exv10w3



 






Exhibit 10. 3


OPTION TO PURCHASE REAL PROPERTY




     IN CONSIDERATION of Twenty Thousand Dollars ($20,000), paid to Warren
Mitchell Thompson and Henrietta P. Thompson, husband and wife, hereinafter referred
to as “Sellers,” receipt of which is acknowledged, Sellers give and grant to Agassiz
Energy, LLC, a Minnesota limited liability company, hereinafter referred to as “Purchaser,”
and Purchaser’s successors and assigns, the exclusive option to purchase the real
property Sellers situated in the County of Polk, State of Minnesota, particularly described
as:



     The North Twenty-four (24) acres of the following-described premises:




That
part of the East Half of the Southwest Quarter (E1⁄2SW1⁄2) of Section
Three (3), Township One Hundred Forty-eight (148) North of Range Forty-two (42) West of the Fifth Principal Meridian, described as follows:
Commencing at an iron pipe monument at the southwest corner of said
Section 3; thence North 88 degrees 47 minutes 47 seconds East, assumed
bearing, along the south line of said Section 3, a distance of 1319.82 feet to
the southwest corner of the said E1⁄2SW1⁄4said point being the point of
beginning of the tract to be described; thence North 01 degrees 34 minutes
42 seconds West along the west line of the said E1⁄2SW1⁄4 a distance of
2329.41 feet to an iron pipe monument on the southerly right of way line of
the Burlington Northern, Inc. Railroad; thence South 61 degrees 10 minutes
38 seconds East along said right of way line 1231.72 feet to an iron pipe
monument; thence South 36 degrees 57 minutes 03 seconds West 533.55
feet to an iron pipe monument; thence South 07 degrees 29 minutes 36
seconds West 386.15 feet to an iron pipe monument; thence North 79
degrees 51 minutes 30 seconds West 82.26 feet to an iron pipe monument;



 









 






thence South 06 degrees 57 minutes 23 seconds West 937.41 feet to the
south line of the said E1⁄2SW1⁄4; thence South 88 degrees 47 minutes 47
seconds West along said south line 449.47 feet to the point of beginning,
containing 33.10 acres, more or less;




Together with a roadway easement for access to and from the above-described real property over and across that part of the East Half of the
Southwest Quarter (E1⁄2SW1⁄4) of Section Three (3), Township One Hundred
Forty-eight (148) North of Range Forty-two (42) West of the Fifth Principal
Meridian, described as follows: Commencing at an iron pipe monument at
the southwest corner of said Section 3; thence North 88 degrees 47 minutes
47 seconds East, assumed bearing, along the south line of said Section 3 a
distance of 1769.29 feet to the point of beginning of the easement to be
described; thence continuing North 88 degrees 47 minutes 47 seconds East
33.34 feet; thence North 06 degrees 57 minutes 23 seconds East 931.03
feet; thence North 79 degrees 51 minutes 30 seconds West 33.05 feet;
thence South 06 degrees 57 minutes 23 seconds West 937.41 feet to the
point of beginning, containing 0.70 acres, more or less.




(specific real estate description to be determined by survey provided by, and paid
for by, Purchaser at the exercise of the Option; the real estate subject to the Option
is illustrated on Exhibit “A” attached hereto);


including all easements, rights of way, and appurtenances, and all of Sellers’ right, title,
and interest in all public ways adjoining the property.




     This Option is given on the following terms and conditions:


SECTION ONE


PRICE AND TERMS OF PAYMENT



     The purchase price for the property shall be Two Hundred Thousand Dollars
($200,000) which shall be paid on exercise of this Option by Purchaser. The Option
payment(s) shall be applied toward the total purchase price.



     In addition, in the event the Option is exercised when the Sellers have growing crop
on the premises, Sellers shall be entitled to remove said crop at harvest or be
compensated the fair market value of the lost crop as agreed in writing or as determined
by Minnesota Regional Extension Service if the parties are unable to agree.



-2-









 




SECTION TWO


PERIOD OF OPTION AND EXTENSION



     This Option may be exercised by giving notice of exercise to Sellers at 22348
350th
Street SE, Erskine, Minnesota 56535, at any time during the primary period from April 1,
2006, until March 31, 2007; or during the extension period, if the Option is extended as
provided below, until March 31, 2008. The Option may be so extended by Purchaser
giving Sellers written notice of extension prior to the termination of the primary period, and
paying to Sellers at the time of the notice the additional consideration of Twenty Thousand
Dollars ($20,000). In the event the Option is not exercised, Sellers shall retain all Option
payments made pursuant to this Agreement.


SECTION THREE


TITLE



     If the Option is exercised, Sellers shall, within sixty (60) days after the delivery to
Sellers of the notice of exercise, secure and submit to Purchaser for examination by
Purchaser’s attorneys, an updated Abstract of Title. Within thirty (30) days thereafter,
Purchaser shall give notice in writing to Sellers of any defects in or objections to the title as
so evidenced, and Sellers shall clear the title of the defects and objections so specified.



     If Sellers fail to clear title to the extent required in this Option or to submit evidence
of Sellers’ ability to do so prior to closing, and such failure continues for one hundred
twenty (120) days after the date of exercise of the Option, Purchaser may clear title to the
extent so required and charge the cost of clearing to Sellers or, at Purchaser’s option, may
terminate the contract by giving thirty (30) days’ written notice to Sellers.



     Title to be conveyed as provided in this Option shall be merchantable title, free and
clear of all liens, encumbrances, restrictions, and easements.



-3-









 




SECTION FOUR


CLOSING



     Sellers shall be responsible for providing an updated Abstract of Title, Deed in
recordable form; and payment of deed tax. Purchaser shall be responsible for surveying
costs, title examination (or owner’s title insurance), and recording the Deed. Taxes and
assessments in the year of closing shall be prorated between the parties as of the date of
the closing. Closing shall be scheduled ten (10) days following determination that the title
to the real estate is marketable.


SECTION FIVE


POSSESSION



     Sellers shall continue in possession of the property until the closing of the
transaction, and shall maintain the property in its present condition, reasonable wear from
ordinary use excepted. Possession shall be transferred to Purchasers at closing.


SECTION SIX


HAZARDOUS SUBSTANCES



     The parties acknowledge that Purchaser may, during the option period(s) conduct
environmental testing pursuant to Section Seven. In the event Purchaser exercises the
purchase option(s) set forth in this Agreement, Purchaser relying on its own testing, shall
accept said property “as is.”


SECTION SEVEN


TESTING



     In the event soil testing or other testing is undertaken by Purchaser during the
Option period, Sellers shall be compensated in an amount to be determined by the
Minnesota Regional Extension service for any crop damage occurring on the parcel or



-4-









 




adjacent area which is caused directly or indirectly by said testing. Purchaser shall be
responsible for costs of environmental testing.



SECTION EIGHT


NOTICES



     Any notice under this Option shall be given in writing to the party for whom it is
intended in person or by certified mail at the following address, or such future address as
may be designated in writing:



	 	 	 	 	 
	 

	 	Sellers:
	 	22348 350th Street SE
	 

	 	 	 	Erskine, MN 56535
	 
	 	 	 	 
	 

	 	Purchaser:
	 	Donald Sargeant
	 

	 	 	 	President and Chief Manager
	 

	 	 	 	510 County Road 71
	 

	 	 	 	Crookston, MN 56716





to any successor or assignee of either party, at the address stated in the notice of
succession or assignment.



SECTION NINE


GOVERNING LAW



     This Option Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota.


SECTION TEN


AMENDMENT



     This Option Agreement may not be amended except by a written instrument signed
by the parties hereto.



-5-









 




SECTION ELEVEN


ASSIGNMENT AND SUCCESSION



     This Option and the contract resulting from its
 exercise shall bind and inure to the
benefit of the heirs, administrators, executors, successors, and assigns of the respective
parties. All rights of Purchaser under this Option may be assigned without restriction, but
notice of each assignment shall be given in writing to Sellers.


DATED this 11th day of March, 2006.




	 	 	 	 	 	 	 
	SELLERS:	 	PURCHASER:
	 
	 	 	 	 	 	 
	 	 	AGASSIZ ENERGY,
LLC
	 
	 	 	 	 	 	 
	/s/ Warren Mitchell Thompson
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	WARREN MITCHELL THOMPSON
	 	 	 	 	 	 
	 	 	By 	Donald Sargeant
	 	 	 	 
	 

	 	 	 	Its
	Chief Manager
	 

	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Henrietta P. Thompson
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	HENRIETTA P. THOMPSON
	 	 	 	 	 	 
	 

	 	By 	 	 	 	 
	 	 	 	 
	 

	 	 	 	Its	 	 
	 

	 	 	 	 	 





	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 
	 

	 	 	)	 	 	ss.
	COUNTY OF POLK

	 	 	)	 	 	 






     The foregoing instrument was acknowledged before me this                      day of
                     , 2005, by Warren Mitchell Thompson and Henrietta P. Thompson,  husband and wife, Sellers.



	 	 	 
	 

	 	 
	 
	 

	 	Notary Public, Polk County, MN

My Comm. Expires:






-6-









 






	 	 	 	 	 	 	 
	STATE OF MINNESOTA

	 	 	)	 	 	 
	 

	 	 	)	 	 	ss.
	COUNTY OF POLK

	 	 	)	 	 	 






     The
foregoing instrument was acknowledged before me this 16th day of
March, 2006, by and Don Sargeant and
                     the Chief Manager and                     , respectively of
Agassiz Energy, LLC a Minnesota limited liability company, Purchaser.



	 	 	 
	

	 	/s/ Daniel L. Rust
	 

	 
	 

	Notary Public, Polk County, MN

My Comm. Expires:






THIS INSTRUMENT WAS DRAFTED BY:

Johannson, Rust, Yon, Stock

& Rasmusson, P.A.

P.O. Box 605

Crookston, MN 56716




-7-









 











-8-