exv10w5



 







Exhibit 10.5




LANDFILL GAS PURCHASE AND SALE AGREEMENT



This Landfill Gas Sale & Agreement (“Agreement”) dated July 28, 2006 is made between Siouxland
Ethanol, a Nebraska corporation (“Buyer”) and L.P. Gill, Inc. a Nebraska corporation (“Seller”).



WHEREAS, Seller owns and operates a private landfill (“Landfill”) at 1402 Highway 20, Jackson,
Nebraska; and



WHEREAS, the Landfill is producing certain gases resulting from the natural anaerobic decomposition
of refuse material (“Landfill Gas”) and Seller desires to capture and dispose of the Landfill Gas
in an environmentally and economically prudent fashion; and



WHEREAS, Buyer owns and operates an ethanol plant facility (the Facility) in Jackson, Nebraska
which is located approximately one mile from the landfill; and



WHEREAS, Seller desires to sell and deliver the Landfill Gas produced at the Landfill to Buyer’s
Facility and to construct facilities to extract, handle, and transport the Landfill Gas; and



WHEREAS, Buyer desires to purchase from Seller the Landfill Gas produced at the Landfill for use as
fuel in one or more burners at the Facility.



NOW, THEREFORE, in consideration of the premises and the mutual promises hereinafter set forth,
Seller agrees to sell and Buyer agrees to purchase Landfill Gas upon the terms and conditions set
forth in this Agreement.




Article I – Definitions



Unless otherwise required by the context in which any defined term appears, the following terms
shall have the meaning assigned to them in this Article I for all purposes including the recitals:



1.1 BTU means British Thermal Units or the amount of heat required to raise the temperature of one
pound of water one (1) degree Fahrenheit at sixty (60) degrees Fahrenheit.



1.2 MMBTU means one million BTU (also known as a decatherm) and for purposes of this Agreement,
MMBTU shall be calculated according to the following formula:





[cubic feet (cf) of Landfill Gas as measured by the Facility Meter] x (500 BTU/cf) x
(1 MMBTU/1,000,000 BTU)



 









 




1.3 Facility Meter means the meter installed by Buyer at the building which will be used to measure
the quantity of Landfill Gas purchased by Buyer under this Agreement and burned in the burner(s) at
Buyer’s Facility.



1.4 Delivery Point means the Northern Boundary of the Buyer’s Facility as described in section 2.1.



1.5 Force Majeure means acts of God; explosions; strikes, lockouts or other industrial

disturbances; acts of the public enemy; wars, blockades; insurrections; riots, epidemics;
landslides; lightening; earthquakes; damage to or destruction of Seller’s landfill gas wells caused
by third parties, (except as otherwise provided below); enactment of statutes, laws or regulations,
the binding order of any court or governmental authority which has been resisted in good faith by
all reasonable legal means, or any other cause, whether of the kind herein enumerated, or
otherwise, not within the control of the party claiming suspension and which by the exercise of due
diligence such party is unable to prevent or overcome.



1.6 Hazardous Materials means all materials which have been determined to be hazardous to health or
the environment by virtue of being defined by the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation, and Liability Act, regulated by the Toxic
Substances Control Act, the Federal Insecticide, Fungicide, and Rodenticide Act, or regulated by
any other applicable federal, state or local law. Reference to specific statutes includes
amendments as they are made from time to time, as well as the regulations promulgated thereunder.



1.7 Landfill Gas means any and all gases resulting from the anaerobic decomposition of refuse
material within the Landfill, consisting principally of methane, carbon dioxide and traces of other
constituent gases.




Article II-Construction of Landfill Gas Equipment and Facilities



2.1 Pipeline, Equipment and Facilities 




(a) Seller shall be solely responsible and liable for designing, constructing, operating,
maintaining and repairing any and all equipment and facilities located on its property and used to
extract, capture, handle, store and/or transport the Landfill Gas from the Landfill to the southern
edge of Seller’s property and to the northern edge of Buyer’s property, located between Knox Blvd.
and 143rd Street, Dakota County, Nebraska (“Seller’s Equipment”). Seller shall be fully
and solely responsible and liable for operating, maintaining and repairing Seller’s Equipment, and
shall be deemed the operator of such pipeline and equipment for purposes of the Nebraska One Call
Law (Title 155, Chap. 2). Seller shall be responsible for obtaining all permits and other
authorizations relating to the construction and operation of Seller’s Equipment. Seller shall
indemnify and hold Buyer harmless from and against any and all claims, actions, losses, damages and
expenses relating to or arising from Seller’s ownership, use, operation, repair and/or maintenance
of Seller’s Equipment.




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	2.2	 	Mutual Support. Each party shall exercise reasonable efforts to support and assist
the other party in the acquisition of all permits and authorizations and in fulfilling the
obligations described above. Such support shall include participating in regulatory
proceedings and providing information concerning each party’s operations.
	 
	2.3	 	Equipment and systems for combustion of Landfill Gas. Seller agrees to reimburse the
Buyer up to $400,000 for the design, installation and maintenance of specific equipment and
systems required for the combustion of Landfill Gas in the Buyers’ ethanol plant. The Seller
has until the end of the fifth year from the Commencement Date to pay the $400,000. Upon
written request, the Buyer shall provide a detailed invoice to Seller for the equipment and
systems costs associated with the combustion of Landfill Gas.





Article III- Sale and Purchase of Landfill Gas



3.1 Sale and Purchase; Quantity — Except as provided in section 3.2 below. Seller shall
make available to Buyer for purchase all of the Landfill Gas that seller extracts from the
Landfill. It is the mutual expectation of Seller and Buyer that the Landfill will generate, and
Seller will make available to Buyer, those quantities of Landfill Gas as described in section
5.1(a) and in Exhibit A attached hereto and incorporated herein. Seller agrees to deliver and sell
to Buyer and Buyer agrees to accept and purchase from Seller that quantity of Landfill Gas and
available for use by Buyer for fuel in the burner(s) in Buyer’s Facility. Exceptions to above
would be in cases of necessary shut down by the ethanol plant for necessary repairs and updates.
It will be the Seller’s responsibility to deal with the landfill methane being created at that time
to either flare the gas or shut down the system in accordance with Nebraska DEQ requirements.



3.2 Price. The price per MMBtu for a given month (1st through month
end) will be a discount of 25% from the price published in Platt’s monthly “Inside FERC’s Gas
Market Report” for the Northern Natural Gas Co. Demarcation spot gas price for that month, except
with a final maximum price (ceiling) of $6.00 per MMBtu and final minimum price (floor) of $4.75
per MMBtu for a subject month period. Siouxland Ethanol further agrees to purchase up to 1200
MMBtu/day at above prices. In such cases that the Seller may produce in excess of 1200 MMBtu/day,
Seller then agrees to lower the price for any amount over and above the initial 1200 MMBtu/day to a
fixed price of the lesser of $3.25 per MMBtu or the Platt’s monthly spot gas price referenced above
should such published price be below $3.25.



3.3MMBTU Adjustment. The agreed pricing set forth In Section 3.2 above is based on assumed
average daily methane content of the Landfill Gas of 50% and a measured BTU value of 9.05
BTU/cf/%Methane by Volume, equal to approximately 500 BTU/cf. (See Exhibit B) Seller’s Equipment
shall include a meter for daily monitoring and recording of percent methane content of the Landfill
Gas. On a daily basis, Seller will record the methane content of the Landfill Gas delivered to
Buyer based on the readings from such


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meter. The average monthly methane content of the Landfill Gas multiplied by 9.05 BTU/cf/%methane
shall be used as the second component in the MMBTU formula set forth in Section 1.2 above in
determining the number of MMBTU purchased during such month.



3.4 Invoices; Payment. Within (10) business days following the end of each month, Buyer
will transmit to Seller the applicable Facility Meter readings for Landfill Gas delivered to Buyer
during the preceding such month. Based on the flow readings from Buyer’s Facility Meter and the
methane readings from Seller’s meter, the BTU values from the Seller’s gas chromatograph and the
“Inside FERC’s Gas Market Report” monthly Northern Natural Gas Co. Demarcation pricing index,
Seller shall prepare and send to Buyer within 10 business days following receipt of the data from
Buyer an invoice which shall be accompanied by a report showing daily amounts for flow, methane and
MMBTUs. Buyer shall remit payment to Seller within 10 business days following receipt of Seller’s
invoices.



3.5 Errors in Billing. Should either party find at any time within one (1) year after the
date of any invoice rendered by Seller that there has been an undercharge or an overcharge in the
amount billed in the invoice, the party finding the error shall promptly notify the other party in
writing. In the Case of an undercharge, Seller shall submit a statement for such undercharge, and
Buyer, upon verifying the same, shall pay such an amount within thirty — (30) days after receipt of
the statement but without interest. In the case of an overcharge, Seller shall refund the amount of
the overcharge to Buyer within thirty — (30) days of notification by Buyer, but without interest.
Neither Seller nor Buyer shall have any liability for any undercharge or overcharge relating to
invoices over one (1) year old.




Article IV – Term, Termination, and Defaults



4.1 Term. Subject to the other provisions contained herein, this Agreement shall become
effective on the date of its execution and shall continue in effect for a period of fifteen (15)
years beginning on the Commencement Date. No later than one hundred eighty (180) days prior to
expiration of this Agreement, the parties will enter into good faith negotiations for potentially
renewing this Agreement on mutually agreeable terms.



4.2 Seller’s Right to Terminate. Seller shall have the right to terminate this Agreement
by written notice to Buyer submitted not later than thirty — (30) days following the occurrence of
any of the following:




          a. Should Buyer commit a material breach of this Agreement and such breach remains uncured
for 30 days following written notice of such breech from Seller.



          b. Should Buyer fail to perform its obligations under this Agreement due to an event of Force
Majeure, which lasts longer than six (6) months.



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          c. Should any involuntary proceeding be initiated against Buyer under the bankruptcy or
insolvency laws, which involuntary proceeding remains undismissed for thirty (30) consecutive days
or in the event of the initiation by the Buyer of a voluntary proceeding under the bankrupt or
insolvency laws.


4.3 Buyer’s Right to Terminate. Buyer shall have the right to terminate this Agreement by
written notice to Seller, submitted no later than thirty — (30) days following the occurrence of
the following:




          a. Should Seller commit a material breach of this Agreement and such breach remains uncured
for 30 days following written notice of such breach from Buyer.



          b. Should Seller fail to perform its obligations under this Agreement due to an event of
Force Majeure, which lasts longer than six (6) months.



          c. Should any involuntary proceeding be initiated against Seller under the bankruptcy or
insolvency laws, which involuntary proceeding remains undismissed for thirty (30) consecutive days,
or in the event of the initiation by Seller of a voluntary proceeding under the bankrupt or
insolvency laws.



          d. Should Buyer elect to sell, shut down or otherwise cease operations at the Facility, the
next owner of the facility will honor this Contract.


4.4 Conditions of Termination. In the event this Agreement is terminated by Seller under
Section 4.2a or by Buyer under Section 4.3a, the party invoking its right to terminate shall be
entitled to seek any available rights or remedies. In the event this Agreement is terminated
pursuant to Sections 4.2b, 4.2c, 4.3b, 4.3c, or 4.3d, neither party shall have any further
obligation to the other following such termination. Notwithstanding such termination, Buyer shall
remain obligated to pay Seller for all Landfill Gas used by Buyer prior to termination.




Article V – Landfill Gas Standards



5.1 Landfill Gas Standards. Seller makes the following warranties with respect to the
Landfill Gas to be delivered to Buyer under this Agreement:




          a. Quantity — Exhibit A, attached hereto and incorporated herein, sets for the parties’
mutual estimate of the quantity and MMBTU content of Landfill Gas that is expected to be produced
at the Landfill and be made available to Buyer.



          b. Methane Content –40% to 60% by volume.



          c. BTU Value – 400 to 550 BTU/cf; (Net Heating Value; Dry Gas @ 60° F, 14.6 psia.)



          d. Sulfur Compounds – 1000 ppm maximum.



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          e. NMOC’s — less than 2400 ppm.



          f. Pressure — minimum pressure of Forty Five — (45) psi measured at the Facility
(before the regulator).



          g. Moisture — dry at burner tip.



          h. Odorization- the landfill gas will have sufficient odorization characteristics to make
it detectable as defined by Federal regulation Title 49 CFR part 192.625 Odorization of Gas.


5.2 Quantity Warranty and Remedy. While Buyer and Seller acknowledge that Seller is not
guaranteeing that any specific quantities of Landfill Gas will be delivered to Buyer and that the
quantities set forth in Exhibit A are merely projections. Seller shall operate the Landfill and
Seller’s Equipment in a prudent and efficient manner in order to attempt to provide Buyer with the
projected daily MMBTU as set forth in exhibit A.



5.3 Landfill Gas Testing by Seller. Twice during the first year of this Agreement (at
approximately 6 month intervals) and once each year thereafter, Seller shall cause the Landfill Gas
to be sampled and subjected to a comprehensive constituent analysis substantially similar to the
analysis contained in the reports set forth on Exhibit B, attached hereto and incorporated herein,
and shall promptly provide Buyer with copies of such reports.




Article VI – Landfill Gas Measurement



6.1 Facility Meter. Buyer shall install the Facility Meter to measure the Landfill Gas
delivered to its facility hereunder and actually burned in the burner(s) at its facility. The
Facility Meter shall include a flow meter capable of measuring the volume of Landfill Gas delivered
each hour. Buyer shall provide Seller with access to the Facility Meter during normal business
hours and upon reasonable advance notice from Seller.



6.2 Meter Tests. Buyer and Seller shall maintain their respective meters used to measure
the Landfill Gas in good condition and repair, and shall have their respective meter inspected
periodically by a reputable third party, but at least once each year. Copies of the inspection
reports shall be made available to the other party upon request.



6.3 Meter Out of Service. If, for any reason, the Facility Meter is out of service or out
of repair so that the amount of Landfill Gas delivered and used by Buyer cannot be ascertained or
determined from its readings, the volume content of Landfill Gas delivered to Buyer during such
period when the Facility Meter is out of service shall be determined by flow meters installed by
Seller at the Landfill.




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Article VII – Taxes



7.1 Taxes. Buyer shall be responsible only for normal state sales tax, if any, when
billed. Seller shall be responsible for the payment of all excise, severance, occupation, and
other taxes leveled in respect to the Landfill Gas covered hereunder and the handling thereof prior
to the delivery to Buyer.




Article VIII – Representations and Warranties



8.1 Representations and Warranties of Seller. Seller represents and warrants that:




          a. This Agreement has been duly authorized by all necessary persons and bodies and Seller has
full power and authority to enter into this Agreement and perform its obligations hereunder.



          b. Seller is not a party to any litigation, or subject to any judgment, order, or decree, or
party to any other contract, which would materially affect its performance of its obligation under
this Agreement.



          c. Seller has full and unqualified title and/or authority to sell all landfill Gas to be
delivered to Buyer hereunder, and all of the Landfill Gas sold and delivered to Buyer is free from
any and all liens, claims and encumbrances. Seller shall hold buyer harmless from and against all
claims, suits, actions, damages, losses, costs, and expenses of every kind and character arising
from each and every claim of any and all persons against such Landfill Gas prior to its delivery at
the Delivery Point.


8.2 Representations and Warranties of Buyer. Buyer represents and warrants that:




          a. Buyer is a duly organized and validly existing corporation under the laws of the State of
Nebraska, with full power and authority to own the Facility and carry on its business in Nebraska.



          b. This Agreement has been duly authorized and Buyer has full power and authority to enter
into this Agreement and perform its obligations hereunder.



          c. Buyer is not a party to any litigation, or subject to any Judgment, order or decree, or
party to any other contract, which would materially affect its performance of its obligations under
this Agreement.



Article IX – Force Majeure



9.1 Force Majeure. If either party is rendered unable, wholly or in part, by a Force
Majeure event to carry out its Obligations under this Agreement, other than to make payment for
amounts accrued, it is agreed that upon such party giving notice and reasonably full particulars of
such Force Majeure event in writing to the other party as soon as possible after the occurrence of
the cause relied on, then the obligations of the


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Party giving such notice, so far as they are affected by such Force Majeure event, shall be
suspended during the continuance of any inability so caused but for no longer period and such cause
shall, as far as possible, be remedied with all reasonable dispatch. Force Majeure events shall
also include in those instances where either party hereto is required to obtain permits or licenses
from any governmental body to enable such party to perform hereunder, the inability of such party
to acquire, or the delays on the part of such party in acquiring, at reasonable cost and after the
exercise of reasonable diligence, such permits or licenses.



9.2 Strikes and Lockouts. It is understood and agreed that the settlement of strikes or
lockouts shall be entirely within the discretion of the party experiencing the strike or lockout or
having the difficulty, and that the foregoing requirement that any Force Majeure shall be remedied
with all reasonable dispatch shall not require the settlement of strikes or lockouts by acceding to
the demands of the opposing party when such course is inadvisable in the discretion of the party
having the difficulty.




Article X – Indemnity



10.1 Buyer’s Environmental Indemnification. Buyer agrees to indemnify and hold Seller, its
agents, contractors, subcontractors, employees or invitees harmless from any and all claims,
damages, fines, judgments, penalties, costs, liabilities, or losses arising from or due to the
presence of Hazardous Materials on Buyer’s property either existing at the time of or which may
have been brought to its property after the execution of this Agreement, provided that Buyer shall
have no obligation under this Article 10.1 for Hazardous Materials which are introduced to or
released on Buyer’s property by Seller, its agents, contractors, subcontractors, employees or
invitees.



10.2 Seller’s Environmental Indemnity. Seller agrees to indemnify and hold Buyer, its
agents, contractors, subcontractors, employees or invitees harmless from and against any and all
claims, damages, fines, judgments, penalties, costs, liabilities or losses arising from or due to
the presence of Hazardous Materials in or on the Landfill or which may flow, diffuse, migrate, or
percolate into, onto, or under the Landfill from neighboring property, or from the Landfill to
neighboring property or ground water after this Agreement commences.



10.3 Seller’s Indemnity. Seller shall indemnify, defend and hold harmless Buyer from and
against any claims, loss, damages, liabilities, fines, penalties, cost, and expense, including
court costs and reasonable attorneys’ fees incurred or suffered by Buyer:




          a. to the extent relating to the Landfill Gas while in Seller’s control and possession.



          b. for personal injury, death or property damage caused by Seller’s or its agents negligent
acts or omissions arising from or relating to this Agreement.



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          c. arising from claims or liens for labor performed or materials furnished for Seller’s
Landfill or relating to Seller’s Equipment.


10.4 Buyers Indemnity. Buyer shall indemnity, defend and hold harmless Seller from and
against any claims, loss, damage, liabilities, fines, penalties, cost, and expense, including court
costs and reasonable attorneys’ fees, incurred or suffered by Seller:




          a. to the extent relating to the Landfill Gas while in Buyer’s control and possession.



          b. for personal injury, death or property damage caused by Buyer’s or its agents’ negligent
acts or omissions arising from or relating to this Agreement.



          c. arising from claims or liens for labor performed or materials furnished for Buyer’s
Facility or relating to Buyer’s Equipment.


10.5 Limitation of Liability. Notwithstanding any other term of this Agreement to the
contrary. In no event shall either party be liable to the other with respect to any claim, whether
based contract, tort (including negligence), warranty, strict liability, implied warranty or
otherwise, for any indirect, special, incidental or consequential loss or damage of any type,
including but not limited to lost profits and damage to goodwill or reputation.




ARTICLE XI – INSURANCE



11.1 Insurance Coverage. Buyer and Seller shall each maintain the following insurance:




          (a) Commercial General Liability Insurance, including contractual liability with limits of
at least $5,000,000.



          (a) Auto Liability policies with combined single limits of $1,000,000.



          (b) Worker’s Compensation Insurance with statutory limits.



          (c) Employers Liability Insurance with liability limits of $1,000,000.


11.2 Certificates of Insurance. Each party will (a) require their insurers to provide the
other party with at least fifteen (15) days advance written notice of cancellation and (b) provide
the other party with certificates of insurance evidencing the coverage and terms as required by
this Article.




ARTICLE XII – MISCELLANEOUS PROVISIONS



12.1 Assignability. Except as otherwise provided, neither party may at any time transfer,
assign or delegate its rights or duties under this Agreement without the express prior written
consent of the other party; and the terms of this Agreement shall be binding on and inure to the
benefit of the successors and assigns of the parties.




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12.2 Severability and Non-Waiver. In the event any sentence or section of this Agreement
is declared by a court of competent jurisdiction to be void, such sentence or section shall be
deemed severed from the remainder of this Agreement, and the balance of this Agreement shall remain
in effect. Either party’s waiver of any breach, or failure to enforce any of the terms and
conditions of this Agreement, shall not in any way affect, limit, or waive such party’s right
thereafter to enforce and compel compliance with every term and condition of this Agreement or to
terminate this Agreement for breach.



12.3 Notices. Any notice which is permitted or required under this Agreement shall be duly
given if in writing and either delivered personally to the person whom it is required to be given
or sent registered or certified mail, return receipt requested, postage prepaid as follows:




	 	 	 	 	 
	 

	 	If to Buyer:
	 	Siouxland Ethanol

P.O. Box 147

Jackson, Nebraska 68743

	 
	 	 	 	 
	 

	 	If to Seller:
	 	L.P. Gill, Inc.

P.O. Box 126

Jackson, Nebraska 68743





12.4 Access. Upon reasonable advance notice not less than 24 hours, each party agrees to
provide the other, and its agents, representatives and contractors with access to its property and
equipment during normal business hours (not including nights, weekends and holidays) for the
purpose of inspection and carrying out its rights and obligations under this Agreement. While on
Siouxland Ethanol’s property, Seller, its agents and contractors shall at all times conduct
themselves in a safe and prudent manner.



12.5 Counterparts. The Agreement may be executed in several counterparts, and as executed
shall constitute one agreement binding on all of the parties hereto.



12.6 Captions. Captions in this Agreement are solely for the convenience of the
parties and are not part of the Agreement, and shall not be used for the interpretation or
determination of the validity of the Agreement or any provision thereof.



12.7 Entire Agreement. This Agreement constitutes the entire understanding between the
parties with respect to the subject hereof.



12.8 Governing Law. This Agreement shall be governed by the substantive laws of the
State of Nebraska, without reference to its conflicts of laws provisions.



12.9 Amendments. The Agreement and any part thereof may be amended at any time by
mutual agreement of the parties. However, no modifications, alteration, amendment or revision of
this Agreement shall be binding upon either party unless executed in writing by the party to be
bound.




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12.10 Independent Contractors. Seller and Buyer are independent contractors. Neither
party is or shall be deemed an agent, servant or employee of or a joint venture with the other
party, and neither party shall have the authority to incur debts or liabilities in the name of
the other or otherwise bind the other party to any contract, debt, or other obligation.



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




	 	 	 	 	 	 	 	 	 
	L.P. GILL, INCORPORATED	 	SIOUXLAND ETHANOL, INCORPORATED	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Leonard P. Gill
 

	 	By:
	 	/s/ Tom Lynch
 

	 	 
	Printed Name: Leonard P. Gill	 	Printed Name: Tom Lynch	 	 
	Title: President	 	Title: President	 	 







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