EXHIBIT 10.24


 


ESCROW AGREEMENT


 


This Escrow Agreement
(the “Agreement”) is made and entered into effective as of November 16th,
2007, by and between Heron Lake Bio Energy, a Minnesota corporation (the “Company”)
and Farmers State Bank of Hartland (the “Escrow Agent”) for the benefit of
Interstate Power and Light Company (IPL) (the “Beneficiary”).


 


RECITALS


 


WHEREAS, the Company is a
party to a certain Agreement called Shared Savings Contract dated November 16th,
2007 with IPL, which Agreement requires the Beneficiary to pay to the Company
an amount equal to $1,850,000 as project cost for the purchase and the
installation of equipment specified in the Shared Savings Contract.


 


WHEREAS, as additional
security for IPL the Company desires to place an amount of $1,710,000 (“Placement”)
in an escrow account with the Escrow Agent until such time as there shall be
payment requests (Escrow Disbursement Authorization) from the Company to pay
IPL, as provided by Section 8 of the Shared Savings Contract.


 


WHEREAS, the Escrow Agent
is willing to accept appointment as escrow agent to complete the duties, terms
and conditions expressly set forth herein.


 


NOW, THEREFORE, in
consideration of the foregoing recitals, and of such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and Escrow Agent agree RS follows:


 


1.)            Acceptance Of Appointment.
Escrow Agent agrees to act as escrow agent for the Placement under this
Agreement. The Escrow Agent shall provide security in the form of a Surety from
Kansas Bankers Surety Company or any other Surety Company acceptable to IPL
which is rated at least A- by Standard and Poor’s (S&P) or A3 by Moody’s
Investors Service (Moody’s). IPL shall be named as the sole beneficiary in the
Surety.


 


2.)            Establishment Of Escrow
Account. An escrow account (the “Escrow Account”) is hereby
established with the Escrow Agent for the sole benefit of Beneficiary in the
Placement. Except as specifically provided in this Agreement, the Escrow
Account shall be created and maintained subject to the customary rules and
regulations of the Escrow Agent pertaining to such accounts.


 


3.)            Ownership Of Escrow
Account. Until such time as IPL shall provide a Statement of
Satisfaction and Release in the form shown herein as Exhibit B the funds
deposited in the Escrow Account including interests received or credited
therein (the “Escrow Funds”) shall not become the property of the Company or be
subject to the debts of the Company or any other person but shall be held by
the Escrow Agent solely for the benefit of IPL. Escrow account shall be titled
in the name of Company and interest income accrued shall be reported under
Company tax ID.


 


4.)            Security Of Escrow Funds.
The funds deposited in the Escrow Account shall be secured by a Bond provided
by Kansas Bankers Surety Company (KBSC). If KBSC ceases to be rated by S&P
or Moody’s, or if the credit ratings assigned to its senior, unsecured debt
shall fall below A- by S&P or A3 by Moody’s, then the Escrow Agent shall
within 5 Business Days provide 


 

















 


a substitute
Guarantor or Surety Company acceptable to IPL whose credit rating shall be at
least A- by S&P or A3 by Moody’s to secure the Escrow Account. IPL and
Company agree to cooperate with Bank in executing a surrender and reissue
request to KBSC for reduction of surety coverage (to match declining principal
balance); such requests shall be made no more often than annually. Not
withstanding anything stated in this section 4, the surety provided by KBSC or
any substitute Guarantor shall not be less than the Termination Values shown
opposite each billing period on the amortization table attached as Exhibit B
to this Agreement less $140,000.


 


5.)            Escrow Fees.
The Company hereby agrees to pay the Escrow Agent a fee equal to $100.00.
Notwithstanding the foregoing, all fees under this Agreement shall be paid or
payable from interest only and not from principal, and shall not exceed the
amount of interest realized on the Escrow Account.


 


6.)            Investment of Escrow Funds.
The Escrow Funds shall be credited by Escrow Agent and recorded in the Escrow
Account. The Escrow Agent shall be permitted, and is hereby authorized to
deposit, transfer, hold and invest all funds received under this Agreement,
including principal and interest. Any interest received by Escrow Agent with
respect to the Escrow Funds shall be considered earned by the Escrow Agent, the
Escrow Agent shall in turn pay the Company a rate of 4.20% per annum on the
Escrow Funds. Interest shall be credited to the Escrow Funds at the end of each
month.


 


7.)            Terms of Escrow.
This Agreement shall terminate on the earliest of (a) December 31,
2012, as provided in (he Shared Savings Contract; (b) the date the Escrow
Agent receives written notice from IPL that it is terminating the Placement; (c) the
date specified on the Statement of Satisfaction and Release signed by IPL. Upon
termination of the Placement, whether after extension or otherwise, the Escrow
Agent shall disburse the funds in the Escrow Account in the manner and upon the
terms directed in Section 8 of this Agreement. IPL may terminate the
Placement at any time or if the Shared Savings Contract is terminated. Upon the
receipt of a certified notice from an authorized officer of IPL stating that
IPL has terminated the Placement, the Escrow Agent shall disburse the monies on
deposit in the Escrow Account together with any accrued interests as provided
in Section 8.


 


8.)            Disbursement of Escrow
Funds. The escrow created by this Agreement shall be disbursed
in accordance with the following:


 


(a)           Upon receipt of
Escrow Disbursement Authorization signed by an officer of the Company in the
form attached herein as Exhibit B (Amortization schedule provided by IPL).
Escrow Disbursement Authorizations shall specify the amounts being paid and the
billing period or periods to which they relate.


 


(b)           Upon full payments
of all amounts stated for the 60 billing periods as specified in the Shared
Savings Contract, IPL shall submit to the Escrow Agents the Statement of
Satisfaction and Release, whereupon any funds remaining on the Escrow Account
shall be transferred and paid to the Company.


 


(c)           Upon receipt of
notice of Termination or notice from IPL that it is terminating the Placement
pursuant to Section 7 of this Agreement, any funds remaining on the Escrow
Account shall be disbursed to IPL or as directed by IPL at its sale option.


 


2

















 


Notwithstanding the above
provisions, if there shall be any dispute regarding the disbursement of funds
from the Escrow funds, IPL shall have the option to provide direction.


 


9.)            Liability of Escrow Agent.
The escrow Agent shall perform all duties as specified for it under this
Agreement and shall be liable to IPL for damages, losses or expenses
attributable to the enforcement of this Agreement. However, the Escrow Agent is
not responsible for determining and verifying the authority of any person
acting or purporting to act on behalf of any patty to this Agreement. The
Escrow Agents shall send Statements of the Escrow Account activities and
balances within 30 days following the end of June and December in
each calendar year to Company and IPL.


 


10.)          Fees and Expenses.
For all Escrow Amounts disbursed pursuant to 7(b), above, the Escrow Agent
shall be entitled to assess the Company a fee of $10.00 for each check, ACH or
Wire transfer made in connection with Disbursements (other than transfers made
for investments) from the Escrow Account, which fees shall be paid from the
interest on the Escrow Account only and not from principal. In the event the
Escrow Agent renders any service not provided for in this Agreement, or if the
Company requests a substantial modification of its terms, or if any controversy
arises; or if the Escrow Agent is made a party to, or intervenes in, any
litigation pertaining to this escrow or its subject matter, the Escrow Agent
shall be reasonably compensated for such extraordinary services and reimbursed
for all costs and reasonably attorney’s fees, including a reasonable allocation
of costs for in-house counsel, and expenses occasioned by such default, delay,
controversy or litigation. In such an event, the Escrow Agent shall have the
right to retain all documents and/or other things of value at any time held by
the Escrow Agent in this escrow until such compensation, fees, costs and
expenses are paid. The Company promises to pay these sums upon demand. Unless
otherwise provided, the Company will pay all of the Escrow Agent’s usual
charges and the Escrow Agent may deduct such sums from the interest on the
Escrow Account only and not from principal deposited to the Escrow Account.


 


11.)          Controversies.
If any controversy arises between the Parties to this Agreement, or with any
other party, concerning the subject matter of this Agreement, its terms or
conditions, the Escrow Agent will not be required to determine the controversy
or to take any action regarding it. The Escrow Agent may hold all documents and
funds and may wait for settlement of any such controversy by final appropriate
legal proceedings or other means as, in the Escrow Agent’s discretion, the
Escrow Agent may require, despite what may be set forth elsewhere in this
Agreement. In such event, the Escrow Agent will not be liable for interest or
damage. Furthermore, the Escrow Agent may at its option file all action of
interpleader requiring the Parties to answer and litigate any claims and rights
among themselves. The Escrow Agent is authorized to deposit with the clerk of
the court all documents and funds held in escrow, except all costs, expenses,
charges and reasonable attorney fees incurred by the Escrow Agent due to the
interpleader action and which the Company agrees to pay. Upon initiating such
action, the Escrow Agent shall be fully released and discharged of and from all
obligations and liability imposed by the terms of this Agreement.


 


12.)          Indemnification of Escrow
Agent. The Company and its successors and assigns  agree jointly and severally to indemnify and
hold the Escrow Agent harmless against any and all losses, claims, damages,
liabilities, and expenses, including reasonable costs of investigation, counsel
fees, including allocated costs of in-house counsel and disbursements that may
be imposed on the Escrow Agent or incurred by the Escrow Agent in connection
with the performance of its 


 


3

















 


duties under this
Agreement, including but not limited to any litigation arising from this
Agreement or involving its subject matter. The Escrow Agent shall have a first
lien on the property and papers held under this Agreement for such compensation
and expenses.


 


13.)          Resignation of Escrow
Agent. The Escrow Agent may resign at any time upon giving at
least thirty (30) days written notice to the Company provided, however, that no
such resignation shall become effective until the appointment of a successor
escrow agent which shall be accomplished as follows: The Company shall use its
best efforts to obtain a successor escrow agent within thirty (30) days after
receiving such notice provided that such successor escrow agent is acceptable
to IPL. If the Company fails to agree upon a successor escrow agent within such
time, the Escrow Agent shall have the right to appoint a successor escrow agent
authorized to do business in the state of Minnesota and acceptable to IPL. The
successor escrow agent shall execute and deliver an instrument accepting such
appointment and it shall without further acts, be vested with all the estates,
properties, rights, powers, and duties of the predecessor escrow agent as if
originally named as escrow agent. The Escrow Agent shall thereupon be
discharged from any further duties and liability under this Agreement. If no
successor escrow agent is appointed, IPL shall at its option give notice
stating that it is terminating the Placement.


 


14.)          Automatic Succession.
Any company into which the Escrow Agent may be merged or with which it may be
consolidated, or any company to whom the Escrow Agent may transfer a
substantial amount of its global escrow business, shall be the Successor to the
Agent without the execution or filing of any paper or any further act on the
part of any of the Parties, anything herein to the contrary notwithstanding.


 


15.)          Additional Provisions.


 


(a)           Governing Laws.
This Agreement is to be construed and interpreted according to Iowa law.


 


(b)           Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. The exchange of copies of this Agreement and of signature pages by
facsimile transmission shall constitute effective execution and delivery of
this Agreement as to the parties and may be used in lieu of the original
Agreement for all purposes. Signatures of the parties transmitted by facsimile
shall be deemed to be their original signatures for all purposes.


 


(c)           Enforcement.
Notwithstanding anything to the contrary, the Escrow Agent and the Company
hereby agree that this Agreement may be enforced by IPL against the Escrow
Agent or the Company or both.


 


(d)           Notices. All
instructions, notices and demands herein provided for shall be in writing and
shall be deemed to have been duly given (a) on the date of service if
served personally on the party to whom notice is to be given; (b) on the
day of transmission if sent by facsimile transmission to the facsimile number
given below and telephonic confirmation of receipt is promptly obtained after
completion of transmission; (c) on the next day on which such deliveries
are made in Hampton, Iowa, when delivery is by nationally recognized overnight
courier; or (d) on the fifth day after mailing if mailed to the party to
whom notice 


 


4

















 


is to be given, by first class mail, registered or certified, postage
prepaid and properly addressed, return receipt requested, to the party as
follows:


 


 


	
  If to the Company:

  	
   

  	
  Heron Lake BioEnergy, LLC

  91246 390th Ave PO Box 198

  Heron Lake, MN 56137-0198

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  OPEN

  
	
   

  	
   

  	
   

  
	
  If to the IPL:

  	
   

  	
  Interstate Power and Light Company

  c/o Alliant Energy

  4902 N. Biltmore Lane

  Madison, WI 53718-2148

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Interstate Power and Light Company

  Legal Services - Internal Ops

  200 First Street, SE

  Cedar Rapids, IA 52401-1409

  
	
   

  	
   

  	
   

  
	
  If to the Escrow Agent:

  	
   

  	
  Farmers State Bank of Hartland

  c/o Daniel Otten,



  SVP



  1452 West Main Street, Albert Lea,

  MN 56007

  Phone: 507-373-1945

  dotten@farmersstatebankmn.com

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Farmers State Bank of Hartland

  c/o David Courey,



  CFO



  1452 West Main Street

  Albert Lea, MN 56007

  Ph: 507-373-1945

  



 


(e)           Amendments.
This Agreement may be amended or modified and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, only be a
written instrument executed by the parties hereto, or in the case of a waiver,
by the party waiving compliance. Any waiver by any party of any condition or of
the breach of any provision, term, covenant, representation or warranty
contained in the Agreement, in any one or more instances, shall not be deemed
to be nor construed as further or continuing waiver of any 


 


5

















 


such conditions or of the breach of any other provision, term,
covenant, representation or warranty of this Agreement.


 


(f)            Entire Agreement.
This Agreement contains the entire understanding among the parties hereto with
respect to the escrow contemplated hereby and supersedes and replaces all prior
and contemporaneous agreements and understandings, oral or written, with regard
to such escrow.


 


(g)           Non-Endorsement.
The Company represents and agrees that it has not made nor will it in the
future make any representation that states or implies that the Escrow Agent has
endorsed, recommended or guaranteed the Energy Shared Savings arrangements
entered into by the Company.


 


IN WITNESS WHEREOF, the
parties hereto have hereunto affixed their signatures as of the day and year
first above written.


 


	
  Heron Lake BioEnergy LLC

  	
   

  	
  Escrow Agent: Farmers State Bank of Hartland

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
      /s/ Robert J. Ferguson

  	
   

  	
  By: Daniel Otten

  	
  /s/ Daniel Otten

  
	
   

  	
   

  	
   

  
	
  Its:

  	
      President

  	
   

  	
  Its: Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Interstate Power and Light

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:        /s/
  Ken Gebhart

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  



 


6

















 


Exhibit B

Escrow Disbursement Authorization


 


 


	
  Billing Period

  	
   

  	
  Date:

  



 


	
  From: Heron Lake BioEnergy, LLC

  91246 390th Ave,

  Heron Lake, MN 56137

  	
   

  	
  To: Farmers State Bank of Hartland (Escrow Agent)

  1452 West Main Street

  Albert Lea, MN 56007

  



 


On receipt of this
Disbursement Authorization, please pay the sum of $29,774.91 by Wire
Transfer/ACH to the account of:


 


Interstate Power and Light Company (IPL)

Bank Name: Wells Fargo Bank, N.A. San Francisco, CA 

Account Number: 4121487128

ABA Number: 121000248


 


Yours truly,


 


Heron Lake BioEnergy, LLC


 


Amortization Schedule
Based on:


i. Periodic payments of
$29,774.91 for period 1-13, plus extra payment of$140,000 for period 13  and; ii. Periodic payments of $29,599.91 for
periods 14-60.


 


	
  Payment

  Dates

  	
   

  	
  Billing

  Period

  	
   

  	
  Termination

  Value

  	
   

  	
  Payment

  Dates

  	
   

  	
  Billing

  Period

  	
   

  	
  Termination

  Value

  	
   

  	
  Payment

  Dates

  	
   

  	
  Billing

  Period

  	
   

  	
  Termination

  Value

  	
   

  
	
  Beg- 

  12/30/2007

  	
   

  	
  0

  	
   

  	
  $

  	
  1,850,000.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1/31/2007

  	
   

  	
  1

  	
   

  	
  $

  	
  1,822,537.59

  	
   

  	
  9/30/2009

  	
   

  	
  21

  	
   

  	
  $

  	
  1,126,023.14

  	
   

  	
  5/31/2011

  	
   

  	
  41

  	
   

  	
  $

  	
  555,429.38

  	
   

  
	
  2/30/2007

  	
   

  	
  2

  	
   

  	
  $

  	
  1,795,040.85

  	
   

  	
  10/31/2009

  	
   

  	
  22

  	
   

  	
  $

  	
  1,097,830.77

  	
   

  	
  6/28/2011

  	
   

  	
  42

  	
   

  	
  $

  	
  526,523.75

  	
   

  
	
  3/31/2007

  	
   

  	
  3

  	
   

  	
  $

  	
  1,767,509.75

  	
   

  	
  11/31/2009

  	
   

  	
  23

  	
   

  	
  $

  	
  1,069,603.15

  	
   

  	
  7/31/2011

  	
   

  	
  43

  	
   

  	
  $

  	
  497,582.00

  	
   

  
	
  4/31/2008

  	
   

  	
  4

  	
   

  	
  $

  	
  1,739,944.23

  	
   

  	
  12/30/2009

  	
   

  	
  24

  	
   

  	
  $

  	
  1,041,340.24

  	
   

  	
  8/30/2011

  	
   

  	
  44

  	
   

  	
  $

  	
  468,604.07

  	
   

  
	
  5/29/2008

  	
   

  	
  5

  	
   

  	
  $

  	
  1,712,344.25

  	
   

  	
  1/31/2009

  	
   

  	
  25

  	
   

  	
  $

  	
  1,013,042.01

  	
   

  	
  9/31/2011

  	
   

  	
  45

  	
   

  	
  $

  	
  439,589.92

  	
   

  
	
  6/31/2008

  	
   

  	
  6

  	
   

  	
  $

  	
  1,684,709.77

  	
   

  	
  2/30/2009

  	
   

  	
  26

  	
   

  	
  $

  	
  984,708.40

  	
   

  	
  10/30/2011

  	
   

  	
  46

  	
   

  	
  $

  	
  410,539.49

  	
   

  
	
  7/30/2008

  	
   

  	
  7

  	
   

  	
  $

  	
  1,657,040.75

  	
   

  	
  3/31/2009

  	
   

  	
  27

  	
   

  	
  $

  	
  956,339.38

  	
   

  	
  11/31/2011

  	
   

  	
  47

  	
   

  	
  $

  	
  381,452.76

  	
   

  
	
  8/31/2008

  	
   

  	
  8

  	
   

  	
  $

  	
  1,629,337.14

  	
   

  	
  4/31/2010

  	
   

  	
  28

  	
   

  	
  $

  	
  927,934.89

  	
   

  	
  12/31/2011

  	
   

  	
  48

  	
   

  	
  $

  	
  352,329.67

  	
   

  
	
  9/30/2008

  	
   

  	
  9

  	
   

  	
  $

  	
  1,601,598.90

  	
   

  	
  5/28/2010

  	
   

  	
  29

  	
   

  	
  $

  	
  899,494.90

  	
   

  	
  1/30/2011

  	
   

  	
  49

  	
   

  	
  $

  	
  323,170.17

  	
   

  
	
  10/31/2008

  	
   

  	
  10

  	
   

  	
  $

  	
  1,573,825.99

  	
   

  	
  6/31/2010

  	
   

  	
  30

  	
   

  	
  $

  	
  871,019.36

  	
   

  	
  2/31/2011

  	
   

  	
  50

  	
   

  	
  $

  	
  293,974.23

  	
   

  
	
  11/31/2008

  	
   

  	
  11

  	
   

  	
  $

  	
  1,546,018.37

  	
   

  	
  7/30/2010

  	
   

  	
  31

  	
   

  	
  $

  	
  842,508.23

  	
   

  	
  3/30/2011

  	
   

  	
  51

  	
   

  	
  $

  	
  264,741.79

  	
   

  
	
  12/30/2008

  	
   

  	
  12

  	
   

  	
  $

  	
  1,518,175.98

  	
   

  	
  8/31/2010

  	
   

  	
  32

  	
   

  	
  $

  	
  813,961.46

  	
   

  	
  4/31/2011

  	
   

  	
  52

  	
   

  	
  $

  	
  235,472.80

  	
   

  
	
  1/31/2008

  	
   

  	
  13

  	
   

  	
  $

  	
  1,350,298.79

  	
   

  	
  9/30/2010

  	
   

  	
  33

  	
   

  	
  $

  	
  785,379.00

  	
   

  	
  5/31/2012

  	
   

  	
  53

  	
   

  	
  $

  	
  206,167.24

  	
   

  
	
  2/30/2008

  	
   

  	
  14

  	
   

  	
  $

  	
  1,322,386.76

  	
   

  	
  10/31/2010

  	
   

  	
  34

  	
   

  	
  $

  	
  756,760.81

  	
   

  	
  6/29/2012

  	
   

  	
  54

  	
   

  	
  $

  	
  176,825.04

  	
   

  
	
  3/31/2008

  	
   

  	
  15

  	
   

  	
  $

  	
  1,294,439.83

  	
   

  	
  11/31/2010

  	
   

  	
  35

  	
   

  	
  $

  	
  728,106.86

  	
   

  	
  7/31/2012

  	
   

  	
  55

  	
   

  	
  $

  	
  147,446.16

  	
   

  
	
  4/31/2009

  	
   

  	
  16

  	
   

  	
  $

  	
  1,266,457.97

  	
   

  	
  12/30/2010

  	
   

  	
  36

  	
   

  	
  $

  	
  699,417.08

  	
   

  	
  8/30/2012

  	
   

  	
  56

  	
   

  	
  $

  	
  118,030.56

  	
   

  
	
  5/28/2009

  	
   

  	
  17

  	
   

  	
  $

  	
  1,238,441.14

  	
   

  	
  1/31/2010

  	
   

  	
  37

  	
   

  	
  $

  	
  670,691.44

  	
   

  	
  9/31/2012

  	
   

  	
  57

  	
   

  	
  $

  	
  88,578.19

  	
   

  
	
  6/31/2009

  	
   

  	
  18

  	
   

  	
  $

  	
  1,210,389.28

  	
   

  	
  2/30/2010

  	
   

  	
  38

  	
   

  	
  $

  	
  641,929.90

  	
   

  	
  10/30/2012

  	
   

  	
  58

  	
   

  	
  $

  	
  59,089.00

  	
   

  
	
  7/30/2009

  	
   

  	
  19

  	
   

  	
  $

  	
  1,182,302.36

  	
   

  	
  3/31/2010

  	
   

  	
  39

  	
   

  	
  $

  	
  613,132.40

  	
   

  	
  11/31/2012

  	
   

  	
  59

  	
   

  	
  $

  	
  29,562.95

  	
   

  
	
  8/31/2009

  	
   

  	
  20

  	
   

  	
  $

  	
  1,154,180.33

  	
   

  	
  4/31/2011

  	
   

  	
  40

  	
   

  	
  $

  	
  584,298.91

  	
   

  	
  12/31/2012

  	
   

  	
  60

  	
   

  	
  $

  	
  0.00

  	
   

  



 


7