Document:

exv10w1

 

EXHIBIT 10.1

Christianson & Associates, PLLP

CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS

May 12, 2006

To the Board of Directors

MinnErgy, LLC

Winona, Minnesota

This letter is to confirm our understanding of the terms and objectives of our engagement and the
nature and limitations of the services we will provide.

We will compile, in accordance with attestation standards established by the American Institute of
Certified Public Accountants, from information management provides, the forecasted balance sheets
and related statements of operations, and cash flows, and summaries of significant assumptions and
accounting policies for the first five years of operations and the years then ending. We will not
express any form of assurance on the achievability of the forecast or reasonableness of the
underlying assumptions.

A compilation of the financial forecast assembling the forecast based on management’s assumptions
and performing certain other procedures with respect to the forecast without evaluating the support
for, or expressing an opinion or any form of assurance on, the assumptions underlying it.

If, for any reason, we are unable to complete our compilation of your financial forecast, we will
not submit the forecast or issue a report as a result of this engagement.

A financial forecast presents, to the best of management’s knowledge and belief, the Company’s
expected financial position, results of operation, and cash flows for the forecasted period. It is
based on management’s assumptions reflecting conditions it expects to exist and the course of
action it expects to take during the forecast period.

Management is responsible for representations about its plans and expectations and for disclosure
of significant information that might affect the ultimate realization of the forecasted results.

There will usually be differences between the forecasted and actual results, because events and
circumstances frequently do not occur as expected, and those differences may be material. Our
report will contain a statement to that effect.

We have no responsibility to update our report for events and circumstances occurring after the
date of our report.

At the conclusion of the engagement, management agrees to supply us with a representation letter,
which, among other things, will confirm management’s responsibility for the underlying

 

 

assumptions and the appropriateness of the financial forecast and its presentation.

In order for us to complete this engagement, management must provide assumptions that are
appropriate for the forecast. If the assumptions provided are inappropriate and have not been
revised to our satisfaction, we will be unable to complete the engagement and, accordingly, we will
not submit the forecast or issue a report on it.

Management is responsible for management decisions and functions, and for designating a competent
employee to oversee any preparation assistance we provide. Management is responsible for evaluating
adequacy and results of the services performed and accepting responsibility from such services.
Management is responsible for establishing and maintaining internal controls, including monitoring
ongoing activities.

If management intends to reproduce and publish the forecast and our report thereon, they must be
reproduces in their entirety, and both the first and subsequent corrected drafts of the document
containing the forecast and any accompanying material must be submitted to us for approval.

We estimate that our fees to be $20,000 — $25,000 for the forecasted financial statements.

We appreciate the opportunity to be of service to you and believe this letter accurately
summarizes the significant terms of our engagement. If you have any questions, please let me
know. If you agree with the terms of our engagement as described in this letter, please sign
this letter to confirm your understanding and return it to us.

Sincerely,

/s/ Christianson & Associates, PLLP

Christianson & Associates, PLLP

RESPONSE:

This letter correctly sets forth the understanding of MinnErgy, LLC

Officer’s signature: /s/ Daniel H. Arnold

Title: Chairman

Date 5/25/06exv10w2

 

Exhibit 10.2

May 10, 2007

Steven C. VonWald

10531 40th Street SE

Eyota, MN 55934

Robert Suk

Suite 104

2434 Superior Street NW

Rochester, MN 55901

	 	 	 	Re: Real Estate Option Agreement dated May 12, 2006 between Steven C. VonWald, a
single person (the “Optionor”) and MinnErgy, LLC, a Minnesota limited liability
company (the “Optionee”)

Dear Sirs:

We hereby extend the term of the option granted by the Agreement referenced above, for an
additional Our check in the amount of $50,000.00 (Additional Option Payment) is enclosed. As so
extended the option shall expire at 12:00 midnight on May 12, 2008, unless further extended
according to the Agreement.

Sincerely,

/s/ Daniel H. Arnold

Daniel H. Arnold, Chairman

RECEIPT

I hereby acknowledge receipt of the Additional Option Payment of $50,000.00, and extension of the
Option to May 12, 2008.

	 	 	 
	/s/ Steven C. Von Wold

	 	Received by Robert G. Suk
	 

	 	Law Office P.C.
	Steven C. VonWald

	 	On 5-10-07
	 

	 	/s/ Judy L. Stern

 

MINNERGY, LLC LETTERHEAD

July 11, 2006

Steven C. VonWald

10531 40th Street SE

Eyota, MN 55934

Robert Suk

Suite 104

2434 Superior Street NW

Rochester, MN 55901

Re: Real Estate Option Agreement dated May 12, 2006 between Steven C. VonWald, a
single person (the “Optionor”) and MinnErgy, LLC, a Minnesota limited liability
company (the “Optionee”)

Dear Sirs:

We hereby extend the term of the option granted by the Agreement referenced above, to a period of
one year, and we hereby authorize and instruct Mr. Suk to deliver to the Optionor the Additional
Option Payment) of Forty-five Thousand Dollars ($45,000.00) held by him. As so extended the option
shall expire at 12:00 midnight on May 12, 2007, unless further extended according to the Agreement.

Sincerely,

/s/ Daniel H. Arnold

Daniel H. Arnold, Chairman

/s/ Steven C. Von Wold July 11, 2006

Steven C. VonWald

 

 

SPACE ABOVE THIS LINE FOR RECORDER

REAL ESTATE OPTION AGREEMENT

     THIS AGREEMENT is made this 12th day of May, 2006, by and between Steven C.
VonWald, a single person (the “Optionor”) and MinnErgy, LLC, a Minnesota limited liability company
(the “Optionee”).

	 	1.	 	GRANT OF OPTION: Optionor hereby grants to Optionee the exclusive
right and option to purchase the real estate (the Property) situated in Olmsted County,
Minnesota, legally described as follows:
	 
	 	 	 	[See legal description attached.]
	 
	 	2.	 	OPTION CONSIDERATION; PAYMENT: Optionee hereby agrees to pay to
Optionor upon the execution of this Option Agreement the sum of Five Thousand Dollars
($5,000.00) (the “Initial Option Payment” and, together with any Additional Option
Payment, the “Option Consideration”).
	 
	 	3.	 	TERM; EXPIRATION: This option shall commence upon its execution by
Optionor and continue for a period of Sixty (60) days. It shall expire if not
exercised or extended as provided herein at 12:00 midnight on the sixtieth day after
the date of execution.
	 
	 	4.	 	EXTENSION; ADDITIONAL PAYMENTS. Optionee may extend the term of this
option to a period of one year, by written notice to Optionor given before expiration
of the initial period accompanied by payment of the additional sum (an Additional
Option Payment) of Forty-five Thousand Dollars ($45,000.00). Optionee further agrees
to deposit in escrow, with Optionor’s attorney, Robert Suk, the said additional sum of
One Hundred Thousand Dollars ($45,000.00) upon the execution of this Option Agreement.
Such sum shall be held by the escrow agent and delivered to the Optionor upon notice of
Optionee’s election to extend the term of this option, or delivered to Optionee if such
election is not made. Such extension period shall expire at 12:00 midnight on the
first anniversary of the date of execution of this Option Agreement. If the term is so
extended, Optionee may extend the term of this option for

 

 

	 	 	 	an additional year, by written notice to Optionor given before expiration of the
extended term accompanied by payment of the additional sum (an Additional Option
Payment) of Fifty Thousand Dollars ($50,000.00). Such extension period shall expire at
12:00 midnight on the second anniversary of the date of execution of this Option
Agreement. If the term is so extended, Optionee may extend the term of this option for
another additional year, by written notice to Optionor given before expiration of the
extended term accompanied by payment of the additional sum (an Additional Option
Payment) of Fifty Thousand Dollars ($50,000.00). Such extension period shall expire at
12:00 midnight of the third anniversary of the date of execution of this Option
Agreement.
	 
	 	5.	 	NOTICE OF EXERCISE. Optionee may exercise or extend this option, as
provided herein, only by giving written notice thereof to Optionor at the address
indicated below, by registered or certified mail, or personal delivery, prior to its
expiration.
	 
	 	6.	 	FAILURE TO EXERCISE. If Optionee does not exercise this option in the
manner and within the time specified herein, this option shall terminate, Optionor
shall retain the Option Consideration, free of any claim by Optionee; and neither party
shall have any claim or right against the other under this Agreement.
	 
	 	7.	 	PURCHASE TERMS: If this option is exercised as provided herein,
Optionor shall sell and Optionee shall purchase the Property with improvements thereon
under the following terms and conditions:

	 	a.	 	Purchase Price: The Purchase Price for the Property shall be
the sum of One Million Four Hundred Fifty Thousand Dollars ($1,450,000.00). The
Option Consideration paid by Optionee to Optionor shall by credited against the
Purchase Price. The Purchase Price shall be paid in cash at closing.
	 
	 	b.	 	Closing. The closing of the purchase shall be at the offices
of Optionor’s attorneys, Streater & Murphy, P.A., 64 East Fourth Street, Winona,
Minnesota, on a date agreed upon by the parties that shall be not less than sixty
(60) nor more than ninety (90) days after exercise of the option.
	 
	 	c.	 	Evidence of Title. Optionor shall, within thirty (30) days
after execution of this Agreement, furnish an abstract of title certified to date,
including proper searches covering bankruptcies, and State and Federal judgments
and liens. Optionee shall be allowed 30 days after receipt thereof for
examination of title and the making of any objections thereto, said objections to
be made in writing or deemed to be waived. If any objections are so made the
Optionor shall be allowed 120 days to make title marketable. Pending correction
of title, if the option has been exercised, the closing shall be postponed, but
upon correction of title and within 10 days after written notice, Optionee shall
perform this agreement according to its terms.
	 
	 	 	 	If said title is not marketable and is not made so within 120 days from the date of
written objections thereto as above provided, this agreement shall be void, at the

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	 	 	 	election of the Optionee, and neither party shall be liable for damages hereunder
to the other party and all money theretofore paid by Optionee to Optionor shall be
refunded; but this provision shall not deprive either party of the right of
enforcing the specific performance of this agreement provided such agreement shall
not be terminated as aforesaid, and provided action to enforce such specific
performance shall be commenced within six months after such right of action shall
arise. If title is not marketable and Optionor fails to correct the title,
Optionee may elect to exercise the option and close and to deduct from the Purchase
Price the cost of correcting the title or the reduction in value of the Property
resulting from the condition of title.
	 
	 	d.	 	Conveyance. Subject to performance by Optionee, Optionor
agrees to execute and deliver a Warranty Deed conveying marketable title to the
Property subject only to the following exceptions:

	 	(i)	 	Building and zoning laws, ordinances, State and Federal
regulations.
	 
	 	(ii)	 	Restrictions relating to use or improvement of premises not
subject to unreleased forfeiture.
	 
	 	(iii)	 	Reservation of any minerals or mineral rights to the State
of Minnesota.
	 
	 	(iv)	 	Utility easements of record or in use.
	 
	 	(v)	 	Public streets and roadways dedicated or in use.
	 
	 	(vi)	 	Rights of tenants under tenancies existing on the date of
this Option Agreement and disclosed to Optionee, or entered into after the
date of this Option Agreement with the consent of Optionee.

	 	e.	 	Possession. Optionor shall be entitled to possess and use
the Property, including the right to farm the land, during the term of this Option
and until the closing. Optionor shall deliver possession of the Property to
Optionee at the time of closing. If there are crops upon the Property, planted
before the exercise of this option and unharvested at the time of closing,
Optionee may, at its sole election

	 	(i)	 	permit the crops to be harvested at the end of the growing
season, or
	 
	 	(ii)	 	pay to their owner, for each acre of crops that are not
permitted to be harvested, the sum of Four Hundred Dollars ($400.00) less the
estimated costs of growing, harvesting and selling such crops that were not
incurred as a result of the delivery of possession.

	 	f.	 	Taxes; Assessments. Real estate taxes due and payable in
years preceding the year in which the closing occurs and any unpaid special
assessments shall be paid by Optionor. Real estate taxes due and payable in the year in which the closing
occurs shall be prorated between the parties to the date of closing. Real estate
taxes due

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	 	 	 	and payable in years after the year in which the closing occurs shall be
paid by Optionee.
	 
	 	g.	 	Prorations. Pro rata adjustments of rents, interest,
insurance, utilities and current operating expenses shall be made as of the date
of closing.
	 
	 	h.	 	Eminent Domain: In the event the property or any part
thereof is taken or threatened to be taken pursuant to eminent domain after the
notice of exercise of the above option, but prior to closing, the Optionee shall
have the right at its election to cancel and terminate this agreement or to
complete the purchase as set forth above with the Optionee being entitled to
receive all condemnation proceeds.
	 
	 	i.	 	Personal Property: The sale and purchase shall include not
include any personal property of Optionor, but shall include all buildings,
improvements and fixtures, including the well, pump, engine, gearbox, water
rights, pivot and any other equipment necessary to get water out of the ground on
the subject property.

	 	8.	 	INVESTIGATION. Optionee shall have the right, during the term of the
option, to investigate at its own expense the condition, quality, and suitability of
the Property, including surveys and site analyses, environmental analyses, soil
sampling, zoning and governmental permit requirements, utility services, and the like,
and may enter upon the property for such purposes, provided such entry does not
interfere with occupancy and use of the Property by Optionor or tenants. Optionee
shall defend, indemnify and save harmless Optionor from and against any claim,
liability or expense arising from or attributable to any act or omission of Optionee or
its employees, contractors or agents in connection with any such activities. If
Optionee damages any crop growing on the Property, or if its investigations or the
closing of the sale prevents the harvest of any growing crop, Optionee shall pay to the
owner of such crop the amount determined as provided in paragraph 7(e)(ii).
	 
	 	9.	 	REPRESENTATIONS OF OPTIONOR. Optionor represents and warrants that
Optionor has not caused the Property to be contaminated by any hazardous substance in
violation of any environmental law or regulation, and does not have knowledge of the
presence of any hazardous substance upon the Property.
	 
	 	10.	 	RECORDING OF OPTION: This Option Agreement may be recorded by either
party.
	 
	 	11.	 	NOTICES: Any notice, demand or other document which either party is
required or may desire to give or deliver to or make upon the other party shall be
given in writing and served either personally or given by prepaid United States
certified mail, return receipt requested, and addressed to the following addresses:

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	 	If to Optionor:	 	Steven C. VonWald
	 
	 	 	 	10531 40th Street SE
	 
	 	 	 	Eyota, MN 55934
	 
	 	 	 	 
	 
	 	with a copy to:	 	Robert Suk
	 
	 	 	 	Suite 104
	 
	 	 	 	2434 Superior Street NW
	 
	 	 	 	Rochester, MN 55901
	 
	 	 	 	 
	 
	 	If to Optionee:	 	MinnErgy, LLC
	 
	 	 	 	4455 Theurer Blvd.
	 
	 	 	 	Winona, MN 55987
	 
	 	 	 	Attn:  Dan Arnold, Chairman
	 
	 	 	 	 
	 
	 	with a copy to:	 	Kent A. Gernander
	 
	 	 	 	Streater & Murphy, P.A.
	 
	 	 	 	64 East Fourth Street
	 
	 	 	 	Winona, MN 55987

	 	 	 	Either party hereto may designate a different address for itself, or additional persons
to whom copies thereof are to be sent, by notice similarly given.
	 
	 	12.	 	BROKERS. Each of the parties represents and warrants to the other that
it has not entered into any agreement or arrangement under which any broker will be
entitled to commission or compensation as a result of this agreement or the sale of the
Property hereunder, and each agrees to defend, indemnify and save harmless the other
party from and against any claim, and any resulting liability or expense, of a broker
under an agreement with or as a result of any act or omission of such party.
	 
	 	13.	 	GOVERNING LAW; FORUM. This Agreement is entered into and is to be
performed in the State of Minnesota. It shall be governed by and interpreted in
accordance with the laws of the State of Minnesota. Any action arising from or
concerning this Agreement shall be brought only in the Third Judicial District Court,
Winona County, Minnesota (except an action to enforce the judgment of such court).
	 
	 	14.	 	ENTIRE AGREEMENT; BINDING EFFECT. This Agreement contains the entire
agreement of the parties concerning its subject matter; and there are no other
understandings between them. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs and representatives or
successors and assigns. Optionee may assign this Agreement and the rights of Optionee
hereunder to a party that assumes and agrees to perform all obligations of Optionee
hereunder, but no such assignment shall relieve Optionee of any obligation hereunder
incurred prior to such assignment. Optionee shall notify Optionor in writing of any
such assignment.

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	 	15.	 	TIME. Time is of the essence as to the performance of all of the terms
and conditions of this Agreement.
	 
	 	16.	 	GENERAL. The captions and titles herein are for reference only and are
not to be considered a part of this Agreement or in the interpretation hereof. This
Agreement shall not be valid until signed by both parties. The phrase “execution and
delivery hereof,” as used above, shall be the date the last party hereto signs this
Agreement and serves it upon the other party in the same manner as set forth for
notices. Time is of the essence.
	 
	 	17,	 	ADDITIONAL TERMS.

	 	a.	 	The Property consists of two parcels represented by Optionor to
contain a total area of One Hundred Seventy Two acres, exclusive of roads and
rights of way. The Purchase Price is not dependent on the specific quantity of
land included in the Property.

[Signature page follows.]

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IN WITNESS WHEREOF, the parties have executed this Agreement.

	 	 	 	 	 	 	 	 	 
	OPTIONOR:	 	 	 	OPTIONEE:	 	 
	 	 	 	 	MinnErgy, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Steven C. VonWald

	 	 	 	By
	 	/s/ Daniel H. Arnold	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Its
	 	Chairman	 	 
	 

	 	 	 	 	 	 

	 	 

	 	 	 
	STATE OF MINNESOTA
	 	)
	 
	 	) ss.
	COUNTY OF WINONA
	 	)

     The foregoing instrument was acknowledged before me this 12th day of May, 2006, by Steven C.

VonWald, a single person, Optionor.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	SEAL
	 	NANCY J. HASS	 	 	 	 	 	 
	 
	 	Notary Public	 	 	 	 	 	 
	 
	 	Minnesota	 	/s/ Nancy J. Hass	 	 	 	 
	

My Commission Expires January 31, 2010
	 	Notary Public
	 	 	 	 
	 	 	 	 	 	 	 

	 	 	 
	STATE OF MINNESOTA
	 	)
	 
	 	) ss.
	COUNTY OF WINONA
	 	)

     The foregoing instrument was acknowledged before me this 12th day of May, 2006, by
Daniel H. Arnold, the Chairman of MinnErgy, LLC, a Minnesota limited liability company, Optionee,
on behalf of said company.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	SEAL
	 	KENT A. GERNANDER	 	 	 	 	 	 
	 
	 	Notary Public — Minnesota	 	/s/ Kent A. Gernander	 	 	 	 
	My Commission Expires January 31, 2010 
	 	Notary Public	 	 	 	 
	
 
	 	 	 	 	 	 
	 	 	 	 	 	 	 

THIS INSTRUMENT DRAFTED BY:

Kent A. Gernander

64 East Fourth Street

P.O. Box 310

Winona, MN 55987

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Exhibit A

Description of Property

The Southwest Quarter of Section 15, Township 106 North, Range 12 West, Olmsted County, Minnesota,
less that tract described as: Commencing at the northwest corner of said Southwest Quarter; thence
East on the quarter line 300 feet; thence South 871 7/30 feet; thence West 300 feet; thence North
871 7/30 feet to the place of beginning; and less that tract described as: Commencing at the
southwest corner of said Southwest Quarter; thence East 1205 feet to the point of beginning; thence
North 525 feet; thence East 480 feet; thence South 525 feet; thence West 480 feet to the place of
beginning.

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