Document:

exv10w8

 

Exhibit 10.8

OPTION AGREEMENT

This Option Agreement is made and entered into on this 29th day of July 2005, by and
between “Jean G. TenHulzen Revocable Trust” (the “Seller”), and E Energy Adams a Nebraska Limited
Liability Company (the “Buyer”). For valuable consideration received, the receipt and sufficiency
of which is hereby acknowledged, the Seller grants to the Buyer an option to purchase under the
following terms and conditions.

SECTION ONE

GRANT OF OPTION

A. In consideration of the mutual promises of the parties, the Seller does hereby give and grant to
the Buyer the exclusive and irrevocable right, privilege and option to purchase, under the
conditions hereinafter provided, all of the Seller’s right title and interest in the real property
which is located in Gage County, State of Nebraska, and more particularly described as follows:

A strip of Lane 100 Ft wide running the full length of the railroad line on those lands belonging
to Jean G. TenHulzen Revocable Trust in Sections 17 and 20 of Township 6 North, Range 8 East of the
6th P.M. Gage County Nebraska. Said strip to be 200 foot South and West of the BNSF
railroad running parallel to it. Parcel is estimated to be approximately 7 acres. Exact legal
description and acreage to be determined by a licensed Surveyor.

(the “Property”)

B. The nonrefundable Option Deposit of $1,000.00 to be paid by the Buyer to the Seller pursuant to
this Agreement shall be applied towards the Purchase Price of the Property. The Seller fully
agrees and acknowledges that the consideration given by the Buyer constitutes legal, adequate, and
valuable consideration for the purposes of this Agreement.

C. The purchase price for the Property shall be the sum of $5,000.00 per acre (the “Purchase
Price”)

D. The “Effective Date” shall be the date that the last of the parties hereto signs and
acknowledges this Option Agreement.

SECTION TWO

OPTIONS TERMS

A. The Seller, in consideration for the payment of the nonrefundable Option Deposit and other
consideration, does hereby give to the Buyer the exclusive right and option to purchase the
Property described above (the “Option”).

 

 

B. The nonrefundable Option Deposit shall be paid by the Buyer to the Seller within five (5)
business days after all parties have executed this Option Agreement.

C. The Buyer shall have the right to exercise this Option during a period of time beginning at
12:00 o’clock noon on the Effective Date and lasting until 12:00 o’clock noon on the same day and
calendar month and two full years after the Effective Date (the “Ending Date”). The Buyer shall
exercise this option by giving written notice by certified or registered mail to the Seller at the
address indicated above, by hand delivering written notice to the Seller, or by providing other
written notice (with the Seller giving the Buyer a written receipt indicating the time and date of
receipt). The date that the Seller receives this notice shall be known as the “Date of
Commencement.”

D. It is understood and agreed that time is of essence of this agreement with regard to the closing
of this transaction after the option is exercised by the Buyer. If the Buyer does not exercise
this Option by the ending date as specified above, then the right and option set forth herein shall
immediately terminate.

SECTION THREE

PROMISES OF PARTIES FOLLOWING EXERCISE OF OPTION

     Subject to the Buyer exercising this Option, the Seller and the Buyer agree that the Seller shall
sell and the Buyer shall buy the Property upon the following terms and conditions:

A. Representations and Warranties

     To induce the Buyer to enter to enter into this Agreement, the Seller makes the following
representation, warranties, and covenants:

          1. Seller has good and marketable fee simple title to the Property, free and clear of all
liens, property taxes, encumbrances, and restrictions, except for those restrictions appearing of
record, taxes for the year of closing, encumbrances that will be cleared prior to closing, and
encumbrances that will be cleared at closing out of the Seller’s proceeds from the Purchase Price.

          2. There are no condemnations or similar proceedings affecting any part of the Property and
no such proceeding shall be pending on the Closing Date. To the best of the Seller’s knowledge, no
such condemnations or other proceeds are threatened or planned.

          3. To the best of the Seller’s knowledge, there are no toxic wastes on, in or around the
Property and the Property has not been used to manufacture, store, or dispose of environmentally
hazardous materials.

          4. There are no leases, service contracts or agreements relating to the operation,
maintenance, or security of the property under which the Seller is Bound and which will survive the
closing, except the existing lease to Gary Kroese currently in effect for the crop year 2005.

 

 

          5. All encroachments, reservations, limitations, road right of ways, or servitudes affecting
the Property are disclosed in the Public Records.

          6. The Seller is not subject to any commitment, obligation, or agreement, including, but not
limited to, any right of first refusal or option to purchase, granted to a third party, which would
or could prevent the Seller from completing the sale of the Property as contemplated by this
Agreement.

          7. Seller shall be in sole and exclusive possession of the Property and will deliver
possession of the Property free of all leases (except the existing lease identified above) on the
Closing Date; provided, however, in the event that Buyer exercises this Option and the transaction
is closed during the calendar year, the total rent for such calendar year shall be prorated between
the parties.

          8. The Seller shall maintain the property in its present condition on the Effective Date
through the date of the Buyer’s exercise of its option and the closing of this transaction. Risk
of loss from fire or other casualty shall remain with the Seller until the property is conveyed to
the Buyer.

B. Conditions Precedent

     The obligations of the Buyer to close this transaction are subject to the Buyer having given
Notice of its exercise of this Option to Purchase and subject to the following:

          1. All representations and warranties of the Seller shall be true and correct as of the
Closing Date as if such representations and warranties were being made on such date.

          2. Seller shall have performed all covenants to e performed by the Seller as is herein
provided.

          3. The Seller shall grant full possession of the real estate to the Buyer at the time of
closing, subject only to the existing Lease to Gary Kroese for the calendar year 2005 and any
annual renewals of said Lease entered into between Seller and the Tenant prior t the time of
Buyers’ exercise of the option to purchase.

          4. If any of such conditions are not fulfilled on or as of the Closing Date, and
notwithstanding anything to the contrary in this Agreement, the Buyer shall have the right to
terminate this Agreement.

C. Marketable Title

          1. Seller shall convey a marketable title, subject only to liens, encumbrances, exceptions, or
qualifications set forth in this Agreement and those which shall be discharged by Seller at or
before closing. Marketable title shall be determined according to applicable title standards
adopted by authority of the Nebraska State Bar Association and in accordance the law.

 

 

          2. The Buyer shall secure and pay the cost of an owner’s title insurance policy through a
carrier of the Buyer’s choice.

          3. If the Buyer discovers that the title is defective, the Buyer shall notify the Seller in
writing specifying the defect(s). If the defect(s) render the title unmarketable or uninsurable
the Seller will have 30 days from the receipt of notice within which to remove the defect(s). All
expenses to clear title defects shall be paid by the Seller.

D. Closing

          1. This transaction shall be closed and the deed and other closing papers delivered on or
before the 30th day following the Date of Commencement of this Agreement (the “Closing
Date”) unless extended by other provisions of this Contract or by the mutual consent of both
parties. The closing shall be held in the county in which the Property is located, at the office
of the title insurance company providing the title insurance policy to the Buyer. It is our
understanding that Mrs. TenHulzen will sing in front of a notary at her place of residence.

          2. At closing the Buyer shall pay the cash portion of the Purchase Price by bank cashier’s
check or certified check either of which shall be issued by and drawn on a local institution and
the Seller shall furnish the deed, an absence of lien affidavit, non-foreign status affidavit, and
any corrective instruments that may be required in connection with perfecting the title.

          3. Except as otherwise specifically provided herein, the Buyer shall pay all of the costs of
the closing of this transaction, including Seller’s Attorney fee.

E. Conveyance

     The Seller shall convey marketable title in the property to the Buyer by Warranty Deed,
subject only to easements and restrictions of record.

F. Survey

     The Buyer, at the Buyer’s expense, at anytime within the Option period, may have the property
surveyed.

G. Ingress and Egress

     The Seller warrants that there is ingress and egress to the Property from the public road or
highway adjacent to the property.

H. Liens

     The Seller shall furnish to the Buyer at time of closing an affidavit attesting to the
absence, unless otherwise provided for herein, of any financing statements, claims of lien or
potential lienors known to the Seller and further attesting that there have been on improvements or
repairs

 

 

to the Property for 120 days immediately preceding the date of closing in a form
satisfactory to the Buyer. If the Property has been improved, or repaired within such time, the
Seller shall deliver releases or waivers of mechanic’s liens, executed by all general contractors,
subcontractors, suppliers, and materialmen, in addition to the Seller’s lien affidavit setting
forth the names of all such general contractors, subcontractors, suppliers, and materialmen and
further reciting that in fact all bills for work to the Property or personalty which could serve as
a basis for a mechanic’s lien or a claim for damages have been paid or will be paid at closing.

I. Prorations

     The Seller shall pay all real estate taxes and assessments (if any) levied and assessed for
all years prior to the date of closing. The real estate taxes for the year of closing shall be
prorated to the date of closing. In the event that the amount of the taxes for the year of closing
is not known at the time of closing, such real estate taxes shall be prorated on the basis of the
taxes levied and assessments for the prior calendar year. The Buyer shall assume and pay any and
all recapture of real estate taxes levied as a result of the property having greenbelt designation.

J. License to Enter

          1. The Seller grants to the Buyer and its employees, representatives, agents, contractors and
subcontractors, a license to enter upon the premises for the purposes of inspection, evaluation and
investigation of the physical characteristics and legal and regulatory status of the Property, as
well as any other physical inspections and other investigations of and concerning the Property as
Buyer, in its sole discretion, may deem appropriate, including but not limited to environmental
assessment, soil boring tests, surveys and appraisals to determine the feasibility of using the
property for the construction and operation of an ethanol plant.

          2. The Seller shall permit the Buyer and its representatives, agents, employees, lenders,
contractors, appraisers, architects and engineers, access to and entry on the Property, and the
Buyer’s consultants may examine, inspect, measure and test the Property for the purposes set forth
herein and for all other reasonable purposes, until this Option Agreement terminates.

          3. The Buyer shall notify the Seller’s existing Tenant in advance of its intention to enter
upon the premises for such purposes. The Buyer shall reimburse the Seller’s Existing Tenant for
any damages caused to such Tenant’s crops as a result of the Buyer’s entry upon, or inspection,
evaluation and investigation of the property.

K. Attorney’s Fees: Costs

     In connection with any litigation arising out of this Agreement, the prevailing party shall be
entitled to recover reasonable attorney’s fees and costs.

L. Persons Bound: Notice

     This Agreement shall bind and inure to the benefit of the parties hereto and their successors
and assigns. Whenever the context permits, singular shall include plural and one gender shall
include

 

 

all. Notice given by or to the attorney for any party shall be as effective as if given by
or to the party.

M. Possession

     Except as expressly noted herein, Seller represents that there are no parties in possession
other than the Seller. Seller agrees to deliver full possession of the property at the time of
closing except as specifically provided herein.

N. Other Agreements

     No prior or present agreements or representations shall be binding upon Buyer or Seller unless
included in this Agreement. No modifications or changes in this Agreement shall be valid or
binding upon the parties unless in writing and executed by the party or parties to be bound
thereby.

O. Notice to Parties

     Notices shall be effective for all purposes pursuant to the Agreement if sent by First Class
United States Mail with postage prepaid to the parties at the following addresses:

1. To the Seller. Notice shall be mailed to the Seller at the following address:

Gaylen TenHulzen

4425 Greyhawk Ridge Drive

Sioux City, Iowa 51106

2. To the Buyer. Notice shall be mailed to the Buyer at the following address:

E Energy Adams, LLC

105 East Veterans Street

Tomah, WI 54660

P. Assignment

     It is specifically understood and agreed by the parties hereto that the Buyer shall be
entitled to assign its rights and obligations under this Option Agreement to the appropriate
governmental body for roadway purposes.

Q. Default: Remedies

     In the event that either party defaults in the performance of its obligations under this
Agreement, the other party shall be entitled to pursue any and all legal and equitable remedies
available under Nebraska Law, including but not limited to specific performance of this Option
Agreement.

 

 

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

	 	 	 	 
	By:

	 	/s/ Jean G. TenHulzen	 
	

	 	 	 
	 
	 	 	 
	Title:
	 	 	 
	

	 	 	 
	 
	 	 	 
	Social Security #

	 	XXX-XX-XXXX	 
	

	 	 	 

E ENERGY ADAMS, LLC

By: /s/ Jack L. Alderman

Title: President

	 	 	 	 	 	 	 	 	 	 	 
	STATE OF NEBRASKA               

	 	 	)	 	 	 	 	[ General Notary – St. of Nebraska
	 	]
	

	 	 	)	 	 	ss.
	 	[ [seal]
        Diane K. Nieveen
	 	]
	COUNTY OF GAGE                       

	 	 	)	 	 	 	 	[ My Comm. Exp. March 31, 2006
	 	]

     The foregoing instrument was acknowledged before me  on July 29
2005, by /s/ Diane K. Nieveen

	 	 	 	 	 
	 	 	 
	 	  	  /s/ Diane K. Nieveen
 	 
	 	 	Notary Public 	 
	 	 	 	 
	 

My Commission Expires: March 31, 2006

	 	 	 	 	 	 	 
	STATE OF WISCONSIN

	 	 	)	 	 	 
	

	 	 	)	 	 	ss.
	COUNTY OF MONROE

	 	 	)	 	 	 

The foregoing instrument was acknowledged before me on Aug 1st, 2005

By Jack L. Alderman, President of E Energy Adams, LLC, a Nebraska LLC, on behalf of the Corporation

	 	 	 	 	 
	

	 	/s/ Diane M. Batten	 	 
	

	 	 	 	 
	My Commission Expires: 5/3/09

	 	Notary Public	 	 
	

	 	[ Diane M. Batten
	 	]
	

	 	[ [seal] Notary Public
	 	]
	

	 	[ State of Wisconsin
	 	]exv10w9

 

Exhibit 10.9

(U.S. ENERGY LOGO)

ENERGY MANAGEMENT AGREEMENT

(Site Development and Operations)

The purpose of this Agreement is to set forth the understanding and agreement between
U.S. Energy Services, Inc. (“U.S. Energy”) and E-Energy Adams, LLC (“Client”) related
to the provision of energy management services.

PROJECT DESCRIPTION: Client is developing a 50 million gallon per year ethanol
plant (“Plant”) to be located near Adams, NE. The Plant will have approximately a 5 MW
peak usage in electricity and will consume approximately 4800 MMBtu of natural gas per
day.

U.S. ENERGY RESPONSIBILITIES: U.S. Energy will provide consulting and energy
management services for supplies of natural gas and electricity for the Plant. These
services will be provided during the construction of the Plant (“Construction Period”),
and after the Construction Period when the Plant has been placed in service
(“Completion Date”). The Completion Date shall be determined when the Plant begins
producing ethanol. These services will be provided to Client upon request:

A. Energy Infrastructure Advisory Services During the Construction Period

	1.	 	Provide an economic comparison of receiving natural gas distribution service.
U.S. Energy will provide preliminary engineering cost estimates, route drawings,
and project timeline related to constructing pipeline facilities.
	 
	 	 	In the event that a direct connect pipeline option is selected, U.S. Energy will
submit a tap request to the pipeline. In addition, U.S. Energy will also attempt
to negotiate an option for Client to minimize interconnect costs through the
purchase of firm transportation to the Plant. Engineering and construction
management services related to constructing a pipeline may be provided by U.S.
Energy’s sister company U.S. Energy Engineering, Inc. on a fee basis.
	 
	2.	 	Determine whether firm, interruptible, or a blend of transportation
entitlement will provide the lowest burnertip cost. Factors that will be
considered include pipeline credits for the new interconnect, cost of an
alternate fuel system, and availability of specific receipt point capacity.
	 
	3.	 	Provide advisory services to Client regarding electric pricing and
service agreements.

	 	a.	 	Analyze the electric service proposals along with primary, secondary
and generation options and recommend an electric sourcing strategy and plan.
The plan may include a combination of electric supplier agreement and/or
installation of on-site generation.

 

 

	 	b.	 	Negotiate final electric service agreements that meet the pricing and
reliability requirements of Client, including options for third party access to
electric metering.
	 
	 	c.	 	Prepare and implement a regulatory strategy, if required and if an
alternative power supplier is selected. Any attorney fees required for the specific
purpose of obtaining regulatory approval for an alternative power supplier, if any,
will be over and above U.S. Energy’s monthly fee herein, and must be pre-approved by
Client.

	4.	 	Evaluate the proposed electric distribution infrastructure (substation) for reliability,
future growth potential and determination of the division of ownership of facilities
between the utility and the Plant.
	 
	5.	 	Investigate economic development rates, utility grants, equipment rebates and other
utility programs that may be available.

B. On-Going Energy Management Services Following the Completion Period

U.S. Energy will provide the following services at Client’s request:

	1.	 	Provide natural gas supply information to minimize the cost of natural gas purchased.
This will include acquiring multiple supply quotes and reporting to Client the various
supply index and fixed prices. U.S. Energy will not take title to Client gas supplies, but
will communicate supply prices and potential buying strategies.
	 
	2.	 	Negotiate with pipelines, utilities, other shippers, and suppliers to provide
transportation, balancing, and supply agreements that meet Client’s performance criteria at
the lowest possible cost.
	 
	3.	 	Develop and implement a price risk management plan that is consistent with Client’s
pricing objectives and risk profile.
	 
	4.	 	Provide daily nominations to the suppliers, pipeline, and other applicable shippers for
natural gas deliveries to the Plant. This will include daily electronic confirmations to
Client of all nominations and actual daily usage. U.S. Energy will utilize customer or
utility supplied telemetering to obtain actual usage data.
	 
	5.	 	Provide a consolidated monthly invoice to Client that reflects all applicable
natural gas and electric energy costs. U.S. Energy will be responsible for
reviewing, reconciling and paying all shipper, supplier and utility invoices.
	 
	6.	 	Provide a monthly usage report of electric energy consumption and costs. Also, where
applicable and available from the utility, obtain monthly interval electric load data and
provide monthly load profile graphs.
	 
	7.	 	On-going review and renegotiation of electric service costs, as required. This may
include:

2

 

	 	a.	 	Completing and evaluating annual proposals to identify the most reliable and
economic third party electric energy supply.
	 
	 	b.	 	Identifying new service tariffs or opportunities to renegotiate the service
agreement to provide lower costs.
	 
	 	c.	 	Identifying on-site generation opportunities as market conditions change.
	 
	 	d.	 	Provide a monthly projection of energy (natural gas and electricity) and
annual summaries.

	8.	 	Provide natural gas and electric energy operating budgets for the Plant.
	 
	9.	 	Perform initial sales tax exemption audits for energy consumption costs as required and
allowed by Nebraska tax laws.

TERM: The initial term of this Agreement shall commence on August 1, 2005 and continue
until twenty-four (24) months after the Plant’s Completion Date. The Completion Date is defined as
the time when the plant is producing ethanol. The Agreement shall be month-to-month after the
initial term. This Agreement may be terminated by either party effective after the initial term
upon sixty (60) days prior written notice. Client shall remain responsible for payment and
performance associated with any and all transportation, supply, and storage transactions entered
into by U.S. Energy and authorized by Client, prior to termination.

FEES: U.S. Energy’s fee for services described above during the Construction Period shall
be $15,000, plus preapproved travel expenses. U.S. Energy’s fee for ongoing energy management
services upon plant completion shall be $2900 per month, plus pre-approved expenses. Client may
defer payment on the invoiced amounts until financing for the plant has been secured. Deferred
invoice amounts shall not bear interest. Plant financing shall be deemed to be secured at the
time Client and its project lender(s) actually execute and deliver all required documents for
closing the loans necessary to finance the complete construction of the Client. In the event that
plant financing is not secured, this Agreement shall become null and void and both parties will be
relieved of professional and/or financial obligations due the other party. Payment of
pre-approved travel expenses shall not be deferred. If Client experiences significant delays in
its project timeline and it is necessary for U.S. Energy to delay work on Client’s energy
management activities, U.S. Energy will suspend its activities and suspend invoicing Client until
U.S. Energy’s activities resume.

U.S. Energy’s fee will increase 4% per year on the annual anniversary date of the effective date
of this Agreement.

BILLING AND PAYMENT: On the first of the month, U.S. Energy shall invoice Client for
appropriate energy costs from the previous month and for the U.S. Energy retainer for the current
month. Client shall pay U.S. Energy within ten (10) days of receipt of invoice.

3

 

TAX: Client will be responsible for payment of all taxes including, but not limited to,
all sales, use, excise, BTU, heating value and other taxes associated with the purchase and/or
transport of natural gas or electricity and the provision of services hereunder.

CONFIDENTIALITY: U.S. Energy shall not divulge to any other person or party any
information developed by U.S. Energy hereunder or revealed to U.S. Energy pursuant to this
Agreement, unless such information is (a) already in U.S. Energy’s possession and such information
is not known by U.S. Energy to be subject to another Confidentiality Agreement, or (b) is or
becomes generally available to the public other than as a result of an unauthorized disclosure by
U.S. Energy, its officers, employees, directors, agents or its advisors, or (c) becomes available
to U.S. Energy on a non-confidential basis from a source which is not known to be prohibited from
disclosing such information to U.S. Energy by legal, contractual or fiduciary obligation to the
supplier, or (d) is required by U.S. Energy to be disclosed by court order, or (e) is permitted by
Client. All such information shall be and remain the property of Client unless such information
is subject to another Confidentiality Agreement, and upon the termination of this Agreement, U.S.
Energy shall return all such information upon Client’s request. Notwithstanding anything to the
contrary herein, U.S. Energy shall not disclose any information which is in any way related to
this Agreement or U.S. Energy’s services hereunder without first discussing such proposed
disclosure with Client.

NOTICES: Any formal notice, request or demand which a party hereto may desire to give to
the other respecting this Agreement shall be in writing and shall be considered as duly delivered
as of the postmark date when mailed by ordinary, registered or certified mail by said party to the
addresses listed below. Either party may, from time to-time, identify alternate addresses at which
they may receive notice during the term of this Agreement by providing written notice to the other
party of such alternate addresses.

	 	 	 	 	 
	Client:

	 	E Energy Adams, LLC
	 	 
	 
	 	 	 	 
	 

	 	Attn: Jack Alderman	 	 
	 
	 	 	 	 
	 

	 	510 North Main Street	 	 
	 
	 	 	 	 
	 

	 	Adams, NE 68301	 	 
	 
	 	 	 	 
	U.S. Energy:

	 	U.S. Energy Services, Inc.	 	 
	          (Payment)

	 	c/o US Bank SDS 12-1449	 	 
	 

	 	Account #: XXXXXXXXXXXX	 	 
	 

	 	P.O. Box 86	 	 
	 

	 	Minneapolis, MN 55486	 	 
	 
	 	 	 	 
	          (Notices):

	 	U.S. Energy Services, Inc.	 	 
	 

	 	1000 Superior Blvd, Suite 201	 	 
	 

	 	Wayzata, MN 55391	 	 
	 

	 	Attn: Contract Administration	 	 

ASSIGNMENT OR AMENDMENT: The Agreement may not be assigned or amended without the written
consent of U.S. Energy and Client.

4

 

APPLICABLE LAW: The Agreement shall be construed in accordance with the laws of the State
of Minnesota.

ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement-among the
parties pertaining to the subject matter hereof and supersedes all prior Agreements and
understanding pertaining hereto.

	 	 	 	 	 
	Agreed to and Accepted by:	 	 
	 
	 	 	 	 
	E-Energy Adams, LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/Jack L. Alderman
 

	 	 
	 
	 	 	 	 
	Name:

	 	Jack L. Alderman
	 	 
	 
	 	 	 	 
	(Print)
	 	 	 	 
	 
	 	 	 	 
	Title:

	 	President	 	 
	 
	 	 	 	 
	Date:

	 	August 27, 2005	 	 
	 
	 	 	 	 
	U.S. Energy Services, Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/Gail McMinn
 

	 	 
	 
	 	 	 	 
	Name:

	 	Gail McMinn	 	 
	(Print)
	 	 	 	 
	 
	 	 	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 
	Date:

	 	September 2, 2005	 	 

5

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