Rail Service and Construction
Agreement
Between Siouxland Ethanol, LLC
and
Nebraska Northeastern Railroad Company
THIS RAIL SERVICE
AND CONSTRUCTION AGREEMENT (the “Agreement”) is made
and entered into as of the 11 th day of November, 2005 by and between SIOUXLAND
ETHANOL, LLC, a Nebraska limited liability company with its
principal offices in Jackson, Nebraska, (“Customer”),
and NEBRASKA NORTHEASTERN RAILROAD COMPANY, a Nevada corporation
with its principal offices in Dallas, Texas
(“Railroad”).
WHEREAS, Siouxland
Ethanol, LLC (“Customer”) has selected a site
(“the Site”) in Dakota County, Nebraska on Highway 20
as the location for a 50-million gallon dry mill corn-based ethanol
plant to produce fuel grade ethanol and distillers grains for sale,
and the Site is bordered by property and railway owned and operated
by Railroad; and
WHEREAS, Customer,
or its agent, shall construct or have constructed one or more
railroad tracks inside its ethanol plant (“Yard”) and
Railroad shall construct or have constructed a sidetrack,
(“Sidetrack”), both as shown in red and blue on the
plan dated 11-11-05, attached hereto as Attachment A and made a
part hereof, to provide rail service to the Site; and
WHEREAS, Railroad
and Customer desire to enter into an agreement setting forth their
rights and obligations with respect to the construction, ownership,
operation, use and maintenance of the Yard and
Sidetrack:
NOW, THEREFORE, it
is mutually understood and agreed as follows:
1.
Easement . Railroad hereby grants at no additional cost to
Customer a lateral easement 10-feet wide as shown in Attachment A
for the installation and maintenance of utility infrastructure for
said Site including, but not limited to, gas line, electric
infrastructure, and water discharge line, so long as the aforesaid
utilities’ installation and infrastructure does not impede
normal operations of the Railroad. Customer hereby agrees to
indemnify, hold harmless and defend Railroad, its officers, owners,
agents and assigns from and against any and all claims or losses
arising from the construction, placement and/or operation of
utilities in said easement, whether caused by negligence or not,
unless resulting from the sole negligence of Railroad.
2.
Construction . Customer shall construct or have constructed
a sidetrack consisting of track structure, ballast, grading,
drainage structures, turnouts and other appurtenances (“the
Sidetrack”) extending along the Railroad’s mainline at
milepost 9.11 for approximately 4082 feet and including a turnout
into the Site as shown in Attachment A. Customer shall construct or
have constructed the track structure, ballast, grading, drainage
structures, turnouts, bumping posts and other appurtenances
constituting the yard and the connecting track (including turnout)
between the yard and Sidetrack (the Yard Tracks). Each party shall
do and perform said work in all respects in
a workmanlike
manner consistent with industry standards. The parties agree to
comply with all statutes and with all regulations of any federal,
state or municipal government or regulatory agency applicable to
the location, placement and construction of said Yard Tracks and
Sidetrack. Each party shall use its best reasonable efforts to
avoid interference with the others construction and
operations.
3.
Clearances . Customer agrees to provide and maintain:
(A) the lateral clearance requirements (at least eight feet
[8’0"] from either side of the centerline of the of each
track in the Yard Tracks as increased for flat curves,
super-elevated curves and approaches thereto); and (B) the
vertical clearance requirements (at least twenty-two feet
[22’0"] above the top of the rail), for the entire yard. Any
clearance not in compliance with the foregoing is a
“Close” clearance. Lateral and vertical clearances for
power poles and lines must also comply with the National Electric
Safety Code (NESC)
4. Ownership
and Maintenance.
(a) Customer
shall own the yard and that portion of the connecting track located
on the Site and shown in blue on Attachment A. Railroad shall own
the Sidetrack and that portion of the connecting track (including
turnout) located on railroad’s right-of-way as shown in red
on Attachment A. Customer shall maintain the entire Sidetrack and
Yard Tracks in a condition that will safely and satisfactorily
accommodate the operation of railroad equipment. In the event
Customer shall fail to so maintain, Railroad shall be under no
obligation to operate, nor shall it have any liability if it does
not operate, over said portion of any track. Failure of Railroad to
notify Customer of the need of such repairs or Railroad’s
continued operation over the tracks shall not relieve Customer of
its obligation to maintain it in a safe condition and shall not
relieve Customer of any responsibility for loss or damage resulting
from its failure to so maintain. Customer shall provide adequate
drainage and keep the area along and adjacent to the Sidetrack and
Yard Tracks free and clear of all ice and snow, materials,
obstacles and debris so as to provide a safe walkway for
Railroad’s employees. Any future changes in or extensions of
the Yard Tracks upon which the Railroad would be expected to
operate railroad locomotives and cars shall not be made by Customer
without prior written notice to Railroad.
(b) All track
and track material in the Sidetrack and in that portion of the
connecting track located on Railroad’s right-of-way and shown
in red on Exhibit A including all turnouts, shall remain the
property of the Railroad.
5.
Lease. Railroad hereby leases at no additional cost to
Customer the Sidetrack on the following terms:
(a) Customer
shall have the non-exclusive right to use the Sidetrack for set-out
and pick-up of railcars delivered or picked up by Railroad.
Railroad’s use of the Sidetrack in connection with traffic
for other shippers will not unreasonably interfere with
Customer’s use of the Sidetrack.
(b) Customer
shall maintain the Sidetrack, at its sole cost and expense, to
normal industry standards.
2
(c) Customer
shall indemnify, defend and hold harmless Railroad, its officers,
owners, agents and assigns from and against any and all claims,
demands, actions or damages arising out of or resulting from the
location, condition, or operation on the Sidetracks, without regard
to negligence, unless resulting from the sole negligence of
Railroad.
(d) This
lease shall terminate upon termination of any or part of this
Agreement.
6.
Reimbursement . Railroad shall reimburse Customer its
reasonable and actual cost of constructing the Sidetrack up to a
maximum of $537,000. Such reimbursement is conditional upon
Customer completing and operating a 50 million gallon dry mill
corn-based ethanol plant at the site. Payment of the reimbursement
amount shall be due and payable $150,000 upon completion of 50% of
the plant structure, and the balance upon the first revenue
movement of railcars into the Site.
7.
Minimum Volume Guarantee . For and in consideration of
Railroad’s reimbursement of certain construction costs and
the other terms and conditions of this agreement, Customer
guarantees that it in each of the first five (5) years after
completion of its ethanol plant, Customer will ship a minimum of
1500 loaded rail cars, inbound or outbound.
In the event that
the number of loaded cars falls short of 1500 in any of the first
five years of plant operation (measured from the anniversary date
of the first revenue carload on the Sidetrack), Customer shall pay
Railroad an amount equal to $75 for each car short of
1500.
EXAMPLE : In the third year of operation, Customer
receives 800 loaded rail cars and ships out 500 loaded cars.
Customer must pay Railroad $15,000 ($75 x [1500 – (800+500)].
No credit is taken for carloads above the minimum in other
years.
Payment shall
be due thirty (30) days after invoice.
8.1 Railroad
agrees, pursuant to the provisions of this Agreement,
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