Exhibit 10.3
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Option Agreement") is entered into as of May
15, 2002, by Oregon Trail Ethanol Coalition, L.L.C., a Nebraska limited
liability company ("Purchaser") and Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx,
husband and wife, 000 X. 0xx, Xxxxxxxxx, XX 00000, ("Owner")
1. GRANT OF OPTION. Owner owns an undivided one-quarter interest in
approximately 60 acres of real property located in Xxxxxx County, Nebraska,
which real property is described in Exhibit A, attached hereto and incorporated
herein (the "Owner's Parcel"). In consideration of the payment of the Option Fee
(as defined below) to Owner by Purchaser, Owner hereby grants to Purchaser the
sole, exclusive and irrevocable right and option (the "Option") to purchase
Owner's Parcel, together with all improvements and appurtenances thereto.
Owner's Parcel to be purchased by Purchaser is herein referred to as the
"Premises."
2. TERM AND EXERCISE OF OPTION. The Option may be exercised by
Purchaser at any time on or before 5:00 P.M. on June 30, 2003. Purchaser shall
exercise the Option by giving written notice to Owner at the following address
by hand delivery, or by registered or certified mail, return receipt requested,
deposited in the United States mail or by air express delivery at any time
during the term of the Option:
Xxxxx and Xxxxxxx Xxxxxxx
000 X. 0xx
Xxxxxxxxx, XX 00000
Owner acknowledges that Purchaser intends to use the Premises to construct and
operate a 40 million gallon per year ethanol plant.
3. OPTION FEE. On the date hereof, Purchaser agrees to deliver to Owner
the sum of One Thousand ($1,000.00) (the "Option Fee"). In the event that
Purchaser exercises the Option, the Option Fee shall not be applied to the
purchase price of the Premises. If Purchaser does not exercise the Option, Owner
shall retain the Option Fee.
4. PURCHASE PRICE. The total purchase price for the Owner's one-quarter
portion shall be Fifty-five Thousand Dollars ($55,000). Purchaser shall pay the
purchase price to Owner pursuant to the terms of a Real Estate Purchase
Agreement to be entered into between the parties following Purchaser's exercise
of the Option (the "Purchase Agreement").
5. POSSESSION. Owner will cause fee simple title to each parcel of the
Premises purchased to be conveyed to Purchaser, or to Purchaser's nominee or
assign, at closing, by General Warranty Deed in customary form properly
executed, free and clear of all liens and encumbrances but subject to easements,
restrictions and covenants of record reasonably acceptable to Purchaser in its
sole discretion. Possession shall be delivered to Purchaser at the date of
closing, subject to the terms of any lease agreement between Purchaser and Xxx
X. Xxxxxxx. Until closing, all risk of loss to the Premises to be purchased
shall be with Owner.
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6. PURCHASE AGREEMENT. The purchase price, contingencies and other
terms of acquiring the Premises, should Purchaser exercise the Option, shall be
contained in the Purchase Agreement containing the following terms:
a. Conveyance. The Premises shall be conveyed to Purchaser, or its
nominee, by general warranty deed, free and clear of all liens and encumbrances
whatsoever, except for real estate taxes and general and special assessments not
then due and payable and such easements, reservations, limitations and
restrictions as Purchaser shall approve.
b. Closing. The transaction shall close on a date (the "Closing
Date") set by Purchaser, which date shall be not more than sixty (60) days
following the date Purchaser exercises the Option. The closing shall be held and
deed shall be delivered at the offices of Purchaser in Xxxxxx County, or such
other place as the parties may hereafter agree upon.
c. Physical Plant Location. The Purchase Agreement shall provide
that the core physical ethanol plant ("Core Plant") to be located on the
Premises shall be located on the east one-half of the Premises, and in the event
that the Core Plant is initially built after closing under the Purchase
Agreement such that any portion of its external structural walls intrude beyond
the east one-half of the Premises when completed, without the prior written
consent of Owner, then Purchaser shall pay to Owner upon completion of the Core
Plant as liquidated damages hereunder an additional cash payment of Ten Thousand
Dollars ($10,000), which shall comprise Owner's sole remedy. The east one-half
of the Premises shall be determined by a line running from the half-way point on
the northern boundary of the Premises to the half-way point on the southern
boundary of the Premises. This restriction and payment of liquidated damages
shall apply solely to the initial construction of the ethanol plant, and shall
not apply to other functional aspects of the ethanol plant, including without
limitation, the building of one or more rail spurs servicing the ethanol plant,
the construction and placement of utilities, roads and parking lots to service
the ethanol plant, and the administrative building for the ethanol plant;
provided, however, that the main access road to the ethanol plant from Highway 4
shall not be located on the west one half of the Premises on Highway 4. This
restriction shall not apply to future additions, improvements or other
operations constructed on the Premises after the completion of the initial
ethanol plant.
d. Other Conditions. The parties shall agree to such other terms
and conditions as are necessary and appropriate to close the transaction
contemplated by this Option. In the event of a disagreement over such terms,
those terms and conditions as are customary in similar real estate purchase
agreements in Xxxxxx County, Nebraska shall control to the extent not
inconsistent with the terms and conditions contained herein.
7. TITLE COMMITMENT. At any time during the term of this Option,
Purchaser may, upon prior written notice to Owner, and at Purchaser's initial
expense, request Owner to furnish Purchaser a currently certified written title
insurance commitment (the "Title Commitment"), issued by a title insurance
company acceptable to Purchaser. Such Title Commitment shall be provided within
20 days of Purchaser's request, and shall show in Owner a good and marketable
title in fee simple to the Premises subject only to defects, if any, which are
acceptable to Purchaser in Purchaser's sole judgment. Such Title Commitment
shall also provide that standard exceptions to coverage will be deleted from the
final title policy, as agreed to between Owner and Purchaser. Within fifteen
(15) days after receipt of the Title Commitment, Purchaser shall notify Owner
whether such Title Commitment discloses, in the opinion of
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Purchaser's attorney, defects in title that are not acceptable to Purchaser.
Owner shall have 30 days to cure such title defects. If such defects are not
corrected within 30 days, Purchaser shall have the option of terminating this
Option Agreement and the parties will be relieved of further obligation
hereunder, or Purchaser may extend the cure period for a reasonable period to
allow Owner to correct any such defects. In the event of any title defects which
are not corrected by Owner as provided above, or in the event the Title
Commitment or survey of the Premises is not satisfactory to Purchaser for any
reason, including without limitation, matters relating to the Highway 4
right-of-way set forth below, Purchaser's sole remedy shall be the termination
or non-exercise of this Option, and Owner shall not have any further liability
to Purchaser. An owner's title insurance policy, in the amount of the purchase
price for the Premises purchased, shall be paid for initially by Purchaser, and
shall be issued to Purchaser in conformity with such title insurance commitment
upon delivery of the deed and as a condition of Purchaser's obligation to close
this purchase and sale. Owner shall cause to be delivered to Purchaser at or
prior to closing and as a condition thereof, a "marked-up" copy of the Title
Commitment dated as of the Closing Date, deleting therefrom standard exceptions
to coverage, as agreed to between Owner and Purchaser, and showing compliance
with all requirements for issuance of the title insurance policy. Upon Closing,
Owner shall reimburse Purchaser for one-half of the amount of the Title
Commitment, provided that Owner's payment obligation for the Title Commitment
shall be based on a Title Commitment cost for the purchase price of the
Premises. Owner has disclosed to Purchaser that Highway 4 originally ran on the
north side of the Premises rather than on its current location on the south side
of the Premises. Purchaser shall have the right to take such steps as are
necessary to determine the impact, if any, of the Highway 4 right-of-way or
easements on the Premises prior to the exercise of the Option; provided, that if
Purchaser exercises the Option, Owner shall have no liability with respect to
any matter arising out of the Highway 4 former or current location and its
impact on the Premises.
8. LAND SURVEY. At any time during the term of this Option, Purchaser
may have prepared, at Purchaser's cost, a survey of the Premises by a registered
land surveyor (the "Survey"). The Survey shall be used to compute the legal
description of the real property to be purchased pursuant to this Option. In the
event such Survey discloses any defects in Owner's title, Purchaser shall so
notify Owner and Owner shall endeavor to cure the same within 30 days after such
notice, or such other period agreed to by Purchaser and prior to closing. If
such defects are not cured by the Closing Date, Purchaser shall have the same
remedies as are allowed in Section 7 above for title defects disclosed in the
Title Commitment.
9. OWNER COMMITMENTS. Owner agrees that from the date hereof until the
expiration of this Option, it will not lease or rent the Premises or any part
thereof to any person or entity, other than Purchaser, or Xxx X. Xxxxxxx as
provided in the Option Agreement between Xxx X. Xxxxxxx and Purchaser, or grant
any person or entity any rights to use or occupy the Premises. Owner shall not
grant any easement on the Premises and nor will Owner mortgage or encumber the
Premises without Purchaser's prior written consent. During the term of this
Option Owner agrees to support, assist, and cooperate with, Purchaser with
respect to Purchaser's objective of constructing an ethanol plant at the
Premises, including obtaining any necessary regulatory approvals, obtaining
necessary zoning, and to take such actions as are reasonably necessary or
desirable in furtherance of the intents and purposes of this Option Agreement
upon request of Purchaser from time to time; provided, that all costs related to
such actions shall be borne by Purchaser.
10. TAXES AND ASSESSMENTS. Owner shall pay all special assessments for
any public improvements constructed or under construction at the Closing Date,
regardless of
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whether or not levied and regardless of whether or not then due, and all real
estate taxes, general and special, for prior years. General real estate taxes
which became due in the year in which the closing hereunder shall occur (and
which become delinquent in the year following closing), shall be prorated
between the parties as of the date of possession. If the amount of such real
estate taxes cannot be determined at the time of closing, such taxes will be
determined using the most current available assessment and tax levy rate for the
Premises. Owner shall pay all taxes for all years prior to the year in which
Closing occurs. Owner shall also pay any "greenbelt" or special agricultural
assessment tax recapture assessed against the Premises due to any change in use
by Owner prior to closing. Owner shall pay all documentary revenue tax on any
conveyance.
11. ENTRY FOR INSPECTION.
a. During the term of the Option, Owner shall provide Purchaser and
Purchaser's agents or representatives with complete access to the Owner's Parcel
for the purpose of conducting such inspections, engineering studies, surveys,
appraisals, test borings or any other activities reasonably required by
Purchaser in order to determine the suitability of the Owner's Parcel for
Purchaser's purposes (collectively, the "Inspections"). The right to conduct
Inspections shall include the right to enter upon any portion of the Owner's
Parcel to take measurements, make inspections, make boundary and topographical
survey maps, and to conduct geotechnical, environmental, groundwater, wetland
and other studies required by Purchaser, in its sole discretion, and to
determine the adequacy of utilities servicing the Owner's Parcel, zoning
ordinances and compliance with laws. No such Inspections shall constitute a
waiver or relinquishment on the part of Purchaser of its rights under any
covenant, condition, representation or warranty of Owner under this Option
Agreement.
b. Upon execution of this Option Agreement, Owner shall deliver to
Purchaser, at no cost to Purchaser, such of the following as are in the
possession of or available to Owner: existing soil and groundwater tests,
surveys, contracts, leases, title policies, environmental reports, underground
storage tank test results, waste disposal records, permit records, traffic
studies, other engineering tests and studies pertaining to the Owner's Parcel,
all existing site plans, drawings, architectural drawings or other plans related
to the development or proposed development of the Owner's Parcel. Owner shall
cooperate with Purchaser during the Inspections and hereby agrees to use best
efforts to attend all meetings in Xxxxxx County, Nebraska, to which Owner is
invited by Purchaser relating to Purchaser's intended use of the Premises, and
site plan approval. Purchaser shall not be obligated to undertake any soil
borings or other invasive testing to determine the existence of hazardous
materials on the Owner's Parcel, it being the intention of the parties that if
noninvasive environmental inspections and testing indicate that the Owner's
Parcel may contain hazardous substances, Purchaser shall have the option to
terminate this Option Agreement, or, at Purchaser's sole election, to undertake
further soil borings or invasive testing. If in Purchaser's judgment, such
borings, surveys, studies, inspections or other tests indicate or determine that
the Owner's Parcel contains any hazardous materials or substances or the
condition of the Owner's Parcel or utility systems is not acceptable to
Purchaser for any reason, then Purchaser may terminate this Option Agreement as
its sole remedy, and Owner shall not have any further liability to Purchaser.
c. In the event Purchaser conducts soil and groundwater tests,
surveys, title searches, environmental reports, underground storage tank tests,
or other engineering tests and studies with respect to the Premises prior to the
exercise of the Option, a copy of such test results and reports shall be
provided to Owner at no additional cost; provided that this obligation of
Purchaser shall terminate upon exercise of the Option. In the event Purchaser
conducts tests on the Premises and does not exercise the Option, the Purchaser
shall return the condition of the
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Premises back to the same condition as found prior to such tests, within 90 days
after the expiration of this Option Agreement.
d. Purchaser agrees that its purchase of the Premises with respect to
the physical condition of the Premises is "AS IS" and is based on Purchaser's
Inspections and not upon any representation or warranty of Owner or Owner's
agents or employees as to the physical condition of the Premises or as to the
fitness of the Premises for Purchaser's intended use of the Premises for the
location of an ethanol plant. Purchaser agrees that in the event of the exercise
of the Option provided for herein, Owner shall not be held responsible for
environmental problems and cleanup caused by the operation of the proposed
ethanol plant after the purchase of the Premises by Purchaser.
12. FAILURE OR REFUSAL TO CONVEY. Subject to the provisions regarding
Purchaser's remedies set forth in Sections 7 and 11 above, in the event, through
no fault of Purchaser, Owner fails, refuses or is unable to convey to Purchaser
the Premises as required herein, or otherwise defaults hereunder, after
Purchaser exercises this Option to Purchase, Purchaser may terminate this Option
to Purchase and recover all damages that Purchaser shall have suffered as a
result of Owner's default. Purchaser may also elect not to terminate this Option
to Purchase, in which event Purchaser shall be entitled to seek specific
performance of Owner's obligations hereunder.
13. EMINENT DOMAIN. In the event, either before or after exercise of
the Option, but prior to closing, any portion of the Premises is taken by
eminent domain, or by a deed in lieu thereof, this Option shall terminate as to
the portion of the Premises so taken. In such event, and if such portion of the
Premises adversely impacts Purchaser's ability to construct and operate an
ethanol plant on the Premises, Purchaser may terminate this Option Agreement by
notice to Owner, and the parties will be relieved of further obligations
hereunder. If Purchaser does not terminate this Option Agreement, all amounts
received by Owner as a result of such taking or deed in lieu thereof, shall be
credited against the purchase price set forth in Section 4 above.
14. SHORT FORM NOTICE. A short form notice of this Option to Purchase
for recording in the public records shall be executed by the parties at the
election of Purchaser and may be recorded at Purchaser's expense.
15. NOTICE. All notices provided for herein shall be personally
delivered, by United States certified mail, return receipt requested or sent by
a nationally recognized overnight package carrier delivered to Purchaser at XX
Xxx 000, Xxxxxxxxx, Xxxxxxxx, 00000 is mailed otherwise 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxx 00000, Attn: Xxxx Xxxxxx, Chairman, and to Owner at the address
specified in Section 2 above. Either party shall have the right to designate a
new address for the receipt of such notices by written notice given as
aforesaid.
16. ASSIGNMENT. Neither party may assign this Option Agreement without
the prior written consent of the other party, which consent shall not be
unreasonably withheld.
17. MISCELLANEOUS. This Option Agreement may not be changed or
modified, either in whole or in part, except by initialing changes herein by the
parties or by an agreement in writing signed by all parties hereto. When used in
this instrument, unless the Option Agreement requires otherwise, words importing
the masculine gender include the feminine and neuter, words importing the
singular number include the plural, and words importing the plural number
include
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the singular. It is mutually agreed by and between the parties hereto that the
covenants and agreements herein contained shall extend to and be obligatory upon
the heirs, legal representative, successors, and permitted assigns of the
respective parties, and that time is of the essence of this Option Agreement.
This Option Agreement shall be interpreted under the laws of the State of
Nebraska. If Owner is a corporation or a partnership, the persons executing this
Option Agreement for Owner warrant that they have authority to do so.
EXECUTED as of the date first above written.
OWNER:
/s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx
PURCHASER:
Oregon Trail Ethanol Coalition. L.L.C.,
a Nebraska limited liability company
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx, its Chairman
NOTARIZATION OF OWNER SIGNATURE:
STATE OF NEBRASKA )
) ss.
COUNTY OF XXXXXX )
The foregoing instrument was acknowledged before me this 15th day of
May, 2002 by Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx as their voluntary act and
deed.
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Notary Public
[STAMP]
My commission expires: 11/23/04
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NOTARIZATION OF PURCHASER SIGNATURE:
STATE OF NEBRASKA )
) ss.
COUNTY OF XXXXXX )
The foregoing instrument was acknowledged before me this 15th day of May,
2002 by Xxxx X. Xxxxxx, Chairman of Oregon Trail Ethanol Coalition, L.L.C., a
Nebraska limited liability company on behalf of the company.
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Notary Public
[STAMP]
My commission expires: 11/23/04
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Exhibit A
NW 1/4 of 21-4-4, Xxxxxx County, commonly known as the land
between the Union Pacific railroad and Highway 4, consisting of approximately 60
acres, per the attached picture.
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