Exhibit 10.7


 


OTTER TAIL VALLEY RAILROAD COMPANY AND BNSF
RAILWAY COMPANY 


LEASE OF LAND FOR CONSTRUCTION/REHABILITATION
OF TRACK


 


THIS LEASE OF LAND FOR
CONSTRUCTION/REHABILITATION OF TRACK (“Lease”)
is made as of the first day of October, 2006  (“Effective Date”), by and between BNSF RAILWAY COMPANY, a Delaware
corporation (hereinafter called “BNSF”), Otter Tail Valley Railroad Company, Inc.,
a Minnesota corporation (hereinafter called “OTVR”),
(hereinafter BNSF & OTVR together are called “Railroad”)  and OTTER TAIL AG
ENTERPRISES, a corporation, formed under the Laws (as hereinafter
defined) of Minnesota, (hereinafter, whether one party or more, called “Industry”).


 


RECITALS


 


A.            Railroad owns or controls certain land
situated at or near the railway station of Fergus Falls, County of Otter Tail, State
of Minnesota, as described or shown on the print hereto attached, dated October 1,
2006, marked Exhibit “A”,  and made a part of this Lease (“Premises”).


 


B.            Railroad and Industry intend to enter into
that certain Industry Track Agreement (“Track
Agreement”) dated effective April 1, 2007, relating to the
operation and maintenance of that certain Railroad Track (as defined in the
Track Agreement) and that certain Industry Track (as defined in the Track
Agreement) (the Railroad Track and Industry Track to be collectively referred to
herein as the “Track”) located on
or near the Premises to serve the Plant (as defined in the Track Agreement).


 


C.            The parties desire to enter into this Lease
to allow Industry to occupy the Premises for the construction of the Track and
the performance of certain activities related to the Track.


 


AGREEMENTS


 


NOW THEREFORE, in consideration of the mutual covenants
contained herein, the parties agree as follows:


 


LEASE OF PREMISES


 


1.             (a)           Railroad hereby leases to Industry, subject to all rights, interests and
estates of third parties, and upon the terms and conditions set forth below,
the Premises for the Permitted Uses (as hereinafter defined).


 


(b)           In the event Industry requires access to and
from the Premises by use of the Railroad Track or Railroad’s property adjacent
to the Premises, Railroad hereby grants Industry a non-exclusive license and
permission to enter upon Railroad’s property for such purpose. OTVR shall, at
its sole discretion, designate the location or route to be used by Industry.
For the purposes of this Lease, the designated access, whether specifically
defined or not, is included in the definition of Premises.


 


PERMITTED USES


 


2.             Industry shall use the Premises exclusively
as a site for: (i) the performance of Routine Activities (as hereinafter
defined) and (ii) Major Construction (as hereinafter defined) related to
the Track and for no other purposes (collectively, the “Permitted  Uses”). Industry shall provide all relevant information to
OTVR’s inquiries regarding the use or condition of the Premises. Railroad may
enter the Premises at any time Railroad desires to inspect the Premises. For
purposes of this Lease:


 


(a)           “Routine Activities” shall mean Industry’s normal maintenance and
operation of the Track that does not include Major Construction. Routine
Activities shall be deemed to include, but not be limited to, those normal
maintenance and operating activities further described in the Track Agreement
so long as such normal maintenance and operating activities described in the
Track Agreement do not involve Major Construction.


 


(b)           “Major Construction” shall mean planning, designing, construction,
erection, installation, modification, repair, maintenance, reconstruction,
rehabilitation, reinstallation, removal, relocation or replacement of the Track
that includes: (i) activities requiring the excavation of soil that would
alter or disturb the Premises; (ii) activities requiring the use of heavy
machinery within fifty (50) feet of the Track or upon the Premises; (iii) activities
involving the Fouling (as hereinafter defined) of the Track; (iv) activities
creating a significant risk of the Fouling of the Track; or (v) activities
requiring the sheltering of the Industry’s Facilities (as hereinafter defined)
or Equipment (as hereinafter defined) in shelters located closer than 25 feet
from the nearest portion of the Track. In addition, the parties agree that all
activities on the Premises prior to the Revenue Commencement Date (as
hereinafter defined) shall be deemed to be “Major Construction”, even if such
activities do not include activities described in (i), (ii), (iii), (iv) or
(v) above.


 


(c)           “Revenue Commencement Date” shall mean the first date that initial
construction/rehabilitation of the Track is complete to the point that railroad
cars can operate over the Track.


 


Form 303; Rev. 01/20/05


 


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(d)  “Fouling”
or “Fouled” shall mean the existence, movement or placement of equipment
and/or personnel on the Track or within twenty-five (25) feet vertically or
laterally of the centerline of the Track, or any other activity which in
Railroad’s sole opinion may interfere with any operations of Railroad.


 


TERM


 


3.             Unless earlier terminated
as hereinafter provided, this Lease shall be in force for a term commencing on
the Effective Date and shall automatically continue thereafter until terminated
by either party giving to the other thirty (30) days’ written notice of its desire
to terminate the Lease. Notwithstanding the foregoing, upon the expiration or
earlier termination of the Track Agreement, Railroad may, in its sole
discretion upon notice to Industry, immediately terminate this Lease.


 


RENTAL


 


4.             Industry shall pay
to OTVR as rental for the Premises, in advance, an amount equal to four
thousand two hundred dollars ($4,200.00) annually during the term of this Lease
(“Base Rent”). Base Rent shall increase 3% annually during the term of the
Lease. OTVR reserves the right to change rental rates as conditions warrant.
Billing or acceptance by OTVR of any rental shall not imply a definite term or
otherwise restrict either party from cancelling this Lease as provided herein.
All rent or other monetary payments under this Lease from Industry to OTVR
shall be delivered solely to the following address:


 


Otter Tail Valley Railroad 

200 North Mill Street 

Fergus Falls, MN 56537


 


Industry shall pay the Base Rent and all additional
amounts when the same become due and payable without demand, set-off or
deduction.


 


COMPLIANCE WITH LAWS AND RAILROAD
REQUIREMENTS


 


5.             (a)           Industry shall be
responsible for obtaining, without expense to Railroad, all necessary real
property rights and public authority and permission, including applicable
permits, for the maintenance and operation of the Premises, provided Industry
obtains prior written consent from Railroad.


 


(b)           Industry has examined the Premises and accepts
the condition thereof “AS IS”, and shall exercise its rights and fulfill its
obligations under this Lease in full compliance with all laws, statutes,
regulations, ordinances, orders, covenants, restrictions, or decisions of any
court of competent jurisdiction (referred to herein as “Law” or “Laws”),
including without limitation all Environmental Laws (as hereinafter defined),
relating to the use of the Premises, Track, Facilities or Equipment.


 


(c)           Prior to entering the Premises, Industry shall
and shall cause its contractor(s) to comply with all Railroad’s applicable
safety rules and regulations. Prior to commencing any Major Construction
or Routine Activities on the Premises, Industry shall complete and shall
require its contractor(s) to complete the safety-training program at the
Railroad’s Internet Website “http://contractororientation.com”. This training
must be completed no more than one year in advance of Industry’s entry on the
Premises.


 


(d)           Prior to any contractor of Industry entering
the Premises, Industry shall cause each such contractor to enter into and
comply with Railroad’s standard Contractor’s Right of Entry Agreement (“Right of Entry Agreement”) in the form
attached hereto as Exhibit “D”
and incorporated herein by this reference.


 


USE AND MAINTENANCE OF PREMISES


 


6.             (a)           Industry shall at
all times, and at its sole risk and expense, maintain, or cause to be
maintained, the Premises, Track and all Facilities and Equipment (if any) in a
safe and satisfactory condition, in compliance with all applicable Laws and in
a condition satisfactory to Railroad. Industry shall not cause, permit, commit,
or maintain any waste or nuisance in, on or about the Premises.


 


(b)           Maintenance for the purpose of this Lease
includes, but is not limited to, responsibility for providing proper drainage along
the relevant portion of the Track and for keeping the Track free and clear of
snow, ice, vegetation, structures, and other obstacles. Maintenance also
includes, but is not limited to, responsibility for the maintenance of grade
crossing warning devices, passive warning signs, stop signs, gates, fences,
barriers, roadways and roadway construction, track drainage facilities,
lighting, track signals and signal maintenance.


 


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(c)           If Industry installs any gates or fencing
across the Track, or a track scale, unloading pit, loading or unloading device,
adjustable loading dock, warehouse door, or any other structure (collectively, “Facilities”) affecting the Track, Industry
shall be solely responsible for assuring the safe and satisfactory condition of
the same and shall not allow any Facilities to be a source of danger to the
safe operation of the Track. Industry shall also be solely responsible for
assuring the safe and satisfactory condition of all of Industry’s equipment
touching, used in conjunction with or affecting the Track (“Equipment”) and shall not allow any
Equipment to be a source of danger to the safe operation of the Track. Before
utilizing or unloading any equipment spotted onto the Track, Industry shall
inspect the same and all other Equipment and Facilities for the safety of
persons working on or about these items to assure compliance with the foregoing.
 Industry shall utilize all Facilities,
Equipment and spotted equipment so as not to adversely affect the safe and
efficient operation over the Track. Industry shall, among other things: keep
any gates across the Track open whenever necessary, in OTVR’s sole judgment, to
enable OTVR to safely and efficiently operate over the Track; keep unloading
pits securely covered when not in actual use and at all times when the Track is
being switched by OTVR; keep all doors firmly secured; and keep adjustable
loading docks at warehouses securely fastened in an upright position when not
in actual use and at all times when the Track is being switched by Railroad.


 


(d)           OTVR may require for safety purposes that
Industry, at its sole cost and expense, provide flagmen, lights, traffic control
devices, automatic warning devices, or any such safety measure that OTVR deems
appropriate in connection with Industry’s use of the Premises for the Permitted
Uses identified in Section 2 above. Industry shall reimburse OTVR within
thirty (30) days of  receipt of a
bill rendered for all such costs expended by OTVR, including but not limited to
the furnishing of Licensor’s Flagman and any vehicle rental costs incurred.  The cost of flagger services provided by the
OTVR, when deemed necessary by the OTVR’s representative, will be borne by the
Industry. The estimated cost for one (1) flagger is $350.00 for an eight (8) hour
basic day with time and one-half or double time for overtime, rest days and
holidays. The estimated cost for each flagger includes vacation allowance, paid
holidays, Railroad and unemployment insurance, public liability and property
damage insurance, health and welfare benefits, transportation, meals, lodging
and supervision. Negotiations for Railway labor or collective bargaining
agreements and rate changes authorized by appropriate Federal authorities may
increase actual or estimated flagging rates. The flagging rate in effect at the
time of performance by the Contractor hereunder will be used to calculate the
actual costs of flagging pursuant to this paragraph.


 


(e)           Industry shall notify OTVR’s representative General Manager, at Fergus
Falls, telephone (218) 736-6073, five (5) days prior to commencing any
construction or rehabilitation of the Track on the Premises.


 


(f)            All alterations, additions, or betterments to
the Premises, other than the rails and the ties, shall upon construction become
the sole property of Railroad.


 


(g)           Industry agrees that Railroad shall not be required to furnish to
Industry any water, light, power or any other services in connection with the
use of the Premises.


 


(h)           Notwithstanding anything contained herein to the contrary, in the event
of any conflict between the terms of this Lease and the Track Agreement with
regard to the use and maintenance of the Premises, the most stringent provision
or requirement applicable to Industry will control.


 


DEFINITION OF COST AND EXPENSE


 


7.             (a)           For the purposes of this Lease, “cost” or “costs”
or “expense” or “expenses” includes, but is not limited to, actual labor and
material costs including all assignable additives, and material and supply
costs at current value where used.


 


(b)           All invoices are due thirty (30) days after the date of invoice. In the
event that Industry shall fail to pay any monies due to OTVR within thirty (30)
days after the invoice date, then Industry shall pay interest on such unpaid
sum from thirty (30) days after its invoice date to the date of payment by
Industry at an annual rate equal to (i) the greater of (a) for the
period January 1 through June 30, the prime rate last published in The Wall Street Journal in the preceding December plus
two and one-half percent (2 1/2%), and for the period July 1 through December 31,
the prime rate last published in The Wall
Street Journal in the preceding June plus two and one-half
percent (2 1/2%), or (b) twelve percent (12%), or (ii) the maximum
rate permitted by applicable Law, whichever is less.


 


RIGHT OF RAILROAD TO USE


 


8.             Railroad
excepts and reserves the right, to be exercised by Railroad and any other
parties who may obtain written permission or authority from Railroad:


 


(a)           to maintain, renew, use, operate, change, modify and relocate any existing
pipe, power, communication lines and appurtenances and other facilities or
structures of like character upon, over, under or across the Premises;


 


(b)           to construct, maintain, renew, use, operate, change, modify and relocate
any tracks or additional facilities or


 


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structures upon, over, under or across the
Premises; or


 


(c)           to use the Premises in any manner as the
Railroad in its sole discretion deems appropriate; provided Railroad uses all
commercially reasonably efforts to avoid material interference with the use of
the Premises by Industry for the Permitted Uses specified in Section 2 above.


 


CLEARANCES


 


9.             (a)           Industry shall not place, permit to be placed, or allow to remain, any
permanent or temporary material, structure, pole, container, storage vessel,
above-ground or underground tank, or other obstruction within 81/2 feet
laterally from the center (nine and one-half (9-1/2) feet on either side of the
centerline of curved track) or within 24 feet vertically from the top of the
rail of the Track (“Minimal Clearances”),
provided that if any Law requires greater clearances than those provided for in
this Section 9, then Industry
shall strictly comply with such Law. However, lateral or vertical clearances
which are less than the Minimal Clearances but are in compliance with
applicable Laws will not be a violation of this Section 9, so long as Industry strictly complies with the
terms of any such Law.


 


(b)           Railroad or Industry’s operation over the
Track with Railroad’s knowledge of an unauthorized reduced clearance will not
be a waiver of the covenants of Industry contained in this Section 9 or of
Railroad’s right to recover and be indemnified and defended against such
damages to property, or injury to or death of persons, that may result
therefrom.


 


(c)           Industry shall not place or allow to be
placed any freight car within 250 feet of either side of any at-grade crossings
on the Premises.


 


INDEMNIFICATION


 


10.          (a)           The provisions of this Section 10
shall apply to Industry throughout the term of this Lease; provided, however,
the provisions of Exhibit “B”,
attached hereto and incorporated herein by this reference, shall also apply to
Industry during: (i) all periods of Major Construction, to the extent
Industry self-performs all or any portion of such Major Construction, and (ii) all
periods during which Industry’s contractor(s) are on the Premises and Industry
has failed to cause its contractor(s) to timely enter into and fully comply
with Railroad’s Right of Entry Agreement.


 


(i)            INDUSTRY SHALL
RELEASE, INDEMNIFY, DEFEND, AND HOLD RAILROAD AND RAILROAD’S AFFILIATED
COMPANIES, PARTNERS, SUCCESSORS, ASSIGNS, LEGAL REPRESENTATIVES, OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS (COLLECTIVELY, THE “INDEMNITEES”)
HARMLESS FROM AND AGAINST ALL CLAIMS, LIABILITIES, FINES, PENALTIES, COSTS,
DAMAGES, LOSSES, LIENS, CAUSES OF ACTION, SUITS, DEMANDS, JUDGMENTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, COURT COSTS, ATTORNEYS’ FEES AND COSTS
OF INVESTIGATION, REMOVAL AND REMEDIATION AND GOVERNMENTAL OVERSIGHT COSTS)
ENVIRONMENTAL OR OTHERWISE (COLLECTIVELY, “LIABILITIES”) ARISING OUT OF OR
RELATED TO (IN WHOLE OR IN PART) ANY CLAIM THAT BY VIRTUE OF THE USE OF THE
TRACK CONTEMPLATED IN THIS LEASE, UNDER CERCLA OR OTHER ENVIRONMENTAL LAWS,
RAILROAD IS (I) AN “OWNER”, “OPERATOR”, “ARRANGER” OR “TRANSPORTER” OF THE
TRACK, OR (II) OTHER THAN A COMMON CARRIER WITH RESPECT TO THE TRACK,
REGARDLESS OF ANY NEGLIGENCE OR STRICT LIABILITY OF ANY INDEMNITEE.


 


(ii)           IF ANY EMPLOYEE OF
INDUSTRY OR INDUSTRY’S OFFICERS, AGENTS, INVITEES, LICENSEES, EMPLOYEES, OR
CONTRACTORS, OR ANY PARTY DIRECTLY OR INDIRECTLY EMPLOYED BY ANY OF THEM, OR
ANY PARTY THEY CONTROL OR EXERCISE CONTROL OVER (COLLECTIVELY, “INDUSTRY
PARTIES”) CLAIMS HE OR SHE IS AN EMPLOYEE OF ANY INDEMNITEE, INDUSTRY SHALL
INDEMNIFY AND HOLD THE INDEMNITEES HARMLESS FROM AND AGAINST ANY LIABILITIES
ARISING OUT OF OR RELATED TO (IN WHOLE OR IN PART) ANY SUCH CLAIM INCLUDING,
BUT NOT LIMITED TO, CLAIMS RELATED TO PROCEEDINGS UNDER OR RELATED TO THE
FEDERAL EMPLOYERS’ LlABILlTY ACT, THE SAFETY APPLIANCE ACT, THE BOILER
INSPECTION ACT, THE OCCUPATIONAL SAFETY AND HEALTH ACT, THE RESOURCE
CONSERVATION AND RECOVERY ACT, AND ANY SIMILAR STATE OR FEDERAL STATUTE AND
REGARDLESS OF ANY NEGLIGENCE OR STRICT LIABILITY OF ANY INDEMNITEE RELATED TO
SUCH CAUSES OF ACTION.


 


(b)           Upon written notice from Railroad, Industry
agrees to assume the defense of any lawsuit or other proceeding brought against
any Indemnitee by any entity, relating to any matter covered by this Lease for
which Industry has an obligation to assume liability for and/or save and hold
harmless any Indemnitee.  Industry shall
pay all costs incident to such defense, including, but not


 


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limited to, attorneys’ fees, investigators’
fees, litigation and appeal expenses, settlement payments, and amounts paid in
satisfaction of judgments.


 


PERSONAL PROPERTY WAIVER


 


11.           ALL PERSONAL PROPERTY, INCLUDING, BUT NOT LIMITED TO,
FIXTURES, EQUIPMENT, OR RELATED MATERIALS UPON THE PREMISES WILL BE AT THE RISK
OF INDUSTRY ONLY, AND NO INDEMNITEE WILL BE LIABLE FOR ANY DAMAGE THERETO OR
THEFT THEREOF, WHETHER OR NOT DUE IN WHOLE OR IN PART TO THE NEGLIGENCE OF ANY
INDEMNITEE.


 


INSURANCE


 


12.           (a)           The provisions of this Section 12 shall apply to Industry
throughout the term of this Lease; provided, however, the provisions of Exhibit “C”, attached hereto and
incorporated herein by this reference, shall also apply to Industry during: (i) all
periods of Major Construction, to the extent Industry self-performs all or any
portion of such Major Construction, and (ii) all periods during which
Industry’s contractor(s) are on the Premises and Industry has failed to cause
its contractor(s) to timely enter into and fully comply with Railroad’s
Right of Entry Agreement.  Throughout the
term of this Lease, Industry shall, at its sole cost and expense, procure and
maintain the following insurance coverage:


 


A.            Commercial
General Liability Insurance. This insurance shall contain broad form
contractual liability with a combined single limit of a minimum of $1,000,000
each occurrence and an aggregate limit of at least $2,000,000. Coverage must be
purchased on a post 1998 ISO occurrence or equivalent and include coverage for,
but not limited to, Bodily Injury and Property Damage, and Products and
completed operations. The definition of insured contract shall be amended to remove
any exclusion or other limitation for any work being done within 50 feet of
railroad property.


 


B.            Workers
Compensation and Employers Liability insurance including coverage for, but not
limited to: 


·      Industry’s statutory liability under the
worker’s compensation Laws of the state(s) in which the work is to be
performed. If optional under State Law, the insurance must cover all employees
anyway. 


·      Employers’
Liability (Part B) with limits of at least $500,000 each accident,
$500,000 by disease policy limit, $500,000 by disease each employee.


 


(b)           In addition to the foregoing, the following
other requirements shall apply to this Section 12:


 


Any insurance policy shall be written by a reputable insurance company
with a current Best’s Guide Rating of A- and Class VII or better, and
authorized to do business in the state(s) in which the service is to be
provided. If any portion of the operation is to be subcontracted by Industry,
Industry shall require that the subcontractor provide and maintain insurance
coverage as set forth herein.


 


Prior to commencing operations governed by this Lease, Industry shall
furnish to Railroad an acceptable certificate(s) of insurance including an
original signature of the authorized representative evidencing the required
coverage, endorsements, and amendments and referencing the contract
audit/folder number if available. The policy(ies) shall contain a provision
that obligates the insurance company(ies) issuing such policy(ies) to notify
Railroad in writing at least 30 days prior to any cancellation or non-renewal
with such provision indicated on the certificate of insurance. In the event of
a claim or lawsuit involving Railroad arising out of this agreement, Industry
will make available any required policy covering such claim or lawsuit.


 


Failure to provide evidence as required by this Section 12 shall entitle, but not require,
Railroad to terminate this Lease immediately. Acceptance of a certificate that
does not comply with this Section 12
shall not operate as a waiver of Industry’s obligations hereunder. The fact
that insurance (including, without limitation, self-insurance) is obtained by
Industry shall not be deemed to release or diminish the liability of Industry
including, without limitation, liability under the indemnity provisions of this
Lease. Damages recoverable by Railroad shall not be limited by the amount of
the required insurance coverage.


 


(c)           For purposes of this Section 12, Railroad shall mean “Otter
Tail Valley Railroad Company, Inc”, “RailAmerica, Inc”, and the subsidiaries,
successors, assigns, and affiliates of each.


 


ENVIRONMENTAL


 


13.           (a)           “Environmental Law(s)” shall mean any federal, state, or local law,
statute, ordinance, code, rule, regulation, policy, common law, license,
authorization, decision, order, or injunction which pertains to health, safely,
any Hazardous Material (as


 


5

















 


hereinafter defined), or the environment (including
but not limited to ground, air, water, or noise pollution or contamination, and
underground or above-ground tanks) and shall include, without limitation, the
Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. §9601 et seq. (“CERCLA”); the Hazardous Materials
Transportation Act, 49 U.S.C §1801 et seq.; the Federal Water Pollution Control
Act, 33 J.S.C. §1251 et seq.; the Clean Air Act, 42 U.S.C. §7401 et seq.; the
Toxic Substances Control Act, 15 U.S.C. §2601 et seq.; the Safe Drinking Water
Act, 42 U.S.C. §300f et seq.; the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. 11001 et seq., the Federal Insecticide, Fungicide
and Rodenticide Act, 7 U.S.C. 136 to 136y; the Oil Pollution Act, 33 U.S.C.
2701 et seq.; and the Occupational Safety and Health Act, 29 U.S.C 651 et seq.;
all as have been amended from time to time, and any other federal, state, or local
environmental requirements, together with all rules, regulations, orders, and
decrees now or hereafter promulgated under any of the foregoing, as any of the
foregoing now exist or may be changed or amended or come into effect in the
future. 


 


(b)           “Hazardous Material(s)” shall include but
shall not be limited to any substance, material, or waste that is regulated by
any Environmental Law or otherwise regulated by any federal, state, or local
governmental authority because of toxic, flammable, explosive, corrosive,
reactive, radioactive or other properties that may be hazardous to human health
or the environment, including without limitation asbestos and
asbestos-containing materials, radon, petroleum and petroleum products, urea
formaldehyde foam insulation, methane, lead-based paint, polychlorinated
biphenyl compounds, hydrocarbons or like substances and their additives or
constituents, pesticides, agricultural chemicals, and any other special, toxic,
or hazardous substances, materials, or wastes of any kind, including without
limitation those now or hereafter defined, determined, or identified as “hazardous
chemicals”, “hazardous  substances,” “hazardous
materials,” “toxic substances,” or “hazardous wastes” in any Environmental Law.


 


(c)           Industry shall strictly comply with all
Environmental Laws.   Industry shall not
maintain any treatment, storage, transfer or disposal facility, or underground
storage tank, as defined by Environmental Laws, on the Premises. Industry shall
not release or suffer the release of oil or Hazardous Materials, as defined by
Environmental Laws, on or about the Premises.


 


(d)           Except as authorized in advance in writing by
OTVR, Hazardous Materials are not permitted on the Premises. Any Hazardous
Materials so permitted by Railroad shall be placed, generated, used, received,
maintained, treated, stored and disposed of by Industry in a manner consistent
with good engineering practice and in strict accordance with all Environmental
Laws. Use or storage on the Premises of any Hazardous Materials that are not
previously authorized by OTVR in writing in advance of such use or storage is a
breach of this Lease.


 


(e)           Industry shall give OTVR immediate notice to
OTVR’s General Manager at (218) 205-7431 of any release of Hazardous Materials
on or from the Premises and to OTVR’s General Manager at (218) 205-7431 for any
violation of Environmental Laws, or inspection or inquiry by governmental
authorities charged with enforcing Environmental Laws with respect to Industry’s
use of the Premises. Industry shall use its best efforts to promptly respond to
any release on or from the Premises. Industry also shall give OTVR’s General
Manager immediate notice of all measures undertaken on behalf of Industry to
investigate, remediate, respond to or otherwise cure such release or violation
and shall provide to OTVR’s General Manager copies of all reports and/or data
regarding any investigations or remediations of the Premises. In the event that
OTVR has notice from Industry or otherwise of a release or violation of
Environmental Laws on the Premises which occurred or may occur during the term
of this Lease, OTVR may require Industry, at Industry’s sole risk and expense,
to take timely measures to investigate, remediate, respond to or otherwise cure
such release or violation affecting the Premises, Railroad’s adjoining property
or Railroad’s right-of-way.


 


(f)            Industry shall
promptly report to OTVR in writing any conditions or activities upon the
Premises which create a risk of harm to persons, property or the environment
and shall take whatever action is necessary to prevent injury to persons or
property arising out of such conditions or activities; provided, however, that
Industry’s reporting to OTVR shall not relieve Industry of any obligation
whatsoever imposed on it by this Lease. Industry shall promptly respond to OTVR’s
request for information regarding said conditions or activities.


 


(g)           Railroad and their respective agents and
representatives shall have a right of entry and access to the Premises: (i) at
any time an actual or suspected emergency exists and (ii) at any
reasonable time, upon prior written notice, and, at Industry’s election, with a
representative of Industry present, for the purposes of (a) inspecting the
documentation relating to Hazardous Materials or environmental matters
maintained by Industry or any occupant of the Premises and (b) ascertaining
whether Industry is in compliance with its obligations under this Section 13.


 


(h)           Prior to the termination of this Lease,
Railroad may, at Railroad’s option, require Industry to conduct an
environmental audit of the Premises through an environmental consulting
engineer acceptable to Railroad, at Industry’s sole cost and expense, to
determine if any noncompliance or environmental damage to the Premises has
occurred during Industry’s occupancy [ILLEGIBLE]. The audit shall be conducted
to Railroad’s satisfaction and a copy of the audit report shall promptly be
provided to Railroad for its review. Industry shall pay all expenses for any
remedial action that may be required as a result of said audit to correct any
noncompliance or environmental damage, and all necessary work shall be
performed by Industry prior to the termination of this Lease.


 


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ALTERATIONS


 


14.           Industry may not make any alterations of the Premises or permanently
affix anything to the Premises or any buildings or other structures adjacent to
the Premises without Railroad’s prior written consent.


 


NO WARRANTIES


 


15.           RAILROAD’S DUTIES AND WARRANTIES ARE LIMITED TO THOSE
EXPRESSLY STATED IN THIS LEASE AND SHALL NOT INCLUDE ANY IMPLIED DUTIES OR
IMPLIED WARRANTIES, NOW OR IN THE FUTURE. NO REPRESENTATIONS OR WARRANTIES HAVE
BEEN MADE BY RAILROAD OTHER THAN THOSE CONTAINED IN THIS LEASE. INDUSTRY HEREBY
WAIVES ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES
WHICH MAY EXIST BY OPERATION OF LAW OR IN EQUITY, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF MERCHANTABILITY, HABITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.


 


QUIET ENJOYMENT


 


16.           RAILROAD DOES NOT WARRANT ITS TITLE TO THE PREMISES
NOR UNDERTAKE TO DEFEND INDUSTRY IN THE PEACEABLE POSSESSION OR USE THEREOF. NO
COVENANT OF QUIET ENJOYMENT IS MADE.


 


DEFAULT


 


17.           (a)           If Industry creates or maintains any
condition, including without limitation, any environmental condition, on or
about the Premises, which in OTVR’s sole judgment interferes with or endangers
the operations of OTVR, or in case of any assignment or transfer of this Lease
by operation of law, Railroad may, at its option, terminate this Lease by
serving five (5) days’ notice in writing upon Industry.


 


(b)           Except as otherwise set forth in subparagraph (a) above, if Industry
defaults on any of the covenants or agreements of Industry contained in this
Lease, for a period of thirty (30) days following written notice of such
default by Railroad, Railroad may, [ILLEGIBLE] its option, terminate this Lease
on five (5) days’ notice in writing to Industry.


 


(c)           Any waiver by Railroad of any default or defaults shall not constitute a
waiver of the right to terminate this Lease for any subsequent default or
defaults, nor shall any such waiver in any way affect Railroad’s ability to
enforce any section of this Lease. The remedy set forth in this Section 17 shall be in addition to,
and not in limitation of, any other remedies that Railroad may have at law or
in equity.


 


LIENS


 


18.           Industry shall promptly pay and discharge any and all liens arising out
of any Construction, Routine Activities or any other activities done, suffered
or permitted to be done by Industry on the Premises. Railroad is hereby
authorized to post any notices or take any other action upon or with respect to
the Premises that is or may be permitted by Law to prevent the attachment of
any such liens to the Premises; provided, however, that failure of Railroad to
take any such action shall not relieve Industry of any obligation or liability under
this Section 18 or any other
section of this Lease.


 


TERMINATION


 


19.           If Industry fails to surrender the Premises to Railroad upon any
termination of this Lease, all liabilities and obligations of Industry
hereunder shall continue in effect until the Premises are surrendered. The
termination of this Lease shall not release Industry from any liability or
obligation, whether of indemnity or otherwise, resulting from any events
happening prior to the date of such termination.


 


ASSIGNMENT/ SUBLETTING


 


20.           Neither Industry, nor the heirs, legal representatives, successors or
assigns of Industry, nor any subsequent assignee, shall sublease the Premises
nor assign or transfer this Lease or any interest herein, without the prior
written consent and approval of Railroad, which may be withheld in Railroad’s
sole discretion.


 


7

















 


NOTICES


 


21.           Any notice required or permitted to be given
hereunder by one party to the other shall be in writing and the same shall be given
and shall be deemed to have been served and given if (i) placed in the
United States mail, certified, return receipt requested, or (ii) deposited
into the custody of a nationally recognized overnight delivery service,
addressed to the party to be notified at the address for such party specified
below, or to such other address as the party to be notified may designate by
giving the other party no less than thirty (30) days’ advance written notice of
such change in address.


 


	
  If to
  Railroad:

  	
  Otter Tail Valley Railroad
  Company, Inc. 

  200 North Mill Street 

  Fergus Falls, MN 56537 

  Attn: General Manager

  
	
   

  	
   

  
	
  with a
  copy to:

  	
  BNSF Railway Company 

  Corporate Real Estate Development 

  2600 Lou Menk Drive 

  Fort Worth, Texas 76131 

  Attn: Track Agreements

  
	
   

  	
   

  
	
  If to Industry:

  	
  Otter Tail Ag Enterprises 

  24096 170th Avenue 

  Fergus Falls, MN 56537

  



 


SURVIVAL


 


22.           Neither termination nor expiration of this Lease will release either
party from any liability or obligation under this Lease, whether of indemnity
or otherwise, resulting from any acts, omissions or events happening prior to
the date of termination or expiration of this Lease, or, if later, the date
when the Premises are restored in accordance with the applicable provisions of
the Track Agreement.


 


RECORDATION


 


23.           It is understood and agreed that this Lease
shall not be placed on public record. 


 


APPLICABLE LAW


 


24.           All questions concerning the interpretation or application of provisions
of this Lease shall be decided according to the Laws of the State of Texas.


 


SEVERABILITY


 


25.           To the maximum extent possible, each provision of this Lease shall be
interpreted in such manner as to be effective and valid under applicable Law,
but if any provision of this Lease shall be prohibited by, or held to be
invalid under, applicable Law, such provision shall be ineffective solely to
the extent of such prohibition or invalidity, and this shall not invalidate the
remainder of such provision or any other provision of this Lease.


 


INTEGRATION


 


26.           This Lease, together with the Track Agreement, is the full and complete
agreement between Railroad and Industry with respect to all matters relating to
lease of the Premises and the construction, maintenance and operation of the
Track located thereon, and supersedes any and all other agreements between the
parties hereto relating to lease of the Premises. However, nothing herein is intended
to terminate any surviving obligation of Industry or Industry’s obligation to
defend and hold Railroad harmless in any prior written agreement between the
parties, including, but not limited to, the Track Agreement.


 


MISCELLANEOUS


 


27.           In the event that the Industry consists of two of more parties, all
covenants and agreements of Industry herein contained shall be the joint and
several covenants and agreements of such parties.


 


28.           The waiver by Railroad of the breach of any provision herein by Industry
shall in no way impair the right of Railroad to enforce that provision for any
subsequent breach thereof. All remedies provided hereunder are cumulative and
are in addition to all other remedies available at law or in equity.


 


8

















 


IN WITNESS WHEREOF, this
Lease has been duly executed, in duplicate, by the parties hereto as of the
Effective Date.


 


	
   

  	
  OTTER TAIL VALLEY RAILROAD COMPANY, INC., a
  Minnesota

  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elizabeth A. Brown

  	
   

  
	
   

  	
  Name:

  	
  Elizabeth A. Brown

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BNSF RAILWAY COMPANY, a Delaware
  corporation 

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen M. Kuzma

  	
   

  
	
   

  	
  Name:

  	
  Stephen M. Kuzma

  	
   

  
	
   

  	
  Title:

  	
  Manager - Land Revenue Management

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OTTER TAIL AG ENTERPRISES

  
	
   

  	
  24096 170th Avenue

  
	
   

  	
  Fergus Falls, MN 56537

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KELLY LONGTIN

  	
   

  
	
   

  	
  Name:

  	
  KELLY LONGTIN

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
						



 


9

















 


EXHIBIT
“A”


 


Description
of Premises


 


[to be attached]


 

















 





 

















 


EXHIBIT
“B”


 


Indemnification
Provisions Applicable During Maior Construction


 


In addition to the provisions of Section 10 above, the provisions of
this Exhibit “B” shall
apply to Industry during: (i) all periods of Major Construction, to the
extent Industry self-performs all or any portion of such Major Construction,
and (ii) all periods during which Industry’s contractor(s) are on the
Premises and Industry has failed to cause its contractor(s) to timely enter
into and fully comply with Railroad’s Right of Entry Agreement.


 


1.             TO THE FULLEST EXTENT
PERMITTED BY LAW, INDUSTRY SHALL RELEASE, INDEMNIFY, DEFEND AND HOLD HARMLESS
RAILROAD AND RAILROAD’S AFFILIATED COMPANIES, PARTNERS, SUCCESSORS, ASSIGNS,
LEGAL REPRESENTATIVES, OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS
(COLLECTIVELY, THE “INDEMNITEES”) FOR, FROM AND AGAINST ANY AND ALL CLAIMS,
LIABILITIES, FINES, PENALTIES, COSTS, DAMAGES, LOSSES, LIENS, CAUSES OF ACTION,
SUITS, DEMANDS, JUDGMENTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, COURT
COSTS, ATTORNEYS’ FEES AND COSTS OF INVESTIGATION, REMOVAL AND REMEDIATION AND
GOVERNMENTAL OVERSIGHT COSTS) ENVIRONMENTAL OR OTHERWISE (COLLECTIVELY, “LIABILITIES”)
OF ANY NATURE, KIND OR DESCRIPTION OF ANY PERSON OR ENTITY D1RECTLY OR
INDIRECTLY ARISING OUT OF, RESULTING FROM OR RELATED TO (IN WHOLE OR IN PART):


 


(a)          THIS LEASE, INCLUDING,
WITHOUT LIMITATION, ITS ENVIRONMENTAL PROVISIONS,


 


(b)          ANY RIGHTS OR INTERESTS
GRANTED PURSUANT TO THIS LEASE,


 


(c)          INDUSTRY’S OCCUPATION
AND USE OF THE PREMISES,


 


(d)          THE ENVIRONMENTAL
CONDITION AND STATUS OF THE PREMISES CAUSED BY, AGGRAVATED BY, OR CONTRIBUTED
IN WHOLE OR IN PART, BY INDUSTRY, OR


 


(e)          ANY ACT OR OMISSION OF
INDUSTRY OR INDUSTRY’S OFFICERS, AGENTS, INVITEES, LICENSEES, EMPLOYEES, OR
CONTRACTORS, OR ANY PARTY DIRECTLY OR INDIRECTLY EMPLOYED BY ANY OF THEM, OR
ANY PARTY THEY CONTROL OR EXERCISE CONTROL OVER (COLLECTIVELY, “INDUSTRY
PARTIES”),


 


EVEN
IF SUCH LIABILITIES ARISE FROM OR ARE ATTRIBUTED TO, IN WHOLE OR IN PART, ANY
NEGLIGENCE OF ANY INDEMNITEE. THE ONLY LIABILITIES WITH RESPECT TO WHICH
INDUSTRY’S OBLIGATION TO INDEMNIFY THE INDEMNITEES DOES NOT APPLY ARE
LIABILITIES TO THE EXTENT PROXIMATELY CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF AN INDEMNITEE.


 


2.             FURTHER,
NOTWITHSTANDING THE LIMITATION IN SECTION 1, INDUSTRY SHALL NOW AND

FOREVER WAIVE ANY AND ALL CLAIMS, REGARDLESS WHETHER BASED ON STRICT LIABILITY,
NEGLIGENCE OR OTHERWISE, THAT RAILROAD IS AN “OWNER”, “OPERATOR”, “ARRANGER”,
OR “TRANSPORTER” OF THE PREMISES FOR PURPOSES OF CERCLA OR OTHER ENVIRONMENTAL
LAWS. INDUSTRY WILL INDEMNIFY, DEFEND AND HOLD THE INDEMNITEES HARMLESS FROM
ANY AND ALL SUCH CLAIMS REGARDLESS OF THE NEGLIGENCE OF THE INDEMNITEES.
INDUSTRY FURTHER AGREES THAT THE USE OF THE PREMISES AS CONTEMPLATED BY THIS
LEASE SHALL NOT IN ANY WAY SUBJECT RAILROAD TO CLAIMS THAT RAILROAD IS OTHER
THAN A COMMON CARRIER FOR PURPOSES OF ENVIRONMENTAL LAWS AND EXPRESSLY AGREES
TO INDEMNIFY, DEFEND, AND HOLD THE INDEMNITEES HARMLESS FOR ANY AND ALL SUCH
CLAIMS. IN NO EVENT SHALL RAILROAD BE RESPONSIBLE FOR THE ENVIRONMENTAL
CONDITION OF THE PREMISES.


 


3.             INDUSTRY FURTHER
AGREES, AND SHALL CAUSE ITS CONTRACTOR TO AGREE, REGARDLESS OF ANY NEGLIGENCE
OR ALLEGED NEGLIGENCE OF ANY INDEMNITEE, TO INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEES AGAINST AND ASSUME THE DEFENSE OF ANY LIABILITIES ASSERTED AGAINST
OR SUFFERED BY ANY INDEMNITEE UNDER OR RELATED TO THE FEDERAL EMPLOYERS’
LIABILITY ACT (“FELA”) WHENEVER EMPLOYEES OF INDUSTRY OR ANY OF ITS AGENTS,
INVITEES, OR CONTRACTORS CLAIM OR ALLEGE THAT THEY ARE EMPLOYEES OF ANY INDEMNITEE
OR OTHERWISE. THIS INDEMNITY SHALL ALSO EXTEND, ON THE SAME BASIS, TO FELA
CLAIMS BASED ON ACTUAL OR ALLEGED VIOLATIONS OF
ANY FEDERAL, STATE OR LOCAL LAWS OR REGULATIONS, INCLUDING BUT NOT
LIMITED TO THE SAFETY APPLIANCE ACT, THE BOILER INSPECTION ACT, THE
OCCUPATIONAL SAFETY AND HEALTH ACT, THE RESOURCE CONSERVATION AND RECOVERY ACT,
AND ANY SIMILAR STATE OR FEDERAL STATUTE.


 

















 


EXHIBIT
“C”


 


Insurance
Provisions Applicable During Major Construction


 


In addition to the provisions of Section 12 above, the provisions of
this Exhibit “C” shall
apply to Industry during: (i) all periods of Major Construction, to the
extent Industry self-performs all or any portion of such Major Construction,
and (ii) all periods during which Industry’s contractor(s) are on the
Premises and Industry has failed to cause its contractor(s) to timely enter
into and fully comply with Railroad’s Right of Entry Agreement.


 


1.             Industry must, at its sole cost and expense,
procure and maintain the following insurance coverages:


 


A.            Commercial
General Liability Insurance. This insurance must contain broad form contractual
liability with a combined single limit of a minimum of $5,000,000 each
occurrence and an aggregate limit of at least $10,000,000. Coverage must be
purchased on a post 1998 ISO occurrence form or equivalent and include coverage
for, but not limited to, the following:


 


·      Bodily
Injury and Property Damage


·      Personal
Injury and Advertising Injury


·      Fire
legal liability


·      Products
and completed operations


 


This policy must also contain the
following endorsements, which must be indicated on the certificate of
insurance:


 


·      The
employee and workers compensation related exclusions in the above policy shall
not apply with respect to claims related to railroad employees.


·      The definition
of insured contract must be amended to remove any exclusion or other limitation
for any work being done within 50 feet of railroad property.


·      Any
exclusions related to the explosion, collapse and underground hazards must be
removed.


 


No other endorsements limiting
coverage may be included on the policy with regard to the work being performed
under this Lease or otherwise with respect to any obligations under this Lease.


 


B.            Business
Automobile Insurance. This insurance must contain a combined single limit of at
least $1,000,000 per occurrence, and include coverage for, but not limited to,
the following:


 


·      Bodily
injury and property damage


·      Any and
all vehicles owned, used or hired


 


C.            Workers
Compensation and Employers Liability insurance including coverage for, but not
limited to:


 


·      Industry’s
statutory liability under the worker’s compensation laws of the state(s) in
which the work is to be performed. If optional under State law, the insurance
must cover all employees anyway.


·      Employers’
Liability (Part B) with limits of at least $500,000 each accident,
$500,000 by disease policy limit, $500,000 by disease each employee.


 


D.            Railroad
Protective Liability insurance naming only the Railroad as the Insured with
coverage of at least $5,000,000 per occurrence and $10,000,000 in the
aggregate. The policy must be issued on a standard ISO form CG 00 35 10 93 and
include the following:


 


·      Endorsed
to include the Pollution Exclusion Amendment (ISO form CG 28 31 10 93)


·      Endorsed to include the Limited Seepage and Pollution Endorsement


·      Endorsed to include Evacuation Expense Coverage Endorsement


·      No other endorsements restricting coverage may be added


·      The original policy must be provided to the Railroad prior to performing
any work or services under this Lease


 


2.             In addition to the foregoing, the following
other requirements shall apply to this Exhibit “C”:


 


Where allowable by law, all policies (applying to coverage listed
above) must not contain an exclusion for punitive damages and certificates of insurance
must reflect that no exclusion exists.


 


Industry agrees to waive its right of recovery against Railroad for all
claims and suits against Railroad. In addition, its insurers, through the terms
of the policy or policy
endorsement, waive their right of subrogation against Railroad for all claims
and suits. The certificate of insurance must reflect the waiver of subrogation
endorsement. Industry further waives its right of recovery, and its insurers
also waive their right of subrogation against Railroad, for loss of its owned
or leased property or property under its care, custody or control.


 


1

















 


Industry’s insurance policies, through policy
endorsement, must include wording which states that the policy will be primary
and non-contributing with respect to any insurance carried by Railroad. The
certificate of insurance must reflect that the above wording is included in
evidenced policies.


 


All policy(ies) required above (excluding
Workers Compensation and if applicable, Railroad Protective) must include a
severability of interest endorsement and must name Railroad and Staubach Global
Services - RR, Inc. as additional insureds with respect to work performed
under this Lease. Severability of interest and naming Railroad and Staubach
Global Services - RR, Inc. as additional insureds must be indicated on the
certificate of insurance.


 


Industry is not allowed to self-insure without
the prior written consent of Railroad. If granted by Railroad, any deductible,
self-insured retention or other financial responsibility for claims must be
covered directly by Industry in lieu of insurance. Any and all Railroad’s
liabilities that would otherwise, in accordance with the provisions of this
Lease, be covered by Industry’s insurance will be covered as if Industry
elected not to include a deductible, self-insured retention or other financial
responsibility for claims.


 


Prior to commencing work, Industry must
furnish to Railroad an acceptable certificate(s) of insurance including an
original signature of the authorized representative evidencing the required
coverage, endorsements, and amendments and referencing the contract
audit/folder number if available. The policy(ies) must contain a provision that
obligates the insurance company(ies) issuing such policy(ies) to notify
Railroad in writing at least 30 days prior to any cancellation, non-renewal,
substitution or material alteration. This cancellation provision must be
indicated on the certificate of insurance. In the event of a claim or lawsuit
involving Railroad arising out of this Lease, Industry will make available any
required policy covering such claim or lawsuit.


 


Any insurance policy must be written by a
reputable insurance company acceptable to Railroad or with a current Best’s
Guide Rating of A- and Class VII or better, and authorized to do business
in the state(s) in which the service is to be provided.


 


Industry represents that this Lease has been
thoroughly reviewed by Industry’s insurance agent(s)/broker(s), who have been
instructed by Industry to procure the insurance coverage required by this
Lease. Allocated Loss Expense must be in addition to all policy limits for
coverages referenced above.


 


Not more frequently than once every five years,
Railroad may reasonably modify the required insurance coverage to reflect
then-current risk management practices in the railroad industry and
underwriting practices in the insurance industry.


 


If any portion of the operation is to be
subcontracted by Industry, Industry must require that the subcontractor provide
and maintain the insurance coverages set forth herein, naming Railroad as an
additional insured, and requiring that the subcontractor release, defend and
indemnify Railroad to the same extent and under the same terms and conditions
as Industry is required to release, defend and indemnify Railroad herein.


 


Failure to provide evidence as required by
this Exhibit “C” will
entitle, but not require, Railroad to terminate this Lease immediately.
Acceptance of a certificate that does not comply with this Exhibit “C” will not operate as a
waiver of Industry’s obligations hereunder.


 


The fact that insurance (including, without
limitation, self-insurance) is obtained by Industry will not be deemed to
release or diminish the liability of Industry including, without limitation,
liability under the indemnity provisions of this Lease. Damages recoverable by
Railroad will not be limited by the amount of the required insurance coverage.


 


3.             For purposes of this
Exhibit “C”,  “Railroad” means “Burlington Northern Santa
Fe Corporation”, “BNSF RAILWAY COMPANY” and the subsidiaries, successors,
assigns, and affiliates of each.


 


2

















 


EXHIBIT
“D”


 


CONTRACTOR’S


RIGHT
OF ENTRY AGREEMENT


FOR
CONSTRUCTION PROJECTS ON OR ADJACENT TO PROPERTY OF


OTTER
TAIL VALLEY RAILROAD COMPANY


 


This Right of Entry Agreement (“Agreement”) is entered into effective as
of                
200  , by and between
                                                        (“Contractor”)                           
corporation, and OTTER TAIL VALLEY RAILROAD COMPANY (“Railway”), a Minnesota corporation.


 


WHEREAS, Railway operates a
freight transportation system by rail with operations throughout the United
States; and 


 


WHEREAS,             [insert Industry’s name here] desires
Contractor to perform certain construction services adjacent to and upon
Railway’s right of way and/or property, and Contractor is willing to perform
such services.


 


NOW, THEREFORE, in consideration
of Railway entering this Agreement with Contractor and granting Contractor
permission to enter upon the Premises (defined herein), Contractor agrees with
Railway as follows:


 


SECTION 1. SCOPE OF SERVICES


 


Contractor  [and/or
Industry] will perform the following services, hereinafter described as “Work”:               
                
                          
                                                                                                                              .


 


Performance of the Work will
necessarily require Contractor to enter Railway’s right of way and property (“Premises”). Contractor agrees that no
work will be commenced on the Premises until (i) this Agreement is
executed by both Contractor and Railway; and (ii) Contractor provides the
Railway with the insurance contemplated herein. Contractor further agrees that
if this Agreement is not executed by the owner, general partner, president or
vice-president of Contractor, Contractor will furnish Railway with evidence
certifying that the signatory is empowered to execute this Agreement.


 


SECTION 2. PAYMENT OF FEES


 


Industry will be responsible for
paying Contractor for the Work performed under this Agreement. 


 


SECTION 3. RELEASE OF LIABILITY AND
INDEMNITY


 


Contractor hereby waives,
releases, indemnifies, defends and holds harmless Railway for, from and against
all judgments, awards, claims, demands, and expenses (including attorney’s
fees), for injury or death to all persons, including Railway’s and Contractor’s
officers and employees, and for loss and damage to property belonging to any
person, arising in any manner from Contractor’s or any of Contractor’s
subcontractors’ acts or omissions or any work performed on or about Railway’s
property or right of way. THE LIABILITY
ASSUMED BY CONTRACTOR WILL NOT BE AFFECTED BY THE FACT, IF IT IS A FACT, THAT
THE DESTRUCTION, DAMAGE, DEATH, OR INJURY WAS OCCASIONED BY OR CONTRIBUTED TO
BY THE NEGLIGENCE OF RAILWAY, ITS AGENTS, SERVANTS, EMPLOYEES OR OTHERWISE,
EXCEPT TO THE EXTENT THAT SUCH CLAIMS ARE PROXIMATELY CAUSED BY THE INTENTIONAL
MISCONDUCT OR GROSS NEGLIGENCE OF RAILWAY.


 


THE INDEMNIFICATION OBLIGATION ASSUMED BY
CONTRACTOR INCLUDES ANY CLAIMS, SUITS OR JUDGMENTS BROUGHT AGAINST RAILWAY
UNDER THE FEDERAL EMPLOYEE’S LIABILITY ACT INCLUDING CLAIMS FOR STRICT
LIABILITY UNDER THE SAFETY APPLIANCE ACT OR THE BOILER INSPECTION ACT, WHENEVER
SO CLAIMED.


 


Contractor further agrees, at its
expense, in the name and on behalf of Railway, that it will adjust and settle
all claims made against Railway, and will, at Railway’s discretion, appear and
defend any suits or actions of law or in equity brought against Railway on any
claim or cause of action arising or growing out of or in any manner connected
with any liability assumed by Contractor under this Agreement for which Railway
is liable or is alleged to be liable. Railway will give notice to Contractor,
in writing, of the receipt or pendency of such claims and thereupon Contractor
must proceed to adjust and handle to a conclusion such claims, and in the event
of a brought against Railway, Railway may forward summons and complaint or
other process in connection therewith to Contractor, and Contractor, at Railway’s
discretion, must defend, adjust, or settle such suits and protect, indemnify,
and save harmless Railway from and against all damages, judgments, decrees,
attorney’s fees, costs, and expenses growing out of or resulting from or
incident to any such claims or suits.


 


It is mutually understood and
agreed that the assumption of liabilities and indemnification provided for in
this Agreement will survive any termination of this Agreement.


 


1

















 


SECTION 4. INSURANCE


 


Contractor must, at its sole cost and expense, procure and maintain during the life of
this Agreement the following insurance Coverages:


 


(a)           Commercial General Liability Insurance.  This insurance must contain broad form
contractual liability with a combined single limit of a minimum of $5,000,000
each occurrence and an aggregate limit of at least $10,000,000. Coverage must
be purchased on a post 1998 ISO occurrence form or equivalent and include
coverage for, but not limited to, the following:


 


·      Bodily Injury and Property Damage


·      Personal Injury and Advertising Injury


·      Fire legal liability


·      Products and completed operations


 


This policy must also contain the following
endorsements, which must be indicated on the certificate of insurance:


 


·      The employee and workers compensation related
exclusions in the above policy shall not apply with respect to claims related
to railroad employees.


·      Compensation, disability benefits, or
unemployment compensation law or similar law.


·      The definition of insured contract must be
amended to remove any exclusion or other limitation for any work being done
within 50 feet of railroad property.


·      Any exclusions related to the explosion,
collapse and underground hazards must be removed.


 


No other endorsements limiting coverage may be
included on the policy with regard to the work being performed under this Agreement
or otherwise with respect to any obligations under this Agreement.


 


(b)           Business Automobile Insurance.  This insurance must contain a combined single
limit of at least $1,000,000 per occurrence, and include coverage for, but not
limited to the following:


 


·      Bodily injury and property damage


·      Any and all vehicles owned, used or hired


 


(c)           Workers Compensation and Employers Liability
insurance including coverage for, but not limited to:


 


·      Contractor’s statutory liability under the worker’s compensation laws of
the state(s) in which the work is to be performed. If optional under State
law, the insurance must cover all employees anyway.


·      Employers’ Liability (Part B) with limits of at least $500,000 each
accident, $500,000 by disease policy limit, $500,000 by disease each employee.


 


(d)           Railroad Protective Liability insurance naming
only the Railroad as the Insured with coverage of at least $5,000,000 per
occurrence and $10,000,000 in the aggregate. The policy must be issued on a
standard ISO form CG 00 35 10 93 and include the following:


 


·      Endorsed to include the Pollution Exclusion Amendment (ISO form CG 28 31
10 93)


·      Endorsed to include the Limited Seepage and Pollution Endorsement


·      Endorsed to include Evacuation Expense Coverage Endorsement


·      No other endorsements restricting coverage may be added


·      The original policy must be provided to the Railroad prior to performing
any work or services under this Agreement


 


Other Requirements:


 


Where allowable by law, all policies (applying
to coverage listed above) must not contain an exclusion for punitive damages
and certificates of insurance must reflect that no exclusion exists.


 


Contractor agrees to waive its right of
recovery against Railroad for all claims and suits against Railroad. In
addition, its insurers, through the terms of the policy or policy endorsement,
waive their right of subrogation against Railroad for all claims and suits. The
certificate of insurance must reflect the waiver of subrogation endorsement.
Contractor further waives its right of recovery, and its insurers also waive
their right of subrogation against Railroad, for loss of its owned or leased
property or property under its care, custody or control.


 


Contractor’s insurance policies, through
policy endorsement, must include wording which states that the policy will be
primary and non-contributing with respect to any insurance carried by Railroad.
The certificate of insurance must reflect that the above wording is included in
evidenced policies.


 


All policy(ies) required above (excluding
Workers Compensation and if applicable, Railroad Protective) must include a severability
of interest endorsement and must name Railroad and Staubach Global Services –
RR, Inc. as additional insureds with respect to work performed under this
agreement. Severability of interest and naming Railroad and Staubach Global
Services – RR, Inc. as additional insureds must be indicated on the
certificate of insurance.


 


2

















 


Contractor is not allowed to self-insure
without the prior written consent of Railroad. If granted by Railroad, any
deductible, self-insured retention or other financial responsibility for claims
must be covered directly by Contractor in lieu of insurance. Any and all
Railroad liabilities that would otherwise, in accordance with the provisions of
this Agreement, be covered by Contractor’s insurance will be covered as if
Contractor elected not to include a deductible, self-insured retention or other
financial responsibility for claims.


 


Prior to commencing the Work, Contractor must
furnish to Railroad an acceptable certificate(s) of insurance including an
original signature of the authorized representative evidencing the required
coverage, endorsements, and amendments and referencing the contract
audit/folder number if available. The policy(ies) must contain a provision that
obligates the insurance company(ies) issuing such policy(ies) to notify
Railroad in writing at least 30 days prior to any cancellation, non-renewal,
substitution or material alteration. This cancellation provision must be
indicated on the certificate of insurance. In the event of a claim or lawsuit
involving Railroad arising out of this Lease, Industry will make available any
required policy covering such claim or lawsuit.


 


Any insurance policy must be written by a
reputable insurance company acceptable to Railroad or with a current Best’s
Guide Rating of A- and Class VII or better, and authorized to do business
in the state(s) in which the service is to be provided.


 


Contractor represents that this Agreement has
been thoroughly reviewed by Contractor’s insurance agent(s)/broker(s), who have
been instructed by Contractor to procure the insurance coverage required by
this Agreement. Allocated Loss Expense must be in addition to all policy limits
for coverages referenced above.


 


Not more frequently than once every five
years, Railroad may reasonably modify the required insurance coverage to
reflect then-current risk management practices in the railroad industry and
underwriting practices in the insurance industry.


 


If any portion of the operation is to be
subcontracted by Contractor, Contractor must require that the subcontractor
provide and maintain the insurance coverages set forth herein, naming Railroad
as an additional insured, and requiring that the subcontractor release, defend
and indemnify Railroad to the same extent and under the same terms and
conditions as Contractor is required to release, defend and indemnify Railroad
herein.


 


Failure to provide evidence as required by
this section will entitle, but not require, Railroad to terminate this
Agreement immediately. Acceptance of a certificate that does not comply with this
section will not operate as a waiver of Contractor’s obligations hereunder.


 


The fact that insurance (including, without
limitation, self-insurance) is obtained by Contractor will not be deemed to
release or diminish the liability of Contractor including, without limitation,
liability under the indemnity provisions of this Agreement. damages recoverable
by Railroad will not be limited by the amount of the required insurance
coverage.


 


For purposes of this section, “Railroad” means “Burlington Northern Santa
Fe Corporation”, “BNSF RAILWAY COMPANY” and the subsidiaries, successors,
assigns and affiliates of each.


 


SECTION 5.
CONTRACTOR REQUIREMENTS


 


(a) While on or about the Premises,
Contractor must fully comply with Railway’s “Contractor Requirements”,
including (but not limited to) clearance requirements and personal protective
equipment requirements. Contractor will be responsible for fully informing
itself as to Railway “Contractor Requirements”.


 


(b) Prior to entering the Premises, each
person providing labor, material, supervision, or services connected with the
Work to be performed on or about the Premises must complete the safety training
program (hereinafter called, “Railway
Contractor Safety Orientation”) at the following internet website: “contractororientation.com”.
Contractor must ensure that each of its employees, subcontractors, agents or
invitees completes the Railway Contractor Safety Orientation before any Work is
performed under this Agreement. Additionally, Contractor must ensure that each
and every employee of Contractor, its subcontractors, agents or invitees
possesses a card certifying completion of the Railway Contractor Safety
Orientation prior to entering the Premises. Contractor must renew the Railway
Contractor Safety Orientation annually.


 


(c) Prior to entering the Premises, the
Contractor must prepare and implement a safety action plan acceptable to Railway.
Contractor must audit compliance with that plan during the course of Contractor’s
work. A copy of the plan and audit results must be kept at the work site and
will be available for inspection by Railway at all reasonable times.


 


(d) When not in use, Contractor’s
machinery and materials must be kept at Least 50 feet from the centerline of
Railway’s nearest track. Contractor must not cross Railway’s tracks except at
existing open public crossings.


 


SECTION 6.
PROTECTION OF RAILWAY FACILITIES AND RAILWAY FLAGGER SERVICES


 


(a) The Contractor must give Railway’s
Roadmaster (telephone                 )  a
minimum of thirty (30) working days advance notice when flagging services will
be required so that the Roadmaster can make appropriate arrangements (i.e.,
bulletin the flagger’s position). If flagging services are scheduled in advance
by Contractor and it is subsequently determined by the parties hereto that such
services are no longer necessary, Contractor must give the Roadmaster five (5) working
days advance notice so that appropriate arrangements can be made to abolish the
position pursuant to union requirements.


 


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(b) Railway flagger and protective
services and devices will be required and furnished when Contractor’s work
activities are located over or under of and within twenty-five (25) feet
measured horizontally from center line of the nearest track and when cranes or
similar equipment positioned outside of 25-foot horizontally from track center
line that could foul the track in the event of tip over or other catastrophic
occurrence, but not limited thereto for the following conditions:


 


(1)           When in the opinion of the Railway’s
representative, it is necessary to safeguard the Premises, employees, trains,
engines and facilities.


 


(2)           When any excavation is performed below the
bottom of tie elevation, if, in the opinion of Railway’s representative, track
or other Railway facilities may be subject to movement or settlement.


 


(3)           When work in any way interferes with the safe
operation of trains at timetable speeds.


 


(4)           When any hazard is presented to Railway track,
communications, signal, electrical, or other facilities either due to persons,
material, equipment or blasting in the vicinity.


 


(5)           Special permission must be obtained from the
Railway before moving heavy or cumbersome objects or equipment which might
result in making the track impassable.


 


(c)  Flagging services
will be performed by qualified Railway flaggers. The estimated cost for one (1) flagger
is $600.00 for an eight (8) hour basic day with time and one-half or
double time for overtime, rest days and holidays. The estimated cost for each flagger
includes vacation allowance, paid holidays, Railway and unemployment insurance,
public liability and property damage insurance, health and welfare benefits,
transportation, meals, lodging and supervision. Negotiations for Railway labor
or collective bargaining agreements and rate changes authorized by appropriate
Federal authorities may increase actual or estimated flagging rates. The
flagging rate in effect at the time of performance by Contractor hereunder will
be used to calculate the actual costs of flagging pursuant to this paragraph.


 


(1)           A flagging crew generally consists of one
employee. However, additional personnel may be required to protect the Premises
and operations, if deemed necessary by the Railway’s representative.


 


(2)           Each time a flagger is called, the minimum
period for billing will be the eight (8) hour basic day.


 


(3)           The cost of flagger services provided by the
Railway, when deemed necessary by the Railway’s representative, will be borne
by the                   /Contractor.


 


SECTION 7. INDEPENDENT CONTRACTOR


 


Contractor is considered an independent
contractor under this Agreement and neither Contractor nor any of its
employees, subcontractors, agents or servants are considered employees of
Railway in any respect. Contractor has the exclusive right and duty to control
the work of its employees. All persons employed by Contractor or any of its
subcontractors under this Agreement are the sole employees of Contractor or its
subcontractors. Contractor will be given general directions and instructions
regarding the Work to be performed under this Agreement; however, direct
supervision of Contractor’s employees will be Contractor’s responsibility and
obligation.


 


SECTION 8. TRAIN DELAYS


 


Work performed by Contractor must not cause
any interference with the constant, continuous and uninterrupted use of the
tracks, property and facilities of the Railway, its lessees, licensees or
others, unless specifically permitted under this Agreement, or specifically
authorized in advance by the Railway Representative. Additionally, Contractor
must not, at any time, impair the safety of Railway operations or the
operations of Railway’s lessees, licensees or other Railway invitees. Delays to
freight or passenger trains affect BNSF’s ability to fully utilize its
equipment and to meet customer service and contract obligations. Contractor
will be responsible to Railway, including its subsidiaries, affiliated
companies, partners, successors and assigns, for economic losses resulting from
unscheduled delays to freight or passenger trains in accordance with the
following:


 


(a) Train Delay Damages


 


(1)           Contractor will be billed for the economic losses
arising from loss of use of equipment and train service employees, contractual
incentive pay and bonuses and contractual penalties resulting from train
delays, whether caused by Contractor, its subcontractors or by Railway
performing Work associated with this project


 


(2)           The parties acknowledge that passenger, U.S.
mail trains and certain other grain, intermodal, coal and freight trains
operate under incentive/penalty contracts with the Railway. Under such
arrangements, if Railway does not meet its contract service commitments,
Railway may (i) suffer loss of performance or incentive pay, or (ii) be
subject to a penalty payment. Contractor is responsible for any train
performance and incentive penalties or other contractual economic losses
actually incurred by Railway which are attributable to a train delay caused by
Contractor, or its subcontractors.


 


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(3)           The contractual relationship between Railway
and its passenger customers is proprietary and confidential. In the event of a
train delay covered by this Agreement, Railway will
share information relevant to any train delay to the maximum extent consistent
with Railway confidentiality obligations.


 


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.


 


 


	
   

  	
  (Contractor)

  	
   

  	
  Otter Tail Valley Railroad Company, a Minnesota

  
	
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