Used imac OS reinstall

I just bought a used iMac 27 inch , MID 2010. The Software installed is Mac OS X Lion 10.7.5 (11G63). I want reinstall the OS and start fresh. But the old owner forgot his Apple ID and password or not ready to give me the details. I would like to do a factory reset that clears all the data and puts back to the state it was when coming from factory. Could someone please guide me through this process? I really appreciate your help. Tried internet restore but not happening . The system is asking the previous owner's Apple ID and password . I think previous owner installed the OS and its tied to that person's ID. Also the previous owner don't have any CDs with him.

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