated progress schedule for the Work and submit it to the Owner
within ten (10) days after the Commencement Date, which schedule shall not
exceed time limits set forth in Exhibit C. During construction, Knutson
shall revise the progress schedule as necessary to conform to the current
status of the Work, distributing copies to the Owner.

 

5.1.1  Substantial Completion and Final Completion: So long as Knutson receives a Notice to
Proceed not later than November 11, 2006, Substantial Completion of the
Project shall be achieved expeditiously as reasonably practicable, but in no
event, later than January 1, 2008. Substantial Completion of the portions
of the Work shall be achieved according to the completion dates for portions of
the Work as set forth in the Schedule and in order to receive subsequent work
of other separate contractors. Final Completion of the Project shall be
achieved as expeditiously as reasonably practicable, but in no event, will Final
Completion of the Work be completed later than February 1, 2008.

 

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

 

5.1.3  Delays to Work: If Knutson is delayed in the performance of
the Work due to acts, omissions, conditions, events, or circumstances beyond
its control and due to no fault or failure to perform or not perform of its
own, its Design Consultants, Subcontractors, or others of those for whom
Knutson is responsible, the Contract Time(s) for performance shall be
reasonably extended by Change Order. By way of example, events that will
entitle Knutson to an extension of the Contract Time(s) include acts or
omissions of Owner or anyone under Owner s control (including separate contractors),
changes in the Work, Differing Site Conditions, Hazardous Conditions, wars,
floods, labor disputes not directed at Knutson or its Subcontractors or Sub- subcontractors,
epidemics abroad, earthquakes, adverse weather conditions not reasonably
anticipated, and other acts of God.

 

5.2  Compensation to Knutson for Delay: In the event any delay in the Work of Knutson
caused by Owner, its employees, its contractor’s or vendors for reasons other
than force

 

12

 

majeure or events beyond the control of Owner
or such others, exceeds, individually or in the aggregate, thirty (30) days,
Knutson shall be entitled to an appropriate adjustment of the Contract Sum for
its direct incurred costs for delays as substantiated by written documentation.

 

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

 

5.4  Substantial Completion Delay Liquidated
Damages. Knutson
understands that if Substantial Completion of the Work is not attained by January 1,
2008, Owner will suffer damages which are difficult to specify accurately and
ascertain. Knutson agrees that if Substantial Completion of the Work is not
attained by January 1, 2008, Knutson shall pay to Owner a sum equal to
$3,000.00 per day for each day that Substantial Completion of the Work is
attained after January 1, 2008.

 

6.  Change Orders

 

Change Orders shall be handled as set forth
in the General Conditions.

 

7.  Substantial Completion and Final Acceptance

 

Substantial Completion and Final Acceptance
processes shall be generally handled as set forth in the General Conditions.

 

8.  Payment

 

8.1  Contract  Sum; Adjustments to Contract Sum: Owner will pay Knutson for the full and
satisfactory completion of the Work, the Contract Sum of $7,450,554.76, or such
other sum

 

13

 

as may be determined in accordance with Section 6
or Section 5. The Contract Sum is a guaranteed maximum price, subject to
adjust as set forth in this Section 8.1 or otherwise as provided in this
Contract. The Contract Sum does not include any sales or other tax. If Knutson
is, now or in the future, required to collect from Owner or pay any federal,
state, local or other tax with respect to all or any part of the Work, then
that amount shall be paid by Owner at Knutson’s request, in addition to the
Contract sum.

 

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

 

Costs
of the Work that would cause the Contract Sum to be exceeded shall be paid by
Knutson without reimbursement by Owner. Cost savings which would cause the cost
of the Work to be less than the Contract Sum shall be split equally between
Knutson and Owner on a 50/50 basis, with the exception of the dryer building
(building number 8 in Exhibit A) for which costs savings from the costs
set forth in the Schedule of Values shall be shared 90% Owner and 10% Knutson.

 

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

 

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

 

14

 

Each Application for Payment shall indicate
the percentage of completion of each portion of the Work as of the end of the
period covered by the Application.

 

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

 

Notwithstanding anything to the contrary in
the foregoing paragraph, Owner will release that portion of the Retainage
attributable to the cost of any pre-engineered building supply packages and
materials on a per building and foundation basis upon incorporation of such
items in full to the applicable building within the Work. Said release of
Retainage is contingent upon verification of incorporation into the applicable
building within the Work and incompliance with the Contract requirements,
including the Project Specifications.

 

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

 

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

 

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

 

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

 

15

 

4.               Subtract amounts, if any, for which the Owner
or Architect has withheld or nullified a Certificate for Payment as provided in
Section 9.5 of the General Conditions.

 

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

 

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

 

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

 

Application for Payment shall not include
requests for payment for portions of the Work for which Knutson does not intend
to pay a Design Consultant or Subcontractor, unless

 

16

 

such Work has been performed
by others whom Knutson intends to pay from proceeds received by Knutson.

 

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

 

Provided Knutson has
properly submitted the Application for Payment to Owner’s Representative with
required documentation received not later than the last day of a month, and
subject to Owner’s rights to withhold, Owner shall make payments to Knutson not
later than the tenth (10th) day of the month next following for all
amounts for which Owner, with the approval of Owner’s lenders, has approved for
payment. Owner’s payment shall constitute a Certificate for Payment if the
Certificate for Payment form is not executed by Owner. If Owner or Owner’s
lenders do not certify payment in the amount of the Application, and Knutson
and Owner cannot agree on a revised amount within five (5) days of the
date of the Certificate for Payment for less than the full amount, then either
Party may request a demand for arbitration in accordance with Section 16.
In any case, when the reasons stated by Owner or Owner’s lenders for
withholding payment of any amount for which an application has been made are
removed, in whole or in part, Owner shall immediately issue a Certificate for
Payment for the amount withheld and make payment of the amount so certified on
or before the date that the next payment is due, but in no case more than
thirty (30) days after the date that such Certificate for Payment was due.
Knutson shall pay Design Consultants and Subcontractors, in accordance with its
contractual obligations to such parties, all the amounts Knutson has received
from Owner on account of such parties’ work. Knutson will impose similar
requirements on Design Consultants and Subcontractors to pay those parties with
whom they have contracted.

 

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

 

17

 

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

 

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

 

8.6  Final Payment: Knutson shall invoice Owner for the final
amount due to it under this Contract upon reaching Final Acceptance. Payment of
all of the Contract Sum remaining unpaid, and any and all other amounts owing
to Knutson under the Contract, shall, unless provided otherwise in Exhibit B,
be made within 30 days after Final Acceptance, subject to adjustment for any
liquidated damages .

 

9.     Stop Work and Termination
for Cause.

 

(Sections 2.3 and 2.4 of the
General Conditions is superseded by the following provisions)

 

9.1  Owner’s Right to Stop Work

 

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

 

9.1.2  Knutson is entitled to seek an adjustment of the Contract Price and/or
Contract Time(s) if its cost or time to perform the Work has been
adversely impacted by any

 

18

 

suspension of stoppage of
work by Owner not resulting from the fault of Knutson or its Design
Consultants, Subcontractors, or others of those for whom Knutson is
responsible.

 

9.2  Owner s Right to Perform and Terminate for Cause

 

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

 

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

 

9.2.3  Upon declaring the Agreement terminated pursuant to Section 9.2.2
above, Owner may enter upon the premises and take possession, for the purpose
of completing the Work, of all materials, equipment, scaffolds, tools,
appliances and other items thereon, which have been purchased or provided for
the performance of the Work, all of which Knutson hereby transfers, assigns and
sets over to Owner for such purpose, and to employ any person or persons to
complete the Work and provide all of the required labor, services, materials,
equipment and other items. In the event of such termination, Knutson shall not
be entitled to receive any further payments under the Contract until the Work
shall be finally completed in accordance with the Contract. At such time, if
the unpaid balance of the Contract Price for Work performed prior to its default
exceeds the cost and expense incurred by Owner in completing the Work, such
excess shall be paid by Owner to Knutson. Knutson will only be entitled to be
paid for Work performed prior to its default. If Owner’s cost and expense of
completing the Work exceeds the unpaid balance of the Contract Price, then
Knutson shall be obligated to pay the difference to Owner. Such costs and
expense shall include not only the cost of completing the Work, but also
losses,

 

19

 

damages, costs and expense,
including attorneys fees and expenses, incurred by Owner in connection with the
reprocurement and defense of claims arising from Knutson’s default, subject to the waiver of consequential damages set forth in
this Contract.

 

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

 

1.  all Work executed;

 

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

 

3.  overhead and profit in the amount of fifteen
percent (15%) on the sum of items 1 and 2 above. In no event shall Owner be
liable to Knutson for profit or overhead on Work not executed.

 

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

 

9.4  Knutson’s Right to Stop Work

 

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

 

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

 

20

 

9.5  Assignments Upon Termination

 

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

 

9.6  Knutson s Right to Terminate for Cause

 

9.6.1  Knutson, in addition to any other rights and remedies provided in the
Contract or by law, may terminate the Agreement for cause for the following
reasons: (1) the Work has been stopped for ninety (90) consecutive days,
because of court order, any government authority having jurisdiction over the
Work, or orders by Owner under Section 9.1.1 hereof, provided that such
stoppages are not due to the acts or omissions of Knutson or anyone for
whose acts Knutson may be responsible; (2) Owner’s failure to provide
Knutson with any information, permits or approvals that are Owner s responsibility under the Contract which
result in the Work being stopped for ninety (90) consecutive days, even though
Owner has not ordered Knutson in writing to stop and suspend the Work pursuant
to Section 9.1.1 hereof; (3) Owner’s failure to cure the problems set
forth in Section 9.4.1 above within ten (10) days after Knutson has
stopped the Work.

 

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

 

21

 

same manner as if Owner had
terminated the Agreement for its convenience under Section 9.3.

 

9.7  Bankruptcy of Owner or Knutson

 

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

 

9.7.2  The
rights and remedies under Section 9.7.1 above shall not be deemed to limit the
ability of the non-Bankrupt Party to seek any other rights and remedies
provided by the Contract or by law, including its ability to seek relief from
any automatic stays under the United States Bankruptcy Code or the right of
Knutson to stop Work under any applicable provision of these General Conditions
of Contract.

 

10.  Safety and Security

 

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

 

22

 

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

 

10.3  Knutson’s Responsibility for Plant Safety.

 

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

 

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

 

10.3.3  Knutson’s responsibility for safety under this Section 10.3 is not
intended in any way to relieve Subcontractors and Sub-Subcontractors, or Owner
and its contractors, of their own contractual and legal obligations and
responsibility for (i) complying with all Legal Requirements, including
those related to health and safety matters, and (ii) taking

 

23

 

all necessary measures to
implement and monitor all safety precautions and programs to guard against
injury, losses, damages or accidents resulting from their
performance of the Work.

 

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

 

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

 

11.  Project Execution

 

11.1  Knutson’s Representative: Knutson’s Project Manager and Knutson’s Site
Manager shall be reasonably available to Owner and shall have the necessary
expertise and experience required to supervise the Work. Knutson’s Project
Manager and Knutson’s Site Manager shall communicate regularly with Owner.
Knutson’s Project Manager shall represent Knutson, and written communications
given to Knutson’s Project Manager shall be as binding as if given to Knutson
itself. All communications to Knutson’s Project Manager or Site Manager by
Owner shall be confirmed in writing upon request by Knutson. The name, title,
address, telephone numbers, and e-mail addresses of Knutson’s Project Manager
and Knutson’s Site Manager shall be provided to Owner’s Representative within
ten (10) days of the date of this Contract.

 

11.2  Owner Representative: Owner will have at all times during the
progress of the Work, a competent representative (“Owner’s Representative”)
assigned to the Work. Owner’s Representative shall represent Owner, and written
communications given to Owner’s Representative shall be as binding as if given
to Owner itself. Owner shall have its Owner’s

 

24

 

Representative on site, or available within
24 hours, at all times during the progress of the Work. Set forth below is the
name, title, address, telephone numbers and e-mail address of Owner’s
Representative:

 

Owners Representative

 

Kelly Longtin, CEO

Otter Tail Ag Enterprises, LLC

1220 North Tower Road, Suite 201

Fergus Falls, MN 56537

(218) 998-4301 office

(218) 998-4302 fax

Kelly.longtin@yahoo.com

(320) 760-0505

 

11.3  Project Reviews and Approvals:

 

11.3.1  Reviews: Knutson will, as appropriate, and
additionally upon Owner’s request, issue a Project progress schedule to Owner.
Knutson shall participate in reviews of the progress of the Work at the site at
Owner’s request as set forth in the General Conditions and the Project
Specifications. Owner may review and comment on any plan, drawing or
specification, that Knutson delivers to Owner. No review or comment made by
Owner shall result in Owner’s being deemed to have assumed any responsibility
for any of the Work. Knutson shall attempt to incorporate Owner’s comments
where it can do so without increasing Knutson’s cost, the time required for
performance, or any of its other obligations, but Knutson shall have no
obligation to suspend work to allow time for review and comment except as
provided in the Schedule, or to incorporate any of Owner’s comments except as
required in order to comply with Knutson’s obligations under the Contract, or
as agreed under Section 6 above.

 

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

 

11.4  Subcontractors and Vendors:

 

11.4.1  Notice of Subcontractor Selection: Knutson shall, as soon as practicable after

 

25

 

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

 

11.5  Cooperation with Owner’s Lender. Knutson agrees to cooperate at all times as
reasonably requested by Owner and any lender or assignee of Owner and their
respective agents and representatives in performance of this Contract. Knutson
shall sign any document reasonably required by Owner in order to satisfy all
lenders or investors providing sources of funds for construction of the Plant.
Owner may assign its interest to one or more lenders or financial institutions
or investors, providing sources of funds for construction of the Plant, at any
time, provided that the party taking the assignment can supply payment
assurances acceptable to Knutson.

 

12.  Warranty

 

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

 

26

 

is intended to limit any
manufacturer’s warranty which provides Owner with greater warranty rights than
set forth in this Section 12.1 or the Contract.

 

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

 

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

 

12.5  Correction of Defective Work:

 

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

 

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

 

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

 

27

 

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

 

13.  Transfer of Title and Risk of Loss

 

Title to, and risk of loss of, the Work or
any part thereof and all materials and components used, or to be used in the
Plant, shall pass to Owner upon acceptance of Substantial Completion. This
provision, however, shall in no case be deemed to alter any of the rights or
obligations of any party under any insurance policy provided under this
Contract, or any waiver of subrogation set forth in Section 14 below.

 

14.  Insurance; Bonds

 

14.1  Required Insurance: Each Party shall carry the insurance coverage
described in General Conditions.

 

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

 

28

 

insured shall bear the costs
of the deductible, if any, under such policy.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

14.5.1.4  Every Bond must display the surety’s bond number. A rider including the
following provisions shall be attached to each bond: (i) The Surety hereby
agrees that it consents to and waives notice of any addition, alteration,
omission, change, or other modifications of the Contract. Any addition,
alteration, change, extension of time, or other modification of the Contract,
or a forbearance on the part of either Owner or Knutson to the other, shall not
release the Surety of its obligations hereunder, and notice to the Surety of
such matters is hereby waived; and (ii) The Surety agrees that it is
obligated under the bonds to any successor, grantee, or assignee of Owner.

 

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

 

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

 

15.  Indemnity (Section 3.18.1 is superseded by Section 15.1 below)

 

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

 

30

 

including reasonable
attorney’s fees as is attributable to its relative share of the negligence or
omission which caused such damage, loss or expense.

 

Knutson’s indemnity
obligations set forth in this Section 15.1 shall not be limited by any
limitation in the amount of damages, compensation, or benefits payable by or
for Knutson, its design consultants, Subcontractors or other entity under any
employee benefit acts, including Worker’s Compensation and disability acts in
instances where an employee of any of them, or anyone for whose acts may be
liable, has a claim against Owner, its lenders, officers, directors, employees,
or agents.

 

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

 

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

 

Notwithstanding anything in
this Contract to the contrary, but without limiting Knutson’s indemnification
and other obligations to Owner as stated in this Contract, Knutson shall have the
right to contest and dispute any lien which Knutson believes, in good faith, is
unjustified or overstated, provided that Knutson contests the same or the validity
thereof  by appropriate and expeditious
legal proceedings which operate to prevent the imposition or foreclosure of the
lien so contested, provided that Knutson, prior to the date of any such
contest, has given such security as may be required by law, including the
provision for removing a contested 

 

31

 

lien as set forth in Minn. Stat. § 514.10 to remove a
contested lien from the Owner’s property and to permit Knutson to contest the
lien claim. Knutson shall give prompt notice to Owner of any such contests. Any
such contests shall be prosecuted with due diligence and Knutson must, promptly
after final determination thereof, comply with and pay the result determined,
together with all interest and penalties, if any, which may be payable
therewith and further will indemnify and hold harmless the Owner against all
losses in connection therewith.

 

15.3 
Conditions to Indemnity: The indemnities set forth in
Sections 15.1 and 15.2 above are valid only if (a) Owner gives notice of any
claim or lawsuit for which it claims indemnity within a time reasonable for
Knutson to contest such claim, 

(b) Owner cooperates fully and promptly with Knutson in the defense thereof at
Owner’s expense for all items related to such defense for time of witnesses who
are employees of Owner, costs related to travel, production of documents, fees
for any counsel it elects to assist it in addition to counsel appointed by
Knutson for defense of the claim, and (c) Knutson has full authority in defense
of such lawsuit or claim and to settle such claim, provided that, it pays to
Owner the cost, if any, of any change in operations resulting from such
settlement.

 

16.  Dispute Resolution

 

The dispute resolutions
provisions of the General Conditions shall be applicable, as modified in this Section 16.
Any dispute resolution proceedings shall be held at St. Cloud, Minnesota, or
such other place as may be mutually agreed to by the Parties.

 

17.  Force Majeure

 

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

 

18.  General Provisions

 

18.1  Assignment: Neither Knutson nor Owner shall assign or
transfer its duties or obligations hereunder without the prior written consent
of the other. Knutson hereby consents to Owner collaterally assigning this
Contract and its rights hereunder to one or more lenders or other sources of
financing as necessary for Owner to obtain and secure

 

32

 

financing to construct and
operate the Plant. This Contract shall be binding upon and shall inure to the
benefit of the Parties and the successors and permitted assigns of Owner and Knutson.

 

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

 

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

 

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

 

	
  If
  to Knutson, to:

  	
  Knutson
  Construction Services

  
	
   

  	
  1907
  2nd Street Southwest

  
	
   

  	
  Rochester,
  MN 55902

  
	
   

  	
  Attn:
  

  	
  Trevor
  Westrom

  
	
   

  	
   

  	
  Dave
  Bastyr

  
	
   

  	
   

  
	
  If
  to Owner, to:

  	
  Otter
  Tail Ag Enterprises, LLC

  
	
   

  	
  1220
  North Tower Road, Suite 201 

  
	
   

  	
  Fergus
  Falls, MN 56537

  
	
   

  	
  Attn: 

  	
  Jerry
  Larson, President

  

 

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

 

33

 

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

 

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

 

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

 

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

 

34

 

[SIGNATURE PAGE TO OTTER
TAIL AG ENTERPRISES, LLC CONSTRUCTION

MANAGEMENT SERVICES CONTRACT]

 

IN WITNESS WHEREOF, the
parties hereto have executed this Contract on the 3  day of November,
2006.

 

 

	
   

  	
  Owner:

  
	
   

  	
   

  
	
   

  	
  OTTER
  TAIL AG ENTERPRISES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/
  Jerry Larson

  	
   

  
	
   

  	
  Jerry
  Larson

  
	
   

  	
  Its
  President

  

 

 

[SIGNATURE PAGE TO OTTER
TAIL AG ENTERPRISES, LLC CONSTRUCTION

SERVICES MANAGEMENT CONTRACT]

 

IN WITNESS WHEREOF, the
parties hereto have executed this Contract on the 3 day of November, 2006.

 

 

	
   

  	
  KNUTSON
  CONSTRUCTION SERVICES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Michael J. Larson

  	
   

  
	
   

  	
  Michael
  J. Larson

  	
   

  
	
   

  	
  Its 

  	
    Chief Estimator

  	
   

  
						

 

 

36

 

Exhibit B
Commercial Terms

Construction
Services Management Contract

Otter
Tail Ag Enterprises, LLC

Exhibit B
Commercial Terms

 

EXHIBIT B

COMMERCIAL TERMS

 

B.1    PRICE

 

B.2    PAYMENT
MILESTONES SCHEDULE OF VALUES

 

B-1

 

B.1     PRICE

 

Contract Sum $7,450,544.76, subject to
adjustment as set forth in Section 8 of the Contract.

 

B.2.    PAYMENT TERMS

 

In addition to the terms set forth in the Contract, the Contract Sum
shall be paid as follows:

 

	
  Construction and

  Equipment Procurement

  	
   

  	
  Construction
  payments to be paid based on schedule of values and milestones to be mutually
  agreed upon and included in Exhibit B.2

  

 

B-2

 

BUILDING:  OTAE Ethanol Plant

LOCATION:  Ottertail Ag
Enterprises

ENGINEER:  Interstate Engineering

SUBJECT:  Schedule of Values

EXHIBIT B

 

	
  DESCRIPTION

  	
   

  	
  TOTAL

  
	
   

  	
   

  	
   

  
	
  Division #1 General
  Conditions

  	
   

  	
  661332

  
	
  Division #2
  Site/Earthwork

  	
   

  	
  342898

  
	
  Division #3 Concrete

  	
   

  	
  3829638

  
	
  Division #4 Masonry

  	
   

  	
  35000

  
	
  Division #5 Metals

  	
   

  	
  30000

  
	
  Division #6 Carpentry

  	
   

  	
  70000

  
	
  Division #7
  Thermal/Moisture Protection

  	
   

  	
  75000

  
	
  Division #8
  Doors & Windows

  	
   

  	
  80000

  
	
  Division #9 Finishes

  	
   

  	
  130000

  
	
  Division #10
  Specialties

  	
   

  	
  10000

  
	
  Division #11 Equipment

  	
   

  	
  0

  
	
  Division #12
  Furnishings

  	
   

  	
  0

  
	
  Division #13 Special
  Construction

  	
   

  	
  2091686

  
	
  Division #14 Conveying
  Systems

  	
   

  	
  0

  
	
  Division #15 Mechanical

  	
   

  	
  60000

  
	
  Division #16 Electrical

  	
   

  	
  35000

  
	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  7450554

  

 

1

 

EXHIBIT C

PROJECT SCHEDULE

 

1.      PROJECT SCHEDULE

 

The Project Schedule is based on a Notice To
Proceed received not later than ten (10) days after November 1, 2006.
Substantial Completion for the Work is scheduled to be not later than January 1,
2008, with Final Completion to be not later than February 1, 2008

 

The attached Exhibit C provides a
Summary Project Schedule which is incorporated into and made part of this Exhibit and
the Contract by reference.

 

C-1

 

TABLE 1020 –
1 SCHEDULE FOR BUILDING CONSTRUCTION

 

	
  Bldg
  # l

  	
   

  	
  Main
  Process

  Building

  	
   

  	
  Construction
  of foundations and floors and tank pads to begin in Spring 2007 as weather
  permits. Erection of building is to take place after process tanks and large
  equipment is set. Expected time for commencement of building erection is September 1,
  2007.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bldg
  # 2

  	
   

  	
  Maintenance

  Building

  	
   

  	
  To
  be constructed early in the process. Bid package includes add alternate for
  winter construction

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bldg
  # 3

  	
   

  	
  Fermentation

  	
   

  	
  Same
  schedule as Bldg # 1 Main Process Building

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bldg
  # 4

  	
   

  	
  Cooling
  Tower

  Pump Building

  	
   

  	
  To
  commence for completion by September 1, 2007 to be ready for
  installation of pumps, controls and piping. Construction of  this building need not be delayed for
  installation of equipment

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bldg
  # 5

  	
   

  	
  Motor
  Control

  Center

  	
   

  	
  To
  commence for completion by September 1 to be ready for installation of
  MCC’s , conduits and wiring. Construction of this building need not be
  delayed for installation of equipment

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bldg
  # 6

  	
   

  	
  Boiler
  Building

  	
   

  	
  To
  commence for completion by October 1, 2007 to be ready for installation
  of Boilers, controls and appurtenances. Construction of this building need
  not be delayed for installation of equipment

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bldg
  # 7

  	
   

  	
  Administration

  Building

  	
   

  	
  Separate
  Bid Package – independent of
  buildings for ethanol production.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bldg
  # 8

  	
   

  	
  Dryer
  Building

  	
   

  	
  Construction
  of foundations and floors and tank pads to begin in Spring 2007 as weather
  permits. Erection of  building is to
  take place after dryers are set. Expected time for commencement of building
  erection is October 2007.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bldg
  # 9

  	
   

  	
  DDGS
  Building

  	
   

  	
  To
  be constructed early in the process. Bid package includes add alternate for
  winter construction

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bldg
  # 10

  	
   

  	
  Fire
  Suppression

  Building

  	
   

  	
  To
  commence for completion by October 1, 2007 to be ready for installation
  of Pumps controls and appurtenances. Construction of  this building need not be delayed for
  installation of equipment

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bldg
  # ll

  	
   

  	
  DD
  & E

  	
   

  	
  Construction
  of foundations and floors and tank pads to begin in Spring 2007 as weather
  permits. Erection of building is by others.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bldg
  # 12

  	
   

  	
  WDGS

  	
   

  	
  To
  be available for use prior to start up as the process start up may precede
  the start up of the dryers.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tanks

  	
   

  	
  Numerous

  	
   

  	
  Exterior
  tank foundations – all to be
  completed by _August 1, 2006 to allow for erection and painting of tank
  shell by December 1, 2007. The Fermenter foundations and MPB foundations
  need to be completed by July 1, 2007.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cooling
  Tower

  Foundation

  	
   

  	
  Foundation
  to be completed and ready for erection of cooling towers and piping by
  September 1, 2007.

  

 

 

TABLE 1020-2 SCHEDULE FOR
GRADING CONSTRUCTION

 

	
  Building

  	
   

  	
  Description

  	
   

  	
  Sub-grade Completion Schedule

  
	
  Bldg
  #l

  	
   

  	
  Main
  Process Building

  	
   

  	
  November 22,
  2006

  
	
  Bldg
  #2

  	
   

  	
  Maintenance
  Building

  	
   

  	
  November 10,
  2006

  
	
  Bldg
  #3

  	
   

  	
  Fermentation

  	
   

  	
  November 22,
  2006

  
	
  Bldg
  #4

  	
   

  	
  Cooling
  Tower Pump Building

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  #5

  	
   

  	
  Motor
  Control Center

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  #6

  	
   

  	
  Boiler
  Building

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  #7

  	
   

  	
  Administration
  Building

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  #8

  	
   

  	
  Dryer
  Building

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  #9

  	
   

  	
  DDGS
  Building

  	
   

  	
  November 10,
  2006

  
	
  Bldg
  #10

  	
   

  	
  Fire
  Suppression Building

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  #11

  	
   

  	
  DD&E

  	
   

  	
  November 10,
  2006

  
	
  Bldg
  #12

  	
   

  	
  WDGS

  	
   

  	
  June 15,
  2007

  
	
  Tanks

  	
   

  	
  Numerous

  	
   

  	
  June 15,
  2007

  
	
   

  	
   

  	
  Cooling
  Tower Foundation

  	
   

  	
  June 15,
  2007

  

 

 

EXHIBIT D

 

GENERAL CONDITIONS
OF THE CONTRACT FOR CONSTRUCTION

 

Attached as Exhibit D are the “General
Conditions of the Contract for Construction,” American Institute of Architects
Document A201TM,  1987 Edition, which
constitute the General Conditions of the Contract, as modified by the
supplementary conditions described in the Project Manual attached as Exhibit A
(Section C-02).

 

D-1

 

THE AMERICAN INSTITUTE OF
ARCHITECTS

 

 

AIA Document A201

 

General Conditions of the Contract

for Construction

 

THIS DOCUMENT HAS IMPORTANT LEGAL
CONSEQUENCES; CONSULTATION

WITH AN ATTORNEY IS ENCOURAGED
WITH RESPECT TO ITS MODIFICATION

 

 

1987 EDITION

TABLE OF ARTICLES

 

	
  1.

  	
  GENERAL PROVISIONS

  
	
   

  	
   

  
	
  2.

  	
  OWNER

  
	
   

  	
   

  
	
  3.

  	
  CONTRACTOR

  
	
   

  	
   

  
	
  4.

  	
  ADMINISTRATION OF THE CONTRACT

  
	
   

  	
   

  
	
  5.

  	
  SUBCONTRACTORS

  
	
   

  	
   

  
	
  6.

  	
  CONSTRUCTION BY OWNER OR BY SEPARATE CONTRACTORS

  
	
   

  	
   

  
	
  7.

  	
  CHANGES IN THE WORK

  
	
   

  	
   

  
	
  8.

  	
  TIME

  
	
   

  	
   

  
	
  9.

  	
  PAYMENTS AND COMPLETION

  
	
   

  	
   

  
	
  10.

  	
  PROTECTION OF PERSONS AND PROPERTY

  
	
   

  	
   

  
	
  11.

  	
  INSURANCE AND BONDS

  
	
   

  	
   

  
	
  12.

  	
  UNCOVERING AND CORRECTION OF WORK

  
	
   

  	
   

  
	
  13.

  	
  MISCELLANEOUS PROVISIONS

  
	
   

  	
   

  
	
  14.

  	
  TERMINATION OR SUSPENSION OF THE CONTRACT

  

 

This document
has been approved and endorsed by the Associated General Contractors of
America.

 

Copyright
1911, 1915, 1918, 1925, 1937, 1951, 1958, 1961, 1963, 1966, 1967, 1970, 1976,
©1987 by The American Institute of Architects, 1735 New York Avenue, N.W.,
Washington, D C, 20006 Reproduction of the material herein or substantial
quotation of its provisions without written permission of the AIA violates the
copyright laws of the United States and will be subject to legal prosecutions

 

	
  AIA DOCUMENT A201 ·  GENERAL CONDITIONS
  OF THE CONTRACT FOR CONSTRUCTION · FOURTEENTH EDITION AIA®
  · © 1987 THE AMERICAN
  INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N W., WASHINGTON, D C 20006

  	
  A201-1987

  

 

1

 

INDEX

 

	
  Acceptance of Nonconforming Work

  	
  9.6.6, 9.9.3, 12.3

  
	
  Acceptance
  of Work

  	
  9.6.6, 9.8.2, 9.9.3, 9.10.1, 9.10.3

  
	
  Access to Work

  	
  3.16, 6.2.1,
  12.1

  
	
  Accident
  Prevention

  	
  4.2.3, 10

  
	
  Acts
  and Omissions

  	
  3.2.1, 3.2.2, 3.3.2, 3.12.8, 3.18, 4.2.3,
  4.3.2, 4.3.9, 8.3.1, 10.1.4, 10.2.5, 13.4.2, 13.7, 14.1

  
	
  Addenda

  	
  1.1.1, 3.11

  
	
  Additional
  Cost, Claims for

  	
  4.3.6, 4.3.7, 4.3.9, 6.1.1, 10.3

  
	
  Additional
  Inspections and Testing

  	
  4.2.6, 9.8.2, 12.2.1, 13.5

  
	
  Additional
  Time, Claims for

  	
  4.3.6, 4.3.8, 4.3.9, 8.3.2

  
	
  ADMINISTRATION OF THE CONTRACT

  	
  3.3.3, 4, 9.4, 9.5

  
	
  Advertisement
  or Invitation to Bid

  	
  1.1.1

  
	
  Aesthetic
  Effect

  	
  4.2.13, 4.5.1

  
	
  Allowances

  	
  3.8

  
	
  All-risk
  Insurance

  	
  11.3.1.1

  
	
  Applications for Payment

  	
  4.2.5,
  7.3.7, 9.2, 9.3, 9.4, 9.5.1, 9.6.3, 9.8.3,
  9.10.1, 9.10.3, 9.10.4,  11.1.3, 14.2.4

  
	
  Approvals

  	
  2.4,
  3.3.3, 3.5, 3.10.2, 3.12.4 through 3.12.8, 3.18.3, 4.2.7, 9.3.2, 11.3.1.4,
  13.4.2, 13.5

  
	
  Arbitration

  	
  4.1.4, 4.3.2, 4.3.4, 4.4.4, 4.5, 8.3.1, 10.1.2, 11.3.9, 11.3.10

  
	
  Architect

  	
  4.1

  
	
  Architect,
  Definition of

  	
  4.1.1

  
	
  Architect,
  Extent of Authority

  	
  2.4, 3.12.6, 4.2, 4.3.2, 4.3.6, 4.4, 5.2, 6.3,
  7.1.2, 7.2.1, 7.3.6, 7.4, 9.2, 9.3.1, 9.4, 9.5, 9.6.3, 9.8.2, 9.8.3, 9.10.1,
  9.10.3, 12.1, 12.2.1, 13.5.1, 13.5.2, 14.2.2, 14.2.4

  
	
  Architect,
  Limitations of Authority and Responsibility

  	
  3.3.3,
  3.12.8, 3.12.11, 4.1.2, 4.2.1, 4.2.2, 4.2.3, 4.2,6, 4.2.7, 4.2.10, 4.2.12,
  4.2.13, 4.3.2, 5.2.1, 7.4, 9.4.2, 9.6.4, 9.6.6

  
	
  Architect’s
  Additional Services and Expenses

  	
  2.4,
  9.8.2, 11.3.1.1, 12.2.1, 12.2.4, 13.5.2, 13.5.3, 14.2.4

  
	
  Architect’s Administration of the Contract

  	
  4.2, 4.3.6, 4.3.7, 4.4, 9.4, 9.5

  
	
  Architect’s
  Approvals

  	
  2.4,
  3.5.1, 3.10.2, 3.12.6, 3.12.8, 3.18.3, 4.2.7

  
	
  Architect’s
  Authority to Reject Work

  	
  3.5.1,
  4.2.6, 12.1.2, 12.2.1

  
	
  Architect’s
  Copyright

  	
  1.3

  
	
  Architect’s
  Decisions

  	
  4.2.6,
  4.2.7, 4.2.11, 4.2.12, 4.2.13, 4.3.2, 4.3.6, 4.4.1, 4.4.4, 4.5, 6.3, 7.3.6, 7.3.8,
  8.1.3, 8.3.1, 9.2, 9.4, 9.5.1, 9.8.2, 9.9.1, 10.1.2, 13.5.2, 14.2.2, 14.2.4

  
	
  Architect’s
  Inspections

  	
  4.2.2, 4.2.9, 4.3.6, 9.4.2, 9.8.2, 9.9.2,
  9.10.1, 13.5

  
	
  Architect’
  s Instructions

  	
  4.2.6,
  4.2.7, 4.2.8, 4.3.7, 7.4.1, 12.1, 13.5.2

  
	
  Architect’s
  Interpretations

  	
  4.2.11,
  4.2.12, 4.3.7

  
	
  Architect’s
  On-Site Observations

  	
  4.2.2, 4.2.5, 4.3.6, 9.4.2, 9.5.1, 9.10.1, 13.5

  
	
  Architect’s
  Project Representative

  	
  4.2.10

  
	
  Architect
  s Relationship with Contractor

  	
  1.1.2,
  3.2.1, 3.2.2, 3.3.3, 3.5.1, 3.7.3, 3.11, 3.12.8, 3.12.11, 3.16, 3.18, 4.2.3,
  4.2.4, 4.2.6, 4.2.12, 5.2, 6.2.2, 7.3.4, 9.8.2, 11.3.7, 12.1, 13.5

  
	
  Architect
  s Relationship with Subcontractors 

  	
  1.1.2,
  4.2.3, 4.2.4, 4.2.6, 9.6.3, 9.6.4, 11.3.7

  
	
  Architect
  s Representations

  	
  9.4.2, 9.5.1, 9.10.1

  
	
  Architect’
  s Site Visits

  	
  4.2.2, 4.2.5, 4.2.9, 4.3.6, 9.4.2, 9.5.1,
  9.8.2, 9.9.2, 9.10.1, 13.5

  
	
  Asbestos

  	
  10.1

  
	
  Attorneys’
  Fees

  	
  3.18.1, 9.10.2, 10.1.4

  
	
  Award
  of Separate Contracts

  	
  6.1.1

  
	
  Award of Subcontracts and
  Other Contracts for Portions of the Work

  	
  5.2

  
	
  Basic Definitions

  	
  1.1

  
	
  Bidding
  Requirements

  	
  1.1.1, 1.1.7, 5.2.1, 11.4.1

  
	
  Boiler and Machinery Insurance

  	
  11.3.2

  
	
  Bonds,
  Lien

  	
  9.10.2

  
	
  Bonds,
  Performance and Payment

  	
  7.3.6.4, 9.10.3, 11.3.9, 11.4

  
	
  Building
  Permit

  	
  3.7.1

  
	
  Capitalization

  	
  1.4

  
	
  Certificate
  of Substantial Completion

  	
  9.8.2

  
	
  Certificates for Payment

  	
  4.2.5, 4.2.9, 9.3.3, 9.4,
  9.5, 9.6.1, 9.6.6, 9.7.1, 9.8.3, 9.10.1, 9.10.3, 13.7, 14.1.1.3, 14.2.4

  
	
  Certificates
  of Inspection, Testing or Approval 

  	
  3.12.11,13.5.4

  
	
  Certificates
  of lnsurance

  	
  9.3.2, 9.10.2, 11.1.3

  
	
  Change Orders

  	
  1.1.1, 2.4.1, 3.8.2.4, 3.11, 4.2.8, 4.3.3, 5.2.3, 7.1, 7.2, 7.3.2, 8.3.1, 9.3.1.1, 9.10.3, 11.3.1.2, 11.3.4,
  11.3.9, 12.1.2

  
	
  Change
  Orders, Definition of 

  	
  7.2.1

  
	
  Changes

  	
  7.1

  
	
  CHANGES IN THE WORK

  	
  3.11, 4.2.8, 7,
  8.3.1, 9.3.1.1, 10.1.3

  
	
  Claim,
  Definition of

  	
  4.3.1

  
	
  Claims and Disputes

  	
  4.3, 4.4, 4.5, 6.2.5, 8.3.2, 9.3.1.2, 9.3.3, 9.10.4, 10.14

  
	
  Claims and Timely Assertion of Claims

  	
  4.5.6

  
	
  Claims for Additional Cost

  	
  4.3.6, 4.3.7, 4.3.9, 6.1.1,
  10.3

  
	
  Claims for Additional Time

  	
  4.3.6, 4.3.8, 4.3.9,  8.3.2

  
	
  Claims for Concealed or Unknown Conditions

  	
  4.3.8

  
	
  Claims
  for Damages

  	
  3.18, 4.3.9, 6.1.1, 6.2.5, 8.3.2, 9.5.12, 10.14

  
	
  Claims
  Subject to Arbitration

  	
  4.3.2, 4.4.4, 4.5.1

  
	
  Cleaning Up

  	
  3.15, 6.3

  
	
  Commencement of Statutory Limitation Period

  	
  13.7

  
	
  Commencement
  of the Work, Conditions Relating to 

  	
  2.12,
  2.2.1, 3.2.1, 3.2.2, 3.7.1, 3.10.1, 3.12.6, 4.3.7, 5.2.1, 6 2.2, 8.1.2,
  8.2.2, 9.2, 11.1.3, 11.3.6, 11.4.1

  
	
  Commencement
  of the Work, Definition of

  	
  8.1.2

  
	
  Communications
  Facilitating Contract Administration

  	
  3.9.1, 4.2.4, 5.2.1

  
	
  Completion,
  Conditions Relating to

  	
  3.11, 3.15, 4.2.2, 4.2.9, 4.3.2, 9.4.2, 9.8,
  9.9.1, 9.10, 11.3.5, 12.2.2, 13.7.1

  
	
  COMPLETION, PAYMENTS AND

  	
  9

  
	
  Completion,
  Substantial

  	
  4.2.9, 4.3.5.2, 8.1.1, 8.1.3, 8.2.3, 9.8,
  9.9.1, 12.2.2, 13.7

  
	
  Compliance
  with Laws

  	
  1.3,
  3.6, 3.7, 3.13, 4.11, 10.2.2, 11.1, 11.3, 13.1, 13.5.1, 13.5.2, 13.6, 14.1.1,
  14.2.1.3

  
	
  Concealed
  or Unknown Conditions

  	
  4.3.6

  
	
  Conditions
  of the Contract

  	
  1.1.1, 1.1.7, 6.1.1

  
	
  Consent,
  Written

  	
  1.3.1, 3.12.8, 3.14.2, 4.1.2, 4.3.4, 4.5.5, 9.3.2,
  9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 10.1.3, 11.3.1, 11.3.1.4, 11.3.11,
  13.2, 13.4.2

  
	
  CONSTRUCTION BY OWNER OR BY
  SEPARATE CONTRACTORS

  	
  1.1.4, 6

  
	
  Construction
  Change Directive, Definition of

  	
  7.3.1

  
	
  Construction Change Directives

  	
  1.1.1, 4.2.8, 7.1, 7.3, 9.3  1.1

  
	
  Construction
  Schedules, Contractor’s

  	
  3.10, 6.1.3

  
	
  Contingent Assignment of Subcontracts

  	
  5.4

  
	
  Continuing Contract Performance

  	
  4.3.4

  
	
  Contract,
  Definition of

  	
  1.1.2

  
	
  CONTRACT, TERMINATION OR

  SUSPENSION OF THE

  	
  4 3 7, 5.4.1.1, 14

  
	
  Contract
  Administration

  	
  3.3.3, 4, 9.4, 9.5

  
	
  Contract
  Award and Execution, Conditions Relating to

  	
  3.7.1, 3.10, 5.2, 9.2, 11.1.3, 11.3.6, 11.4.1

  
	
  Contract Documents, The

  	
  1.1, 1.2, 7

  
	
  Contract
  Documents, Copies Furnished and Use of

  	
  1.3, 2.2.5, 5.3

  
	
  Contract
  Documents, Definition of

  	
  1.1.1

  
	
  Contract
  Performance During Arbitration

  	
  4.3.4,
  4.5.3

  
	
  Contract Sum

  	
  3.8,
  4.3.6, 4.3.7, 4.4.4, 5.2.3, 6.1.3, 7.2, 7.3, 9.1, 9.7,
  11.3.1, 12.2.4, 12.3, 14.2.4

  
	
  Contract Sum, Definition of

  	
  9.1

  
	
  Contract
  Time

  	
  4.3.6, 4.3.8, 4.4.4, 7.2.1.3, 7.3, 8.2.1, 8.3.1,
  9.7, 12.1.1

  
	
  Contract
  Time, Definition of

  	
  8.1.1

  

 

2

 

	
  CONTRACTOR

  	
  3

  
	
  Contractor, Definition of

  	
  3.1, 6.1.2

  
	
  Contractor’s Bid

  	
  1.1.1

  
	
  Contractor’s Construction
  Schedules

  	
  3.10, 6.1.3

  
	
  Contractor’s Employees

  	
  3.3.2, 3.4.2, 3.8.1, 3.9, 3.18, 4.2.3,

  4.2.6, 8.1.2, 10.2, 10.3, 11.1.1, 14.2.1.1

  
	
  Contractor’s Liability
  Insurance

  	
  11.1

  
	
  Contractor’s Relationship with Separate
  Contractors and Owner’s Forces

  	
  2.2.6, 3.12.5, 3.14.2, 4.2.4, 6, 12.2.5

  
	
  Contractor’s Relationship with Subcontractors

  	
  1.2.4,
  3.3.2, 

  3.18.1, 3.18.2, 5.2, 5.3, 5.4, 9.6.2, 11.3.7, 11.3.8, 14.2.1.2

  
	
  Contractor’s Relationship with the Architect

  	
  1.1.2,
  3.2.1, 3.2.2,

  3.3.3, 3.5.1, 3.7.3, 3.11, 3.12.8 3.16, 3.18, 4.2.3, 4.2.4, 4.2.6,

  4.2.12, 5.2, 6.2.2, 7.3.4, 9.8.2, 11.3.7, 12.1, 13.5

  
	
  Contractor’s Representations

  	
  1.2.2,
  3.5.1, 3.12.7, 6.2.2, 8.2.1, 9.3.3

  
	
  Contractor’s Responsibility for Those
  Performing the Work

  	
  3.3.2, 3.18, 4.2.3, 10

  
	
  Contractor’s Review of Contract Documents

  	
  1.2.2, 3.2, 3.7.3

  
	
  Contractor’s Right to Stop the Work

  	
  9.7

  
	
  Contractor’s Right to Terminate the Contract

  	
  14.1

  
	
  Contractor’s Submittals

  	
  3.10, 3.11, 3.12, 4.2.7, 5.2.1, 5.2.3,

  7.3.6, 9.2, 9.3.1, 9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 11.4.2, 11.4.3

  
	
  Contractor’s Superintendent

  	
  3.9, 10.2.6

  
	
  Contractor’s Supervision and Construction
  Procedures

  	
  1.2.4,
 3.3, 3.4, 4.2.3, 8.2.2, 8.2.3, 10

  
	
  Contractual Liability Insurance

  	
  11.1.1.7, 11.2.1

  
	
  Coordination and Correlation

  	
  1.2.2, 1.2.4, 3.3.1, 3.10, 3.12.7, 6.1.3, 6.2.1

  
	
  Copies Furnished of Drawings and Specifications

  	
  1.3, 2.2.5, 3.11

  
	
  Correction of Work

  	
  2.3, 2.4, 4.2.1, 9.8.2,

  9.9.1, 12.1.2, 12.2, 13.7.1.3

  
	
  Cost, Definition of

  	
  7.3.6, 14.3.5

  
	
  Costs

  	
  2.4,
  3.2.1, 3.7.4, 3.8.2, 3.15.2, 4.3.6, 4.3.7, 4.3.8.1, 5.2.3,

  6.1.1, 6.2.3, 6.3, 7.3.3.3, 7.3.6, 7.3.7, 9.7, 9.8.2, 9.10.2, 11.3.1.2,

  11.3.1.3, 11.3.4, 11.3.9, 12.1, 12.2.1, 12.2.4, 12.2.5, 13.5, 14

  
	
  Cutting and Patching

  	
  3.14, 6.2.6

  
	
  Damage to Construction of Owner or Separate
  Contractors

  	
  3.14.2,
  

  6.2.4, 9.5.1.5, 10.2.1.2, 10.2.5, 10.3, 11.1, 11.3, 12.2.5

  
	
  Damage to the Work

  	
  3.14.2,
  9.9.1, 10.2.1.2, 10.2.5, 10.3, 11.3

  
	
  Damages, Claims for

  	
  3.18,
  4.3.9, 6.1.1, 6.2.5, 8.3.2, 9.5.1.2, 10.1.4

  
	
  Damages for Delay

  	
  6.1.1, 8.3.3, 9.5.1.6, 9.7

  
	
  Date of Commencement of the Work, Definition of

  	
  8.1.2

  
	
  Date of Substantial Completion, Definition of

  	
  8.1.3

  
	
  Day, Definition of

  	
  8.1.4

  
	
  Decisions of the Architect

  	
  4.2.6,
  4.2.7, 4.2.11, 4.2.12, 4.2.13, 

  4.3.2, 4.3.6, 4.4.1, 4.4.4, 4.5, 6.3, 7.3.6, 7.3.8, 8.1.3, 8.3.1, 9.2,

  9.4, 9.5.1, 9.8.2, 9.9.1, 10.1.2, 13.5.2, 14.2.2, 14.2.4

  
	
  Decisions to Withhold
  Certification

  	
  9.5, 9.7, 14.1.1.3

  
	
  Defective or Nonconforming Work, Acceptance,
  Rejection and Correction of

  	
  2.3, 2.4, 3.5.1, 4.2.1, 4.2.6, 4.3.5, 9.5.2,
  9.8.2, 9.9.1, 10.2.5, 12,

  13.7 1.3

  
	
  Defective Work, Definition of

  	
  3.5.1

  
	
  Definitions

  	
  1.1, 2.1.1, 3.1, 3.5.1, 3.12.1, 3.12.2, 3.12.3,
  4.1.1,

  4.3.1, 5.1, 6.1.2, 7.2.1, 7.3.1, 7.3.6, 8.1, 9.1, 9.8.1

  
	
  Delays and Extensions of Time

  	
  4.3.1, 4.3.8.1,
  4.3.8.2,

  6.1.1,
  6.2.3, 7.2.1, 7.3.1, 7.3.4, 7.3.5, 7.3.8,

  7.3.9, 8.1.1, 8.3, 10.3.1, 14.1.1.4,

  
	
  Disputes

  	
  4.1.4, 4.3, 4.4, 4.5, 6.2.5, 6.3, 7.3.8, 9.3.1.2

  
	
  Documents and Samples at the Site

  	
  3.11

  
	
  Drawings, Definition of

  	
  1.1.5

  
	
  Drawings and Specifications, Use and Ownership
  of

  	
  1.1.1, 1.3,

  2.2.5, 3.11, 5.3

  
	
  Duty to Review Contract Documents and Field
  Conditions

  	
  3.2

  
	
  Effective Date of Insurance

  	
  8.2.2,
  11.1.2

  
	
  Emergencies

  	
  4.3.7, 10.3

  
	
  Employees, Contractor’s

  	
  3.3.2, 3.4.2, 3.8.1, 3.9, 3.18.1,

  3.18.2, 4.2.3, 4.2.6, 8.1.2, 10.2, 10.3, 11.1.1, 14.2.1.1

  
	
  Equipment, Labor, Materials and

  	
  1.1.3, 1.1.6, 3.4, 3.5.1,

  3.8.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1, 4.2.7,

  6.2.1, 7.3.6, 9.3.2, 9.3.3, 11.3, 12.2.4, 14

  
	
  Execution and Progress of the Work

  	
  1.1.3, 1.2.3, 3.2,
  3.4.1,

  3.5.1, 4.2.2, 4.2.3, 4.3.4,
  4.3.8, 6.2.2, 7.1.3,

  7.3.9, 8.2, 8.3, 9.5, 9.9.1, 10.2, 14.2, 14.3

  
	
  Execution, Correlation and
  Intent of the Contract Documents

  	
  1.2, 3.7.1

  
	
  Extensions of Time

  	
  4.3.1, 4.3.8, 7.2.1.3, 8.3, 10.31

  
	
  Failure of Payment by Contractor

  	
  9.5.1.3, 14.2.1.2

  
	
  Failure of Payment by Owner

  	
  4.3.7, 9.7, 14.1.3

  
	
  Faulty
  Work (See Defective or Nonconforming Work) 

  Final Completion and Final Payment

  	
  4.2.1, 4.2.9, 4.3.2, 4.3.5, 9.10, 11.1.2,
  11.1.3, 11.3.5, 12.3.l, 13.7

  
	
  Financial Arrangements, Owner’s

  	
  2.2.1

  
	
  Fire and Extended Coverage Insurance

  	
  11.3

  
	
   

  	
   

  
	
  GENERAL PROVISIONS

  	
  1

  
	
  Governing Law

  	
  13.1

  
	
  Guarantees (See Warranty and Warranties)

  	
   

  
	
  Hazardous Materials

  	
  10.1, 10.2.4

  
	
  Identification of Contract Documents

  	
  1.2.1

  
	
  Identification of Subcontractors and Suppliers

  	
  5.2.1

  
	
  Indemnification

  	
  3.17,
  3.18, 9.10.2, 10.1.4, 11.3.1.2,
  11.3.7

  
	
  Information and Services
  Required of the Owner

  	
  2.1.2, 2.2,

  4.3.4, 6.1.3, 6.1.4, 6.2.6, 9.3.2, 9.6.1, 9.6.4, 9.8.3, 9.9.2,

  9.10.3, 10.1.4, 11.2, 11.3, 13.5.1, 13.5.2

  
	
  Injury or Damage to Person or
  Property

  	
  4.3.9

  
	
  Inspections

  	
  3.3.3, 3.3.4, 3.7.1, 4.2.2,

  4.2.6, 4.2.9, 4.3.6, 9.4.2, 9.8.2, 9.9.2, 9.10.1, 13.5

  
	
  Instructions to Bidders

  	
  1.l.l

  
	
  Instructions to the Contractor

  	
  3.8.1, 4.2.8, 5.2.1, 7, 12.1, 13.5.2

  
	
  Insurance

  	
  4.3.9 6.1.1, 7.3.6.4, 9.3.2, 9.8.2, 9.9.1,
  9.10.2, 11

  
	
  Insurance, Boiler and
  Machinery

  	
  11.3.2

  
	
  Insurance, Contractor’s
  Liability

  	
  11.1

  
	
  Insurance, Effective Date of

  	
  8.2.2, 11.1.2

  
	
  Insurance, Loss of Use

  	
  11.3.3

  
	
  Insurance, Owner’s Liability

  	
  11.2

  
	
  Insurance, Property

  	
  10.2.5, 11.3

  
	
  Insurance, Stored Materials

  	
  9.3.2, 11.3.1.4

  
	
   

  	
   

  
	
  INSURANCE AND BONDS

  	
  11

  
	
  Insurance Companies, Consent to Partial
  Occupancy

  	
  9.9.1, 11.3.11

  
	
  Insurance Companies, Settlement with

  	
  11.3.10

  
	
  Intent of the Contract Documents

  	
  1.2.3, 3.12.4,

  4.2.6, 4.2.7, 4.2.12, 4.2.13, 7.4

  
	
  Interest

  	
  13.8

  
	
  Interpretation

  	
  1.2.5, 1.4, 1.5, 4.1.1, 4.3.1, 5.1, 6.1.2, 8.1.4

  
	
  Interpretations, Written

  	
  4.2.11, 4.2.12, 4.3.7

  
	
  Joinder and Consolidation of Claims Required

  	
  4.5.6

  
	
  Judgment on Final Award

  	
  4.5.1, 4.5.4.1, 4.5.7

  
	
  Labor and Materials, Equipment

  	
  1.1.3, 1.1.6,
  3.4, 3.5.1, 3.8.2,

  3.12.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1,

  4.2.7, 6.2.1, 7.3.6, 9.3.2, 9.3.3, 12.2.4, 14

  
	
  Labor Disputes

  	
  8.3.1

  
	
  Laws and Regulations

  	
  1.3,
  3.6, 3.7, 3.13, 4.1.1, 4.5.5, 4.5.7,

  9.9.1, 10.2.2, 11.1, 11.3, 13.1, 13.4, 13.5.1, 13.5.2, 13.6

  
	
  Liens

  	
  2.1.2, 4.3.2, 4.3.5.1, 8.2.2, 9.3.3, 9.10.2

  
	
  Limitation on Consolidation or
  Joinder

  	
  4.5.5

  
	
  Limitations, Statutes of

  	
  4.5.4.2, 12.2.6, 13.7

  
	
  Limitations of Authority

  	
  3.3.1, 4.1.2, 4.2.1,

  4.2.3, 4.2.7, 4.2.10, 5.2.2, 5.2.4, 7.4, 11.3.10

  

 

3

 

	
  Limitations of Liability

  	
  2.3, 3.2.1, 3.5.1, 3.7.3, 3.12.8, 3.12.11, 

  3.17, 3.18, 4.2.6, 4.2.7, 4.2.12, 6.2.2, 9.4.2, 9.6.4, 9.10.4, 

  10.1.4, 10.2.5, 11.1.2, 11.2.1, 11.3.7, 13.4.2, 13.5.2

  
	
   

  	
   

  
	
  Limitations of Time, General

  	
  2.2.1, 2.2.4, 3.2.1, 3.7.3, 

  3.8.2, 3.10, 3.12.5, 3.15.1, 4.2.1, 4.2.7, 4.2.11, 4.3.2, 

  4.3.3, 4.3.4, 4.3.6, 4.3.9, 4.5.4.2, 5.2.1, 5.2.3, 6.2.4, 7.3.4, 7.4, 

  8.2, 9.5, 9.6.2, 9.8, 9.9, 9.10, 11.1.3, 11.3.1, 11.3.2, 11.3.5,

  11.3.6, 12.2.1, 12.2.2, 13.5, 13.7

  
	
  Limitations of Time,
  Specific

  	
  2.1.2, 2.2.1, 2.4,
  3.10, 3.11,

  3.15.1, 4.2.1, 4.2.11, 4.3, 4.4, 4.5, 5.3, 5.4, 7.3.5, 7.3.9, 8.2,

  9.2, 9.3.1, 9.3.3, 9.4.1, 9.6.1, 9.7, 9.8.2, 9.10.2, 11.1.3, 11.3.6, 

  11.3.10, 11.3.11, 12.2.2, 12.2.4, 12.2.6, 13.7, 14

  
	
  Loss of Use Insurance

  	
  11.3.3

  
	
  Material Suppliers

  	
  1.3.1, 3.12.1, 4.2.4, 4.2.6, 5.2.1, 

  9.3.1, 9.3.1.2, 9.3.3, 9.4.2, 9.6.5, 9.10.4

  
	
  Materials, Hazardous

  	
  10.1, 10.2.4

  
	
  Materials, Labor, Equipment and

  	
  1.1.3, 1.1.6, 3.4, 3.5.1, 3.8.2,

  3.12.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1, 4.2.7, 6.2.1,

  7.3.6, 9.3.2, 9.3.3, 12.2.4, 14

  
	
  Means, Methods, Techniques, Sequences and
  Procedures of Construction

  	
  3.3.1, 4.2.3, 4.2.7, 9.4.2

  
	
  Minor Changes in the Work

  	
  1.1.1, 4.2.8, 4.3.7,
  7.1, 7.4

  
	
  MISCELLANEOUS PROVISIONS

  	
  13

  
	
  Modifications, Definition of

  	
  1.1.1

  
	
  Modifications to the Contract

  	
  1.1.1, 1.1.2, 3.7.3, 3.11, 

  4.1.2, 4.2.1, 5.2.3, 7, 8.3.1, 9.7

  
	
  Mutual Responsibility

  	
  6.2

  
	
  Nonconforming Work, Acceptance
  of

  	
  12.3

  
	
  Nonconforming Work, Rejection and Correction of

  	
  2.3.1,

  4.3.5, 9.5.2, 9.8.2, 12, 13.7.1.3

  
	
  Notice

  	
  2.3, 2.4, 3.2.1, 3.2.2, 3.7.3, 3.7.4, 3.9, 3.12.8,

  3.12.9, 3.17, 4.3, 4.4.4, 4.5, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1,

  9.5.1, 9.6.1, 9.7, 9.10, 10.1.2, 10.2.6, 11.1.3, 11.3, 12.2.2,

  12.2.4, 13.3, 13.5.1, 13.5.2, 14

  
	
  Notice, Written

  	
  2.3, 2.4, 3.9.3 12.8, 3.12.9, 4.3,

  4.4.4, 4.5, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1, 9.5.1, 9.7, 9.10,

  10.1.2, 10.2.6, 11.1.3, 11.3, 12.2.2, 12.2.4, 13.3,
  13.5.2, 14

  
	
  Notice of Testing and Inspections

  	
  13.5.1, 13.5.2

  
	
  Notice to Proceed

  	
  8.2.2

  
	
  Notices, Permits, Fees and

  	
  2.2.3, 3.7, 3.13, 7.3.6.4, 10.2.2

  
	
  Observations, Architect’s On-Site

  	
  4.2.2, 4.2.5, 

  4.3.6, 9.4.2, 9.5.1, 9.10.1, 13.5

  
	
  Observations, Contractor’s

  	
  1.2.2, 3.2.2

  
	
  Occupancy

  	
  9.6.6, 9.8.1, 9.9, 11.3.11

  
	
  On-Site Inspections by the Architect

  	
  4.2.2, 4.2.9, 4.3.6, 

  9.4.2, 9.8.2, 9.9.2, 9.10.1

  
	
  On- Site Observations by the Architect

  	
  4.2.2, 4.2.5, 4.3.6, 

  9.4.2, 9.5.1, 9.10.1, 1.3.5

  
	
  Orders, Written

  	
  2.3, 3.9, 4.3.7, 7, 8.2.2, 11.3.9, 12.1, 
 12.2, 13.5.2, 14.3.1

  
	
   

  	
   

  
	
  OWNER

  	
  2

  
	
  Owner, Definition of

  	
  2.1

  
	
  Owner, Information and
  Services Required of the

  	
  2.12,

  2.2, 4.3.4, 6, 9, 10.1.4, 11.2, 11.3, 13.5.1,
  14.1.1.5, 14.1.3

  
	
  Owner’s Authority

  	
  3.8.1, 4.1.3, 4.2.9, 5.2.1, 5.2.4, 5.4.1,

  7.3.1, 8.2.2, 9.3.1, 9.3.2, 11.4.1, 12.2.4, 13.5.2, 14.2, 14.3.1

  
	
  Owner’s Financial Capability

  	
  2.2.1, 14.1.1.5

  
	
  Owner’s Liability Insurance

  	
  11.2

  
	
  Owner’s Loss of Use Insurance

  	
  11.3 3

  
	
  Owner’s Relationship with Subcontractors

  	
  1.1.2,

  5.2.1, 5.4.1, 9.6.4

  
	
  Owner’s Right to Carry Out the Work

  	
  2.4,
  12.2.4, 14.2.2.2

  
	
  Owner’s Right to Clean Up

  	
  6.3

  
	
  Owner’s Right to Perform
  Construction and to Award Separate Contracts

  	
  6.1

  
	
  Owner’s Right to Stop the Work

  	
  2.3, 4.3.7

  
	
  Owner’s Right to Suspend the Work

  	
  14.3

  
	
  Owner’s Right to Terminate the Contract

  	
  14.2

  
	
  Ownership and Use of
  Architect’s Drawings, Specifications and Other Documents

  	
  1.1.1, 1.3, 2.2.5, 5.3

  
	
  Partial Occupancy or Use

  	
  9.6.6, 9.9, 11.3.11

  
	
  Patching, Cutting and

  	
  3.14, 6.2.6

  
	
  Patents, Royalties and

  	
  3.17

  
	
  Payment, Applications for

  	
  4.2.5, 9.2, 9.3, 9.4,

  9.5.1, 9.8.3, 9.10.1, 9.10.3, 9.10.4, 14.2.4

  
	
  Payment, Certificates for

  	
  4.2.5, 4.2.9, 9.3.3, 9.4, 9.5,  

  9.6.1, 9.6.6, 9.7.1, 9.8.3, 9.10.1, 9.10.3, 13.7, 14.1.1 3, 14.2.4

  
	
  Payment, Failure of

  	
  4.3.7, 9.5.1.3,

  9.7, 9.10.2, 14.1.1.3, 14.2.1.2

  
	
  Payment, Final

  	
  4.2.1, 4.2.9, 4.3.2, 4.3.5, 9.10, 11.1.2,
  11.13, 11.3.5, 12.3.1

  
	
  Payment Bond, Performance Bond
  and

  	
  7.3.6.4,

  9.10.3, 11.3.9, 11.4

  
	
  Payments, Progress

  	
  4.3.4, 9.3, 9.6, 

  9.8.3, 9.10.3, 13.6, 14.2.3

  
	
  PAYMENTS AND COMPLETION

  	
  9, 14

  
	
  Payments to Subcontractors

  	
  5.4.2, 9.5.1.3, 

  9.6.2, 9.6.3, 9.6.4, 11.3.8, 14.2.1.2

  
	
  PCB

  	
  10.1

  
	
  Performance Bond and Payment Bond

  	
  7.3.6.4,

  9.10.3, 11.3.9, 11.4

  
	
  Permits, Fees and Notices

  	
  2.2.3, 3.7, 3.13, 7.3.6.4, 10.2.2

  
	
  PERSONS AND PROPERTY,
  PROTECTION OF

  	
  10

  
	
  Polychlorinated Biphenyl

  	
  10.1

  
	
  Product Data, Definition of

  	
  3.12.2

  
	
  Product Data and Samples, Shop
  Drawings

  	
  3.11, 3.12, 4.2.7

  
	
  Progress and Completion

  	
  4.2.2, 4.3.4, 8.2

  
	
  Progress Payments

  	
  4.3.4, 9.3,

  9.6, 9.8.3, 9.10.3, 13.6, 14.2.3

  
	
  Project, Definition of the

  	
  1.1.4

  
	
  Project Manual, Definition of the

  	
  1.1.7

  
	
  Project Manuals

  	
  2.2.5

  
	
  Project Representatives

  	
  4.2.10

  
	
  Property Insurance

  	
  10.2.5, 11.3

  
	
  PROTECTION OF PERSONS AND
  PROPERTY

  	
  10

  
	
  Regulations and Laws

  	
  1.3, 3.6, 3.7, 3.13, 4.1.1, 4.5.5,

  4.5.7, 10.2.2, 11.1, 11.3, 13.1, 13.4, 13.5.1, 13.5.2, 13.6, 14

  
	
  Rejection of Work

  	
  3.5.1, 4.2.6, 12.2

  
	
  Releases of Waivers and Liens

  	
  9.10.2

  
	
  Representations

  	
  1.2.2, 3.5.1, 3.12.7,

  6.2.2, 8.2.1, 9.3.3, 9.4.2, 9.5.1, 9.8.2, 9.10.1

  
	
  Representatives

  	
  2.1.1,
  3.1.1, 3.9, 

  4.1.1, 4.2.1, 4.2.10, 5.1.1, 5.1.2, 13.2.1

  
	
  Resolution of Claims and
  Disputes

  	
  4.4, 4.5

  
	
  Responsibility for Those Performing the Work

  	
  3.3.2,
 4.2.3, 6.1.3, 6.2, 10

  
	
  Retainage

  	
  9.3.1, 9.6.2, 9.8.3, 9.9.1, 9.10.2, 9.10.3

  
	
  Review of Contract Documents
  and Field Conditions by Contractor

  	
  1.2.2, 3.2, 3.7.3,
  3.12.7 

  
	
  Review of Contractor’s Submittals by Owner and
  Architect

  	
  3.10.1, 3.10.2, 3.11, 3.12, 4.2.7, 4.2.9,
  5.2.1, 5.2.3, 9.2, 9.8.2

  
	
  Review of Shop Drawings, Product Data and
  Samples by Contractor

  	
  3.12.5

  
	
  Rights and Remedies

  	
  1.1.2,
  2.3, 2.4, 3.5.1, 3.15.2, 

  4.2.6, 4.3.6, 4.5, 5.3, 6.1, 6.3, 7.3.1, 8.3.1, 9.5.1, 9.7, 10.2.5,
 10.3, 12.2.2, 12.2.4, 13.4, 14

  
	
  Royalties and Patents

  	
  3.17

  

 

4

 

	
  Rules and Notices for Arbitration

  	
  4.5.2

  
	
  Safety of Persons and Property

  	
  10.2

  
	
  Safety Precautions and Programs

  	
  4.2.3, 4.2.7, 10.1

  
	
  Samples,
  Definition of

  	
  3.12.3

  
	
  Samples, Shop Drawings, Product Data and 

  	
  3.11, 3.12, 4.2.7

  
	
  Samples at the Site, Documents and

  	
  3.11

  
	
  Schedule of Values

  	
  9.2, 9.3.1

  
	
  Schedules,
  Construction

  	
  3.10

  
	
  Separate
  Contracts and Contractors

  	
  1.1.4, 3.14.2, 4.2.4,

  4.5.5, 6, 11.3.7, 12.1.2, 12.2.5

  
	
  Shop
  Drawings, Definition of

  	
  3.12.1

  
	
  Shop Drawings, Product Data and Samples

  	
  3.11, 3.12, 4.2.7

  
	
  Site, Use of

  	
  3.13, 6.1.1, 6.2.1

  
	
  Site
  Inspections 

  	
  1.2.2,
  3.3.4, 4.2.2, 4.2.9, 4.3.6, 9.8.2, 9.10.1, 13.5

  
	
  Site
  Visits, Architect’s

  	
  4.2.2,
  4.2.5, 4.2.9, 4.3.6,

  9.4.2, 9.5.1, 9.8.2, 9.9.2, 9.10.1, 13.5

  
	
  Special
  Inspections and Testing

  	
  4.2.6, 12.2.1, 13.5

  
	
  Specifications, Definition of the

  	
  1.1.6

  
	
  Specifications, The

  	
  1.1.1, 1.1.6, 1.1.7, 1.2.4, 1.3,
  3.11

  
	
  Statutes
  of Limitations

  	
  4.5.4.2, 12.2.6, 13.7

  
	
  Stopping
  the Work 

  	
  2.3, 4.3.7, 9.7, 10.1.2, 10.3, 14.1

  
	
  Stored
  Materials

  	
  6.2.1, 9.3.2, 10.2.1.2, 11.3.1.4, 12.2.4

  
	
  Subcontractor,
  Definition of

  	
  5.1.1

  
	
  SUBCONTRACTORS

  	
  5

  
	
  Subcontractors,
  Work by

  	
  1.2.4, 3.3.2, 3.12.1, 

  4.2.3, 5.3, 5.4

  
	
  Subcontractual Relations

  	
  5.3, 5.4, 9.3.1.2, 9.6.2, 

  9.6.3, 9.6.4, 10.2.1, 11.37, 11.3.8, 14.1.1, 14.2.1.2, 14.3.2

  
	
  Submittals

  	
  1.3, 3.2.3, 3.10, 3.11, 3.12, 4.2.7, 5.2.1,
  5.2.3, 

  7.3.6, 9.2, 9.3.1, 9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 11.1.3

  
	
  Subrogation, Waivers of

  	
  6.1.1, 11.3.5, 11.3.7

  
	
  Substantial Completion

  	
  4.2.9, 4.3.5.2, 8.1.1, 8.1.3,

  
	
   

  	
  8.2.3, 9.8, 9.9.1,
  12.2.1, 12.2.2, 13.7

  
	
  Substantial
  Completion, Definition of

  	
  9.8.1

  
	
  Substitution
  of Subcontractors

  	
  5.2.3, 5.2.4

  
	
  Substitution
  of the Architect

  	
  4.1.3

  
	
  Substitutions
  of Materials

  	
  3.5.1

  
	
  Sub-subcontractor,
  Definition of

  	
  5.1.2

  
	
  Subsurface
  Conditions

  	
  4.3.6

  
	
  Successors and Assigns

  	
  13.2

  
	
  Superintendent

  	
  3.9, 10.2.6

  
	
  Supervision and Construction Procedures

  	
  1.2.4,
  3.3, 3.4,

  4.2.3, 4.3.4, 6.1.3, 6.2.4, 7.1.3, 7.3.4, 8.2, 8.3.1, 10, 12, 14

  
	
  Surety

  	
  4.4.1, 4.4.4, 5.4.1.2, 9.10.2, 9.10.3, 14.2.2

  
	
  Surety,
  Consent of

  	
  9.9.1, 9.10.2, 9.10.3

  
	
  Surveys

  	
  2.2.2, 3.18.3

  
	
  Suspension by the Owner for Convenience

  	
  14.3

  
	
  Suspension
  of the Work 

  	
  4.3.7, 5.4.2, 14.1.1.4, 14.3

  
	
  Suspension
  or Termination of the Contract

  	
  4.3.7, 5.4.1.1, 14

  
	
  Taxes

  	
  3.6, 7.36.4

  
	
  Termination by the Contractor

  	
  14.1

  
	
  Termination by the Owner for Cause

  	
  5.4.1.1, 14.2

  
	
  Termination
  of the Architect

  	
  4.1.3

  
	
  Termination
  of the Contractor

  	
  14.2.2

  
	
  TERMINATION OR SUSPENSION OF THE CONTRACT

  	
  14

  
	
  Tests and Inspections

  	
  3.3.3, 4.2.6, 4.2.9,
  9.4.2, 12.2.1, 13.5

  
	
  TIME

  	
  8

  
	
  Time, Delays and Extensions of

  	
  4.3.8, 7.2.1, 8.3

  
	
  Time
  Limits, Specific

  	
  2.1.2, 2.2.1, 2.4, 3.10, 3.11, 3.15.1, 

  4.2.1, 4.2.11, 4.3, 4.4, 4.5, 5.3, 5.4, 7.3.5, 7.3.9, 8.2, 9.2. 9.3.1, 

  9.3.3, 9.4.1, 9.6.1, 9.7, 9.8.2, 9.10.2, 11.1.3, 11.3.6, 11.3.10,

  11.3.11, 12.2.2, 12.2.4, 12.2.6, 13.7, 14

  
	
  Time Limits on Claims

  	
  4.3.2, 4.3.3, 4.3.6, 4.3.9, 4.4, 4.5

  
	
  Title
  toWork

  	
  9.3.2, 9.3.3

  
	
  UNCOVERING AND CORRECTION OF WORK

  	
  12

  
	
  Uncovering of Work

  	
  12.1

  
	
  Unforeseen
  Conditions

  	
  4.3.6, 8.3.1, 10.1

  
	
  Unit
  Prices

  	
  7.1.4, 7.3.3.2

  
	
  Use
  of Documents

  	
  1.1.1, 13, 2.2.5, 3.12.7, 5.3 

  
	
  Use of Site

  	
  3.13, 6.1.1,
  6.2.1

  
	
  Values, Schedule of

  	
  9.2, 9.3.1

  
	
  Waiver of Claims: Final Payment

  	
  4.3.5, 4.5.1,
  9.10.3

  
	
  Waiver
  of Claims by the Architect

  	
  13.4.2

  
	
  Waiver
  of Claims by the Contractor

  	
  9.10.4, 11.37, 13.4.2 

  
	
  Waiver
  of Claims by the Owner

  	
  4.3.5, 4.5.1, 9.9.3,

  9.10.3, 11.3.3, 11.3.5, 11.3.7, 13.4.2

  
	
  Waiver
  of Liens

  	
  9.10.2

  
	
  Waivers
  of Subrogation

  	
  6.1.1, 11.3.5, 11.3.7

  
	
  Warranty and Warranties

  	
  3.5, 4.2.9,

  4.3.5.3, 9.3.3, 9.8.2, 9.9.1, 12.2.2, 13.7.1.3

  
	
  Weather
  Delays

  	
  4.3.8.2

  
	
  When Arbitration May Be Demanded

  	
  4.5.4

  
	
  Work,
  Definition of

  	
  1.1.3

  
	
  Written
  Consent

  	
  1.3.1, 3.12.8, 3.14.2, 4.1.2, 4.3.4

  4.5.5, 9.3.2, 9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 10.1.3,

  11.3.1, 11.3.1.4, 11.3.11, 13.2, 13.4.2

  
	
  Written
  Interpretations

  	
  4.2.11, 4.2.12, 4.3.7

  
	
  Written Notice

  	
  2.3,
  2.4, 3.9, 3.12.8, 3.12.9, 4.3, 4.4.4,

  4.5, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1, 9.5.1, 9.7, 9.10, 10.1.2,

  10.2.6, 11.1.3, 11.3, 12.2.2, 12.2.4,
  13.3, 13.5.2, 14

  
	
  Written
  Orders

  	
  2.3, 3.9, 4.3.7,

  7, 8.2.2, 11.3.9, 12.1, 12.2, 13.5.2, 14.3.1

  

 

5

 

GENERAL
CONDITIONS OF THE CONTRACT FOR CONSTRUCTION

 

ARTICLE 1

 

GENERAL PROVISIONS

 

1.1          BASIC DEFINITIONS

 

1.1.1       THE
CONTRACT DOCUMENTS

 

The Contract Documents consist of the
Agreement between Owner and Contractor (hereinafter the Agreement), Conditions
of the Contract (General, Supplementary and other Conditions), Drawings,
Specifications, addenda issued prior to execution of the Contract, other
documents listed in the Agreement and Modifications issued after execution of
the Contract. A Modification is (1) a written amendment to the Contract
signed by both parties, (2) a Change Order, (3) a Construction Change
Directive or (4) a written order for a minor change in the Work issued by
the Architect. Unless specifically enumerated in the Agreement, the Contract
Documents do not include other documents such as bidding requirements
(advertisement or invitation to bid, Instructions to Bidders, sample forms, the
Contractor’s bid or portions of addenda relating to bidding requirements).

 

1.1.2       THE CONTRACT

 

The Contract Documents form the Contract for
Construction. The Contract represents the entire and integrated agreement
between the parties hereto and supersedes prior negotiations, representations
or agreements, either written or oral. The Contract may be amended or modified
only by a Modification. The Contract Documents shall not be construed to create
a contractual relationship of any kind (1) between the Architect and
Contractor, (2) between the Owner and a Subcontractor or Sub-subcontractor
or (3) between any persons or entities other than the Owner and
Contractor. The Architect shall, however, be entitled to performance and
enforcement of obligations under the Contract intended to facilitate
performance of the Architect’s duties.

 

1.1.3       THE WORK

 

The term “Work” means the construction and
services required by the Contract Documents, whether completed or partially completed,
and includes all other labor, materials, equipment and services provided or to
be provided by the Contractor to fulfill the Contractor’s obligations. The Work
may constitute the whole or a part of the Project.

 

1.1.4       THE PROJECT

 

The Project is the total construction of
which the Work performed under the Contract Documents may be the whole or a
part and which may include construction by the Owner or by separate
contractors.

 

1.1.5       THE DRAWINGS

 

The Drawings are the graphic and pictorial
portions of the Contract Documents, wherever located and whenever issued,
showing the design, location and dimensions of the Work, generally including
plans, elevations, sections, details, schedules and diagrams.

 

1.1.6       THE
SPECIFICATIONS

 

The Specifications are that portion of the
Contract Documents consisting of the written requirements for materials,
equipment, construction systems, standards and workmanship for the Work, and
performance of related services.

 

1.1.7       THE PROJECT
MANUAL

 

The Project Manual is the volume
usually assembled for the Work which may include the bidding requirements,
sample forms, Conditions of the Contract and Specifications.

 

1.2           EXECUTION, CORRELATION AND INTENT

 

1.2.1  The Contract Documents shall be
signed by the Owner and Contractor as provided in the Agreement. If either the
Owner or Contractor or both do not sign all the Contract Documents, the
Architect shall identify such unsigned Documents upon request.

 

1.2.2  Execution of the Contract by the
Contractor is a representation that the Contractor has visited the site, become
familiar with local conditions under which the Work is to be performed and
correlated personal observations with requirements of the Contract Documents.

 

1.2.3  The intent of the Contract Documents
is to include all items necessary for the proper execution and completion of
the Work by the Contractor. The Contract Documents are complementary, and what
is required by one shall be as binding as if required by all; performance by
the Contractor shall be required only to the extent consistent with the
Contract Documents and reasonably inferable from them as being necessary to
produce the intended results.

 

1.2.4  Organization of the Specifications
into divisions, sections and articles, and arrangement of Drawings shall not
control the Contractor in dividing the Work among Subcontractors or in
establishing the extent of Work to be performed by any trade.

 

1.2.5  Unless otherwise stated in the Contract
Documents, words which have well-known technical or construction industry
meanings are used in the Contract Documents in accordance with such recognized
meanings.

 

1.3           OWNERSHIP AND USE OF ARCHITECT’S DRAWINGS, SPECIFICATIONS
AND OTHER DOCUMENTS

 

1.3.1  The Drawings, Specifications and other documents prepared by the
Architect are instruments of the Architect’s service through which the Work to
be executed by the Contractor is described. The Contractor may retain one
contract record set. Neither the Contractor nor any Subcontractor,
Sub-subcontractor or material or equipment supplier shall own or claim a
copyright in the Drawings, Specifications and other documents prepared by the
Architect, and unless otherwise indicated the Architect shall be deemed the
author of them and will retain all common law, statutory and other reserved
rights, in addition to the copyright.  All copies of them, except the Contractor’s
record set, shall be returned or suitably accounted for to the Architect, on
request, upon completion of the Work.  The Drawings, Specifications and other
documents prepared by the Architect, and copies thereof furnished to the
Contractor, are for use solely with respect to this Project. They are not to be
used by the Contractor or any Subcontractor, Sub-subcontractor or material or
equipment supplier on other projects or for additions to this Project outside
the scope of the

 

6

 

Work
without the specific written consent of the Owner and Architect. The
Contractor, Subcontractors, Sub-subcontractors and material or equipment
suppliers are granted a limited license to use and reproduce applicable
portions of the Drawings, Specifications and other documents prepared by the
Architect appropriate to and for use in the execution of their Work under the
Contract Documents. All copies made under this license shall bear the statutory
copyright notice, if any, shown on the Drawings, Specifications and other
documents prepared by the Architect. Submittal or distribution to meet official
regulatory requirements or for other purposes in connection with this Project
is not to be construed as publication in derogation of the Architect’s
copyright or other reserved rights.

 

1.4           CAPITALIZATION

 

1.4.1  Terms
capitalized in these General Conditions include those which are (1) specifically
defined, (2) the titles of numbered articles and identified references to
Paragraphs, Subparagraphs and Clauses in the document or (3) the titles of
other documents published by the American Institute of Architects.

 

1.5           INTERPRETATION

 

1.5.1  In the interest of brevity the Contract Documents frequently omit
modifying words such as “all” and “any” and articles such as “the” and “an,”
but the fact that a modifier or an article is absent from one statement and
appears in another is not intended to affect the interpretation of either
statement.

 

ARTICLE 2

 

OWNER

 

2.1           DEFINITION

 

2.1.1  The
Owner is the person or entity identified as such in the Agreement and is
referred to throughout the Contract Documents as if singular in number. The
term “Owner” means the Owner or the Owner’s authorized representative.

 

2.1.2  The Owner upon reasonable written request shall furnish to the
Contractor in writing information which is necessary and relevant for the
Contractor to evaluate, give notice of or enforce mechanic’s lien rights. Such
information shall include a correct statement of the record legal title to the
property on which the Project is located, usually referred to as the site, and
the Owner’s interest therein at the time of execution of the Agreement and,
within five days after any change, information of such change in title,
recorded or unrecorded

 

2.2           INFORMATION AND SERVICES REQUIRED
OF THE OWNER

 

2.2.1  The Owner shall, at the request of the Contractor, prior
to execution of the Agreement and promptly from time to time thereafter,
furnish to the Contractor reasonable evidence that financial arrangements have
been made to fulfill the Owner’s obligations under the Contract [Note: Unless such
reasonable evidence were furnished on request prior to tbe execution of the Agreement,
the prospective contractor would not be required to execute the Agreement or to
commence the Work ]

 

2.2.2  The Owner shall
furnish surveys describing physical characteristics, legal limitations and
utility locations for the site of the Project, and a legal description of the
site.

 

2.2.3  Except for permits and fees which are the responsibility of the
Contractor under the Contract Documents, the Owner shall secure and pay for
necessary approvals, easements, assessments and charges
required for construction, use or occupancy of permanent structures or for
permanent changes in existing facilities.

 

2.2.4  Information or services under the Owner’s control shall be furnished by
the Owner with reasonable promptness to avoid delay in orderly progress of the Work.

 

2.2.5  Unless otherwise provided in the
Contract Documents, the Contractor will be furnished, free of charge, such
copies of Drawings and Project Manuals as are reasonably necessary for
execution of the Work.

 

2.2.6  The foregoing are in addition to other
duties and responsibilities of the Owner enumerated herein and especially those
in respect to Article 6 (Construction by Owner or by Separate
Contractors), Article 9 (Payments and Completion) and Article 11
(Insurance and Bonds).

 

2.3           OWNER’S RIGHT TO STOP THE WORK

 

2.3.1  If the Contractor fails to correct
Work which is not in accordance with the requirements of the Contract Documents
as required by Paragraph 12.2 or persistently fails to carry out Work in
accordance with the Contract Documents, the Owner, by written order signed
personally or by an agent specifically so empowered by the Owner in writing,
may order the Contractor to stop the Work, or any portion thereof, until the
cause for such order has been eliminated; however, the right of the Owner to
stop the Work shall not give rise to a duty on the part of the Owner to
exercise this right for the benefit of the Contractor or any other person or
entity, except to the extent required by Subparagraph 6.1.3.

 

2.4           OWNER’S RIGHT TO CARRY OUT THE WORK

 

2.4.1  If
the Contractor defaults or neglects to carry out the Work in accordance with
the Contract Documents and fails within a seven-day period after receipt of
written notice from the Owner to commence and continue correction of such
default or neglect with diligence and promptness, the Owner may after such
seven-day period give the Contractor a second written notice to correct such
deficiencies within a second seven-day period. If the Contractor within such
second seven-day period after receipt of such second notice fails to commence
and continue to correct any deficiencies, the Owner may, without prejudice to
other remedies the Owner may have, correct such deficiencies. In such case an
appropriate Change Order shall be issued deducting from payments then or
thereafter due the Contractor the cost of correcting such deficiencies,
including compensation for the Architect’s additional services and expenses
made necessary by such default, neglect or failure. Such action by the Owner
and amounts charged to the Contractor are both subject to prior approval of the
Architect. If payments then or thereafter due the Contractor are not sufficient
to cover such amounts, the Contractor shall pay the difference to the Owner.

 

ARTICLE 3

 

CONTRACTOR

 

3.1           DEFINITION

 

3.1.1  The Contractor is the person or entity identified as such in the
Agreement and is referred to throughout the Contract Documents as if singular
in number.  The term “Contractor” means
the Contractor or the Contractor’s authorized representative.

 

7

 

3.2           REVIEW OF CONTRACT DOCUMENTS AND FIELD CONDITIONS BY
CONTRACTOR

 

3.2.1  The Contractor shall
carefully study and compare the Contract Documents with each other and with
information furnished by the Owner pursuant to Subparagraph 2.2.2 and shall at
once report to the Architect errors, inconsistencies or omissions discovered.
The Contractor shall not be liable to the Owner or Architect for damage
resulting from errors, inconsistencies or omissions in the Contract Documents
unless the Contractor recognized such error, inconsistency or omission and
knowingly failed to report it to the Architect.  If the Contractor performs any construction
activity knowing it involves a recognized error, inconsistency or omission in
the Contract Documents without such notice to the Architect, the Contractor
shall assume appropriate responsibility for such performance and shall bear an
appropriate amount of the attributable costs for correction.

 

3.2.2  The Contractor shall
take field measurements and verify field conditions and shall carefully compare
such field measurements and conditions and other information known to the
Contractor with the Contract Documents before commencing activities. Errors,
inconsistencies or omissions discovered shall be reported to the Architect at
once.

 

3.2.3  The Contractor shall
perform the Work in accordance with the Contract Documents and submittals
approved pursuant to Paragraph 3.12.

 

3.3           SUPERVISION AND CONSTRUCTION PROCEDURES

 

3.3.1  The Contractor shall
supervise and direct the Work, using the Contractor’s best skill and attention
The Contractor shall be solely responsible for and have control over
construction means, methods, techniques, sequences and procedures and for
coordinating all portions of the Work under the Contract, unless Contract
Documents give other specific instructions concerning these matters.

 

3.3.2  The Contractor shall be
responsible to the Owner for acts and omissions of the Contractor’s employees,
Subcontractors and their agents and employees, and other persons performing
portions of the Work under a contract with the Contractor.

 

3.3.3  The Contractor shall
not be relieved of obligations to perform the Work in accordance with the
Contract Documents either by activities or duties of the Architect in the
Architect’s administration of the Contract, or by tests, inspections or
approvals required or performed by persons other than the Contractor.

 

3.3.4  The Contractor shall be
responsible for inspection of portions of Work already performed under this
Contract to determine that such portions are in proper condition to receive
subsequent Work.

 

3.4           LABOR AND MATERIALS

 

3.4.1  Unless otherwise
provided in the Contract Documents, the Contractor shall provide and pay for
labor, materials, equipment, tools, construction equipment and machinery,
water, heat, utilities, transportation, and other facilities and services
necessary for proper execution and completion of the Work, whether temporary or
permanent and whether or not incorporated or to be incorporated in the Work.

 

3.4.2  The Contractor shall
enforce strict discipline and good order among the Contractor’s employees and
other persons carrying out the Contract. The Contractor shall not permit
employment of unfit persons or persons not skilled in tasks assigned to them.

 

3.5           WARRANTY

 

3.5.1  The Contractor warrants
to the Owner and Architect that materials and equipment furnished under the
Contract will be of good quality and new unless otherwise required or permitted
by the Contract Documents, that the Work will be free from defects not inherent
in the quality required or permitted, and that the Work will conform with the
requirements of the Contract Documents. Work not conforming to these
requirements, including substitutions not properly approved and authorized, may
be considered defective. The Contractor’s warranty excludes remedy for damage
or defect caused by abuse, modifications not executed by the Contractor,
improper or insufficient maintenance, improper operation, or normal wear and
tear under normal usage. If required by the Architect, the Contractor shall
furnish satisfactory evidence as to the kind and quality of materials and
equipment.

 

3.6           TAXES

 

3.6.1  The Contractor shall
pay sales, consumer, use and similar taxes for the Work or portions thereof
provided by the Contractor which are legally enacted when bids are received or
negotiations concluded, whether or not yet effective or merely scheduled to go
into effect.

 

3.7           PERMITS, FEES AND NOTICES

 

3.7.1  Unless otherwise
provided in the Contract Documents, the Contractor shall secure and pay for the
building permit and other permits and governmental fees, licenses and
inspections necessary for proper execution and completion of the Work which are
customarily secured after execution of the Contract and which are legally
required when bids are received or negotiations concluded.

 

3.7.2  The Contractor shall
comply with and give notices required by laws, ordinances, rules, regulations
and lawful orders of public authorities bearing on performance of the Work

 

3.7.3  It is not the
Contractor’s responsibility to ascertain that the Contract Documents are in
accordance with applicable laws, statutes, ordinances, building codes, and rules and
regulations. However, if the Contractor observes that portions of the Contract
Documents are at variance therewith, the Contractor shall promptly notify the
Architect and Owner in writing, and necessary changes shall be accomplished by
appropriate Modification.

 

3.7.4  If the Contractor performs
Work knowing it to be contrary to laws, statutes, ordinances, building codes,
and rules and regulations without such notice to the Architect and Owner,
the Contractor shall assume full responsibility for such Work and shall bear
the attributable costs.

 

3.8           ALLOWANCES

 

3.8.1  The Contractor shall
include in the Contract Sum all allowances stated in the Contract Documents.
Items covered by allowances shall be supplied for such amounts and by such
persons or entities as the Owner may direct, but the Contractor shall not be
required to employ persons or entities against which the Contractor makes
reasonable objection.

 

3.8.2  Unless otherwise
provided in the Contract Documents:

 

.1 materials and equipment
under an allowance shall be selected promptly by the Owner to avoid delay in
the Work;

 

.2 allowances shall cover
the cost to the Contractor of materials and equipment delivered at the site and
all required taxes, less applicable trade discounts;

 

8

 

.3 Contractor’s costs for
unloading and handling at the site, labor, installation costs, overhead, profit
and other expenses contemplated for stated allowance amounts shall be included
in the Contract Sum and not in the allowances;

 

.4 whenever costs are more
than or less than allowances, the Contract Sum shall be adjusted accordingly by
Change Order, The amount of the Change Order shall reflect (1) the
difference between actual costs and the allowances under Clause

3.8.2.2 and (2) changes in Contractor’s costs under Clause 3.8.2.3.

 

3.9           SUPERINTENDENT

 

3.9.1  The Contractor shall
employ a competent superintendent and necessary assistants who shall be in
attendance at the Project site during performance of the Work. The
superintendent shall represent the Contractor, and communications given to the
superintendent shall be as binding as if given to the Contractor.  Important communications shall be confirmed in
writing. Other communications shall be similarly confirmed on written request
in each case.

 

3.10        CONTRACTOR’S CONSTRUCTION SCHEDULES

 

3.10.1  The Contractor,
promptly after being awarded the Contract, shall prepare and submit for the
Owner’s and Architect’s information a Contractor’s construction schedule for
the Work. The schedule shall not exceed time limits current under the Contract
Documents, shall be revised at appropriate intervals as required by the
conditions of the Work and Project, shall be related to the entire Project to
the extent required by the Contract Documents, and shall provide for expeditious
and practicable execution of the Work.

 

3.10.2  The Contractor shall
prepare and keep current, for the Architect’s approval, a schedule of
submittals which is coordinated with the Contractor’s construction schedule and
allows the Architect reasonable time to review submittals.

 

3.10.3  The Contractor shall
conform to the most recent schedules.

 

3.11         DOCUMENTS AND SAMPLES AT THE SITE

 

3.11.1  The Contractor shall
maintain at the site for the Owner one record copy of the Drawings,
Specifications, addenda, Change Orders and other Modifications, in good order
and marked currently to record changes and selections made during construction,
and in addition approved Shop Drawings, Product Data, Samples and similar
required submittals These shall be available to the Architect and shall be
delivered to the Architect for submittal to the Owner upon completion of the
Work.

 

3.12        SHOP DRAWINGS, PRODUCT DATA AND SAMPLES

 

3.12.1  Shop Drawings are
drawings, diagrams, schedules and other data specially prepared for the Work by
the Contractor or a Subcontractor, Sub-subcontractor, manufacturer, supplier or
distributor to illustrate some portion of the Work

 

3.12.2  Product Data are
illustrations, standard schedules, performance charts, instructions, brochures,
diagrams and other information furnished by the Contractor to illustrate
materials or equipment for some portion of the Work

 

3.12.3  Samples are physical
examples which illustrate materials, equipment or workmanship and establish
standards by which the Work will be judged

 

3.12.4  Shop Drawings, Product
Data, Samples and similar submittals are not Contract Documents The purpose of
their submittal is to demonstrate for those portions of the Work for which
submittals are required the way the Contractor proposes to conform to the
information given and the design concept expressed in the Contract Documents.
Review by the Architect is subject to the limitations of Subparagraph 4.2.7.

 

3.12.5  The Contractor shall
review, approve and submit to the Architect Shop Drawings, Product Data,
Samples and similar submittals required by the Contract Documents with
reasonable promptness and in such sequence as to cause no delay in the Work or
in the activities of the Owner or of separate contractors Submittals made by
the Contractor which are not required by the Contract Documents may be returned
without action.

 

3.12.6  The Contractor shall
perform no portion of the Work requiring submittal and review of Shop Drawings,
Product Data, Samples or similar submittals until the respective submittal has
been approved by the Architect Such Work shall be in accordance with approved
submittals.

 

3.12.7  By approving and
submitting Shop Drawings, Product Data, Samples and similar submittals, the
Contractor represents that the Contractor has determined and verified
materials, field measurements and field construction criteria related thereto,
or will do so, and has checked and coordinated the information contained within
such submittals with the requirements of the Work and of the Contract Documents.

 

3.12.8  The Contractor shall
not be relieved of responsibility for deviations from requirements of the
Contract Documents by the Architect’s approval of Shop Drawings, Product Data,
Samples or similar submittals unless the Contractor has specifically informed
the Architect in writing of such deviation at the time of submittal and the
Architect has given written approval to the specific deviation. The Contractor
shall not be relieved of responsibility for errors or omissions in Shop
Drawings, Product Data, Samples or similar submittals by the Architect’s
approval thereof.

 

3.12.9  The Contractor shall
direct specific attention, in writing or on resubmitted Shop Drawings, Product
Data, Samples or similar submittals, to revisions other than those requested by
the Architect on previous submittals.

 

3.12.10  Informational
submittals upon which the Architect is not expected to take responsive action
may be so identified in the Contract Documents.

 

3.12.11  When professional
certification of performance criteria of materials, systems or equipment is
required by the Contract Documents, the Architect shall be entitled to rely
upon the accuracy and completeness of such calculations and certifications.

 

3.13        USE OF SITE

 

3.13.1  The Contractor shall
confine operations at the site to areas permitted by law, ordinances, permits
and the Contract Documents and shall not unreasonably encumber the site with
materials or equipment

 

3.14        CUTTING AND PATCHING

 

3.14.1  The Contractor shall be
responsible for cutting, fitting or patching required to complete the Work or
to make its parts fit together properly.

 

3.14.2  The Contractor shall
not damage or endanger a portion of the Work or fully or partially completed
construction of the Owner or separate contractors by cutting, patching or
otherwise altering such construction, or by excavation. The Contractor shall
not cut or otherwise alter such construction by the

 

9

 

Owner or a separate contractor except with
written consent of the Owner and of such separate contractor; such consent
shall not be unreasonably withheld. The Contractor shall not unreasonably
withhold from the Owner or a separate contractor the Contractor’s consent to
cutting or otherwise altering the Work.

 

3.15        CLEANING UP

 

3.15.1  The Contractor shall
keep the premises and surrounding area free from accumulation of waste
materials or rubbish caused by operations under the Contract. At completion of
the Work the Contractor shall remove from and about the Project waste materials,
rubbish, the Contractor’s tools, construction equipment, machinery and surplus
materials.

 

3.15.2  If the Contractor fails
to clean up as provided in the Contract Documents, the Owner may do so and the
cost thereof shall be charged to the Contractor.

 

3.16        ACCESS TO WORK

 

3.16.1  The Contractor shall
provide the Owner and Architect access to the Work in preparation and progress
wherever located.

 

3.17        ROYALTIES AND PATENTS

 

3.17.1  The Contractor shall
pay all royalties and license fees The Contractor shall defend suits or claims
for infringement of patent rights and shall hold the Owner and Architect
harmless from loss on account thereof, but shall not be responsible for such
defense or loss when a particular design, process or product of a particular manufacturer
or manufacturers is required by the Contract Documents. However, if the
Contractor has reason to believe that the required design, process or product
is an infringement of a patent, the Contractor shall be responsible for such
loss unless such information is promptly furnished to the Architect.

 

3.18        INDEMNIFICATION

 

3.18.1  To the fullest extent
permitted by law, the Contractor shall indemnify and hold harmless the Owner,
Architect, Architect’s consultants, and agents and employees of any of them from
and against claims, damages, losses and expenses, including but not limited to
attorneys’ fees, arising out of or resulting from performance of the Work,
provided that such claim, damage, loss or expense is attributable to bodily
injury, sickness, disease or death, or to injury to or destruction of tangible
property (other than the Work itself) including loss of use resulting therefrom,
but only to the extent caused in whole or in part by negligent acts or
omissions of the Contractor, a Subcontractor, anyone directly or indirectly
employed by them or anyone for whose acts they may be liable, regardless of
whether or not such claim, damage, loss or expense is caused in part by a party
indemnified hereunder. Such obligation shall not be construed to negate,
abridge, or reduce other rights or obligations of indemnity which would
otherwise exist as to a party or person described in this Paragraph 3.18.

 

3.18.2  In claims against any
person or entity indemnified under this Paragraph 3.18 by an employee of the
Contractor, a Subcontractor, anyone directly or indirectly employed by them or
anyone for whose acts they may be liable, the indemnification obligation under
this Paragraph 3.18 shall not be limited by a limitation on amount or type of
damages, compensation or benefits payable by or for the Contractor or a
Subcontractor under workers’ or workmen’s compensation acts, disability benefit
acts or other employee benefit acts.

 

3.18.3  The obligations of the
Contractor under this Paragraph 3.18 shall not extend to the liability of the
Architect, the Architect’s consultants, and agents and employees of any of them
arising out of (1) the preparation or approval of maps, drawings,
opinions, reports, surveys, Change Orders, designs or specifications, or (2) the
giving of or the failure to give directions or instructions by the Architect,
the Architect’s consultants, and agents and employees of any of them provided
such giving or failure to give is the primary cause of the injury or damage.

 

ARTICLE 4

 

ADMINISTRATION OF THE CONTRACT

 

4.1           ARCHITECT

 

4.1.1  The Architect is the
person lawfully licensed to practice architecture or an entity lawfully
practicing architecture identified as such in the Agreement and is referred to
throughout the Contract Documents as if singular in number. The term “Architect”
means the Architect or the Architect’s authorized representative.

 

4.1.2  Duties,
responsibilities and limitations of authority of the Architect as set forth in
the Contract Documents shall not be restricted, modified or extended without
written consent of the Owner, Contractor and Architect. Consent shall not be
unreasonably withheld.

 

4.1.3  In case of termination
of employment of the Architect, the Owner shall appoint an architect against
whom the Contractor makes no reasonable objection and whose status under the
Contract Documents shall be that of the former architect.

 

4.1.4  Disputes arising under
Subparagraphs 4.1.2 and 4.1.3 shall be subject to arbitration.

 

4.2           ARCHITECT’S ADMINISTRATION OF
THE CONTRACT

 

4.2.1  The Architect will
provide administration of the Contract as described in the Contract Documents,
and will be the Owner’s representative (1) during construction, (2) until
final payment is due and (3) with the Owner’s concurrence, from time to
time during the correction period described in Paragraph 12.2. The Architect
will advise and consult with the Owner The Architect will have authority to act
on behalf of the Owner only to the extent provided in the Contract Documents,
unless otherwise modified by written instrument in accordance with other
provisions of the Contract.

 

4.2.2  The Architect will
visit the site at intervals appropriate to the stage of construction to become
generally familiar with the progress and quality of the completed Work and to
determine in general if the Work is being performed in a manner indicating that
the Work, when completed, will be in accordance with the Contract Documents.
However, the Architect will not be required to make exhaustive or continuous
on-site inspections to check quality or quantity of the Work. On the basis of
on-site observations as an architect, the Architect will keep the Owner
informed of progress of the Work, and will endeavor to guard the Owner against
defects and deficiencies in the Work.

 

4.2.3  The Architect will not
have control over or charge of and will not be responsible for construction
means, methods, techniques, sequences or procedures, or for safety precautions
and programs in connection with the Work, since these are solely the Contractor’s
responsibility as provided in Paragraph 3.3. The Architect will not be
responsible for the Contractor’s failure to carry out the Work in accordance
with the Contract Documents. The Architect will not have control over or charge
of and will not be responsible for acts or omissions of the Contractor,

 

10

 

Subcontractors, or their agents or employees, or of any
other persons performing portions of the Work.

 

4.2.4  Communications
Facilitating Contract Administration. Except as otherwise provided in the Contract
Documents or when direct communications have been specially authorized, the
Owner and Contractor shall endeavor to communicate through the Architect.
Communications by and with the Architect’s consultants shall be through the
Architect. Communications by and with Subcontractors and material suppliers
shall be through the Contractor. Communications by and with separate
contractors shall be through the Owner

 

4.2.5  Based on the Architect’s
observations and evaluations of the Contractor’s Applications for Payment, the
Architect will review and certify the amounts due the Contractor and will issue
Certificates for Payment in such amounts.

 

4.2.6  The Architect will have
authority to reject Work which does not conform to the Contract Documents.
Whenever the Architect considers it necessary or advisable for implementation
of the intent of the Contract Documents, the Architect will have authority to
require additional inspection or testing of the Work in accordance with
Subparagraphs 13.5.2 and 13.5.3, whether or not such Work is fabricated,
installed or completed.  However, neither
this authority of the Architect nor a decision made in good faith either to
exercise or not to exercise such authority shall give rise to a duty or
responsibility of the Architect to the Contractor, Subcontractors, material and
equipment suppliers, their agents or employees, or other persons performing
portions of the Work.

 

4.2.7  The Architect will
review and approve or take other appropriate action upon the Contractor’s
submittals such as Shop Drawings, Product Data and Samples, but only for the
limited purpose of checking for conformance with information given and the
design concept expressed in the Contract Documents.  The Architect’s action will be taken with such
reasonable promptness as to cause no delay in the Work or in the activities of
the Owner, Contractor or separate contractors, while allowing sufficient time
in the Architect’s professional judgment to permit adequate review. Review of
such submittals is not conducted for the purpose of determining the accuracy
and completeness of other details such as dimensions and quantities, or for
substantiating instructions for installation or performance of equipment or
systems, all of which remain the responsibility of the Contractor as required
by the Contract Documents. The Architect’s review of the Contractor’s
submittals shall not relieve the Contractor of the obligations under Paragraphs
3.3, 3.5 and 3.12. The Architect’s review shall not constitute approval of
safety precautions or, unless otherwise specifically stated by the Architect,
of any construction means, methods, techniques, sequences or procedures. The
Architect’s approval of a specific item shall not indicate approval of an
assembly of which the item is a component.

 

4.2.8  The Architect will
prepare Change Orders and Construction Change Directives, and may authorize
minor changes in the Work as provided in Paragraph 7.4.

 

4.2.9  The Architect will
conduct inspections to determine the date or dates of Substantial Completion
and the date of final completion, will receive and forward to the Owner for the
Owner’s review and records written warranties and related documents required by
the Contract and assembled by the Contractor, and will issue a final
Certificate for Payment upon compliance with the requirements of the Contract
Documents

 

4.2.10  If the Owner and
Architect agree, the Architect will provide one or more project representatives
to assist in carrying out the Architect’s responsibilities at the site. The
duties, responsibilities and limitations of authority of such project
representatives shall be as set forth in an exhibit to be incorporated in the
Contract Documents.

 

4.2.11  The Architect will
interpret and decide matters concerning performance under and requirements of
the Contract Documents on written request of either the Owner or Contractor.
The Architect’s response to such requests will be made with reasonable
promptness and within any time limits agreed upon. If no agreement is made
concerning the time within which interpretations required of the Architect
shall be furnished in compliance with this Paragraph 4.2, then delay shall not
be recognized on account of failure by the Architect to furnish such interpretations
until 15 days after written request is made for them.

 

4.2.12  Interpretations and
decisions of the Architect will be consistent with the intent of and reasonably
inferable from the Contract Documents and will be in writing or in the form of
drawings. When making such interpretations and decisions, the Architect will
endeavor to secure faithful performance by both Owner and Contractor, will not
show partiality to either and will not be liable for results of interpretations
or decisions so rendered in good faith.

 

4.2.13  The Architect’s
decisions on matters relating to aesthetic effect will be final if consistent
with the intent expressed in the Contract Documents.

 

4.3           CLAIMS AND DISPUTES

 

4.3.1  Definition. A Claim is a demand or
assertion by one of the parties seeking, as a matter of right, adjustment or
interpretation of Contract terms, payment of money, extension of time or other
relief with respect to the terms of the Contract. The term “Claim” also
includes other disputes and matters in question between the Owner and
Contractor arising out of or relating to the Contract. Claims must be made by
written notice. The responsibility to substantiate Claims shall rest with the
party making the Claim.

 

4.3.2  Decision of
Architect. Claims, including those alleging an error or omission by the Architect,
shall be referred initially to the Architect for action as provided in
Paragraph 4.4. A decision by the Architect, as provided in Subparagraph 4.4.4,
shall be required as a condition precedent to arbitration or litigation of a
Claim between the Contractor and Owner as to all such matters arising prior to
the date final payment is due, regardless of (1) whether such matters
relate to execution and progress of the Work or (2) the extent to which
the Work has been completed. The decision by the Architect in response to a
Claim shall not be a condition precedent to arbitration or litigation in the
event (1) the position of Architect is vacant, (2) the Architect has
not received evidence or has failed to render a decision within agreed time
limits, (3) the Architect has failed to take action required under
Subparagraph 4.4.4 within 30 days after the Claim is made, (4) 45 days
have passed after the Claim has been referred to the Architect or (5) the
Claim relates to a mechanic’s lien.

 

4.3.3  Time Limits on
Claims. Claims by either party must be made within 21 days after occurrence of
the event giving rise to such Claim or within 21 days after the claimant first
recognizes the condition giving rise to the Claim, whichever is later.  Claims must be made by written notice.  An additional Claim made after the initial
Claim has been implemented by Change Order will not be considered unless
submitted in a timely manner.

 

11

 

4.3.4  Continuing
Contract Performance. Pending final resolution of a Claim including
arbitration, unless otherwise agreed in writing the Contractor shall proceed
diligently with performance of the Contract and the Owner shall continue to
make payments in accordance with the Contract Documents.

 

4.3.5  Waiver of
Claims: Final Payment. The making of final payment shall constitute a waiver
of Claims by the Owner except those arising from:

 

.1 liens, Claims,
security interests or encumbrances arising out of the Contract and unsettled;

 

.2 failure of the Work to
comply with the requirements of the Contract Documents; or

 

.3 terms of special
warranties required by the Contract Documents.

 

4.3.6  Claims for
Concealed or Unknown Conditions. If conditions arc encountered at the site which
are (1) subsurface or otherwise concealed physical conditions which differ
materially from those indicated in the Contract Documents or (2) unknown
physical conditions of an unusual nature, which differ materially from those
ordinarily found to exist and generally recognized as inherent in construction
activities of the character provided for in the Contract Documents, then notice
by the observing party shall be given to the other party promptly before
conditions are disturbed and in no event later than 21 days after first
observance of the conditions. The Architect will promptly investigate such
conditions and, if they differ materially and cause an increase or decrease in
the Contractor’s cost of, or time required for, performance of any part of the
Work, will recommend an equitable adjustment in the Contract Sum or Contract
Time, or both.  If the Architect
determines that the conditions at the site are not materially different from
those indicated in the Contract Documents and that no change in the terms of
the Contract is justified, the Architect shall so notify the Owner and
Contractor in writing, stating the reasons. Claims by either party in
opposition to such determination must be made within 21 days after the
Architect has given notice of the decision. If the Owner and Contractor cannot
agree on an adjustment in the Contract Sum or Contract Time, the adjustment
shall be referred to the Architect for initial determination, subject to
further proceedings pursuant to Paragraph 4.4.

 

4.3.7  Claims for
Additional Cost. If the Contractor wishes to make Claim for an increase
in the Contract Sum, written notice as provided herein shall be given before
proceeding to execute the Work. Prior notice is not required for Claims
relating to an emergency endangering life or property arising under Paragraph
10.3. If the Contractor believes additional cost is involved for reasons
including but not limited to (1) a written interpretation from the
Architect, (2) an order by the Owner to stop the Work where the Contractor
was not at fault, (3) a written order for a minor change in the Work
issued by the Architect, (4) failure of payment by the Owner, (5) termination
of the Contract by the Owner, (6) Owner’s suspension or (7) other
reasonable grounds, Claim shall be filed in accordance with the procedure
established herein

 

4.3.8    Claims
for Additional Time

 

4.3.8.1  If the Contractor
wishes to make Claim for an increase in the Contract Time, written notice as
provided herein shall be given. The Contractor’s Claim shall include an
estimate of cost and of probable effect of delay on progress of the Work.  In the case of a continuing delay only one
Claim is necessary.

 

4.3.8.2  If adverse weather
conditions are the basis for a Claim for additional time, such Claim shall be
documented by data substantiating that weather conditions were abnormal for the
period of time and could not have been reasonably anticipated, and that weather
conditions had an adverse effect on the scheduled construction.

 

4.3.9  Injury or Damage to
Person or Property. If either party to the Contract suffers injury or
damage to person or property because of an act or omission of the other party,
of any of the other party’s employees or agents, or of others for whose acts
such party is legally liable, written notice of such injury or damage, whether
or not insured, shall be given to the other party within a reasonable time not
exceeding 21 days after first observance. The notice shall provide sufficient
detail to enable the other party to investigate the matter. If a Claim for
additional cost or time related to this Claim is to be asserted, it shall be
filed as provided in Subparagraphs 4.3.7 or 4.3 8.

 

4.4           RESOLUTION OF CLAIMS AND DISPUTES

 

4.4.1  The Architect will
review Claims and take one or more of the following preliminary actions within
ten days of receipt of a Claim: (1) request additional supporting data
from the claimant, (2) submit a schedule to the parties indicating when
the Architect expects to take action, (3) reject the Claim in whole or in
part, stating reasons for rejection, (4) recommend approval of the Claim
by the other party or (5) suggest a compromise.  The Architect may also, but is not obligated
to, notify the surety, if any, of the nature and amount of the Claim

 

4.4.2  If a Claim has been
resolved, the Architect will prepare or obtain appropriate documentation.

 

4.4.3  If a Claim has not been
resolved, the party making the Claim shall, within ten days after the Architect’s
preliminary response, take one or more of the following actions: (1) submit
additional supporting data requested by the Architect, (2) modify the
initial Claim or (3) notify the Architect that the initial Claim stands

 

4.4.4  If a Claim has not been
resolved after consideration of the foregoing and of further evidence presented
by the parties or requested by the Architect, the Architect will notify the
parties in writing that the Architect’s decision will be made within seven
days, which decision shall be final and binding on the parties but subject to
arbitration.  Upon expiration of such
time period, the Architect will render to the parties the Architect’s written
decision relative to the Claim, including any change in the Contract Sum or
Contract Time or both. If there is a surety and there appears to be a
possibility of a Contractor’s default, the Architect may, but is not obligated
to, notify the surety and request the surety’s assistance in resolving the
controversy

 

4.5           ARBITRATION

 

4.5.1  Controversies and
Claims Subject to Arbitration. Any controversy or Claim
arising out of or related to the Contract, or the breach thereof, shall be
settled by arbitration in accordance with the Construction Industry Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrator or arbitrators may be entered in any court having
jurisdiction thereof, except controversies or Claims relating to aesthetic
effect and except those waived as provided for in Subparagraph 4.3.5. Such
controversies or Claims upon which the Architect has given notice and rendered
a decision as provided in Subparagraph 4.4.4 shall be subject to arbitration
upon written demand of either party.  Arbitration may be commenced when 45 days have
passed after a Claim has been referred to the Architect as provided in
Paragraph 4.3 and no decision has been rendered.

 

12

 

4.5.2  Rules and
Notices for Arbitration. Claims between the Owner and Contractor not
resolved under Paragraph 4.4 shall, if subject to arbitration under
Subparagraph 4.5.1, be decided by arbitration in accordance with the
Construction Industry Arbitration Rules of the American Arbitration
Association currently in effect, unless the parties mutually agree otherwise.
Notice of demand for arbitration shall be filed in writing with the other party
to the Agreement between the Owner and Contractor and with the American
Arbitration Association, and a copy shall be filed with the Architect.

 

4.5.3  Contract
Performance During Arbitration. During arbitration proceedings, the Owner and
Contractor shall comply with Subparagraph 4.3.4.

 

4.5.4  When
Arbitration May Be Demanded. Demand for arbitration of any Claim may not be
made until the earlier of (1) the date on which the Architect has rendered
a final written decision on the Claim, (2) the tenth day after the parties
have presented evidence to the Architect or have been given reasonable
opportunity to do so, if the Architect has not rendered a final written
decision by that date, or (3) any of the five events described in
Subparagraph 4.3.2.

 

4.5.4.1  When a written decision
of the Architect states that (1) the decision is final but subject to
arbitration and (2) a demand for arbitration of a Claim covered by such
decision must be made within 30 days after the date on which the party making
the demand receives the final written decision, then failure to demand
arbitration within said 30 days’ period shall result in the Architect’s
decision becoming final and binding upon the Owner and Contractor. If the
Architect renders a decision after arbitration proceedings have been initiated,
such decision may be entered as evidence, but shall not supersede arbitration
proceedings unless the decision is acceptable to all parties concerned.

 

4.5.4.2  A demand for
arbitration shall be made within the time limits specified in Subparagraphs 4.5.1
and 4.5.4 and Clause 4.5.4.1 as applicable, and in other cases within a
reasonable time after the Claim has arisen, and in no event shall it be made
after the date when institution of legal or equitable proceedings based on such
Claim would be barred by the applicable statute of limitations as determined
pursuant to Paragraph 13.7.

 

4.5.5  Limitation on
Consolidation or Joinder. No arbitration arising out of or relating to the
Contract Documents shall include, by consolidation or joinder or in any other
manner, the Architect, the Architect’s employees or consultants, except by
written consent containing specific reference to the Agreement and signed by
the Architect, Owner, Contractor and any other person or entity sought to be
joined. No arbitration shall include, by consolidation or joinder or in any
other manner, parties other than the Owner, Contractor, a separate contractor
as described in Article 6 and other persons substantially involved in a
common question of fact or law whose presence is required if complete relief is
to be accorded in arbitration.  No person
or entity other than the Owner, Contractor or a separate contractor as
described in Article 6 shall be included as an original third party or
additional third party to an arbitration whose interest or responsibility is
insubstantial. Consent to arbitration involving an additional person or entity
shall not constitute consent to arbitration of a dispute not described therein
or with a person or entity not named or described therein. The foregoing
agreement to arbitrate and other agreements to arbitrate with an additional
person or entity duly consented to by parties to the Agreement shall be
specifically enforceable under applicable law in any court having jurisdiction
thereof.

 

4.5.6  Claims and
Timely Assertion of Claims. A party who files a notice of demand for
arbitration must assert in the demand all Claims then known to that party on
which arbitration is permitted to be demanded. When a party fails to include a
Claim through oversight, inadvertence or excusable neglect, or when a Claim has
matured or been acquired subsequently, the arbitrator or arbitrators may permit
amendment.

 

4.5.7  Judgment on
Final Award. The award rendered by the arbitrator or arbitrators
shall be final, and judgment may be entered upon it in accordance with
applicable law in any court having jurisdiction thereof.

 

ARTICLE 5

 

SUBCONTRACTORS

 

5.1           DEFINITIONS

 

5.1.1  A Subcontractor is a person
or entity who has a direct contract with the Contractor to perform a portion of
the Work at the site. The term “Subcontractor” is referred to throughout the
Contract Documents as if singular in number and means a Subcontractor or an
authorized representative of the Subcontractor. The term “Subcontractor” does
not include a separate contractor or subcontractors of a separate contractor.

 

5.1.2  A Sub-subcontractor is
a person or entity who has a direct or indirect contract with a Subcontractor
to perform a portion of the Work at the site. The term “Sub-subcontractor” is
referred to throughout the Contract Documents as if singular in number and
means a Sub-subcontractor or an authorized representative of the
Sub-subcontractor.

 

5.2           AWARD OF SUBCONTRACTS AND OTHER CONTRACTS FOR PORTIONS OF
THE WORK

 

5.2.1  Unless otherwise stated
in the Contract Documents or the bidding requirements, the Contractor, as soon
as practicable after award of the Contract, shall furnish in writing to the
Owner through the Architect the names of persons or entities (including those
who are to furnish materials or equipment fabricated to a special design)
proposed for each principal portion of the Work. The Architect will promptly
reply to the Contractor in writing stating whether or not the Owner or the
Architect, after due investigation, has reasonable objection to any such
proposed person or entity. Failure of the Owner or Architect to reply promptly
shall constitute notice of no reasonable objection.

 

5.2.2  The Contractor shall not
contract with a proposed person or entity to whom the Owner or Architect has
made reasonable and timely objection.  The Contractor shall not be required to
contract with anyone to whom the Contractor has made reasonable objection

 

5.2.3  If the Owner or
Architect has reasonable objection to a person or entity proposed by the
Contractor, the Contractor shall propose another to whom the Owner or Architect
has no reasonable objection.  The
Contract Sum shall be increased or decreased by the difference in cost
occasioned by such change and an appropriate Change Order shall be issued.
However, no increase in the Contract Sum shall be allowed for such change
unless the Contractor has acted promptly and responsively in submitting names
as required

 

5.2.4  The Contractor shall
not change a Subcontractor, person or entity previously selected if the Owner
or Architect makes reasonable objection to such change.

 

13

 

5.3           SUBCONTRACTUAL RELATIONS

 

5.3.1  By appropriate agreement,
written where legally required for validity, the Contractor shall require each
Subcontractor, to the extent of the Work to be performed by the Subcontractor,
to be bound to the Contractor by terms of the Contract Documents, and to assume
toward the Contractor all the obligations and responsibilities which the
Contractor, by these Documents, assumes toward the Owner and Architect. Each
subcontract agreement shall preserve and protect the rights of the Owner and
Architect under the Contract Documents with respect to the Work to be performed
by the Subcontractor so that subcontracting thereof will not prejudice such
rights, and shall allow to the Subcontractor, unless specifically provided
otherwise in the subcontract agreement, the benefit of all rights, remedies and
redress against the Contractor that the Contractor, by the Contract Documents,
has against the Owner. Where appropriate, the Contractor shall require each
Subcontractor to enter into similar agreements with Sub-subcontractors. The
Contractor shall make available to each proposed Subcontractor, prior to the
execution of the subcontract agreement, copies of the Contract Documents to
which the Subcontractor will be bound, and, upon written request of the
Subcontractor, identify to the Subcontractor terms and conditions of the
proposed subcontract agreement which may be at variance with the Contract
Documents. Subcontractors shall similarly make copies of applicable portions of
such documents available to their respective proposed Sub-subcontractors.

 

5.4           CONTINGENT ASSIGNMENT OF SUBCONTRACTS

 

5.4.1  Each subcontract
agreement for a portion of the Work is assigned by the Contractor to the Owner
provided that:

 

.1 assignment is effective
only after termination of the Contract by the Owner for cause pursuant to
Paragraph 14.2 and only for those subcontract agreements which the Owner
accepts by notifying the Subcontractor in writing; and

 

.2 assignment is subject
to the prior rights of the surety, if any, obligated under bond relating to the
Contract

 

5.4.2  If the Work has been
suspended for more than 30 days, the Subcontractor’s compensation shall be
equitably adjusted.

 

ARTICLE 6

 

CONSTRUCTION BY OWNER OR BY SEPARATE
CONTRACTORS

 

6.1           OWNER’S RIGHT TO PERFORM CONSTRUCTION AND TO AWARD
SEPARATE CONTRACTS

 

6.1.1  The Owner reserves the
right to perform construction or operations related to the Project with the
Owner’s own forces, and to award separate contracts in connection with other
portions of the Project or other construction or operations on the site under
Conditions of the Contract identical or substantially similar to these
including those portions related to insurance and waiver of subrogation. If the
Contractor claims that delay or additional cost is involved because of such
action by the Owner, the Contractor shall make such Claim as provided elsewhere
in the Contract Documents.

 

6.1.2  When separate contracts
are awarded for different portions of the Project or other construction or
operations on the site, the term “Contractor” in the Contract Documents in each
case shall mean the Contractor who executes each separate Owner-Contractor
Agreement

 

6.1.3  The Owner shall provide
for coordination of the activities of the Owner’s own forces and of each
separate contractor with the Work of the Contractor, who shall cooperate with
them. The Contractor shall participate with other separate contractors and the
Owner in reviewing their construction schedules when directed to do so. The
Contractor shall make any revisions to the construction schedule and Contract
Sum deemed necessary after a joint review and mutual agreement. The
construction schedules shall then constitute the schedules to be used by the
Contractor, separate contractors and the Owner until subsequently revised.

 

6.1.4  Unless otherwise provided
in the Contract Documents, when the Owner performs construction or operations
related to the Project with the Owner’s own forces, the Owner shall be deemed
to be subject to the same obligations and to have the same rights which apply
to the Contractor under the Conditions of the Contract, including, without
excluding others, those stated in Article 3, this Article 6 and
Articles 10, 11 and 12.

 

6.2           MUTUAL RESPONSIBILITY

 

6.2.1  The Contractor shall
afford the Owner and separate contractors reasonable opportunity for
introduction and storage of their materials and equipment and performance of
their activities and shall connect and coordinate the Contractor’s construction
and operations with theirs as required by the Contract Documents.

 

6.2.2  If part of the
Contractor’s Work depends for proper execution or results upon construction or
operations by the Owner or a separate contractor, the Contractor shall, prior
to proceeding with that portion of the Work, promptly report to the Architect
apparent discrepancies or defects in such other construction that would render
it unsuitable for such proper execution and results.  Failure of the Contractor so to report shall
constitute an acknowledgment that the Owner’s or separate contractors’
completed or partially completed construction is fit and proper to receive the
Contractor’s Work, except as to defects not then reasonably discoverable.

 

6.2.3  Costs caused by delays
or by improperly timed activities or defective construction shall be borne by
the party responsible therefor.

 

6.2.4  The Contractor shall
promptly remedy damage wrongfully caused by the Contractor to completed or
partially completed construction or to property of the Owner or separate
contractors as provided in Subparagraph 10.2.5.

 

6.2.5  Claims and other
disputes and matters in question between the Contractor and a separate
contractor shall be subject to the provisions of Paragraph 4.3 provided the separate contractor
has reciprocal obligations.

 

6.2.6  The Owner and each
separate contractor shall have the same responsibilities for cutting and
patching as are described for the Contractor in Paragraph 3.14.

 

6.3           OWNER’S RIGHT TO CLEAN UP

 

6.3.1  If a dispute arises
among the Contractor, separate contractors and the Owner as to the
responsibility under their respective contracts for maintaining the premises
and surrounding area free from waste materials and rubbish as described in
Paragraph 3.15, the Owner may clean up and allocate the cost among those
responsible as the Architect determines to be just.

 

14

 

ARTICLE
7

 

CHANGES IN THE WORK

 

7.1        CHANGES

 

7.1.1  Changes in the
Work may be accomplished after execution of the Contract, and without
invalidating the Contract, by Change Order, Construction Change Directive or
order for a minor change in the Work, subject to the limitations stated in this
Article 7 and elsewhere in the Contract Documents.

 

7.1.2  A Change Order
shall be based upon agreement among the Owner, Contractor and Architect; a
Construction Change Directive requires agreement by the Owner and Architect and
may or may not be agreed to by the Contractor; an order for a minor change in
the Work may be issued by the Architect alone.

 

7.1.3  Changes in the
Work shall be performed under applicable provisions of the Contract Documents,
and the Contractor shall proceed promptly, unless otherwise provided in the
Change Order, Construction Change Directive or order for a minor change in the
Work.

 

7.1.4  If unit prices
are stated in the Contract Documents or subsequently agreed upon, and if
quantities originally contemplated are so changed in a proposed Change Order or
Construction Change Directive that application of such unit prices to
quantities of Work proposed will cause substantial inequity to the Owner or
Contractor, the applicable unit prices shall be equitably adjusted.

 

7.2         CHANGE ORDERS

 

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

 

.1  a change in the Work;

.2  the amount of the adjustment in the Contract
Sum, if any; and

.3  the extent of the adjustment in the Contract
Time, if any.

 

7.2.2  Methods used in
determining adjustments to the Contract Sum may include those listed in
Subparagraph 7.3.3.

 

7.3         CONSTRUCTION CHANGE DIRECTIVES

 

7.3.1  A Construction
Change Directive is a written order prepared by the Architect and signed by the
Owner and Architect, directing a change in the Work and stating a proposed
basis for adjustment, if any, in the Contract Sum or Contract Time, or both.
The Owner may by Construction Change Directive, without invalidating the
Contract, order changes in the Work within the general scope of the Contract
consisting of additions, deletions or other revisions, the Contract Sum and
Contract Time being adjusted accordingly.

 

7.3.2  A
Construction Change Directive shall be used in the absence of total
agreement on the terms of a Change Order.

 

7.3.3  If the
Construction Change Directive provides for an adjustment to the Contract Sum,
the adjustment shall be based on one of the following methods:

 

.1  mutual acceptance of a lump sum properly
itemized and supported by sufficient substantiating data to permit evaluation;

.2  unit prices stated in the Contract Documents
or subsequently agreed upon;

.3  cost to be determined in a manner agreed upon by the parties and
a mutually acceptable fixed or percentage
fee; or

.4  as provided in Subparagraph
7.3.6.

 

7.3.4  Upon receipt of
a Construction Change Directive, the Contractor shall promptly proceed with the
change in the Work involved and advise the Architect of the Contractor’s
agreement or disagreement with the method, if any, provided in the Construction
Change Directive for determining the proposed adjustment in the Contract Sum or
Contract Time

 

7.3.5  A Construction Change
Directive signed by the Contractor indicates the agreement of the Contractor
therewith, including adjustment in Contract Sum and Contract Time or the method
for determining them. Such agreement shall be effective immediately and shall
be recorded as a Change Order.

 

7.3.6  If the Contractor does not
respond promptly or disagrees with the method for adjustment in the Contract
Sum, the method and the adjustment shall be determined by the Architect on the
basis of reasonable expenditures and savings of those performing the Work
attributable to the change, including, in case of an increase in the Contract
Sum, a reasonable allowance for overhead and profit. In such case, and also
under Clause 7.3.3.3, the Contractor shall keep and present, in such form as
the Architect may prescribe, an itemized accounting together with appropriate
supporting data. Unless otherwise provided in the Contract Documents, costs for
the purposes of this Subparagraph 7.3.6 shall be limited to the following:

 

.1  costs of labor, including social security, old
age and unemployment insurance, fringe benefits required by agreement or
custom, and workers’ or workmen’s compensation insurance;

.2  costs of materials, supplies and equipment,
including cost of transportation, whether incorporated or consumed;

.3  rental costs of machinery and equipment,
exclusive of hand tools, whether rented from the Contractor or others;

.4  costs of premiums for all bonds and insurance,
permit fees, and sales, use or similar taxes related to the Work; and

.5  additional costs of supervision and field
office personnel directly attributable to the change.

 

7.3.7  Pending final determination of cost to the Owner, amounts not in dispute
may be included in Applications for Payment. The amount of credit to be allowed
by the Contractor to the Owner for a deletion or change which results in a net
decrease in the Contract Sum shall be actual net cost as confirmed by the
Architect. When both additions and credits covering related Work or
substitutions are involved in a change, the allowance for overhead and profit
shall be figured on the basis of net increase, if any, with respect to that
change.

 

7.3.8  If the Owner and
Contractor do not agree with the adjustment in Contract Time or the method for
determining it, the adjustment or the method shall be referred to the Architect
for determination

 

7.3.9  When the Owner
and Contractor agree with the determination made by the Architect concerning
the adjustments in the Contract Sum and Contract Time, or otherwise reach
agreement upon the adjustments, such agreement shall be effective immediately
and shall be recorded by preparation and execution of an appropriate Change
Order

 

15

 

7.4        MINOR
CHANGES IN THE WORK

 

7.4.1  The Architect
will have authority to order minor changes in the Work not involving adjustment
in the Contract Sum or extension of the Contract Time and not inconsistent with
the intent of the Contract Documents. Such changes shall be effected by written
order and shall be binding on the Owner and Contractor. The Contractor shall
carry out such written orders promptly.

 

ARTICLE 8 

 

TIME

 

8.1         DEFINITIONS

 

8.1.1  Unless otherwise
provided, Contract Time is the period of time, including authorized adjustments,
allotted in the Contract Documents for Substantial Completion of the Work.

 

8.1.2  The date of
commencement of the Work is the date established in the Agreement. The date
shall not be postponed by the failure to act of the Contractor or of persons or
entities for whom the Contractor is responsible.

 

8.1.3  The date of
Substantial Completion is the date certified by the Architect in accordance
with Paragraph 9.8.

 

8.1.4  The term “day”
as used in the Contract Documents shall mean calendar day unless otherwise
specifically defined

 

8.2         PROGRESS
AND COMPLETION

 

8.2.1  Time limits
stated in the Contract Documents are of the essence of the Contract. By
executing the Agreement the Contractor confirms that the Contract Time is a
reasonable period for performing the Work

 

8.2.2  The Contractor
shall not knowingly, except by agreement or instruction of the Owner in
writing, prematurely commence operations on the site or elsewhere prior to the
effective date of insurance required by Article 11 to be furnished by the
Contractor. The date of commencement of the Work shall not be changed by the
effective date of such insurance. Unless the date of commencement is
established by a notice to proceed given by the Owner, the Contractor shall
notify the Owner in writing not less than five days or other agreed period
before commencing the Work to permit the timely filing of mortgages, mechanic’s
liens and other security interests.

 

8.2.3  The Contractor shall proceed
expeditiously with adequate forces and shall achieve Substantial Completion
within the Contract Time.

 

8.3         DELAYS AND EXTENSIONS
OF TIME

 

8.3.1  If the
Contractor is delayed at any time in progress of the Work by an act or neglect
of the Owner or Architect, or of an employee of either, or of a separate
contractor employed by the Owner, or by changes ordered in the Work, or by
labor disputes, fire, unusual delay in deliveries, unavoidable casualties or
other causes beyond the Contractor’s control, or by delay authorized by the
Owner pending arbitration, or by other causes which the Architect determines
may justify delay, then the Contract Time shall be extended by Change Order for
such reasonable time as the Architect may determine

 

8.3.2  Claims relating
to time shall be made in accordance with applicable provisions of Paragraph 4.3

 

8.3.3  This Paragraph
8.3 does not preclude recovery of damages for delay by either party under other
provisions of the Contract Documents

 

ARTICLE 9

 

PAYMENTS AND COMPLETION

 

9.1         CONTRACT SUM

 

9.1.1  The Contract Sum
is stated in the Agreement and, including authorized adjustments, is the total
amount payable by the Owner to the Contractor for performance of the Work under
the Contract Documents.

 

9.2         SCHEDULE OF
VALUES

 

9.2.1  Before the first
Application for Payment, the Contractor shall submit to the Architect a
schedule of values allocated to various portions of the Work, prepared in such
form and supported by such data to substantiate its accuracy as the Architect
may require. This schedule, unless objected to by the Architect, shall be used
as a basis for reviewing the Contractor’s Applications for Payment.

 

9.3         APPLICATIONS
FOR PAYMENT

 

9.3.1  At least ten
days before the date established for each  progress payment, the
Contractor shall submit to the Architect  an itemized Application for
Payment for operations completed  in accordance with the
schedule of values. Such application  shall be notarized, if
required, and supported by such data  substantiating the Contractor’s
right to payment as the Owner  or Architect may require,
such as copies of requisitions from  Subcontractors and material
suppliers, and reflecting retainage  if provided for elsewhere in
the Contract Documents.

 

9.3.1.1  Such
applications may include requests for payment on account of changes in the Work
which have been properly authorized by Construction Change Directives but not
yet included in Change Orders

 

9.3.1.2  Such
applications may not include requests for payment of amounts the Contractor
does not intend to pay to a Subcontractor or material supplier because of a
dispute or other reason

 

9.3.2  Unless otherwise
provided in the Contract Documents, payments shall be made on account of
materials and equipment delivered and suitably stored at the site for
subsequent incorporation in the Work. If approved in advance by the Owner,
payment may similarly be made for materials and equipment suitably stored off
the site at a location agreed upon in writing. Payment for materials and
equipment stored on or off the site shall be conditioned upon compliance by the
Contractor with procedures satisfactory to the Owner to establish the Owner’s
title to such materials and equipment or otherwise protect the Owner’s
interest, and shall include applicable insurance, storage and transportation to
the site for such materials and equipment stored off the site.

 

9.3.3  The Contractor
warrants that title to all Work covered by an Application for Payment will pass
to the Owner no later than the time of payment. The Contractor further warrants
that upon submittal of an Application for Payment all Work for which
Certificates for Payment have been previously issued and payments received from
the Owner shall, to the best of the Contractor’s knowledge, information and
belief, be free and clear of liens, claims, security interests or encumbrances
in favor of the Contractor, Subcontractors, material suppliers, or other
persons or entities making a claim by reason of having provided labor,
materials and equipment relating to the Work

 

9.4          CERTIFICATES FOR PAYMENT

 

9.4.1  The Architect
will, within seven days after receipt of the Contractor’s Application for
Payment, either issue to the

 

16

 

Owner
a Certificate for Payment, with a copy to the Contractor, for such amount as
the Architect determines is properly due, or notify the Contractor and Owner in
writing of the Architect’s reasons for withholding certification in whole or in
part as provided in Subparagraph 9.5.1

 

9.4.2  The issuance of
a Certificate for Payment will constitute a representation by the Architect to
the Owner, based on the Architect’s observations at the site and the data
comprising the Application for Payment, that the Work has progressed to the
point indicated and that, to the best of the Architect’s knowledge, information
and belief, quality of the Work is in accordance with the Contract Documents.  The foregoing representations are subject to
an evaluation of the Work for conformance with the Contract Documents upon
Substantial Completion, to results of subsequent tests and inspections, to
minor deviations from the Contract Documents correctable prior to completion
and to specific qualifications expressed by the Architect. The issuance of a
Certificate for Payment will further constitute a representation that the
Contractor is entitled to payment in the amount certified. However, the
issuance of a Certificate for Payment will not be a representation that the
Architect has (1) made exhaustive or continuous on-site inspections to
check the quality or quantity of the Work, (2) reviewed construction
means, methods, techniques, sequences or procedures, (3) reviewed copies
of requisitions received from Subcontractors and material suppliers and other
data requested by the Owner to substantiate the Contractor’s right to payment
or (4) made examination to ascertain how or for what purpose the
Contractor has used money previously paid on account of the Contract Sum

 

9.5          DECISIONS
TO WITHHOLD CERTIFICATION

 

9.5.1  The Architect
may decide not to certify payment and may withhold a Certificate for Payment in
whole or in part, to the extent reasonably necessary to protect the Owner, if
in the Architect’s opinion the representations to the Owner required by Subparagraph

9.4.2 cannot be made. If the Architect is unable to certify payment in the
amount of the Application, the Architect will notify the Contractor and Owner
as provided in Subparagraph 9.4.1. If the Contractor and Architect cannot agree
on a revised amount, the Architect will promptly issue a Certificate for
Payment for the amount for which the Architect is able to make such
representations to the Owner. The Architect may also decide not to certify
payment or, because of subsequently discovered evidence or subsequent
observations, may nullify the whole or a part of a Certificate for Payment previously
issued, to such extent as may be necessary in the Architect’s opinion to
protect the Owner from loss because of:

 

.1  defective Work not remedied;

.2  third party claims filed or reasonable
evidence indicating probable filing of such claims;

.3  failure of the Contractor to make payments
properly to Subcontractors or for labor, materials or equipment;

.4  reasonable evidence that the Work cannot be
completed for the unpaid balance of the Contract Sum;

.5  damage to the Owner or another contractor;

.6  reasonable evidence that the Work will not be
completed within the Contract Time, and that the unpaid balance would not be
adequate to cover actual or liquidated damages for the anticipated delay; or

.7  persistent failure to carry out the Work in
accordance with the Contract Documents

 

9.5.2  When the above
reasons for withholding certification are removed, certification will be made
for amounts previously withheld.

 

9.6          PROGRESS
PAYMENTS

 

9.6.1  After the
Architect has issued a Certificate for Payment, the Owner shall make payment in
the manner and within the time provided in the Contract Documents, and shall so
notify the Architect.

 

9.6.2  The Contractor
shall promptly pay each Subcontractor, upon receipt of payment from the Owner,
out of the amount paid to the Contractor on account of such Subcontractor’s
portion of the Work, the amount to which said Subcontractor is entitled,
reflecting percentages actually retained from payments to the Contractor on
account of such Subcontractor’s portion of the Work. The Contractor shall, by
appropriate agreement with each Subcontractor, require each Subcontractor to
make payments to Sub-subcontractors in similar manner.

 

9.6.3  The Architect
will, on request, furnish to a Subcontractor, if practicable, information regarding
percentages of completion or amounts applied for by the Contractor and action
taken thereon by the Architect and Owner on account of portions of the Work
done by such Subcontractor.

 

9.6.4  Neither the
Owner nor Architect shall have an obligation to pay or to see to the payment of
money to a Subcontractor except as may otherwise be required by law.

 

9.6.5  Payment to
material suppliers shall be treated in a manner similar to that provided in
Subparagraphs 9.6.2, 9.6.3 and 9.6.4.

 

9.6.6  A Certificate
for Payment, a progress payment, or partial or entire use or occupancy of the
Project by the Owner shall not constitute acceptance of Work not in accordance
with the Contract Documents

 

9.7          FAILURE OF PAYMENT

 

9.7.1  If the Architect
does not issue a Certificate for Payment, through no fault of the Contractor,
within seven days after receipt of the Contractor’s Application for Payment, or
if the Owner does not pay the Contractor within seven days after the date
established in the Contract Documents the amount certified by the Architect or
awarded by arbitration, then the Contractor may, upon seven additional days’
written notice to the Owner and Architect, stop the Work until payment of the
amount owing has been received. The Contract Time shall be extended
appropriately and the Contract Sum shall be increased by the amount of the
Contractor’s reasonable costs of shut-down, delay and start-up, which shall be
accomplished as provided in Article 7.

 

9.8          SUBSTANTIAL COMPLETION

 

9.8.1  Substantial
Completion is the stage in the progress of the Work when the Work or designated
portion thereof is sufficiently complete in accordance with the Contract
Documents so the Owner can occupy or utilize the Work for its intended use.

 

9.8.2  When the Contractor considers
that the Work, or a portion thereof which the Owner agrees to accept
separately, is substantially complete, the Contractor shall prepare and submit
to the Architect a comprehensive list of items to be completed or corrected.
The Contractor shall proceed promptly to complete and correct items on the
list. Failure to include an item on such list does not alter the responsibility
of the Contractor to complete all Work in accordance with the Contract
Documents. Upon receipt of the Contractor’s list, the Architect will make an
inspection to determine whether the Work or designated

 

17

 

portion
thereof is substantially complete. If the Architect’s inspection discloses any
item, whether or not included on the Contractor’s list, which is not in
accordance with the requirements of the Contract Documents, the Contractor
shall, before issuance of the Certificate of Substantial Completion, complete
or correct such item upon notification by the Architect. The Contractor shall
then submit a request for another inspection by the Architect to determine
Substantial Completion. When the Work or designated portion thereof is
substantially complete, the Architect will prepare a Certificate of Substantial
Completion which shall establish the date of Substantial Completion, shall
establish responsibilities of the Owner and Contractor for security,
maintenance, heat, utilities, damage to the Work and insurance, and shall fix
the time within which the Contractor shall finish all items on the list
accompanying the Certificate. Warranties required by the Contract Documents
shall commence on the date of Substantial Completion of the Work or designated
portion thereof unless otherwise provided in the Certificate of Substantial
Completion. The Certificate of Substantial Completion shall be submitted to the
Owner and Contractor for their written acceptance of responsibilities assigned
to them in such Certificate.

 

9.8.3  Upon Substantial
Completion of the Work or designated portion thereof and upon application by
the Contractor and certification by the Architect, the Owner shall make
payment, reflecting adjustment in retainage, if any, for such Work or portion
thereof as provided in the Contract Documents

 

9.9          PARTIAL
OCCUPANCY OR USE

 

9.9.1  The Owner may
occupy or use any completed or partially completed portion of the Work at any
stage when such portion is designated by separate agreement with the
Contractor, provided such occupancy or use is consented to by the insurer as
required under Subparagraph 11.3.11 and authorized by public authorities having
jurisdiction over the Work. Such partial occupancy or use may commence whether
or not the portion is substantially complete, provided the Owner and Contractor
have accepted in writing the responsibilities assigned to each of them for
payments, retainage if any, security, maintenance, heat, utilities, damage to
the Work and insurance, and have agreed in writing concerning the period for
correction of the Work and commencement of warranties required by the Contract
Documents. When the Contractor considers a portion substantially complete, the
Contractor shall prepare and submit a list to the Architect as provided under Subparagraph
9.8.2.  Consent of the Contractor to
partial occupancy or use shall not be unreasonably withheld. The stage of the
progress of the Work shall be determined by written agreement between the Owner
and Contractor or, if no agreement is reached, by decision of the Architect.

 

9.9.2  Immediately
prior to such partial occupancy or use, the Owner, Contractor and Architect
shall jointly inspect the area to be occupied or portion of the Work to be used
in order to determine and record the condition of the Work.

 

9.9.3  Unless otherwise
agreed upon, partial occupancy or use of a portion or portions of the Work
shall not constitute acceptance of Work not complying with the requirements of
the Contract Documents.

 

9.10        FINAL
COMPLETION AND FINAL PAYMENT

 

9.10.1  Upon receipt of
written notice that the Work is ready for final inspection and acceptance and
upon receipt of a final Application for Payment, the Architect will promptly
make such inspection and, when the Architect finds the Work acceptable under
the Contract Documents and the Contract fully performed, the Architect will
promptly issue a final Certificate for Payment stating that to the best of the
Architect’s knowledge, information and belief, and on the basis of the
Architect’s observations and inspections, the Work has been completed in
accordance with terms and conditions of the Contract Documents and that the
entire balance found to be due the Contractor and noted in said final
Certificate is due and payable. The Architect’s final Certificate for Payment
will constitute a further representation that conditions listed in Subparagraph
9.10.2 as precedent to the Contractor’s being entitled to final payment have
been fulfilled.

 

9.10.2  Neither final
payment nor any remaining retained percentage shall become due until the
Contractor submits to the Architect (1) an affidavit that payrolls, bills
for materials and equipment, and other indebtedness connected with the Work for
which the Owner or the Owner’s property might be responsible or encumbered
(less amounts withheld by Owner) have been paid or otherwise satisfied, (2) a
certificate evidencing that insurance required by the Contract Documents to
remain in force after final payment is currently in effect and will not be
cancelled or allowed to expire until at least 30 days’ prior written notice has
been given to the Owner, (3) a written statement that the Contractor knows
of no substantial reason that the insurance will not be renewable to cover the
period required by the Contract Documents, (4) consent of surety, if any,
to final payment and (5), if required by the Owner, other data establishing
payment or satisfaction of obligations, such as receipts, releases and waivers
of liens, claims, security interests or encumbrances arising out of the
Contract, to the extent and in such form as may be designated by the Owner. If
a Subcontractor refuses to furnish a release or waiver required by the Owner,
the Contractor may furnish a bond satisfactory to the Owner to indemnify the
Owner against such lien. If such lien remains unsatisfied after payments are
made, the Contractor shall refund to the Owner all money that the Owner may be
compelled to pay in discharging such lien, including all costs and reasonable
attorneys’ fees.

 

9.10.3  If, after
Substantial Completion of the Work, final completion thereof is materially
delayed through no fault of the Contractor or by issuance of Change Orders
affecting final completion, and the Architect so confirms, the Owner shall,
upon application by the Contractor and certification by the Architect, and
without terminating the Contract, make payment of the balance due for that
portion of the Work fully completed and accepted. If the remaining balance for
Work not fully completed or corrected is less than retainage stipulated in the
Contract Documents, and if bonds have been furnished, the written consent of surety
to payment of the balance due for that portion of the Work fully completed and
accepted shall be submitted by the Contractor to the Architect prior to
certification of such payment. Such payment shall be made under terms and
conditions governing final payment, except that it shall not constitute a
waiver of claims. The making of final payment shall constitute a waiver of
claims by the Owner as provided in Subparagraph 4.3.5.

 

9.10.4  Acceptance of
final payment by the Contractor, a Subcontractor or material supplier shall
constitute a waiver of claims by that payee except those previously made in
writing and identified by that payee as unsettled at the time of final
Application for Payment. Such waivers shall be in addition to the waiver
described in Subparagraph 4.3.5

 

18

 

ARTICLE 10

 

PROTECTION OF PERSONS AND PROPERTY

 

10.1        SAFETY
PRECAUTIONS AND PROGRAMS

 

10.1.1  The Contractor
shall be responsible for initiating, maintaining and supervising all safety precautions
and programs in connection with the performance of the Contract.

 

10.1.2  In the event the
Contractor encounters on the site material reasonably believed to be asbestos
or polychlorinated biphenyl (PCB) which has not been rendered harmless, the Contractor
shall immediately stop Work in the area affected and report the condition to
the Owner and Architect in writing. The Work in the affected area shall not
thereafter be resumed except by written agreement of the Owner and Contractor
if in fact the material is asbestos or polychlorinated biphenyl (PCB) and has
not been rendered harmless. The Work in the affected area shall be resumed in
the absence of asbestos or polychlorinated biphenyl (PCB), or when it has been
rendered harmless, by written agreement of the Owner and Contractor, or in
accordance with final determination by the Architect on which arbitration has
not been demanded, or by arbitration under Article 4.

 

10.1.3  The Contractor
shall not be required pursuant to Article 7 to perform without consent any
Work relating to asbestos or polychlorinated biphenyl (PCB).

 

10.1.4  To the fullest extent
permitted by law, the Owner shall indemnify and hold harmless the Contractor,
Architect, Architect’s consultants and agents and employees of any of them from
and against claims, damages, losses and expenses, including but not limited to
attorneys’ fees, arising out of or resulting from performance of the Work in
the affected area if in fact the material is asbestos or polychlorinated
biphenyl (PCB) and has not been rendered harmless, provided that such claim,
damage, loss or expense is attributable to bodily injury, sickness, disease or
death, or to injury to or destruction of tangible property (other than the Work
itself) including loss of use resulting therefrom, but only to the extent
caused in whole or in part by negligent acts or omissions of the Owner, anyone
directly or indirectly employed by the Owner or anyone for whose acts the Owner
may be liable, regardless of whether or not such claim, damage, loss or expense
is caused in part by a party indemnified hereunder. Such obligation shall not
be construed to negate, abridge, or reduce other rights or obligations of
indemnity which would otherwise exist as to a party or person described in this
Subparagraph 10.1.4.

 

10.2  SAFETY OF PERSONS
AND PROPERTY

 

10.2.1 The Contractor shall take reasonable
precautions for safety of, and shall provide reasonable protection to prevent
damage, injury or loss to:

 

.1  employees on the Work and other persons who
may be affected thereby;

.2  the Work and materials and equipment to be
incorporated therein, whether in storage on or off the site, under care,
custody or control of the Contractor or the Contractor’s Subcontractors or
Sub-subcontractors; and

.3  other property at the site or adjacent
thereto, such as trees, shrubs, lawns, walks, pavements, roadways, structures
and utilities not designated for removal, relocation or replacement in the
course of construction.

 

10.2.2  The Contractor
shall give notices and comply with applicable laws, ordinances, rules,
regulations and lawful orders of public authorities bearing on safety of
persons or property or their protection from damage, injury or loss.

 

10.2.3  The Contractor shall erect and maintain, as required by existing conditions
and performance of the Contract, reasonable safeguards for safety and
protection, including posting danger signs and other warnings against hazards,
promulgating safety regulations and notifying owners and users of adjacent
sites and utilities.

 

10.2.4  When use or storage of explosives or other hazardous materials or equipment
or unusual methods are necessary for execution of the Work, the Contractor
shall exercise utmost care and carry on such activities under supervision of
properly qualified personnel.

 

10.2.5  The Contractor
shall promptly remedy damage and loss (other than damage or loss insured under
property insurance required by the Contract Documents) to property referred to
in Clauses 10.2.1.2 and 10.2.1.3 caused in whole or in part by the Contractor,
a Subcontractor, a Sub-subcontractor, or anyone directly or indirectly employed
by any of them, or by anyone for whose acts they may be liable and for which
the Contractor is responsible under Clauses 10.2.1.2 and 10.2.1.3, except damage
or loss attributable to acts or omissions of the Owner or Architect or anyone
directly or indirectly employed by either of them, or by anyone for whose acts either
of them may be liable, and not attributable to the fault or negligence of the
Contractor. The foregoing obligations of the Contractor are in addition to the
Contractor’s obligations under Paragraph 3.18.

 

10.2.6 The Contractor
shall designate a responsible member of the Contractor’s organization at the
site whose duty shall be the prevention of accidents. This person shall be the
Contractor’s superintendent unless otherwise designated by the Contractor in
writing to the Owner and Architect.

 

10.2.7 The Contractor
shall not load or permit any part of the construction or site to be loaded so
as to endanger its safety.

 

10.3        EMERGENCIES

 

10.3.1 In an emergency
affecting safety of persons or property, the Contractor shall act, at the
Contractor’s discretion, to prevent threatened damage, injury or loss.
Additional compensation or extension of time claimed by the Contractor on
account of an emergency shall be determined as provided in Paragraph 4.3 and Article 7.

 

ARTICLE 11

 

INSURANCE AND BONDS

 

11.1        CONTRACTOR’S
LIABILITY INSURANCE

 

11.1.1  The Contractor
shall purchase from and maintain in a company or companies lawfully authorized
to do business in the jurisdiction in which the Project is located such
insurance as will protect the Contractor from claims set forth below which may
arise out of or result from the Contractor’s operations under the Contract and
for which the Contractor may be legally liable, whether such operations be by
the Contractor or by a Subcontractor or by anyone directly or indirectly
employed by any of them, or by anyone for whose acts any of them may be liable:

 

.1  claims under workers’ or workmen’s
compensation, disability benefit and other similar employee benefit acts which
are applicable to the Work to be performed;

 

19

 

.2  claims for damages because of bodily injury,
occupational sickness or disease, or death of the Contractor’s employees;

.3  claims for damages because of bodily injury,
sickness or disease, or death of any person other than the Contractor’s
employees;

.4  claims for damages insured by usual personal
injury liability coverage which are sustained (1) by a person as a result
of an offense directly or indirectly related to employment of such person by
the Contractor, or (2) by another person;

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

.6  claims for damages because of bodily injury,
death of a person or property damage arising out of ownership, maintenance or
use of a motor vehicle; and

.7  claims involving contractual liability
insurance applicable to the Contractor’s obligations under Paragraph 3.18.

 

11.1.2  The insurance
required by Subparagraph 11.1.1 shall be written for not less than limits of
liability specified in the Contract Documents or required by law, whichever
coverage is greater. Coverages, whether written on an occurrence or claims-made
basis, shall be maintained without interruption from date of commencement of
the Work until date of final payment and termination of any coverage required to
be maintained after final payment.

 

11.1.3  Certificates of
Insurance acceptable to the Owner shall be filed with the Owner prior to
commencement of the Work. These Certificates and the insurance policies
required by this Paragraph 11.1 shall contain a provision that coverages
afforded under the policies will not be cancelled or allowed to expire until at
least 30 days’ prior written notice has been given to the Owner. If any of the
foregoing insurance coverages are required to remain in force after final
payment and are reasonably available, an additional certificate evidencing
continuation of such coverage shall be submitted with the final Application for
Payment as required by Subparagraph 9.10.2. Information concerning reduction of
coverage shall be furnished by the Contractor with reasonable promptness in
accordance with the Contractor’s information and belief.

 

11.2        OWNER’S
LIABILITY INSURANCE

 

11.2.1  The Owner shall
be responsible for purchasing and maintaining the Owner’s usual liability
insurance. Optionally, the Owner may purchase and maintain other insurance for
self-protection against claims which may arise from operations under the
Contract. The Contractor shall not be responsible for purchasing and
maintaining this optional Owner’s liability insurance unless specifically
required by the Contract Documents

 

11.3        PROPERTY INSURANCE

 

11.3.1  Unless otherwise
provided, the Owner shall purchase and maintain, in a company or companies
lawfully authorized to do business in the jurisdiction in which the Project is
located, property insurance in the amount of the initial Contract Sum as well
as subsequent modifications thereto for the entire Work at the site on a
replacement cost basis without voluntary deductibles. Such property insurance
shall be maintained, unless otherwise provided in the Contract Documents or
otherwise agreed in writing by all persons and entities who are beneficiaries
of such insurance, until final payment has been made as provided in Paragraph
9.10 or until no person or entity other than the Owner has an insurable
interest in the property required by this Paragraph 11.3 to be covered,
whichever is earlier. This insurance shall include interests of the Owner, the
Contractor, Subcontractors and Sub-subcontractors in the Work.

 

11.3.1.1  Property
insurance shall be on an all-risk policy form and shall insure against the
perils of fire and extended coverage and physical loss or damage including,
without duplication of coverage, theft, vandalism, malicious mischief,
collapse, false-work, temporary buildings and debris removal including
demolition occasioned by enforcement of any applicable legal requirements, and
shall cover reasonable compensation for Architect’s services and expenses
required as a result of such insured loss Coverage for other perils shall not
be required unless otherwise provided in the Contract Documents.

 

11.3.1.2  If the Owner does not intend
to purchase such property insurance required by the Contract and with all of
the coverages in the amount described above, the Owner shall so inform the
Contractor in writing prior to commencement of the Work. The Contractor may
then effect insurance which will protect the interests of the Contractor,
Subcontractors and Sub-subcontractors in the Work, and by appropriate Change Order
the cost thereof shall be charged to the Owner. If the Contractor is damaged by
the failure or neglect of the Owner to purchase or maintain insurance as
described above, without so notifying the Contractor, then the Owner shall bear
all reasonable costs properly attributable thereto.

 

11.3.1.3  If the property
insurance requires minimum deductibles and such deductibles are identified in
the Contract Documents, the Contractor shall pay costs not covered because of
such deductibles. If the Owner or insurer increases the required minimum
deductibles above the amounts so identified or if the Owner elects to purchase
this insurance with voluntary deductible amounts, the Owner shall be
responsible for payment of the additional costs not covered because of such increased
or voluntary deductibles. If deductibles are not identified in the Contract
Documents, the Owner shall pay costs not covered because of deductibles.

 

11.3.1.4  Unless otherwise
provided in the Contract Documents, this property insurance shall cover
portions of the Work stored off the site after written approval of the Owner at
the value established in the approval, and also portions of the Work in
transit.

 

11.3.2 Boiler and Machinery Insurance. The Owner shall
purchase and maintain boiler and machinery insurance required by the Contract
Documents or by law, which shall specifically cover such insured objects during
installation and until final acceptance by the Owner; this insurance shall
include interests of the Owner, Contractor, Subcontractors and
Sub-subcontractors in the  Work, and the Owner and Contractor
shall be named insureds.

 

11.3.3  Loss of
Use Insurance. The Owner, at the Owner’s option, may purchase and
maintain such insurance as will insure the Owner against loss of use of the
Owner’s property due to fire or other hazards, however caused. The Owner waives
all rights of action against the Contractor for loss of use of the Owner’s
property, including consequential losses due to fire or other hazards however
caused.

 

11.3.4  If the Contractor requests in
writing that insurance for risks other than those described herein or for other
special hazards be included in the property insurance policy, the Owner shall,
if possible, include such insurance, and the cost thereof shall be charged to the
Contractor by appropriate Change Order.

 

20

 

11.3.5  If during the
Project construction period the Owner insures properties, real or personal or
both, adjoining or adjacent to the site by property insurance under policies
separate from those insuring the Project, or if after final payment property
insurance is to be provided on the completed Project through a policy or
policies other than those insuring the Project during the construction period,
the Owner shall waive all rights in accordance with the terms of Subparagraph
11.3.7 for damages caused by fire or other perils covered by this separate
property insurance. All separate policies shall provide this waiver of
subrogation by endorsement or otherwise.

 

11.3.6  Before an
exposure to loss may occur, the Owner shall file with the Contractor a copy of
each policy that includes insurance coverages required by this Paragraph 11.3.
Each policy shall contain all generally applicable conditions, definitions,
exclusions and endorsements related to this Project. Each policy shall contain
a provision that the policy will not be cancelled or allowed to expire until at
least 30 days’ prior written notice has been given to the Contractor.

 

11.3.7  Waivers
of Subrogation. The Owner and Contractor waive all rights against (1) each
other and any of their subcontractors, sub-subcontractors, agents and
employees, each of the other, and (2) the Architect, Architect’s
consultants, separate contractors described in Article 6, if any, and any
of their subcontractors, sub-subcontractors, agents and employees, for damages
caused by fire or other perils to the extent covered by property insurance
obtained pursuant to this Paragraph 11.3 or other property insurance applicable
to the Work, except such rights as they have to proceeds of such insurance held
by the Owner as fiduciary. The Owner or Contractor, as appropriate, shall
require of the Architect, Architect’s consultants, separate contractors
described in Article 6, if any, and the subcontractors,
sub-subcontractors, agents and employees of any of them, by appropriate
agreements, written where legally required for validity, similar waivers each
in favor of other parties enumerated herein. The policies shall provide such
waivers of subrogation by endorsement or otherwise. A waiver of subrogation
shall be effective as to a person or entity even though that person or entity
would otherwise have a duty of indemnification, contractual or otherwise, did
not pay the insurance premium directly or indirectly, and whether or not the
person or entity had an insurable interest in the property damaged.

 

11.3.8  A loss insured
under Owner’s property insurance shall be adjusted by the Owner as fiduciary
and made payable to the Owner as fiduciary for the insureds, as their interests
may appear, subject to requirements of any applicable mortgagee clause and of
Subparagraph 11.3.10. The Contractor shall pay Subcontractors their just shares
of insurance proceeds received by the Contractor, and by appropriate
agreements, written where legally required for validity, shall require
Subcontractors to make payments to their Sub-subcontractors in similar manner.

 

11.3.9  If required in
writing by a party in interest, the Owner as fiduciary shall, upon occurrence
of an insured loss, give bond for proper performance of the Owner’s duties. The
cost of required bonds shall be charged against proceeds received as fiduciary.
The Owner shall deposit in a separate account proceeds so received, which the
Owner shall distribute in accordance with such agreement as the parties in
interest may reach, or in accordance with an arbitration award in which case
the procedure shall be as provided in Paragraph 4.5.If after such loss no other
special agreement is made, replacement of damaged property shall be covered by
appropriate Change Order.

 

11.3.10  The Owner as
fiduciary shall have power to adjust and settle a loss with insurers unless one
of the parties in interest shall object in writing within five days after
occurrence of loss to the Owner’s exercise of this power; if such objection be
made, arbitrators shall be chosen as provided in Paragraph 4.5. The Owner as
fiduciary shall, in that case, make settlement with insurers in accordance with
directions of such arbitrators. If distribution of insurance proceeds by
arbitration is required, the arbitrators will direct such distribution.

 

11.3.11  Partial
occupancy or use in accordance with Paragraph 9.9 shall not commence until the
insurance company or companies providing property insurance have consented to
such partial occupancy or use by endorsement or otherwise. The Owner and the
Contractor shall take reasonable steps to obtain consent of the insurance
company or companies and shall, without mutual written consent, take no action
with respect to partial occupancy or use that would cause cancellation, lapse
or reduction of insurance.

 

11.4      PERFORMANCE
BOND AND PAYMENT BOND

 

11.4.1  The Owner shall
have the right to require the Contractor to furnish bonds covering faithful
performance of the Contract and payment of obligations arising thereunder as
stipulated in bidding requirements or specifically required in the Contract
Documents on the date of execution of the Contract.

 

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

 

ARTICLE 12

 

UNCOVERING
AND CORRECTION OF WORK

 

12.1                 UNCOVERING
OF WORK

 

12.1.1  If a portion of
the Work is covered contrary to the Architect’s request or to requirements
specifically expressed in the Contract Documents, it must, if required in
writing by the Architect, be uncovered for the Architect’s observation and be
replaced at the Contractor’s expense without change in the Contract Time.

 

12.1.2  If a portion of
the Work has been covered which the Architect has not specifically requested to
observe prior to its being covered, the Architect may request to see such Work
and it shall be uncovered by the Contractor. If such Work is in accordance with
the Contract Documents, costs of uncovering and replacement shall, by
appropriate Change Order, be charged to the Owner. If such Work is not in
accordance with the Contract Documents, the Contractor shall pay such costs
unless the condition was caused by the Owner or a separate contractor in which
event the Owner shall be responsible for payment of such costs.

 

12.2                 CORRECTION
OF WORK

 

12.2.1  The Contractor
shall promptly correct Work rejected by the Architect or failing to conform to
the requirements of the Contract Documents, whether observed before or after
Substantial Completion and whether or not fabricated, installed or completed.
The Contractor shall bear costs of correcting such rejected Work, including
additional testing and inspections and compensation for the Architect’s
services and expenses made necessary thereby.

 

12.2.2  If, within one
year after the date of Substantial Completion of the Work or designated portion
thereof, or after the date

 

21

 

for
commencement of warranties established under Subparagraph 9.9.1, or by terms of
an applicable special warranty required by the Contract Documents, any of the
Work is found to be not in accordance with the requirements of the Contract
Documents, the Contractor shall correct it promptly after receipt of written
notice from the Owner to do so unless the Owner has previously given the
Contractor a written acceptance of such condition. This period of one year
shall be extended with respect to portions of Work first performed after
Substantial Completion by the period of time between Substantial Completion and
the actual performance of the Work. This obligation under this Subparagraph 12.2.2
shall survive acceptance of the Work under the Contract and termination of the
Contract. The Owner shall give such notice promptly after discovery of the
condition.

 

12.2.3  The Contractor
shall remove from the site portions of the Work which are not in accordance
with the requirements of the Contract Documents and are neither corrected by
the Contractor nor accepted by the Owner.

 

12.2.4  If the
Contractor fails to correct nonconforming Work within a reasonable time, the
Owner may correct it in accordance with Paragraph 2.4. If the Contractor does
not proceed with correction of such nonconforming Work within a reasonable time
fixed by written notice from the Architect, the Owner may remove it and store
the salvable materials or equipment at the Contractor’s expense. If the
Contractor does not pay costs of such removal and storage within ten days after
written notice, the Owner may upon ten additional days’ written notice sell
such materials and equipment at auction or at private sale and shall account
for the proceeds thereof, after deducting costs and damages that should have
been borne by the Contractor, including compensation for the Architect’s
services and expenses made necessary thereby. If such proceeds of sale do not
cover costs which the Contractor should have borne, the Contract Sum shall be
reduced by the deficiency. If payments then or thereafter due the Contractor
are not sufficient to cover such amount, the Contractor shall pay the
difference to the Owner.

 

12.2.5  The Contractor
shall bear the cost of correcting destroyed or damaged construction, whether
completed or partially completed, of the Owner or separate contractors caused
by the Contractor’s correction or removal of Work which is not in accordance
with the requirements of the Contract Documents.

 

12.2.6  Nothing
contained in this Paragraph 12.2 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 time period of one year as
described in Subparagraph 12.2.2 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.

 

12.3                 ACCEPTANCE OF
NONCONFORMING WORK

 

12.3.1  If the Owner
prefers to accept Work which is not in accordance with the requirements of the
Contract Documents, the Owner may do so instead of requiring its removal and
correction, in which case the Contract Sum will be reduced as appropriate and
equitable. Such adjustment shall be effected whether or not final payment has
been made.

 

ARTICLE 13

 

MISCELLANEOUS PROVISIONS

 

13.1                 GOVERNING LAW

 

13.1.1  The Contract
shall be governed by the law of the place where the Project is located.

 

13.2                 SUCCESSORS AND ASSIGNS

 

13.2.1  The Owner and
Contractor respectively bind themselves, their partners, successors, assigns
and legal representatives to the other party hereto and to partners,
successors, assigns and legal representatives of such other party in respect to
covenants, agreements and obligations contained in the Contract Documents.
Neither party to the Contract shall assign the Contract as a whole without
written consent of the other. If either party attempts to make such an
assignment without such consent, that party shall nevertheless remain legally
responsible for all obligations under the Contract.

 

13.3                 WRITTEN
NOTICE

 

13.3.1  Written notice
shall be deemed to have been duly served if delivered in person to the
individual or a member of the firm or entity or to an officer of the
corporation for which it was intended, or if delivered at or sent by registered
or certified mail to the last business address known to the party giving notice.

 

13.4                 RIGHTS AND REMEDIES

 

13.4.1  Duties and
obligations imposed by the Contract Documents and rights and remedies available
thereunder shall be in addition to and not a limitation of duties, obligations,
rights and remedies otherwise imposed or available by law.

 

13.4.2  No action or
failure to act by the Owner, Architect or Contractor shall constitute a waiver
of a right or duty afforded them under the Contract, nor shall such action or
failure to act constitute approval of or acquiescence in a breach thereunder,
except as may be specifically agreed in writing.

 

13.5                 TESTS AND
INSPECTIONS

 

13.5.1  Tests,
inspections and approvals of portions of the Work required by the Contract
Documents or by laws, ordinances, rules, regulations or orders of public
authorities having jurisdiction shall be made at an appropriate time. Unless
otherwise provided, the Contractor shall make arrangements for such tests,
inspections and approvals with an independent testing laboratory or entity
acceptable to the Owner, or with the appropriate public authority, and shall
bear all related costs of tests, inspections and approvals. The Contractor
shall give the Architect timely notice of when and where tests and inspections
are to be made so the Architect may observe such procedures. The Owner shall
bear costs of tests, inspections or approvals which do not become requirements
until after bids are received or negotiations concluded.

 

13.5.2  If the
Architect, Owner or public authorities having jurisdiction determine that
portions of the Work require additional testing, inspection or approval not
included under Subparagraph 13.5.1, the Architect will, upon written
authorization from the Owner, instruct the Contractor to make arrangements for
such additional testing, inspection or approval by an entity acceptable to the
Owner, and the Contractor shall give timely notice to the Architect of when and
where tests and inspections are to be made so the Architect may observe such
procedures.

 

22

 

The
Owner shall bear such costs except as provided in Subparagraph 13.5.3.

 

13.5.3  If such
procedures for testing, inspection or approval under Subparagraphs 13.5.1 and
13.5.2 reveal failure of the portions of the Work to comply with requirements
established by the Contract Documents, the Contractor shall bear all costs made
necessary by such failure including those of repeated procedures and
compensation for the Architect’s services and expenses.

 

13.5.4  Required
certificates of testing, inspection or approval shall, unless otherwise
required by the Contract Documents, be secured by the Contractor and promptly
delivered to the Architect.

 

13.5.5  If the Architect is to
observe tests, inspections or approvals required by the Contract Documents, the
Architect will do so promptly and, where practicable, at the normal place of
testing.

 

13.5.6  Tests or
inspections conducted pursuant to the Contract Documents shall be made promptly
to avoid unreasonable delay in the Work.

 

13.6                 INTEREST

 

13.6.1  Payments due and
unpaid under the Contract Documents shall bear interest from the date payment
is due at such rate as the parties may agree upon in writing or, in the absence
thereof, at the legal rate prevailing from time to time at the place where the
Project is located.

 

13.7               COMMENCEMENT
OF STATUTORY

LIMITATION
PERIOD

 

13.7.1 As between the Owner and
Contractor:

 

.1  Before Substantial Completion. As to acts or
failures to act occurring prior to the relevant date of Substantial Completion,
any applicable statute of limitations shall commence to run and any alleged
cause of action shall be deemed to have accrued in any and all events not later
than such date of Substantial Completion;

 

.2  Between Substantial Completion and Final
Certificate for Payment. As to acts or failures to act occurring
subsequent to the relevant date of Substantial Completion and prior to issuance
of the final Certificate for Payment, any applicable statute of limitations
shall commence to run and any alleged cause of action shall be deemed to have
accrued in any and all events not later than the date of issuance of the final Certificate
for Payment; and

 

.3  After Final Certificate for Payment. As to acts or
failures to act occurring after the relevant date of issuance of the final
Certificate for Payment, any applicable statute of limitations shall commence
to run and any alleged cause of action shall be deemed to have accrued in any
and all events not later than the date of any act or failure to act by the
Contractor pursuant to any warranty provided under Paragraph 3.5, the date of
any correction of the Work or failure to correct the Work by the Contractor
under Paragraph 12.2, or the date of actual commission of any other act or
failure to perform any duty or obligation by the Contractor or Owner, whichever
occurs last.

 

ARTICLE 14

 

TERMINATION OR SUSPENSION OF THE
CONTRACT

 

14.1                 TERMINATION
BY THE CONTRACTOR

 

14.1.1  The Contractor may terminate
the Contract if the Work  is stopped for a period of 30 days through no
act or fault of the  Contractor or a Subcontractor,
Sub-subcontractor or their  agents or employees or any
other persons performing portions  of the Work under contract
with the Contractor, for any of the  following reasons:

 

.1  issuance of an order of a
court or other public authority having jurisdiction;

.2  an act of government, such as
a declaration of national emergency, making material unavailable;

.3  because the Architect has not
issued a Certificate for Payment and has not notified the Contractor of the
reason for withholding certification as provided in Subparagraph 9.4.1, or
because the Owner has not made payment on a Certificate for Payment within the
time stated in the Contract Documents;

.4  if repeated suspensions,
delays or interruptions by the Owner as described in Paragraph 14.3 constitute
in the aggregate more than 100 percent of the total number of days scheduled
for completion, or 120 days in any 365-day period, whichever is less; or

.5  the Owner has failed to
furnish to the Contractor promptly, upon the Contractor’s request, reasonable
evidence as required by Subparagraph 2.2.1.

 

14.1.2  If one of the
above reasons exists, the Contractor may, upon seven additional days’ written
notice to the Owner and Architect, terminate the Contract and recover from the
Owner payment for Work executed and for proven loss with respect to materials,
equipment, tools, and construction equipment and machinery, including
reasonable overhead, profit and damages.

 

14.1.3  If the Work is
stopped for a period of 60 days through no act or fault of the Contractor or a
Subcontractor or their agents or employees or any other persons performing
portions of the Work under contract with the Contractor because the Owner has
persistently failed to fulfill the Owner’s obligations under the Contract
Documents with respect to matters important to the progress of the Work, the
Contractor may, upon seven additional days’ written notice to the Owner and the
Architect, terminate the Contract and recover from the Owner as provided in
Subparagraph 14.1.2.

 

14.2                 TERMINATION
BY THE OWNER FOR CAUSE

 

14.2.1  The Owner may
terminate the Contract if the Contractor:

 

.1  persistently or repeatedly
refuses or fails to supply enough properly skilled workers or proper materials;

.2  fails to make payment to
Subcontractors for materials or labor in accordance with the respective
agreements between the Contractor and the Subcontractors;

.3  persistently disregards laws,
ordinances, or rules, regulations or orders of a public authority having
jurisdiction; or

.4  otherwise is guilty of
substantial breach of a provision of the Contract Documents.

 

14.2.2  When any of the above reasons
exist, the Owner, upon certification by the Architect that sufficient cause
exists to justify

 

23

 

such action, may without
prejudice to any other rights or remedies of the Owner and after giving the
Contractor and the Contractor’s surety, if any, seven days’ written notice,
terminate employment of the Contractor and may, subject to any prior rights of
the surety:

 

.1  take possession of the site and of all
materials, equipment, tools, and construction equipment and machinery thereon
owned by the Contractor;

.2  accept assignment of
subcontracts pursuant to Paragraph 5.4; and

.3  finish the Work by whatever
reasonable method the Owner may deem expedient.

 

14.2.3  When the Owner terminates the Contract for one of the
reasons stated in Subparagraph 14.2.1, the Contractor shall not be entitled to
receive further payment until the Work is finished.

 

14.2.4  If the unpaid balance of the Contract Sum exceeds
costs of finishing the Work, including compensation for the Architect’s
services and expenses made necessary thereby, such excess shall be paid to the
Contractor. If such costs exceed the unpaid balance, the Contractor shall pay
the difference to the  Owner. The
amount to be paid to the Contractor or Owner, as the case may be, shall be
certified by the Architect, upon application, and this obligation for payment
shall survive termination of the Contract.

 

14.3          SUSPENSION BY THE OWNER FOR
CONVENIENCE

 

14.3.1  The
Owner may, without cause, order the Contractor in writing to suspend, delay or
interrupt the Work in whole or in part for such period of time as the Owner may
determine.

 

14.3.2  An adjustment shall be made for increases in the cost
of performance of the Contract, including profit on the increased cost of
performance, caused by suspension, delay or interruption. No adjustment shall
be made to the extent:

 

.1 that performance
is, was or would have been so suspended, delayed or interrupted by another
cause for which the Contractor is responsible; or

.2 that an
equitable adjustment is made or denied under another provision of this
Contract.

 

14.3.3  Adjustments made in the cost of
performance may have  a mutually agreed fixed or percentage fee.

 

24

 

[SIGNATURE PAGE TO OTTER TAIL AG ENTERPRISES,
LLC CONSTRUCTION 

MANAGEMENT SERVICES CONTRACT]

 

IN WITNESS WHEREOF, the parties hereto have
executed this Contract on the 3 day of  November, 2006.

 

	
   

  	
  Owner:

  
	
   

  	
   

  
	
   

  	
  OTTER
  TAIL AG ENTERPRISES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/
  Jerry Larson

  	
   

  
	
   

  	
  Jerry
  Larson

  
	
   

  	
  Its
  President

  

 

 

[SIGNATURE PAGE TO OTTER TAIL AG ENTERPRISES,
LLC CONSTRUCTION 

SERVICES MANAGEMENT CONTRACT]

 

IN WITNESS WHEREOF, the parties hereto have
executed this Contract on the 3 day of  November, 2006.

 

 

	
   

  	
  KNUTSON
  CONSTRUCTION SERVICES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Michael J. Larson

  	
   

  
	
   

  	
  Michael J.Larson

  	
   

  
	
   

  	
  Its 

  	
   Chief Estimator

  	
   

  
					

 

36

 

 

	
  BUILDING:

  	
   

  	
  OTAE Ethanol Plant

  
	
  LOCATION:

  	
   

  	
  Ottertail Ag
  Enterprises

  
	
  ENGINEER:

  	
   

  	
  Interstate Engineering

  
	
  SUBJECT:

  	
   

  	
  Schedule of Values

  

 

EXHIBIT B

 

	
  DESCRIPTION

  	
   

  	
  TOTAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Division #1
  General Conditions

  	
   

  	
  661332

  	
   

  
	
  Division #2
  Site/Earthwork

  	
   

  	
  342898

  	
   

  
	
  Division #3
  Concrete

  	
   

  	
  3829638

  	
   

  
	
  Division #4
  Masonry

  	
   

  	
  35000

  	
   

  
	
  Division #5
  Metals

  	
   

  	
  30000

  	
   

  
	
  Division #6
  Carpentry

  	
   

  	
  70000

  	
   

  
	
  Division #7
  Thermal/Moisture Protection

  	
   

  	
  75000

  	
   

  
	
  Division #8
  Doors & Windows

  	
   

  	
  80000

  	
   

  
	
  Division #9
  Finishes

  	
   

  	
  130000

  	
   

  
	
  Division #10
  Specialties

  	
   

  	
  10000

  	
   

  
	
  Division #11
  Equipment

  	
   

  	
  0

  	
   

  
	
  Division #12
  Furnishings

  	
   

  	
  0

  	
   

  
	
  Division #13
  Special Construction

  	
   

  	
  2091686

  	
   

  
	
  Division #14
  Conveying Systems

  	
   

  	
  0

  	
   

  
	
  Division #15
  Mechanical

  	
   

  	
  60000

  	
   

  
	
  Division #16
  Electrical

  	
   

  	
  35000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  7,450,554

  	
   

  

 

 

TABLE 1020
– 1 SCHEDULE FOR BUILDING CONSTRUCTION

 

	
  Bldg
  # l

  	
   

  	
  Main
  Process Building

  	
   

  	
  Construction
  of foundations and floors and tank pads to begin in Spring 2007 as weather
  permits. Erection of building is to take place after process tanks and large
  equipment is set. Expected time for commencement of building erection is
  September 1, 2007.

  
	
  Bldg
  # 2

  	
   

  	
  Maintenance
  Building

  	
   

  	
  To
  be constructed early in the process. Bid package includes add alternate for
  winter construction

  
	
  Bldg
  # 3

  	
   

  	
  Fermentation

  	
   

  	
  Same
  schedule as Bldg # 1 Main Process Building

  
	
  Bldg
  # 4

  	
   

  	
  Cooling
  Tower Pump Building

  	
   

  	
  To
  commence for completion by September 1, 2007 to be ready for
  installation of pumps, controls and piping. Construction of this building
  need not be delayed for installation of equipment

  
	
  Bldg
  # 5

  	
   

  	
  Motor
  Control Center

  	
   

  	
  To
  commence for completion by September 1 to be ready for installation of
  MCC’s , conduits and wiring. Construction of this building need not be
  delayed for installation of equipment

  
	
  Bldg
  # 6

  	
   

  	
  Boiler
  Building

  	
   

  	
  To
  commence for completion by October 1, 2007 to be ready for installation
  of Boilers, controls and appurtenances. Construction of this building need
  not be delayed for installation of equipment

  
	
  Bldg
  # 7

  	
   

  	
  Administration
  Building

  	
   

  	
  Separate
  Bid Package – independent of buildings for ethanol production.

  
	
  Bldg
  # 8

  	
   

  	
  Dryer
  Building

  	
   

  	
  Construction
  of foundations and floors and tank pads to begin in Spring 2007 as weather
  permits. Erection of building is to take place after dryers are set. Expected
  time for commencement of building erection is October 2007.

  
	
  Bldg
  # 9

  	
   

  	
  DDGS
  Building

  	
   

  	
  To
  be constructed early in the process. Bid package includes add alternate for
  winter construction

  
	
  Bldg
  # 10

  	
   

  	
  Fire
  Suppression Building

  	
   

  	
  To
  commence for completion by October 1, 2007 to be ready for installation
  of Pumps controls and appurtenances. Construction of this building need not
  be delayed for installation of equipment

  
	
  Bldg
  # 11

  	
   

  	
  DD
  & E

  	
   

  	
  Construction
  of foundations and floors and tank pads to begin in Spring 2007 as weather
  permits. Erection of building is by others.

  
	
  Bldg
  # 12

  	
   

  	
  WDGS

  	
   

  	
  To
  be available for use prior to start up as the process start up may precede
  the start up of the dryers.

  
	
  Tanks

  	
   

  	
  Numerous

  	
   

  	
  Exterior
  tank foundations – all to be completed by _August 1, 2006 to allow for
  erection and painting of tank shell by December 1, 2007. The Fermenter
  foundations and MPB foundations need to be completed by July 1, 2007.

  
	
   

  	
   

  	
  Cooling
  Tower Foundation

  	
   

  	
  Foundation
  to be completed and ready for erection of cooling towers and piping by
  September 1, 2007.

  

 

 

TABLE 1020-2 SCHEDULE FOR GRADING
CONSTRUCTION

 

	
  Building

  	
   

  	
  Description

  	
   

  	
  Sub-grade Completion Schedule

  
	
  Bldg
  # l

  	
   

  	
  Main
  Process Building

  	
   

  	
  November 22,
  2006

  
	
  Bldg
  # 2

  	
   

  	
  Maintenance
  Building

  	
   

  	
  November 10,
  2006

  
	
  Bldg
  # 3

  	
   

  	
  Fermentation

  	
   

  	
  November 22,
  2006

  
	
  Bldg
  # 4

  	
   

  	
  Cooling
  Tower Pump Building

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  # 5

  	
   

  	
  Motor
  Control Center

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  # 6

  	
   

  	
  Boiler
  Building

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  # 7

  	
   

  	
  Administration
  Building

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  # 8

  	
   

  	
  Dryer
  Building

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  # 9

  	
   

  	
  DDGS
  Building

  	
   

  	
  November 10,
  2006

  
	
  Bldg
  # 10

  	
   

  	
  Fire
  Suppression Building

  	
   

  	
  June 15,
  2007

  
	
  Bldg
  # 11

  	
   

  	
  DD&E

  	
   

  	
  November 10,
  2006

  
	
  Bldg
  # 12

  	
   

  	
  WDGS

  	
   

  	
  June 15,
  2007

  
	
  Tanks

  	
   

  	
  Numerous

  	
   

  	
  June 15,
  2007

  
	
   

  	
   

  	
  Cooling
  Tower Foundation

  	
   

  	
  June 15,
  2007Exhibit
10.14

 

ENGINEERING,
PROCUREMENT AND CONSTRUCTION

 

SERVICES

 

FIXED PRICE CONTRACT

 

 

BETWEEN

 

 

GATEWAY BUILDING SYSTEMS

 

 

AND

 

 

OTTER TAIL AG ENTERPRISES, LLC

 

DATED: NOVEMBER 13, 2006

 

 

EPC
Contract

Otter Tail Ag
Enterprises, LLC

 

INDEX

 

	
  SECTION

  	
   

  	
  PAGE

  NUMBER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  GATEWAY’S
  SCOPE OF WORK

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  INFORMATION, GOODS AND SERVICES TO BE PROVIDED BY OWNER

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  INTERFACE
  AND SITE CONDITIONS

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  SCHEDULE

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  CHANGE
  ORDERS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  SUBSTANTIAL
  COMPLETION AND FINAL ACCEPTANCE

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  PAYMENT

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  STOP
  WORK AND TERMINATION FOR CAUSE

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  SAFETY
  AND SECURITY

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  PROJECT
  EXECUTION

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  WARRANTY

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  TRANSFER
  OF TITLE AND RISK OF LOSS

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  INSURANCE;
  BONDS

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  INDEMNITY

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  DISPUTE
  RESOLUTION

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  FORCE
  MAJEURE

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  GENERAL
  PROVISIONS

  	
   

  	
  39

  

 

 

	
  List of Exhibits

  
	
  A. Gateway Scope of Services and Technical
  Specifications

  
	
  B. Commercial Terms

  
	
  C. Project Schedule

  

 

i

 

Engineering
Procurement and Construction Services Fixed Price Contract

 

GENERAL
CONDITIONS

 

THIS “CONTRACT”, IS made this 13th day of
November, 2006, by and between Otter Tail Ag Enterprises, LLC, a Minnesota
limited liability company organized and acting under and pursuant to the laws
of Minnesota and having its main place of business at 1220 North Tower Road, Suite 201,
Fergus Falls, Minnesota 56537 (hereinafter called the “Owner”) and Gateway
Building Systems, a corporation organized and acting under and pursuant to the
laws of the State of North Dakota and having its main place of business at 3451
South University Drive, Fargo, ND 58104 (hereinafter called “Gateway”). Owner
and Gateway may sometimes be referred to herein individually as a “Party” or
jointly as the “Parties.”

 

WITNESSETH:

 

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

 

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

 

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

 

1.    Defined Terms and Contract Documents

 

1.1 Defined Terms: The following
words, when capitalized, shall have the meanings set forth below:

 

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

 

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

 

1

 

1.1.3 Day:
“Day” means calendar
day.

 

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

 

1.1.5  Delta-T
Technology: “Delta-T
Technology” shall mean all data, technical information, trade secrets,
inventions (whether patented or not and whether issued before or after the
Effective Date), know-how, procedures, processes, drawings, designs,
methodology, models, inventions, specifications, plant or equipment test and/or
operating data, or other technical information and copyrights embodied in the
Plant, used in the operation of the Plant, in equipment or in drawings, or
included in any documents, drawings or other materials delivered electronically
or otherwise by Delta-T to Gateway, Gateway or Owner on connection with
construction of the Plant.

 

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

 

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

 

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

 

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

 

1.1.10 Final
Completion: “Final
Completion” means that (i) a certificate of occupancy has been issued as
applicable for all buildings within the Work; (ii) all Work has been completed
as required by and incompliance with the Contract, has been approved by Owner
and its representatives, and all of the items on the Punch List signed by both Owner
and Gateway have been corrected and completed to the reasonable satisfaction of
Owner, (iii) all lien waivers, or affidavits, required under the Contract
have been delivered, (iv) all drawings and other documents identified in
this Contract as documents to be delivered by Gateway to Owner have been
delivered, (v) the Work has been inspected and approved by all applicable
public authorities having jurisdiction over the Work, (vi) a general
release executed by Gateway waiving, upon receipt of final payment

 

2

 

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

 

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

 

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

 

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

 

1.1.14 Legal
Requirements: “Legal
Requirements” means all applicable federal, state, and local laws, codes,
ordinances, rules, regulations, orders and decrees of any government or
quasi-government entity having jurisdiction over the Plant or the Site, the
practices involved in the Plant or the Site, or any Work.

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

2.    Gateway’s Scope of Work

 

2.1 Description of Work: Gateway shall perform, or cause to be
performed, the Work and shall furnish and perform all construction services,
design, engineering, procurement and other services, and provide all material,
equipment, tools, and labor, necessary to complete the Work and the Project, as
described in and reasonably inferable from this Contract and in compliance with
the Delta T specifications as set forth in Exhibit A, except as modified
by the parties in writing.

 

2.2 Permits: Gateway shall, at its expense, secure all
permits necessary (if any) for the Work to be performed, except for the
environmental permits and the Fergus Falls Town Building and Special Use
permits which have been procured by Owner. All other permits required by
applicable law or regulation, including without limitation, permits related to
environmental protection, to operation of the Plant, or activities of Owner or
any of its contractors, if any, other than Gateway, shall be secured by Owner
or Owner’s other contractors.

 

5

 

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

 

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

 

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

 

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

 

6

 

2.7 Standard
of Care for Services The standard of care for all services, including
design professional services, performed by Gateway, its Subcontractors, its
Design Consultants, or others retained to execute the Work shall be the care
and skill ordinarily used by members of the profession or applicable industry
practicing under similar conditions at the same time and locality of the Plant.
Notwithstanding the preceding sentence, if the parties agree upon specific
performance standards for any aspect of the Work as set forth in the Project
Specifications, the Services shall be performed to achieve such standards.
Gateway shall supervise and direct the Work, using Gateway’s best skill and
attention. Gateway shall be solely responsible for and have control over
construction means, methods, techniques, sequences, and procedures, and for
coordinating all the portions of the Work pursuant to the terms and conditions
of this Contract, unless this Contract gives other specific instructions
concerning such matters. Contractor shall be responsible to Owner for acts
and/or omissions of the Contractor’s employees, Subcontractors,
Sub-subcontractors, and their agents and employees, and other persons
performing portions of the Work under a contract or other arrangements with
Gateway.

 

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

 

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

 

2.10 Government
Approvals and Permits. Gateway shall provide reasonable assistance to
Owner in obtaining those permits, approvals, and licenses that are Owner’s
responsibility.

 

7

 

2.11 Gateway’s
Construction Phase Services.

 

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

 

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

 

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

 

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

 

2.11.5 Gateway shall coordinate the activities
of all Subcontractors. If Owner performs other work on the Plant or at the Site
with separate contractors under Owner’s control, Gateway agrees to reasonably
cooperate and coordinate its activities with those of such separate contractors
so that the Plant can be completed in an orderly and coordinated manner without
unreasonable disruption.

 

2.12 Gateway’s Reporting Services: Gateway will provide construction administration
and management services required to perform the Work. Gateway shall meet with
Owner’s consultants and other
contractors jointly schedule and regularly attend meetings with Owner. Gateway shall consult with the Owner
regarding site use and improvements in the selection of materials,  buildings
systems,  and equipment. Gateway
shall  provide recommendations on construction feasibility,
actions designed to minimize adverse effects of labor or material shortages, time requirements for procurement,
installation,  and construction completion, and factors related
to construction costs, including estimates of alternative designs and materials, preliminary budgets, and possible
economies for the Work.  Gateway shall schedule and conduct meetings
at which the Owner, Owner’s other

 

8

 

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

 

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

 

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

 

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

 

9

 

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

 

4.    Interface and Site Conditions

 

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

 

4.2 Cooperation with Others: Gateway will cooperate with Owner’s other
contractors, if any, to facilitate coordination of the Work with the work of
others. Gateway shall not have control over or responsibility for the
construction, methods, techniques, sequences or

 

10

 

procedures or for
safety precautions and programs used by Owner or Owner’s contractors or
subcontractors in connection with the Owner’s work or work of others and shall
have no liability thereon.

 

5.    Schedule

 

5.1
Schedule: The Schedule and the dates for performance set forth therein (the “Contract
Times”) shall form the basis of the time frame for the Work to be completed.
Owner shall give to Gateway a notice to proceed with the work not later than November 17,
2006. The Work shall commence within five (5) days of Gateway’s receipt of
a Notice to Proceed from Owner. Gateway agrees that it will commence
performance of the Work and achieve the Contract Times in accordance with the
Schedule and this Article 5. During construction, Gateway shall revise the
progress schedule as necessary to conform to the current status of the Work,
distributing copies to the Owner.

 

5.1.1 Substantial
Completion and Final Completion: So long as Gateway receives a Notice to
Proceed not later than November 20, 2006, Substantial Completion of the
Project shall be achieved expeditiously as reasonably practicable, but in no
event, later than November 1, 2007. Substantial Completion of the portions
of the Work shall be achieved according to the completion dates for portions of
the Work as set forth in the Schedule and in order to receive subsequent work
of other separate contractors. Final Completion of the Project shall be
achieved as expeditiously as reasonably practicable, but in no event, will
Final Completion of the Work be completed later than December 1, 2007.

 

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

 

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

 

11

 

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

 

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

 

5.3 Plant Substantial Completion
Delay Liquidated Damages. Gateway understands that if Plant Substantial Completion Completion is
not attained by the earlier of April 1, 2008 or the date that is thirty
(30) days from the date Mechanical Completion (as defined in Owner’s Agreement
with Gateway) is attained (the first date to occur being the “Scheduled
Substantial Completion Date”), Owner will suffer damages which are difficult to
specify accurately and ascertain. Gateway agrees that if Plant Substantial
Completion is not attained by the Scheduled Plant Substantial Completion Date,
due to the acts or omissions of Gateway, Subcontractors, Sub-subcontractors,
Design Consultants, and other persons for whom Gateway is responsible, Gateway
shall pay to Owner a sum equal to $5,000.00 per day for each day that Plant
Substantial Completion is attained after the Schedule Substantial Completion
Date.

 

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

 

12

 

6.    Change Orders

 

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

 

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

 

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

 

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

 

6.2  Work Change
Directives

 

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

 

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

 

13

 

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

 

6.3  Minor Changes in the Work

 

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

 

6.4  Contract Price Adjustments

 

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

 

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

 

14

 

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

 

6.5 Emergencies

 

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

 

7.     Substantial
Completion and Final Acceptance

 

7.1 Completion
According to Schedule:

 

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

 

7.2 Substantial
Completion:

 

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

 

15

 

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

 

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

 

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

 

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

 

8.    Payment

 

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

 

16

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

9. Stop
Work and Termination for Cause.

 

9.1 Owner
s Right to Stop Work

 

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

 

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

 

9.2 Owner
s Right to Perform and Terminate for Cause

 

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

 

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

 

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

 

21

 

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

 

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

 

1.   all Work executed;

 

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

 

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

 

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

 

22

 

9.4 Gateway’s
Right to Stop Work

 

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

 

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

 

9.5 Assignments Upon
Termination

 

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

 

9.6 Gateway’s
Right to Terminate for Cause

 

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

 

23

 

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

 

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

 

9.7 Bankruptcy of Owner or Gateway

 

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

 

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

 

24

 

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

 

10. Safety
and Security

 

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

 

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

 

10.3 Gateway’s
Responsibility for Plant Safety.

 

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

 

25

 

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

 

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

 

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

 

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

 

11. Project
Execution

 

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

 

26

 

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

 

Brian Shuck/Tim Peterson

Gateway Building Systems, Inc.

33424 US Hwy 59

Elbow Lake, MN 56531

Telephone: 218 685-4420

Fax:218 685-9975

E-mail: bshuck@gatewaybuilding.com

              tpeterson@gatewaybuilding.com

 

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

 

Owners
Representative

 

Kelly
Longtin, CEO

Otter Tail Ag
Enterprises, LLC

1220 North
Tower Road, Suite 201

Fergus
Falls, MN 56537

(218)
998-4301 office

(218)
998-4302 fax

Kelly.longtin@yahoo.com

(320)
760-0505 (mobile)

 

11.3 Project
Reviews and Approvals:

 

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

 

27

 

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

 

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

 

11.4 Subcontractors
and Vendors:

 

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

 

11.5 Cooperation with Owner’s Lender. Gateway agrees to cooperate at all times
as reasonably requested by Owner and any lender or assignee of Owner and their respective
agents and representatives in performance of this Contract. Gateway shall sign
any document reasonably required by Owner in order to satisfy all lenders or investors
providing sources of funds for construction of the Plant. Owner may assign its

 

28

 

interest to one or more
lenders or financial institutions or investors, providing sources of funds for
construction of the Plant, at any time, provided that the party taking the
assignment can supply payment assurances acceptable to Gateway.

 

12. Warranty

 

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

 

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

 

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

 

12.5 Correction
of Defective Work:

 

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

 

29

 

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

 

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

 

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

 

30

 

13. Transfer
of Title and Risk of Loss

 

Title
to, and risk of loss of, the Work or any part thereof and all materials and
components used, or to be used in the Plant, shall pass to Owner upon
acceptance of Substantial Completion. This provision, however, shall in no case
be deemed to alter any of the rights or obligations of any party under any
insurance policy provided under this Contract, or any waiver of subrogation set
forth in Section 14 below.

 

14. Insurance;
Bonds

 

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

 

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

 

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

 

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

 

14.4 Insurance
– Miscellaneous:

 

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

 

31

 

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

 

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

 

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

 

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

 

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

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

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

 

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

 

14.5  Performance
Bond and Payment Bond: Gateway shall provide the following performance bond and
labor and material payment bond or other performance security: A Performance
Bond and Labor and Material Payment Bond in the amount of $2,500,000.00.

 

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

 

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

 

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

 

34

 

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

 

14.5.1.4  Every Bond must display the surety’s bond number. A rider including the
following provisions shall be attached to each bond: (i) The Surety hereby
agrees that it consents to and waives notice of any addition, alteration,
omission, change, or other modifications of the Contract. Any addition,
alteration, change, extension of time, or other modification of the Contract,
or a forbearance on the part of either Owner or Gateway to the other, shall not
release the Surety of its obligations hereunder, and notice to the Surety of
such matters is hereby waived; and (ii) The Surety agrees that it is
obligated under the bonds to any successor, grantee, or assignee of Owner.

 

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

 

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

 

15. Indemnity

 

15.1
Indemnity by Gateway for Personal Injury and Property Damage: Gateway shall indemnify and hold harmless Owner and its agents and
employees from and against all claims made by a third party for any, damages,
losses and expenses, including, but not limited to attorney’s fees, arising out
of or resulting from Gateway’s conduct, performance of the Work, or failure to
perform the Work, provided that any such damage, loss or expense is
attributable to bodily injury, sickness, disease or death, or to injury to or
destruction of tangible property (other than the Plant, Equipment or the Work
itself) including loss of use, and is caused in whole or in part by any act or

 

35

 

omission
of Gateway, Subcontractors, Sub-subcontracts, Design Consultants, or anyone for
whose acts any of them may be liable. In the event that any such damage, loss
or expense was caused in part by Owner or by any other person or entity,
however, then Gateway shall be obliged to pay only the portion of the damage,
loss or expense, including reasonable attorney’s fees as is attributable to its
relative share of the negligence or omission which caused such damage, loss or
expense.

 

Gateway’s
indemnity obligations set forth in this Section 15.1 shall not be limited
by any limitation in the amount of damages, compensation, or benefits payable
by or for Gateway, its design consultants, Subcontractors or other entity under
any employee benefit acts, including Worker’s Compensation and disability acts
in instances where an employee of any of them, or anyone for whose acts may be
liable, has a claim against Owner, its lenders, officers, directors, employees,
or agents.

 

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

 

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

 

Notwithstanding
anything in this Contract to the contrary, but without limiting Gateway’s indemnification
and other obligations to Owner as stated in this Contract, Gateway shall

 

36

 

have
the right to contest and dispute any lien which Gateway believes, in good
faith, is unjustified or overstated, provided that Gateway contests the same or
the validity thereof by appropriate and expeditious legal proceedings which
operate to prevent the imposition or foreclosure of the lien so contested,
provided that Gateway, prior to the date of any such contest, has given such
security as may be required by law, including the provision for removing a
contested lien as set forth in Minn. Stat. § 514.10 to remove a contested lien
from the Owner’s property and to permit Gateway to contest the lien claim.
Gateway shall give prompt notice to Owner of any such contests. Any such
contests shall be prosecuted with due diligence and Gateway must, promptly
after final determination thereof, comply with and pay the result determined,
together with all interest and penalties, if any, which may be payable
therewith and further will indemnify and hold harmless the Owner against all
losses in connection therewith.

 

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

 

16. Dispute Resolution

 

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

 

37

 

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

 

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

 

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

 

38

 

17.  Force
Majeure

 

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

 

18.  General
Provisions

 

18.1 Assignment:  Gateway shall not assign or transfer its duties or obligations
hereunder without the prior written consent of the Owner. Gateway hereby
consents to Owner collaterally assigning this Contract and its rights hereunder
to one or more lenders or other sources of financing as necessary for Owner to
obtain and secure financing to construct and operate the Plant. This Contract
shall be binding upon and shall inure to the benefit of the Parties and the
successors and assigns of Owner.

 

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

 

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

 

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

 

39

 

	
   

  	
  If to Gateway, to:

  	
  Gateway Building Systems, Inc.

  
	
   

  	
  33424 US Hwy 59 

  
	
   

  	
  Elbow Lake, MN 56531

  
	
   

  	
  Attn: Brian Shuck

  
	
   

  	
   

  
	
   

  	
  If to Owner, to:

  	
  Otter Tail Ag Enterprises, LLC

  
	
   

  	
  1220 North Tower Road, Suite 201

  
	
   

  	
  Fergus Falls, MN 56537

  
	
    

  	
  Attn: Jerry Larson, President

  

 

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

 

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

 

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

 

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

 

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

 

40

 

[This page intentionally
left blank]

 

41

 

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

CONSTRUCTION SERVICES
CONTRACT]

 

 

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

 

 

	
   

  	
  Owner:

  
	
   

  	
   

  
	
   

  	
  OTTER TAIL AG ENTERPRISES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Jerry Larson

  	
   

  
	
   

  	
  Jerry Larson

  
	
   

  	
  Its President

  

 

42

 

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

CONSTRUCTION SERVICES
CONTRACT]

 

 

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

 

 

	
   

  	
  GATEWAY BUILDING SYSTEMS

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Brian Shuck

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
  Division Manager

  	
   

  
						

 

43

 

FIRST AMENDMENT TO ENGINEERING, PROCUREMENT

AND CONSTRUCTION FIXED PRICE CONTRACT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“B.1 PRICE

 

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

 

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

 

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

 

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

 

 

[Signature Page to First Amendment to Engineering, Procurement,

and Fixed Price Contract]

 

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

 

	
   

  	
  GATEWAY
  BUILDING SYSTEMS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Brian Shuck

  	
   

  
	
   

  	
  Brian Shuck

  
	
   

  	
  Its Division
  Manager

  

 

 

[Signature Page to First Amendment to Engineering, Procurement,

and Fixed Price Contract]

 

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

 

	
   

  	
  OTTER TAIL AG
  ENTERPRISES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Kelly
  Longtin

  	
   

  
	
   

  	
  Kelly
  Longtin

  
	
   

  	
  Its
  CEO/General Manager

  

 

 

 

	
  ACORD

  	
  CERTIFICATE OF LIABILITY
  INSURANCE

  	
  OP ID BJ

  MNFERG4 

  	
  DATE (MM/DD/YYYY)

  11/09/06

  
	
  PRODUCER

   

  Ag States Group

  Po. Box 64089

  St. Paul MN 55164-0089

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

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

  	
  INSURERS AFFORDING COVERAGE

  	
  NAIC #

  
	
  INSURED

  	
  INSURER A:    Nationwide Agribusiness

  	
   

  
	
   

  	
  INSURER B:

  	
   

  
	
  Otter
  Tail Ag Enterprises, LLC

  	
  INSURER C:

  	
   

  
	
  Kelly
  Longtin

  	
  INSURER D:

  	
   

  
	
  1220 N
  Tower Road #201

  	
  INSURER E:

  	
   

  
	
  Fergus
  Falls MN 56537

  	
   

  	
   

  
						

 

COVERAGES

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

  

 

	
  INSR

  LTR

  	
  ADDL

  INSRD

  	
  TYPE OF INSURANCE

  	
  POLICY
  NUMBER

  	
  POLICY
  EFFECTIVE

  DATE (MM/DD/YY)

  	
  POLICY
  EXPIRATION

  DATE (MM/DD/YY)

  	
  LIMITS

  
	
   

  	
   

  	
    GENERAL LIABILITY

  	
   

  	
   

  	
   

  	
  EACH
  OCCURRENCE

  	
  $

  	
  1,000,000

  
	
  A

  	
   

  	
  x COMMERCIAL GENERAL LIABILITY

   

  	
  CPP124428

  	
  10/24/06

  	
  10/24/07

  	
  DAMAGE
  TO RENTED PREMISES (Es OCCURRENCE)

  	
  $

  	
  100,000

  
	
   

  	
   

  	
  oo CLAIMS MADE

  x OCCUR

  	
   

  	
   

  	
   

  	
  MED
  EXP (Any one person)

  	
  $

  	
  5,000

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  PERSONAL
  & ADV INJURY

  	
  $

  	
   1,000,000

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  GENERAL
  AGGREGATE

  	
  $

  	
  2,000,000

  
	
   

  	
   

  	
    GEN’L AGGREGATE LIMIT APPLIES PER:

  o POLICY o PROJECT

  o LOC

  	
   

  	
   

  	
   

  	
  PRODUCTS - COMP/OP
  AGG

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    AUTOMOBILE LIABILITY

  	
   

  	
   

  	
   

  	
  COMBINED
  SINGLE LIMIT (Ea accident)

  	
  $

  	
  1,000,000

  
	
  A

  	
   

  	
  x ANY AUTO

  	
  CPP124428

  	
  10/24/06

  	
  10/24/07

  	
   

  	
   

  
	
   

  	
   

  	
  o ALL OWNED AUTOS

  	
   

  	
   

  	
   

  	
  BODILY INJURY

  (Per person)

  	
  $

  	
   

  
	
   

  	
   

  	
  o SCHEDULED AUTOS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  x HIRED AUTOS

  	
   

  	
   

  	
   

  	
  BODILY INJURY

  (Per accident)

  	
  $

  	
   

  
	
   

  	
   

  	
  x NON-OWNED AUTOS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  PROPERTY DAMAGE (Per
  accident)

  	
  $

  	
   

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
  AUTO
  ONLY - EA ACCIDENT

  	
  $

  	
   

  
	
   

  	
   

  	
    GARAGE LIABILITY

  	
   

  	
   

  	
   

  	
  OTHER THAN 

  	
  EA ACC

  	
  $

  	
   

  
	
   

  	
   

  	
  o ANY AUTO

  	
   

  	
   

  	
   

  	
  AUTO ONLY:

  	
  AGG

  	
  $

  	
   

  
	
   

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   
  EXCESS/UMBRELLA LIABILITY

  	
   

  	
   

  	
   

  	
  EACH OCCURRENCE

  	
  $

  	
  4,000,000

  
	
  A

  	
   

  	
  x OCCUR   
  o CLAIMS MADE

  	
  CU124428

  	
  10/24/06

  	
  10/24/07

  	
  AGGREGATE

  	
  $

  	
  4,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
  o DEDUCTIBLE

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
  x RETENTION   $10,000

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
  WORKERS COMPENSATION AND
  EMPLOYERS’ LIABILITY

  	
   

  	
   

  	
   

  	
   

  	
  WC STATUTORY LIMITS

  	
  OTHER

  	
   

  	
   

  
	
   

  	
   

  	
  ANY
  PROPRIETOR/PARTNER/EXECUTIVE OFFICER/MEMBER EXCLUDED?

  	
   

  	
   

  	
   

  	
  E.L.
  EACH ACCIDENT

  	
  $

  	
   

  
	
   

  	
   

  	
  If yes, describe under

  SPECIAL PROVISIONS below 

  	
   

  	
   

  	
   

  	
  E.L.
  DISEASE - EA EMPLOYEE

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  E.L.
  DISEASE - POLICY LIMIT

  	
  $

  	
   

  
	
   

  	
   

  	
    OTHER

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A

  	
   

  	
    Property/Stock/BI

  	
  COP124428

  	
  10/24/06

  	
  10/24/07

  	
  Property

  on File

  	
   

  
												

 

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

 

EVIDENCE OF INSURANCE

 

	
  CERTIFICATE HOLDER

  	
   

  	
  CANCELLATION

  
	
  GATFAR1

  	
   

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

  
	
   

  
	
  GATEWAY
  BUILDING SYSTEMS

  
	
  BRIAN
  SHUCK

  
	
  3451
  SOUTH UNIVERSITY DRIVE

  
	
  FARGO ND
  58104

  
	
   

  	
  AUTHORIZED
  REPRESENTATIVE

  
	
   

  	
  /s/ Dale
  Lieb

  
	
   

  	
   

  
	
  ACORD 25 (2001/08)

  	
  © ACORD CORPORATION 1988

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