Document:

exv10w17

 

EXHIBIT 10.17

OPTION TO PURCHASE REAL ESTATE

     This option made and entered by and between M.J.C.F. Farms, Inc., 2845 York Road, Helena, MT
59602-8820, hereinafter referred to as SELLER, and Cardinal Ethanol, LLC, 2 OMCO Square, P.O. Box
501, Winchester, Indiana 47394, hereinafter referred to as BUYER, WITNESSETH:

     SELLER owns the real estate described at Exhibit “A” attached hereto and incorporated herein
by reference.

     SELLER desires to grant BUYER an option to purchase the real estate described at Exhibit “A”.

     For and in consideration of the sum of Five Thousand ($5,000.00) Dollars paid to SELLER by
BUYER, receipt of said sum being acknowledged by SELLER with the execution of this option, SELLER
gives and grants to BUYER the exclusive option, under the following terms and conditions, to
purchase the real estate described at Exhibit “A”, said real estate to be surveyed, the real estate
described at Exhibit “A” as surveyed, hereinafter referred to as PROPERTY.

     1. Term of Option. BUYER shall exercise this option on or before April 1, 2007. BUYER
may extend the time to exercise this option to October 1, 2007, provided on or before April 1,
2007, BUYER gives to SELLER written notice of BUYER’S desire to extend the time to exercise this
option and pays to BUYER an additional Two Thousand Five Hundred ($2,500.00) Dollars. BUYER may
extend the time to exercise this option to April 1, 2008, provided on or before October 1, 2007,
BUYER gives to SELLER written notice of BUYER’S desire to extend the time to exercise this option
and pays to BUYER an additional Five Thousand. ($5,000.00) Dollars. If BUYER has not exercised this
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on or before April 1, 2007, or on or before the extension date, this option shall terminate,
be of no further force and effect, and SELLER shall be entitled to keep all sums paid under this
agreement.

     2. Exercise of Option. This option may be exercised by giving written notice to
SELLER, at SELLER’S address as set forth above, by certified mail, return receipt requested or by
personal service, on or before midnight of April 1, 2007, or on or before midnight of the extension
date.

     3. Purchase Price. The purchase price for the PROPERTY shall be Nine Thousand
($9,00.00) Dollars per surveyed acre. Any Sum paid for this option and any extension thereof shall
be deducted from the purchase price.

     4. Survey. At any time after the execution of this option and during the option
period or after the exercise of this option, BUYER shall cause an ALTA/ACSM survey of the PROPERTY.
The entire cost of the survey shall be paid by the BUYER. BUYER shall have fourteen (14) days
after the delivery of said survey to object to any material matter disclosed by the Survey. SELLER
shall be able to cure any matter objected to by BUYER on or before fifteen (15) days prior to
closing. In the event SELLER is unable to cure any material matter disclosed by the survey and
objected to by BUYER, this option shall become null and void and all sums paid by BUYER to SELLER
under this option, shall be retained by SELLER.

     5. Deed. Upon payment in full by BUYER to SELLER of the purchase price as herein
stated, SELLER agrees to convey the PROPERTY to BUYER by warranty deed, which warranty deed will
convey the PROPERTY to the BUYER free and clear of any and all liens and encumbrances except
easements and restrictions of record acceptable to

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BUYER, real estate taxes and assessments, those
liens and encumbrances that may possibly attach to the PROPERTY by reason of the acts of omission
or commission of the BUYER, and those liens and encumbrances as herein set forth and specified.

     6. Property Taxes. SELLER shall pay all installments of property taxes which become
due prior to the Closing. BUYER shall pay all installments of property taxes which become due after
the Closing.

     7. Evidence of Title. At any time after the execution of this option and during the
option period or after the exercise of this option, BUYER may request a commitment for title
insurance to be issued by a title company acceptable to BUYER certified to a date within thirty (30) days of
delivery to BUYER, showing merchantable title to the PROPERTY in the name of SELLER. The cost of
the commitment shall be paid by BUYER. BUYER shall have fourteen (14) days after the delivery of
said commitment for title insurance to notify SELLER of the acceptance of title or of any material
defects therein. It is agreed by SELLER and BUYER that the following shall not be considered
material defects in title: easements, covenants and restrictions of record acceptable to BUYER;
real estate taxes and assessments; liens and encumbrances as set forth and mentioned in this
agreement; any liens and encumbrances that may possibly attach to the PROPERTY by reason of the
acts of omission or commission of the BUYER; and those liens and encumbrances that will be paid at
the time of closing. SELLER shall be able to cure any material defects in title on or before
fifteen (15) days prior to closing. In the event SELLER is unable to cure said material title
defects, this option shall become null and void and all sums paid by BUYER to SELLER under this
option shall be retained by SELLER.

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     On or before thirty (30) days after the closing of this transaction, a title insurance policy
shall be delivered to BUYER which shall show merchantable title to the PROPERTY in the name of
BUYER and show said real estate to be free and clear of any and all liens and encumbrances except
as set forth above.

     8. Right of Inspection and Investigation. At any time after the execution of this
option and during the option period or after the exercise of this option, BUYER shall have the
right, at BUYER’S expense, to conduct such inspections and investigations of the PROPERTY as BUYER
may desire at BUYER’S absolute discretion. BUYER shall pay to SELLER any damages caused by BUYER or
BUYER’S agents, independent contractors, employees, or invitees for damages to the PROPERTY as a
result of BUYER’S inspections or investigations. Damage to any bean crop growing on the PROPERTY
shall be Three Hundred Fifty ($350.00) Dollars per acre. Damage to any corn crop growing on the
PROPERTY shall be Four Hundred Twenty-five ($425.00) Dollars per acre. In the
event BUYER’S inspections and investigations reveal that the property is not satisfactory for
BUYER’S purposes, such determination to be in BUYER’S sole and absolute discretion, this option
shall become null and void and all sums paid by BUYER to SELLER under this option shall be retained
by SELLER. BUYER shall make its best efforts to inform SELLER of the scheduling of such
inspections and investigations and the progress of the decision making process in the determination
of whether BUYER will exercise this option.

     9. Insurance. Within twenty (20) days of the signing of this option, BUYER shall
provide evidence to SELLER that it has purchased insurance covering any damages caused by or on
behalf of BUYER as a result of carrying out BUYER’s right of inspection set forth in paragraph 8
above.

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     10. Permits to Allow Use of PROPERTY for BUYER’S Intended Purposes. At any time
after the execution of this option, and during the option period, or after the exercise of this
option, BUYER shall, at BUYER’S expense, pursue and obtain from all governmental authorities and
nongovernmental entities, approvals which are necessary to permit the use of the PROPERTY for BUYER
intended purposes. SELLER shall execute such documents as are necessary and shall assist BUYER to
obtain such approvals. In the event BUYER cannot obtain such approvals, this option shall become
null and void and all sums paid by BUYER to SELLER under this option shall be retained by SELLER.

     11. Assignment. This option may not be assigned by BUYER to any individual, limited
partnership, corporation or other entity unless the consent of the SELLER is first obtained in
writing.

     12. Real Estate Agent. The parties agree that. BUYER has no responsibility for the
payment of any real estate agent or brokerage fees incurred in the sale of the PROPERTY.

     13. Recording. A memorandum of this option may be recorded in the public records of
Randolph County, State of Indiana.

     14. Time. Time is of the essence of this option.

     15. Attorney’s Fees. After the exercise of this option by BUYER, in the event that
either party shall fail or refuse to complete the transaction as provided for in this option, the
non-prevailing party shall pay the prevailing party all reasonable expenses incurred by the
prevailing party including, but not limited to, Attorneys fees and Court

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costs, incurred by the
prevailing party in any litigation, negotiation or transactions relating to, or arising out of, the
enforcement of this option by the prevailing party.

     16. Expenses. SELLER shall pay for the cost of deed preparation; the cost of curing
title defects; and one-half (1/2) of the settlement fee at closing up to Four Hundred ($400.00)
Dollars. BUYER shall pay the cost of Title Insurance; the cost of any inspectiosn of the real
estate under paragraph 9; one-half (1/2) of the settlement fee at closing up to Four Hundred
($400.00) Dollars; the balance of the settlement fee over Eight Hundred ($800.00) Dollars; and the
entire costs of the survey. Any other costs of this transaction will be paid by the party
incurring the same.

     17. Closing. This transaction shall close at the law office of Robert G. Cook, 116
E. Washington Street, Winchester, IN 47394, or such other place as may be agreed upon by the
parties, sixty (60) days after the conditions of paragraphs 4, 7, 8, and 10 have been met.
Provided, that this transaction shall, in any event, close no later than six (6) months after the
date the option is exercised.

     18. SELLER’S Default. After the exercise of this option by BUYER, in the event that
SELLER shall refuse or fail to complete the transaction as provided for in this option, SELLER
shall pay to BUYER all sums paid to SELLER under this option and this option shall he considered
null and void or, at the option of BUYER, BUYER may pursue such remedies as are available to BUYER
at either law or equity.

     19. BUYER’S Default. After the exercise of this option by BUYER, in the event that
BUYER shall refuse or fail to complete the transaction as provided for in this option, SELLER’S
sole and only remedy shall be to retain all sums paid under this option as liquidated damages and
this option shall be considered null and void.

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     20. Severability. If any provision of this option is held invalid by a Court of
competent jurisdiction, it shall be considered deleted from this option, but such invalidity shall not
affect the other provisions that can be given effect without the invalid provisions.

     21. Entire Agreement. This option constitutes the entire agreement between the
parties. This option shall not be amended except by written agreement signed by both parties.

     22. Headings. Headings or titles to said sections or paragraphs of this option are
solely for the convenience of the parties and shall have no effect whatsoever on the interpretation
of the provisions of this agreement.

     23. Law Governing. This option shall be governed by the laws of the State of
Indiana.

     24. Authority. The undersigned person executing this agreement for and on behalf of
SELLER represents and certifies that said undersigned is the President of SELLER and said
undersigned has authority to execute this agreement for and on behalf of SELLER.

     25. Authority. The undersigned person executing this agreement for and on behalf of
BUYER represents and certifies that he is the President of BUYER and he has authority to execute
this agreement for and on behalf of BUYER.

     26. Binding on Successors and Assigns. Provisions of this agreement will bind the
successors and assigns of the respective parties.

     27. 1031 Exchange. The SELLER may assign all or any portion of its rights and
obligations under this agreement to any other person or entity for purposes of effectuating a
like-kind exchange under Section 1031 of the Internal Revenue Code of

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1986, as amended. The
parties agree to cooperate and execute such documents as are reasonably necessary to effectuate
such like-kind exchange provided BUYER incurs no additional liability, cost or expense. The
parties further agree that the rights, obligations and representations contained in this agreement
shall extend to the benefit of and be enforceable by the assignor not withstanding any such
assignment.

          IN WITNESS WHEREOF, SELLER has caused this option to be executed this 8th day of
May, 2006, and BUYER has caused this option to be executed this 8th day of
May, 2006.

	 	 	 	 	 	 	 
	M.J.C.F. Farms, Inc.

	 	 	 	Cardinal Ethanol, LLC	 	 
	 
	 	 	 	 	 	 
	/s/ Mary Jean Snider

	 	 	 	/s/ Troy A Prescott	 	 
	 

	 	 	 	 	 	 
	Mary Jean Snider (MJS)

	 	 	 	Troy A. Prescott	 	 
	President

	 	 	 	President	 	 
	     SELLER

	 	 	 	     BUYER	 	 

State of Arizona

County of Yuma , SS:

     Personally appeared before me, the undersigned Notary Public in and for Yuma County,
State of Arizona, this 8th day of May, 2006, Jean Fisher Snyder,
personally known to me to be Presidnet of M.J.C.F. Farms, Inc., and after first being duly sworn
upon their oaths, acknowledged the execution of the, above and foregoing instrument for and on
behalf of M.J.C.F. Farms, Inc., and stated that the representations contained therein are true.

Seal: MARCO GUERRA JR.

Notary Public – Arizona

Maricopy County

Expires 6/13/09

	 	 	 	 	 
	 

	 	/s/ Marco Guerra Jr.	 	 
	 

	 	 	 	 
	 

	 	Notary Public	 	 
	 

	 	Printed Name:Marco Guerra Jr.	 	 
	 

	 	County of Residence: Yuma	 	 

My Commission expires:

     6/13/2009

      

STATE OF ARIZONA}

COUNTY OF YUMA } SS

This instrument was acknowlegdged before me this 8th day of

May, 2006 by Mary Jean Snider

/s/Marco Guerra Jr.

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State of Indiana

County of Randolph , SS:

     Personally appeared before me, the undersigned Notary Public in and for Randolph
County, State of Indiana, this 11th day of May, 2006, Troy A. Prescott,
personally known to me to be President of Cardinal Ethanol, LLC, and after first being duly sworn
upon their oaths, acknowledged the execution of the, above and foregoing instrument for and on
behalf of Cardinal Ethanol, LLC, and stated that the representations contained therein are true.

	 	 	 	 	 
	 

	 	/s/ Jane Ellen Smith	 	 
	 

	 	 	 	 
	 

	 	Notary Public	 	 
	 

	 	Printed Name:Jane Ellen Smith	 	 
	 

	 	County of Residence: Randolph	 	 

My Commission expires:

     December 28, 2009

This instrument prepared by Robert G, Cook, Attorney, Winchester, IN

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The following described real estate situate in Randolph County, State of Indiana, to-wit:

The East half of the South West Quarter of Section 17, Township 20 North, Range 15 East, containing
80 acres, more or less in Randolph County, Indiana, and ALSO a piece of land lying South of and
adjoining the C.C.C. and I.R. Railroad and described as follows: Beginning at the center of said
Section 17, running thence North 20 rods and 17 links, thence parallel with the C.C.C. & I.R.R.
westerly to the West side of the South East Quarter of the North West Quarter, thence South 4 rods
and 16 links, thence East 80 rods and 20 links to the place of beginning, containing 7.15 acres,
more or less, being a part of the land deeded by Horace Pease to J.L. Cozade.

10<PAGE>
Exhibit 10.1

DESCRIPTION OF ANNUAL SUPPORT CENTER AND FIELD MANAGEMENT BONUS PLAN

     Under our Annual Support Center and Field Management Bonus Plan, which is
an unwritten plan, our Vice Presidents, Senior Directors and Directors, Director
of Operations, Regional Human Resources Managers, Regional Training Managers and
District Managers are eligible to receive cash bonuses ranging from 10% to 50%
of base compensation each year. The total amount of bonus paid is based (1) 50%
on the achievement of a certain corporate performance goal and (2) 50% on the
individual participant's performance as compared to pre-determined goals and
objectives. Each fiscal year, our board of directors sets the performance goal
for this plan to be achieved. After the completion of a fiscal year, the board
of directors certifies whether the performance goal has been met and awards
bonuses. No bonuses are paid if we do not meet the corporate performance goal.
Except for our Vice President of Global Franchising and Vice President of
Business Development and Commercial Sales, our board of directors has set a
corporate performance goal of achieving a set level of Adjusted EBITDA for each
year. For our Vice President of Global Franchising and Vice President of
Business Development and Commercial Sales, our board has set a corporate
performance goal of achieving a set level of sales for each year.

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