Document:

Exhibit
10.4

PURCHASE
AGREEMENT

This Agreement, made
and entered into this 7th day of June, 2006, by and between Thomas
Halter and Cathy Halter, husband and wife, hereinafter “Seller”, and Highwater
Ethanol, LLC, hereinafter “Buyer”.

1.                                                                                       Buyer
offers to purchase and Seller agrees to sell real property in Redwood County,
Minnesota, legally described as:

That portion of the Southwest Quarter of Section
Twenty-one (21), Lamberton Township, Redwood County, State of Minnesota,
located North of the DM and E rail line. 
If necessary, legal description to be determined by survey.  Purchaser to pay for the survey.

2.                                                                                       Any
of the following items of personal property and fixtures owned by Seller and
currently located on property are included in the sale: NONE.

3.                                                                                       The
consideration for this agreement includes an initial payment of Five Thousand
and no/100ths Dollars ($5000.00) and other good and valuable consideration,
including, but not limited to the reliance by Highwater Ethanol, LLC on this
Purchase Agreement.  The initial payment
of $5000.00 will be paid upon execution of this Agreement, and will apply
towards the purchase price if Buyer elects to complete the purchase.

The sale price for the property will be $7000.00 per acre, with acreage
determined by agreement of the parties or, if necessary, survey.  The price for any partial acre to be pro
rated.  Acreage shall be determined as is
customary for farmland sales, without reduction for roads or ditches.  The balance of the purchase price, after
application of the initial payment, will be due in full at closing.

This Purchase Agreement shall be construed as an option, with the terms
of this Purchase Agreement binding on the parties through and including
December 31, 2006.  If Highwater Ethanol,
LLC does not exercise the option and proceed to close so that closing occurs by
December 31, 2006, as of December 31, 2006 this Agreement shall be null and
void and without further force and effect. 
In the event that the Agreement become void, then Seller shall retain
the initial deposit of $5000.00

If and when Highwater Ethanol, LLC desires to proceed to close, they
will give written notice to Seller and the transaction will close sixty (60)
days after the date of said written notice as given by Highwater Ethanol, LLC
to Seller.

 

4.                                                                                       Upon
performance by Buyer, Seller shall execute and deliver a Warranty
Deed conveying marketable title, subject to:

1.                                       Building and zoning laws, ordinances,
state and federal regulations;

2.                                       Restrictions relating to use or
improvement of the property without effective forfeiture provisions;

3.                                       Reservation of any mineral rights by the
State of Minnesota;

4.                                       Utility and drainage easements which do
not interfere with existing improvements;

5.                                       Protective covenants of record;

6.                                       Existing road easements.

5.                                       Real estate taxes shall be paid as
follows: All prior year real estate taxes shall be paid by
Seller.  The real estate taxes due and
payable in 2006 shall be prorated to closing date.  Buyer shall pay all real estate taxes due and
payable in 2007 and thereafter.

6.                                       Special assessments shall be paid as
follows: Seller shall pay in full all special assessments
levied as of the date of closing.

7.                                       Damages to real property.  If the real property is substantially damaged
prior to closing, this Agreement shall terminate and the earnest money shall be
refunded to Buyer.  If the real property
is damaged materially but less than substantially prior to closing, Buyer may
rescind this Agreement by notice to seller within twenty-one (21) days after
Seller notifies Buyer of such damage, during which twenty-one (21) Buyer may
inspect the real property, and in the event of such rescission, the earnest
money shall be refunded to Buyer.

8.                                       Seller’s boundary line, access,
restrictions and lien warranties.  Seller
warrants that buildings, if any, are entirely within the boundary lines of the
property.  Seller warrants that there is
a right of access to the real property from a public right of way.  Seller warrants that there has been no labor
or material furnished to the property for which payment has not been made.  Seller warrants that there are no present
violations of any restrictions relating to the use or improvement of the
property.  These warrants shall survive
the delivery of the deed or contract for deed.

9.                                       Buyer acknowledges and warrants that
Buyer has personally inspected the premises and accepts them in an “As Is”
condition as of the date hereof.  Seller 

 

has made no
representations or warranties in connection with the condition of the premises,
or in regard to any other matter except title as explicitly set out
herein.  The property is specifically
being sold “As Is” with no express or implied representation or warranties as
to physical conditions, quality of construction, workmanship, or fitness for
any particular purpose and Buyer acknowledges that they accept said property in
said “As Is” condition.

10.                                 Seller shall deliver possession of the
property not later than the date of closing. 
All utilities shall be prorated between the parties as of the date of
closing.

11.                                 Examination of title.  Within a reasonable time after Buyer gives
written notice to close, Seller shall furnish Buyer with an abstract of title
or a registered property abstract certified to date including proper searches
covering bankruptcies and state and federal judgments, liens, and levied and
pending special assessments.  Buyer will
reimburse Seller for all abstracting expenses at closing.  Buyer shall have fifteen (15) business days
after receipt of the abstract of title or registered property abstract either
to have Buyer’s attorney examine the title and provide Seller with written
objections or, at Buyers own expense, to make an application for a title
insurance policy and notify Seller of the application.  Buyer shall have ten (10) business days after
receipt of the commitment of title insurance to provide Seller with a copy of
the commitment and written objections. 
Buyer shall be deemed to have waived any title objections not made
within the applicable ten (10) days period for above, except that this shall
not operate as a waiver of Seller’s covenant to deliver a statutory warranty
deed, unless a warranty deed is not specified above.

12.                                 Title corrections and remedies.  Seller shall have 120 days from receipt of
Buyer’s written title objection to make title marketable.  Upon receipt of Buyer’s title objections,
Seller shall, within ten (10) business days, notify Buyers of Seller’s
intention to make title marketable within the 120-day period.  Liens or encumbrances for liquidated amounts
which can be released by payment or escrow from proceeds of closing shall not
delay the closing.  Cure of the defects
by Seller shall be reasonable, diligent, and prompt.  Pending correction of title, all payments
required herein and the closing shall be postponed.

1.                                       If notice is given and Seller makes title
marketable, then upon presentation to Buyer and proposed lender of
documentation establishing that title has been made marketable, and if not
objected to in the same time and manner as the original title objections, the
closing shall take place within ten (10) business days or on the scheduled
closing date, whichever is later.

2.                                       If notice is given and Seller proceeds in
good faith to make title marketable but the 120-day period expires without
title being made marketable, Buyer may declare this Agreement null and void by
notice to Seller, neither party shall be liable for damages hereunder to the
other, and earnest money shall be refunded to Buyer.

 

3.                                       If Seller does not give notice of
intention to make title marketable, or if notice is given but 120-day period
expires without title being made marketable due to Seller’s failure to proceed
in good faith, Buyer may seek, as permitted by law, any one or more of the
following:

1.                                       Proceed to closing
without waiver or merger in the deed of the objections to title and without
waiver of any remedies, and may:

a.                                       Seek damages, costs
and reasonable attorney’s fees from Sellers as permitted by law (damages under
this subparagraph (a) shall be limited to the cost of curing objections to
title, and consequential damages are excluded) or;

b.              Undertake proceedings to correct the objections to
title;

2.                                                                                       Rescission of this purchase agreement by
notice as provided herein, in which case the purchase agreement shall be null
and void and all earnest money paid hereunder shall be refunded to Buyer;

3.                                                                                       Damages from Seller including costs and
reasonable attorney’s fees, as permitted by law;

4.                                                                                       Specific performance within six (6)
months after such right of action arises.

4.                                       If title is marketable, or is made
marketable as provided herein, and Buyer defaults in any of the agreements
herein, Seller may elect either of the following options, as permitted by law:

1.                                                                                       Cancel this contract as provided by
statute and retain all payments made hereunder as liquidated damages.  The parties acknowledge their intention that
any note given pursuant to this contact is a down payment note, and may be
presented for payment notwithstanding cancellation;

2.                                                                                       Seek specific performance within six (6)
months after such right of action arises, including costs and reasonable
attorney’s fees, as permitted by law.

5.                                       If title is marketable, or is made
marketable as provided herein, and Seller defaults in any of the agreements
herein, Buyer may, as provided by law:

 

1.                                                                                       Seek damages from Seller including costs
and reasonable attorney’s fees;

2.                                                                                       See specific performance within six
months after such right of action arises.

13                                    TIME IS OF THE
ESSENCE FOR ALL PROVISIONS OF THIS CONTRACT. 
This Purchase Agreement, and any attached exhibits and any addendum or
amendments signed by the parties, shall constitute the entire agreement between
Seller and Buyer, and supersedes any other written or oral agreements between
Seller and Buyer.  This Purchase
Agreement can be modified only in writing signed by Seller and Buyer.  Buyer understands and agrees that this
Purchase Agreement is subject to acceptance by Seller in writing.

14.           Buyer acknowledges that no
oral representations have been made regarding possible problems with water in basement, or damage caused by water or ice
build-up on the roof of the property and Buyer relies solely on that regard in
the following statement by Seller:

Seller has not had a wet basement, and has not had roof, wall or
ceiling damage caused by water or ice build-up. 
Buyer         has X has not received a real estate transfer disclosure
statement.  Seller represents that there      
is X is not a well on the property.  If there is a well, Buyer has received the
well disclosure statement required by Minnesota Statutes 103I235.  Seller represents that there      
is X is not an individual sewage treatment
system on the property or serving the property. 
If there is such a system, Buyer as received the disclosure statement
required by Minnesota Statutes 115.55, subd. 6

15.                
Environmental Concerns: To the best of the Seller’s knowledge there are
no  hazardous substances, or underground
storage tanks on the property, except herein noted:

NONE

16.                 This
Purchase Agreement          is X is not subject to a contingency addendum.

17.                 This
Purchase Agreement          is X is not subject to cancellation of a previously written
Purchase Agreement.

18.                 Subdivision
of Land: If this sale constitutes or requires a subdivision of land owned by Seller,
Buyers shall pay all subdivision expenses, including any required survey, and
obtain all necessary governmental approvals. 
Seller warrants that the legal description of the real property to be
conveyed has been or will be approved for recording as of the date of closing.

 

19.                   
Any crop damage (if crop is growing and is harmed by Buyer) shall be
paid to seller or if Seller has leased the property, to the Tenant.  Crop damage shall be determined by
multiplying the acreage damaged by the actual yield per acre obtained on the
balance of the Southwest Quarter (SW1/4) of said Section Twenty-one (21) and
multiplied by the cash price at such time at Meadowland

Co-op, which shall by payable within ten (10) days of determination of
the amount.  This provision shall survive
the closing.

20.                 If any
tile lines are affected by any construction or activity of Buyer on the real
estate being purchased hereby, Buyer, at its sole and exclusive costs, shall
repair or reroute the tile lines so that any drainage of Seller remains in
effect and in the condition as such existed prior to the purchase of said real
estate by Buyer.  Buyer agrees to execute
an easement at closing allowing Seller to maintain said drainage rights as
provided by this paragraph.  Buyer
acknowledges that there exists a main tile line which crosses the southwest
corner of the subject property and drains the Southeast Quarter (SE1/4) of
Section Twenty (20) and Seller shall have the right to enter on the property
sold and maintain such main tile.  Buyer
agrees that it will not utilize such main tile line by making additional
connections thereto, and that any connecting branch lines cut during
construction will be capped.  Buyer
agrees to install a new drainage system and main to drain the area developed by
Buyer.  Buyer further agrees that it will
not take any action which will interfere with surface drainage across the
southwest corner of the subject property. 
The terms of this paragraph shall survive the closing of this
transaction.

21.                 The
parties hereto understand that Seller (Halter) desires to maintain an
investment in real estate suitable for purposes of Seller and that accordingly
this transaction shall be performed so as to achieve a “like-kind exchange” so
that a tax free sale of this real estate and a replacement thereof by real
estate suitable to Seller occurs.

Accordingly, all funds to
be paid pursuant to this purchase agreement (including the earnest money and
all further payments) shall be paid to an independent escrow agent, designated
by Seller, pursuant to an Irrevocable Escrow Agreement.  The parties understand and acknowledge that
the Seller shall be using all of the sales price to perform a like-kind
exchange, specifically using said funds to purchase “replacement property”, and
that such replacement property shall be identified by a separate “identification
agreement”, to be executed pursuant to and within the time frames required by
applicable laws and regulations.  The
parties hereto also understand and agree that all of said sales price shall be
handled pursuant to the terms of said irrevocable escrow agreement, and that
said escrow agreement cannot be amended or revoked, but that the funds must be
handled and all parties must perform according to the terms of said irrevocable
escrow agreement.  The proceeds from the
sale of the first property (as sold by this agreement) shall be escrowed and
shall be used to obtain “replacement property”, said “replacement property” to
be identified in a separate “identification agreement”, again to be executed
and handled pursuant to and

 

within the time frames
required by applicable laws and regulations. 
Buyer agrees to execute any additional documents deemed necessary by
Seller to facilitate the Like-Kind Exchange, so long as those documents do not
increase the cost or legal obligations of Buyer.

22.                    Buyer
agrees to pay all expenses of the transaction, including document preparation,
Deed Tax, abstracting and recording fees.

23.                   Seller
shall have the right to farm all tillable acreage not developed for a period of
three (3) years after closing at a rental rate of $105.00 per acre.  This provision shall survive the closing.

I, the owner of
the property, accept this agreement.

	
  Dated:

  	
        6-6-06

  	
   

  	
   

  	
             /s/
  Thomas Halter

  	
   

  
	
   

  	
   

  	
   

  	
  Thomas Halter

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Social Security
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             /s/
  Cathy Halter

  	
   

  
	
   

  	
   

  	
   

  	
  Cathy Halter

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Social Security
  #

  	
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I agree to
purchase the property for the price and on the terms and conditions set forth
above.

	
  Dated:

  	
        6-7-06

  	
   

  	
   

  	
  HIGHWATER ETHANOL, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
      /s/
  Brian Kletscher

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
    Its:

  	
     President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ID Number:

  	
     20-4798531

  	
   

  
										

 

THIS IS A
LEGALLY BINDING CONTACT BETWEEN BUYER AND SELLER.  IF YOU DESIRE LEGAL OR TAX ADVICE, CONSULT AN
APPROPRIATE PROFESSIONAL.

 

THIS INSTRUMENT WAS DRAFTED BY:

Paul N. Muske

Muske, Muske, & Suhrhoff, Ltd.

112 North Cass Avenue

PO Box 143

Springfield, MN 56087

507-723-6221Exhibit
10.5

CONTINUOUS
SERVICES AGREEMENT

FOR

ENGINEERING SERVICES

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

WITNESSETH:

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

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

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

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

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

 1
 

SECTION
1

DESCRIPTION OF AGREEMENT

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

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

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

SECTION
2

SCOPE OF WORK

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

 2
 

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

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

 3
 

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

SECTION
3

DUTIES AND RESPONSIBILITIES

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

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

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

 4
 

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

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

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

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

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

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

 5
 

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

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

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

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

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

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

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

 6
 

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

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

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

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

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

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

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

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

 7
 

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

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

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

SECTION
4

PERIODS OF SERVICE, COMPLETION DATE,
FORCE MAJEURE

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

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

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

 8
 

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

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

SECTION
5

TRANSYSTEMS’ COMPENSATION

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

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

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

 9
 

and the Reimbursable
Expenses are incurred.

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

Section 5.3            Other
Provisions Concerning Payments.

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

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

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

 10
 

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

SECTION
6

OPINIONS OF COST AND SCHEDULE

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

 11

 

SECTION
7

GENERAL CONSIDERATIONS

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

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

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

 12
 

 

Section 7.3                            Use of Electronic Media.

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

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

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

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

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

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

 13
 

 

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

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

Section
7.6                                   Insurance.

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

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

Worker’s
Compensation     Statutory

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

 14
 

 

(b)                                 Comprehensive
Automobile Liability

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

(c)                                  Comprehensive
General Liability

$1,000,000 - per
occurrence

$2,000,000 - annual
aggregate

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

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

(d)                                 Umbrella/Excess
Liability

$1,000,000 -per
occurrence

$1,000,000
-annual aggregate

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

Section 7.6.2                        If, pursuant to the
provisions of Exhibit A, OWNER is required to obtain certain insurance
coverages, OWNER agrees to obtain and maintain throughout the duration of this
Agreement (or, as applicable, cause its contractors to obtain and maintain)
such insurance in the coverages and the amounts specified on Exhibit A.  OWNER will furnish TRANSYSTEMS with a copy of
certification of such insurance. 
TRANSYSTEMS’ interests shall be covered under any such insurance
coverage.

Section
7.7                                   Liability
and Indemnification.

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

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

 15
 

 

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

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

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

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

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

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

 16
 

 

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

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

SECTION
8

SPECIAL PROVISIONS, EXHIBITS AND
SCHEDULES

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

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

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

 17
 

 

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

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

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

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

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

 18
 

 

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

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

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

Section
8.9  Interpretation.

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

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

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

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

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

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

 20
 

 

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

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

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

	
   

  	
   

  	
   

  	
   

  
	
  Highwater Ethanol

  	
   

  	
      TranSystems Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
      /s/ Brian Kletscher

  	
   

  	
  By:

  	
      /s/ Timothy P. Rock

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Printed Name:

  	
    Brian Kletscher

  	
   

  	
  Printed Name:

  	
     Timothy P. Rock

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
    President

  	
   

  	
  Title:

  	
         Assistant
  Vice President

  	
   

  
														

 

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