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Rail Service and Construction Agreement Between Siouxland Ethanol, LLC and Nebraska Northeastern Railroad Company

Construction Agreement

Rail Service and Construction Agreement
Between Siouxland Ethanol, LLC
and
Nebraska Northeastern Railroad Company | Document Parties: SIOUXLAND ETHANOL, LLC | Nebraska Northeastern Railroad Company You are currently viewing:
This Construction Agreement involves

SIOUXLAND ETHANOL, LLC | Nebraska Northeastern Railroad Company

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Title: Rail Service and Construction Agreement Between Siouxland Ethanol, LLC and Nebraska Northeastern Railroad Company
Date: 2/14/2007

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Exhibit 10.4

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”).

W I T N E S S E T H :

     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.

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     (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.  Rail Service .

     8.1 Railroad agrees, pursuant to the provisions of this Agreement,


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