Document:

exv10w7

 

EXHIBIT 10.7

OPTION AGREEMENT FOR

PURCHASE OF REAL PROPERTY

     THIS OPTION AGREEMENT (“Agreement”) is made and entered into this the
10th
day of May, 2006, by Charles A. Smith and Leattrice Ann Smith
husband and wife, (hereinafter “Seller”) and NEK-SEN Energy, LLC, a Kansas limited liability
company, (hereinafter “Purchaser”).

     WHEREAS, Seller is the fee simple owner of certain real property located in Brown County,
Kansas, (“Real Property”) more particularly described as follows:

A tract of land located in the Northeast Quarter (NE1/4) of Section 1, Township 1
South, Range 16 East of the 6th P.M., Brown County, Kansas, consisting of
127 acres, more or less.

     WHEREAS, Purchaser desires to procure an Option to Purchase the Real Property upon the terms
and provisions as hereinafter set forth;

     1. GRANT OF OPTION. In consideration of One Thousand Dollars and no cents ($1,000.00), and
other good and valuable consideration, the receipt of which is hereby acknowledged by the parties
hereto and for the mutual covenants contained herein, Seller does hereby grant to Purchaser the
exclusive and irrevocable option and right to purchase (“Option”) the Real Property upon the terms
and conditions as set forth herein. The Seller agrees that this option payment shall be credited
against the total purchase price in the event Purchaser exercises this Option Agreement.

     2. TERM OF OPTION. Unless otherwise agreed upon by the parties in writing, the Option
granted by Seller to Purchaser shall remain in effect for a period of 17 months from the date of
this agreement, to expire on September 30, 2007 (“Option Period”). Upon the failure of the
Purchaser to exercise said Option by such date, the Option shall automatically terminate and all
amounts paid by Purchaser shall be retained by Seller.

     3. PURCHASE PRICE. The purchase price for the Real Property shall be $635,000.00, less any
option payments. The parties agree to close the sale transaction within 60 days of the notice of
exercise of the Option, unless otherwise agreed to in writing by the parties.

     4. 1031 EXCHANGE CONSENT. Purchaser hereby consents to Seller designating the Real Property
or the contract as the “Relinquished Property” in accordance with Internal Revenue Reg.
1.1031(k)-1(a) and Purchaser hereby further consents to the assignment by Seller of this agreement,
or subsequent contract, to a “Qualified Intermediary” as such term is defined in Internal Revenue
Reg. 1.1031(k)-1(g)(4).

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     5. ESCROW AND CLOSING. An escrow shall be opened with Mishler & Deiter Law Office, of
Sabetha, Kansas upon exercise of the Option. All necessary documents shall be delivered to the
Escrow Agent and all payments required hereunder, including payment of the balance of the purchase
price, shall be made to escrow agent in accordance with the Contract. Seller and Purchaser shall
execute such escrow instructions, not inconsistent with the terms of this Option, as may be
requested by the escrow agent from time to time.

               Closing shall occur in accordance with the terms of the Contract and delivery of possession as
set out therein.

     6. EXERCISE OF OPTION. Seller and Purchaser agree that Purchaser may exercise the Option to
purchase the Premises at any time during the Option Period by written notice to Seller at the
address set out below.

     7. NOTICE. All notices, demands and/or consents provided for in this Agreement shall be in
writing and shall be delivered to the parties hereto by hand or by United States Mail with postage
pre-paid. Such notices shall be deemed to have been served on the date mailed, postage pre-paid.
All such notices and communications shall be addressed to the Seller at 70803 648 Avenue, Salem,
NE. 68433, and to Purchaser at NEK-SEN Energy, LLC c/o Gary Edelman, 205 South 8th
Street, Sabetha, KS 66534, or at such other address as either may specify to the other in writing.

     8. CONTRACT FOR PURCHASE & SALE OF REAL PROPERTY. In the event that the Purchaser exercises
its Option as provided for above, Seller and Purchaser agree to execute a contract for such
purchase and sale of the Real Property with the terms and conditions to be stated therein. Such
terms and conditions shall include the terms of this agreement, which shall be incorporated by
reference, and other terms as follows:

     a. Marketable Title: The Seller shall, within seven (7) days after request from the
Purchaser, deliver to the Purchaser or to whom the Purchaser may direct, an abstract of title, or a
commitment for an owner’s policy of title insurance, certified to date by a competent and bonded
abstracter showing all instruments of record affecting said property from the United States
Government to this date, with the usual certificates as to bankruptcy, taxes, judgments and
mechanic’s liens. Subsequent acceptance of the abstract or title commitment by the Purchaser shall
be a waiver of time of delivery. The Purcahser shall have a reasonable time after delivery of said
abstract or title report, not to exceed ten (10) days, in which to have the same examined and
returned to the Seller with any written objections to the marketability of the title. The cost of
updating the abstract or providing the title insurance policy shall be paid by Purchaser.

     b. Deed: At the closing, Seller shall convey good and marketable title to the Purchaser in
the form of a General Warranty Deed which shall be executed and acknowledged so as to convey to
Purchaser the fee simple of the Premises, free and clear of all encumbrances except as stated
within the contract for sale and purchase of the premises.

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     c. Taxes and Farm Payments: Seller shall pay all general taxes and special assessments for
the years prior to the current calendar year. General taxes and special assessment installments
for the calendar year in which the Option is exercised shall be paid by the party receiving the
farm income for that year. The Purchaser shall assume all general taxes and special assessments
other than those to be paid by the Seller as described herein. Seller has entered into a cash rent
lease with Jim Schawang for the 2006 crop year. Purchaser shall reimburse the tenant for actual
farm expenses, including the cash rent payment and a reasonable profit, if closing occurs prior to
Seller receiving the farm income or rental payment for that crop year. Purchaser agrees to pay to
the U.S. Department of Agriculture the sum of money required to buy-out such Real Property from the
program and to hold Seller harmless for the same.

     9. CONDITIONS OF OPTION. Seller and Purchaser agree that Purchaser shall not encumber the
Real Property in anyway until the closing of the sale transaction. Purchaser agrees to survey the
Real Property at Purchaser’s expense prior to the exercise of the option and that the purchase
price shall be calculated based on the surveyed acres. The parties agree to execute any and all
documents necessary to reform the legal description to conform to the surveyed description. Seller
hereby grants Purchaser, its agents, representatives, contractors, and assigns, access to the Real
Property as is reasonably necessary during the Option Period to conduct surveys, soil samples, test
wells, engineering and architectural studies, environmental studies, and any other test or study as
required by Purchaser to determine suitability of Real Property. Purchaser shall reimburse Seller
reasonable damages to growing crops caused by Purchaser’s access to the Real Property.

     10. MISCELLANEOUS.

     (a) Execution by Both Parties. This Agreement shall not become effective and binding until
fully executed by both Purchaser and Seller.

     (b) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of Kansas.

     (c) Successors and Assigns. This Agreement shall apply to, inure to the benefit of and be
binding upon and enforceable against the parties hereto and their respective heirs, successors, and
or assigns, to the extent as if specified at length throughout this Agreement.

     (d) Time. Time is of the essence of this Agreement.

     (e) Cost of this Agreement. Any cost and/or fees incurred by the Purchaser or Seller in
executing this Agreement shall be borne by the respective party incurring such cost and/or fee.

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     (f) Entire Agreement. This Agreement contains all of the terms, promises, covenants,
conditions and representations made or entered into by or between Seller and Purchaser and
supersedes all prior discussions and agreements whether written or oral between Seller and
Purchaser with respect to the Option and all other matters contained herein and constitutes the
sole and entire agreement between Seller and Purchaser with respect thereto. This Agreement may
not be modified or amended unless such amendment is set forth in writing and executed by both
Seller and Purchaser with the formalities hereof.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under proper
authority:

	 	 	 	 	 	 	 
	SELLER

	 	 	 	PURCHASER	 	 
	 

	 	 	 	NEK-SEN Energy, LLC	 	 
	 
	 	 	 	 	 	 
	/s/ Charles A. Smith
 

Charles A. Smith

	 	 	 	/s/ Lonnie D. Goff
 

By: Lonnie Goff, Vice-President
	 	 
	 
	 	 	 	 	 	 
	/s/ Leattrice Ann Smith
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Leattrice Ann Smith
	 	 	 	 	 	 

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ACKNOWLEDGMENT

STATE OF NEBRASKA, COUNTY OF RICHARDSON, ss:

     The foregoing instrument was acknowledged before me, a Notary Public, on the
10th day of May, 2006, by Charles A. Smith and Leattrice Ann Smith, husband
and wife.

	 	 	 	 	 
	 	 	 
	 	     /s/ Brian O. Poppe
 	 
	 	Notary Public 	 

	 	 	 
	 

	 	[Notary Stamp]
	 

	 	GENERAL NOTARY – State of Nebraska
	My appointment expires:

	 	BRIAN O. POPPE
	March 27, 2007

	 	My Comm. Exp. Mar. 27, 2007

STATE OF KANSAS, COUNTY OF RICHARDSON, ss:

     The foregoing instrument was acknowledged before me, a Notary Public, on the
10th day of May, 2006, by Lonnie Goff, Vice-President, NEK-SEN Energy,
LLC, a Kansas limited liability company.

	 	 	 	 	 
	 	 	 
	 	    /s/ Brian O. Poppe
 	 
	 	Notary Public 	 

	 	 	 
	 

	 	[Notary Stamp]
	 

	 	GENERAL NOTARY – State of Nebraska
	My appointment expires:

	 	BRIAN O. POPPE
	March 27, 2007

	 	My Comm. Exp. Mar. 27, 2007

5exv10w8

 

Exhibit 10.8

OPTION

TO PURCHASE REAL ESTATE

     Reesman Investment Corporation, a Nebraska Corporation, GRANTOR, whether one or more, for
valuable consideration, hereby give and grant unto NEK-SEN Energy, LLC, GRANTEE, the option to
purchase the following described real estate situated in Richardson County, Nebraska:

Approximately 90 acres containing the NE1/4 NW1/4 of Section 17, Township 1 North,
Range 16, East of the 6th P.M., North of the railroad right of way line, the SE1/4
SW1/4 of Section 8, Township 1 North, Range 16, East of the 6th P.M., and that
portion of the SW1/4 SE1/4 South of the terrace line and West of the main ditch as
shown on the attached map;1st terrace west of the southeast cornerpost of the
adjoining 40 acres west of the Reesman Ranch. [/s/WHR]

on the following terms and conditions:

     1. Term. GRANTEE has paid to GRANTOR the sum of $5,000.00, the receipt of which is
hereby acknowledged for an option to purchase the above real estate until August 31, 2007. The
option payments shall be credited against the purchase price if the option is exercised.

     2. Exercise of Option. GRANTEE shall exercise the option by giving GRANTOR written
notice of its intent to purchase to GRANTOR, no later than August 31, 2007. Closing shall be
within 60 days of the exercise of the option but not later than October 31, 2007 unless otherwise
agreed to by the parties in writing.

     3. Purchase Price. The purchase price shall be the sum of $7,500.00 per acre as
surveyed. GRANTEE shall pay the balance of the purchase price, less credits for all option
payments to GRANTOR at closing, concurrently with delivery of the deed of conveyance from GRANTOR
to GRANTEE.

     4. Survey. GRANTEE shall at its expense have the property surveyed prior to the
exercise of the option and such surveyed description shall be substituted for the above description
of the real estate. Total purchase price shall be based upon the acres shown on said survey.

NEK-SEN Energy, LLC Reesman Investment Corporation Option to Purchase Real Estate: 1

 

 

     5. Conveyance. GRANTOR shall convey the real estate with marketable title to GRANTEE
by good and sufficient warranty deed, subject to existing roads and existing easements and rights
of way of record and visible easements. GRANTEE shall pay the cost of title work and deed
preparation. GRANTOR shall pay the cost of any document transfer tax. GRANTEE shall pay the cost
of recording the Deed.

     6. Possession. GRANTEE shall receive possession of the subject premises from GRANTOR
effective at closing.

     7. Taxes and Crop Expenses. GRANTOR shall pay all real estate taxes assessed for the
year immediately prior to the date of closing of the option and all prior years. The GRANTEE shall
pay all real estate taxes on the optioned portion of the property for the year in which the closing
occurs unless closing is after GRANTOR received the crop or arrangements are made for GRANTOR to
receive the crop in which case GRANTOR shall pay the real estate taxes for that year. If closing
is at a time during the year such that GRANTOR has incurred expenses for the crop, but has not
received its crop at the time of closing, GRANTEE shall reimburse GRANTOR for all such expenses,
and shall pay all real estate taxes for the year in which closing occurs. Cost shall be reimbursed
at actual expenses paid per acre on said land plus cost for field work per acre based on the most
recent edition of Nebraska Farm Custom Rates published by the University of Nebraska Cooperative
extension service.

     8. Title. GRANTEE shall obtain title insurance on the real estate at its expense. If
GRANTOR is unable to provide marketable title within a reasonable time GRANTEE may elect to accept
title in the condition it is in or cancel the contract and receive a complete refund of all option
payments made.

     9. Failure of Option. Failure of GRANTEE to give notice of exercising option to
purchase shall result in all payments made being retained by GRANTOR and all terms of this option
regarding future obligations of GRANTOR will expire under the terms of this option.

     10. No Encumbrance. GRANTEE will not encumber the land in anyway, so long as title is
in the GRANTOR.

     11. Notices. Any notice required hereunder shall be given to the parties hereto as
follows:

NEK-SEN Energy, LLC Reesman Investment Corporation Option to Purchase Real Estate: 2

 

 

	 	 	 	 	 
	 
	 	 	 	 
	(a)

	 	TO GRANTOR:
	 	Reesman Investment Corporation
	 

	 	 	 	Ward H. Reesman, Jr.
	 

	 	 	 	6411 South 179th Street
	 

	 	 	 	Omaha, Nebraska 68135
	 
	 	 	 	 
	(b)

	 	TO GRANTEE:
	 	NEK-SEN Energy, LLC
	 

	 	 	 	Gary Edelman
	 

	 	 	 	2324 T Rd.
	 

	 	 	 	Sabetha, Kansas 66534

Either party may change the address for notice by written notice to the other party under the
provisions of this paragraph, and thereafter such amended address shall apply to any notices
hereunder.

     12. Access to Grantee During Option Period. GRANTOR hereby grants to GRANTEE, its
agents, representatives, contractors, and assigns access to the option property and so much of
GRANTOR’s adjoining property as is reasonably necessary during the option period for the purposes
of conducting surveys, soil borings and testing, test wells, engineering and architectural studies,
environmental studies, and any other test or study as may be needed by GRANTEE to determine whether
the site is suitable for the intended use. GRANTEE shall pay to GRANTOR reasonable damages to any
growing crops caused by such actions for the benefit of GRANTEE.

     13. Stock Purchase Option. As additional consideration for the purchase of the above
real estate GRANTEE grants to GRANTOR the Right to Purchase shares valued up to $200,000.00 of
NEK-SEN Energy, Inc. at its initial public offering price. This price is indented to be
approximately $1,000.00 per share. Such option shall be for a period of four (4) years from the
date of the initial offering. Initial purchase must be for at least $25,000.00. After initial
purchase, shares may be purchased one at a time. Purchases can be made at this price only until
this option expires or $200,000.00 of shares have been purchased. The stock purchase option shall
be assignable in whole or in part but any one shareholder shall be required to make an initial
purchase of $25,000.00. The stock purchase option shall be given at time of closing on the
purchase of the above real estate and is contingent upon GRANTEE exercising this option and closing
on said real estate purchase. These options are instantly exercisable. The owner of these options
has to be notified of any declared dividends prior to the dividend date. [/s/WHR]

NEK-SEN Energy, LLC Reesman Investment Corporation Option to Purchase Real Estate: 3

 

 

     14. 2032a Recapture. The parties recognize that be virtue of the real estate which
this option to purchase includes was a part of the Estate of Ward H. Reesman who died on May 19,
1997 and that his estate and heirs elected what is know as a Section 2032A special use valuation
election for Federal Estate Tax purposes and that if this option is exercised within the 10-year
recapture period measured from the descendents death that there will be owed to the Internal
Revenue Service an amount which is the excess of the estate tax liability that would have been
incurred had the special use valuation procedure not been used over the actual estate tax liability
based on the special use valuation. In other words, the maximum additional or “recapture” tax is
the amount that the special use valuation had saved the estate which is called the “adjusted tax
difference.” The additional tax on recaptured property is due on the day that is six months after
the recapture event (premature disposition of the property). GRANTEE agrees that if it exercises
its option to purchase that as part of the consideration here that it will additionally pay the
“adjusted tax difference” plus any interest thereon up to maximum of $30,000.00. GRANTOR agrees to
pay any amount over said $30,000.00. GRANTEE will receive in consideration therefore a release of
any IRS lien on the property. GRANTEE further agrees to pay all legal and accounting fees incurred
in obtaining the IRS Lien Release.

     15. Repurchase Right. If GRANTEE after exercise of the Option and prior to
commencement of construction determines not to go forward with the project for construction of an
ethanol plant, GRANTEE grants to GRANTOR the right to repurchase said property for the purchase
price of $3,000.00 per acre. GRANTOR must repurchase the entire property under this repurchase.
If GRANTEE gives Notice of GRANTEE’S intention not to commence construction to GRANTOR then GRANTOR
shall have 30 days to notify GRANTEE of its intent to repurchase the property and 90 days from the
date of the original Notice from GRANTEE to close the repurchase.

     16. Benefit. This option shall benefit and bind the parties hereto, their respective
heirs, personal representative and assigns. This option is assignable.

     Executed this 9th day of May ,2006.

NEK-SEN Energy, LLC Reesman Investment Corporation Option to Purchase Real Estate: 4

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	REESMAN INVESTMENT CORPORATION,	 	NEK-SEN Energy, LLC, GRANTEE
	A Nebraska Corporation, GRANTOR	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Ward H. Reesman
	 	By:
	 	/s/ Lonnie D. Goff	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	  Ward H. Reesman, Jr.	 	 	 	 	 	 	 	 
	 

	 	            President
	 	Title:
	 	Vice President	 	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	STATE
OF
NEBRASKA                             
	 	 	)	 	 	 
	 

	 	 	)	SS	 	 
	COUNTY OF RICHARDSON                     

	 	 	)	 	 	 

     The foregoing instrument was acknowledged before me on May 9, 2006, by Ward H.
Reesman, Jr., President of Reesman Investment Corporation, a Nebraska Corporation.

	 	 	 
	 
	 	 
	[Notary Stamp]
	 	 
	GENERAL NOTARY – State of Nebraska

	 	/s/ Sharon Gilmore
	 

	 	 
	SHARON GILMORE

	 	Notary Public
	My Comm. Exp. 4/17/2010
	 	 
	 
	 	 
	My Commission Expires:
	 	 
	 
	 	 
	April 17, 2010
	 	 
	 
	 	 

NEK-SEN Energy, LLC Reesman Investment Corporation Option to Purchase Real Estate: 5

 

 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	STATE
OF
KANSAS                             
	 	 	)	 	 	 
	 

	 	 	)	SS	 	 
	COUNTY
OF NEMAHA                     

	 	 	)	 	 	 

     The foregoing instrument was acknowledged before me on May 15, 2006, by Lonnie D.
Goff, of NEK-SEN Energy, LLC, a Kansas limited liability company.

	 	 	 
	 
	 	 
	[Notary Stamp]
	 	 
	NOTARY PUBLIC – State of Kansas

	 	/s/ Gerald L. Howard
	GERALD L. HOWARD

	 	Notary Public
	My Appt. Exp. April 5, 2010
	 	 
	 
	 	 
	My Commission Expires:
	 	 
	 
	 	 
	5 Apr 2010
	 	 
	 
	 	 

NEK-SEN Energy, LLC Reesman Investment Corporation Option to Purchase Real Estate: 6

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