Document:

Exhibit 4.3

 

ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT,
dated as of                        2006
(this “Agreement”), is entered into by and between Illini Bio-Energy, LLC, an Illinois limited liability company
(the “Company”), and Marine Bank, Springfield, an Illinois state banking
corporation, located in Springfield, Illinois (the “Escrow Agent”).

 

RECITALS

 

A.                                   The Company
is raising equity capital to construct and operate an ethanol plant in Logan
County, Illinois or such other location as may be determined by the Company.

 

B.                                     The Company
is offering up to an aggregate of 30,000,000 Class A Units, at a purchase price
of $2.00 per Unit, to investors pursuant an offering registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the “Offering”).

 

C.                                     Each
investor who subscribes to purchase Units (a “Subscriber”) will execute a
Subscription Agreement, a Promissory Note and a signature page to the Company’s
Limited Liability Company Agreement, will provide evidence of identity or
organization in the form of a copy of a drivers license or state issued
identification card (front and back) of each Subscriber (including each joint
tenant, tenant in common or other additional Subscriber) and/or authorized
signer for an entity Subscriber, and will supply a check or other funds as part
or all of the purchase price for the Units (the foregoing, a “Subscription”). The
terms of the Offering provide that Subscriptions will be held in escrow until
certain conditions for release from escrow are satisfied and the Subscriptions
and Offering proceeds are released to the Company or until such Subscriptions
are required to be returned to Subscribers.

 

D.                                    The minimum
investment by each Subscriber in the Offering is $20,000 (10,000 Units), with a
payment equal to at least ten percent (10%) of the total purchase price due at
the time the Subscription is made (an “Initial Payment”) and with payment for
the remaining balance of the total purchase price due upon 30 days written
notice from the Company pursuant to the terms of a promissory note (a “Promissory
Note”) to be executed and delivered as part of each Subscriber’s Subscription. Initial
Payments and payments received on Promissory Notes are herein referred to as “Payments.”

 

E.                                      The Company
and the Escrow Agent desire to enter into an agreement with respect to said
escrow of Subscriptions in an escrow account to be established with the Escrow
Agent (the “Escrow Account”) in accordance with the terms and conditions of
this Agreement.

 

NOW THEREFORE, in
consideration of the premises and covenants set forth herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, for themselves, their successors and assigns,
hereby agree as follows:

 

1.                                      Definitions. The
following terms shall have the following meanings when used herein:

 

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“Escrow Funds” shall mean
the funds deposited with the Escrow Agent pursuant to this Agreement, together
with any interest and other income thereon.

 

“Escrow Closing Date”
shall mean                           ,         [one year and 90 days following the effective date of
the registration statement filed with the Securities and Exchange Commission],
unless prior to such date, the Company provides written notice to the Escrow
Agent of the extension of the Escrow Closing Date in accordance with applicable
federal and state laws, in which case the Escrow Closing Date shall mean the
extended date established by such extension.

 

“Final Offering Closing Date”
shall mean                           ,         [one year following the effective date of the
registration statement filed with the Securities and Exchange Commission],
unless prior to such date, the Company provides written notice to the Escrow
Agent of the extension of the Final Offering Closing Date in accordance with
applicable federal and state laws, in which case the Final Offering Closing
Date shall mean the extended date established by such extension.

 

“Notice of Escrow Closing”
shall mean a written certificate that is signed on behalf of the Company by a
duly authorized officer thereof stating that the following conditions to the
release of Subscriptions and Escrow Funds from escrow have been satisfied:

 

(i)                                     The
Company has received and deposited in escrow Subscriptions (including Payments
and Promissory Notes) for $26,000,000 or more, exclusive of interest;

 

(ii)                                  The
Company has received a written commitment or commitments for senior and
subordinated debt financing which, combined with the total amount of Payments
and Promissory Notes deposited in escrow, would equal at least $117,500,000;
and

 

(iii)                               The
Company has received the air emission source permit necessary to commence
construction of a 50 million gallon per year ethanol plant on a site available
to the Company (by ownership, lease, option or otherwise).

 

“Payment Instrument”
shall mean a check, money order, promissory note, or similar instrument
received by the Company as a Payment for the Units subscribed for by any
Subscriber in the Offering.

 

“Subscription Accounting”
shall mean an accounting prepared by the Company of all subscriptions for Units
received by the Company as of the date of such accounting for which Payment(s)
has been deposited into the Escrow Account, indicating for each subscription
(i) the Subscriber’s name, address and federal taxpayer identification number,
(ii) the amount of the Payment(s) received for the subscribed Units, (iii) the
date of deposit by the Company of the Payment Instrument relating thereto and
notations of any nonpayment of the Payment Instrument submitted with any such
subscription, and (iv) any rejection of any such subscription in whole or in
part by the Company, or any other termination, for whatever reason, of any such
subscription.

 

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2.                                      Appointment
of and Acceptance by Escrow Agent. The Company hereby appoints the Escrow
Agent to serve as escrow agent hereunder, and the Escrow Agent hereby accepts
such appointment and agrees to act as Escrow Agent in accordance with the terms
of this Agreement.

 

3.                                      Deposits into Escrow.

 

a.                                       Delivery of Subscriptions. All
Subscriptions received by the Company or its agents prior to the termination of
this Agreement shall, as soon as practicable after such receipt, be forwarded
to the Escrow Agent for deposit into the Escrow Account. All Payment
Instruments shall be delivered to the Escrow Agent within five (5) business
days from the date of the receipt thereof, endorsed (if appropriate) to the
Escrow Agent, together with a list of the applicable Subscribers, showing, with
respect to each such Subscriber, the Subscriber’s name and address,
subscription date, amount of subscription and amount paid, and evidence of
identity or organization in the form of a copy of a drivers license or state
issued identification card (front and back) of each Subscriber (including each
joint tenant, tenant in common or other additional Subscriber) and/or
authorized signer for an entity Subscriber, 
From time to time and upon request by the Escrow Agent, the Company
shall provide a Subscription Accounting to the Escrow Agent.

 

ALL ESCROW FUNDS SHALL REMAIN THE PROPERTY OF THE SUBSCRIBERS ACCORDING
TO THEIR RESPECTIVE INTERESTS, SHALL NOT BE OR BECOME THE PROPERTY OR ASSETS OF
THE COMPANY, AND SHALL NOT BE SUBJECT TO ANY LIEN OR CHARGE BY THE ESCROW
AGENT, ANY LIEN OR CLAIM BY THE COMPANY OR BY JUDGMENT OR CREDITORS CLAIMS
AGAINST THE COMPANY, UNTIL RELEASED TO THE COMPANY IN ACCORDANCE WITH SECTION
4 HEREOF. IN NO EVENT SHALL ANY OF THE ESCROW FUNDS BE COMMINGLED WITH
DEPOSIT ACCOUNTS OF THE ESCROW AGENT OR OTHERWISE TREATED AS A DEPOSIT ACCOUNT
OF THE ESCROW AGENT OR REFLECTED ON THE FINANCIAL STATEMENTS OF THE ESCROW
AGENT.

 

b.                                      Availability of Funds. Notwithstanding
anything to the contrary contained in this Agreement, the Company understands
and agrees that all Payment Instruments received by the Escrow Agent hereunder
are subject to collection requirements of presentment and final payment, and
that the funds represented thereby cannot be drawn upon or disbursed until such
time as final payment in collected funds has been made and is no longer subject
to dishonor. Upon receipt, the Escrow Agent shall process each Payment
Instrument it receives for collection, and the proceeds thereof shall be held
as part of the Escrow Funds and disbursed in accordance with Sections 4 and 5
hereof. If, upon presentment for payment, any Payment Instrument is dishonored,
the Escrow Agent shall notify the Company of such dishonor and return such
Payment Instrument to the Company to take whatever action it deems necessary. The
Escrow Agent shall have no duty or responsibility to establish whether any
Payment Instrument is valid and enforceable or represents collectible funds and
shall have no duty or responsibility to take any action for the collection
(other than deposit for payment) or enforcement of any Payment Instrument.

 

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4.                                      Release of Subscriptions and Escrow Funds to the
Company.

 

a.                                       Escrow Closing. Promptly upon receipt of the following
documents from or at the direction of the Company, the Escrow Agent shall
release the Subscriptions and Escrow Funds to the Company.

 

1.                                       A
Notice of Escrow Closing in the form attached hereto as Exhibit A; and

 

2.                                       Subscription
Accounting as of the date of the Notice of Escrow Closing.

 

Escrow Funds shall be remitted to the Company
by wire transfer or such other means as may be requested by the Company.

 

The Escrow Agent shall have no duty or responsibility to review or seek
to determine the truth, accuracy or sufficiency of documents contemplated or
referred to in the Notice of Escrow Closing. The Escrow Agent shall have no
duty to review any Subscription Accounting, it being the understanding and
agreement of the parties hereto that the Escrow Agent shall release the
Subscriptions and disburse the Escrow Funds upon receipt of documents the
Escrow Agent believes, without any duty of further inquiry, to conform to the
requirements set forth in this Section 4(a).

 

b.                                      Issuance and Registration of Units. Until the
terms of this Agreement have been met and the Subscriptions have been released
and Escrow Funds have been disbursed to the Company, the Company shall not
issue any Units to Subscribers or register any Units in the names of any
Subscribers, and Subscribers shall have no ownership interest in any Units
until the Units are so issued and registered.

 

5.                                      Return of Subscriptions and Escrow Funds to
Subscribers.

 

a.                                       Failure to Obtain Minimum Offering Proceeds. If,
by the date that is five (5) business days after the Final Offering Closing
Date, the Escrow Agent is not in receipt Subscriptions, including Payments and
Promissory Notes, but exclusive of interest, which total $26,000,000 or more,
then the Escrow Agent shall (i) notify the Company in writing that the minimum
Subscriptions required for the Offering have not been received, (ii) as soon as
practicable but no later than thirty (30) days following the Final Offering
Closing Date, return the Subscriptions and Escrow Funds then held by the Escrow
Agent directly to the Subscribers by certified mail, including a check in the
amount of the Payments received in respect of such Subscriptions and on deposit
in the Escrow Account, together with interest earned on the amount of such
Payments and without deduction except as stated in Sections 7 and 13 of and
Exhibits B and C to this Agreement (interest earned will be calculated at the
end of the month of account termination and may be disbursed through a separate
payment following calculation) and (iii) notify the Company in writing of such
return.

 

b.                                      Failure to Reach Escrow Closing. If, by
the date that is five (5) business days after the Escrow Closing Date, the
Escrow Agent is not in receipt of the documents described in Section 4(a), then
the Escrow Agent shall (i) notify the Company in writing that the conditions

 

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set forth in Section 4(a) have
not been satisfied, (ii) as soon as practicable but no later than thirty (30)
days following the Escrow Closing Date, return the Subscriptions and Escrow
Funds then held by the Escrow Agent directly to the Subscribers by certified
mail, including a check in the amount of the Payments received in respect of
such Subscriptions and on deposit in the Escrow Account, together with interest
earned on the amount of such Payments and without deduction except as stated in
Sections 7 and 13 of and Exhibits B and C to this Agreement (interest earned
will be calculated at the end of the month of account termination and may be
disbursed through a separate payment following calculation) and (iii) notify
the Company in writing of such return.

 

c.                                       Rejection of Any Subscription. As soon as
practicable but no later than thirty (30) days after receipt by the Escrow
Agent of written notice from the Company that the Company intends to reject a
Subscriber’s subscription in whole or in part, the Escrow Agent shall return
directly to the applicable Subscriber, by certified mail, the Subscriber’s
Subscription, including funds equal to the Payment(s) made by or on behalf of
such Subscriber, together with interest earned on the amount of such Payments
and without deduction except as stated in Section Sections 7 and 13 of and
Exhibits B and C to this Agreement (interest earned will be calculated at the
end of the month of account termination and may be disbursed through a separate
payment following calculation).

 

d.                                      Abandonment of Offering. As soon as
practicable but no later than thirty (30) days after receipt by the Escrow
Agent of written notice from the Company that it is abandoning the Offering,
the Escrow Agent shall return directly to the Subscribers by certified mail the
Subscribers’ Subscriptions, including funds equal to the Payments made by or on
behalf of each such Subscriber, together with interest earned on the amount of
such Payments and without deduction except as stated in Sections 7 and 13 of
and Exhibits B and C to this Agreement (interest earned will be calculated at the
end of the month of account termination and may be disbursed through a separate
payment following calculation).

 

e.                                       Accounting. In connection with a return of
funds to Subscribers pursuant to this Section 5, the Company shall provide the
Escrow Agent with a Subscription Accounting. Under no circumstances may a
Subscriber receive less than the principal amount of all Payments made by the
Subscriber in connection with a return of funds to Subscribers pursuant to this
Section 5.

 

6.                                      Suspension of Performance or Disbursement Into Court.
If, at any time, there shall exist any dispute between the Company, the Escrow
Agent, any Subscriber or any other person with respect to the holding or
disposition of any portion of any Subscription or Escrow Funds or any other
obligations of the Escrow Agent hereunder, or if at any time the Escrow Agent
is unable to determine, to the Escrow Agent’s reasonable satisfaction, the
proper disposition of any portion of the Subscriptions or the Escrow Funds or
the Escrow Agent’s proper actions with respect to its obligations hereunder, or
if the Escrow Agent is uncertain concerning its duties or rights under this
Agreement, or if the Escrow Agent shall have received instructions, claims or
demands from the Company or Subscribers or others which, in its opinion, are in
conflict with any of the provisions of this Agreement, or if the Company has
not within 30 days of the furnishing by the Escrow Agent of a notice of
resignation pursuant to Section 9 hereof appointed a successor Escrow Agent to
act hereunder, then the Escrow Agent may, in its sole discretion, consult legal
counsel selected by it and take either or both of the following actions:

 

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a.                                       Suspend
the performance of any of its obligations under this Agreement until such
dispute, uncertainty or conflict shall be resolved to the reasonable
satisfaction of the Escrow Agent or until a successor Escrow Agent shall have
been appointed (as the case may be); provided,
however, that the Escrow Agent shall continue to hold the
Subscriptions and to invest the Escrow Funds in accordance with Section 7
hereof; and/or

 

b.                                      Petition (by
means of an interpleader action or any other appropriate method) any court of
competent jurisdiction of the state of Illinois, for instructions with respect
to such dispute or uncertainty, and pay into such court all Subscriptions and
Escrow Funds for holding and disposition in accordance with the instructions of
such court, and the Escrow Agent shall thereupon be discharged from all further
duties under this Escrow Agreement.

 

The Escrow Agent shall have no liability to
the Company, any Subscriber or any other person with respect to any such
suspension of performance or disbursement into court, specifically including
any liability or claimed liability that may arise, or be alleged to have
arisen, out of or as a result of any delay in the disbursement of Escrow Funds
or any delay in or with respect to any other action required or requested of
the Escrow Agent, except in instances of the Escrow Agent’s bad faith, gross
negligence or willful misconduct.

 

7.                                      Investment of Funds. The Escrow Agent shall
invest and reinvest the Escrow Funds as the Company shall direct (subject to
applicable minimum investment requirements) in writing; provided, however, that no investment or
reinvestment may be made except in the following:

 

a.                                       Direct
obligations of the United States of America or obligations the principal of and
the interest on which are unconditionally guaranteed by the United States of
America;

 

b.                                      Savings
accounts, certificates of deposit or repurchase agreements of any bank, trust
company or national banking association (including the Escrow Agent and its
affiliates); or

 

c.                                       United
States Treasury Money Market funds (money market funds investing exclusively in
U.S. Treasury securities and other investments that are backed by the full
faith and credit of the United States of America).

 

Until otherwise directed by the Company, the Escrow Funds shall be
invested as set forth on Exhibit B to this Agreement.

 

If the Escrow Agent has not received written
instructions from the Company when an investment decision needs to be made, the
Escrow Agent shall invest the Escrow Funds, or such portion thereof as to which
no written instructions have been received, in any of the investments described
in clause (a) or clause (c) as it deems appropriate. Each of the foregoing
investments shall be made in the name of the Escrow Agent in its stated
capacity hereunder. No investment shall be made in any instrument or security
that has a maturity of greater than three (3) months or would mature after                           ,         [one year and 90 days following the effective date of
the registration statement filed with the Securities and Exchange Commission],
and any and all investments hereunder shall be made in investments that are
currently marketable or may be

 

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liquidated
within five (5) business days without penalty or charge. Notwithstanding
anything to the contrary contained herein, the Escrow Agent may, without notice
to the Company, sell or liquidate any of the foregoing investments at any time
if the proceeds thereof are required for any release of funds permitted or
required hereunder. The Escrow Agent shall have no liability for any loss or
diminution in the Escrow Account resulting from investments made in accordance
with the provisions of this Agreement. Notwithstanding anything to the contrary
herein, in no event may Escrow Funds be held in any deposit account of the
Escrow Agent in an amount that exceeds $100,000.

 

Transaction
costs associated with the investment of the Escrow Funds, such as commissions,
brokerage fees and the like, shall be paid out of the Escrow Funds, but in no
event shall such costs exceed the amount of interest earned on the Escrow
Funds.

 

8.                                      Inspection of Records. The Company may, at
any time upon reasonable notice, inspect and copy the records of the Escrow
Agent, insofar as they relate to this Agreement, for the purpose of determining
compliance with and conformance to the provisions of this Agreement and the
Subscriptions.

 

9.                                      Resignation and Removal of Escrow Agent. The
Escrow Agent may resign from the performance of its duties hereunder at any
time by giving thirty (30) days’ prior notice to the Company and upon providing
an accounting of all Subscriptions and Escrow Funds accepted, held and
disbursed by the Escrow Agent hereunder. The Escrow Agent may be removed, with
or without cause, by the Company, at any time upon thirty (30) days’ prior
written notice to the Escrow Agent. Such resignation or removal shall take
effect upon the appointment of a successor Escrow Agent, as provided herein
below, and upon receipt by the Company and a successor Escrow Agent of an
accounting of all Subscriptions and Escrow Funds accepted, held and disbursed
by the Escrow Agent hereunder. Upon any such notice of resignation or removal,
the Company shall appoint a successor Escrow Agent hereunder. Upon the
acceptance in writing of any appointment as Escrow Agent hereunder by a
successor Escrow Agent, and upon receipt of the full accounting referred to
above, such successor Escrow Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations under this Agreement, but shall not be discharged from any
liability hereunder for actions taken as Escrow Agent hereunder prior to such
succession. Notwithstanding anything to the contrary herein provided, in the
event the Escrow Agent resigns as Escrow Agent hereunder and no successor
Escrow Agent has been designated and accepted appointment as successor Escrow
Agent within forty-five (45) days following the date of the Escrow Agent’s
notice of resignation, the Escrow Agent shall have the right to deposit all
property held pursuant to this Agreement into the registry of any court of
competent jurisdiction of the state of Illinois and notify the parties hereto
of such deposit, and thereupon the Escrow Agent shall be discharged from all
further duties and responsibilities as Escrow Agent under this Agreement. After
any Escrow Agent’s resignation or removal, the provisions of this Agreement
shall continue to apply as to any actions taken or omitted to be taken by it
while it was Escrow Agent under this Agreement.

 

10.                               Duty and Liability of
Escrow Agent. The sole duty of the Escrow Agent, other than as herein
specified, shall be to receive the Subscriptions and Escrow Funds and hold them
subject to release, in accordance herewith, and the Escrow Agent shall be under
no duty to determine

 

6

 

whether the
Company is complying with the requirements of this Agreement or any applicable
laws or regulations, including but not limited to federal or state securities
laws, in tendering to the Escrow Agent said proceeds from the sale of the
Units. The Escrow Agent may conclusively rely upon and shall be protected in acting
upon any statement, certificate, notice, request, approval, consent, order or
other document believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall have no duty
or liability to verify any such statement, certificate, notice, request,
consent, order or other document, and its sole responsibility shall be to act
only as expressly set forth in this Agreement. The Escrow Agent shall be under
no obligation to institute or defend any action, suit or proceeding in
connection with this Agreement unless first indemnified to its satisfaction.
The Escrow Agent may consult counsel with respect to any question arising under
this Agreement and the Escrow Agent shall not be liable for any action taken or
omitted upon advice of such counsel except in the event of the Escrow Agent’s
bad faith, willful misconduct or gross negligence. The Escrow Agent shall not
be required to act upon or take notice of any direction, demand, notice,
communication or instructions provided to the Escrow Agent by any Subscriber,
but shall act upon and take notice solely of notices, communications and
instructions provided to the Escrow Agent by the Company or as otherwise set
forth in this Agreement. The Escrow Agent shall have no implied duties or
obligations and shall not be charged with knowledge or notice of any fact or
circumstance not specifically set forth herein or in any notices given to it in
accordance with the notice provisions of this Agreement. The Escrow Agent shall
have no liability with respect to the transfer or distribution of any funds
made by the Escrow Agent pursuant to transfer or wiring instructions provided
to the Escrow Agent by any party to this Agreement. The Escrow Agent shall not
be obligated to take any legal action or to commence any proceedings in
connection with the Escrow Account or this Agreement, or to appear in,
prosecute or defend in any such legal action or proceedings. In performing its
duties under this Agreement, or upon the claimed failure to perform its duties,
the Escrow Agent shall have no liability except for the Escrow Agent’s bad
faith, willful misconduct or gross negligence. In no event shall the Escrow
Agent be liable for incidental, indirect, special, consequential or punitive damages.
The Escrow Agent shall have no duty by reason of this Agreement to prepare or
file any federal or state tax report or return with respect to the Escrow
Account or any income earned thereon, except that the Escrow Agent may be
required to prepare IRS Forms 1099 and provide such forms to the IRS and the
Subscribers as may be required under IRS regulations with respect to interest
or other income earned on the Escrow Funds. Required Forms 1099 for 2006 will
be issued to the Company if the Notice of Escrow Closing is given on or prior
to December 31, 2006; required Forms 1099 for 2006 will be sent to the
Subscribers, together with payment of interest earned in respect of Payments
attributable to the Subscriptions of the respective Subscribers, if the Notice
of Escrow Closing is given on or after January 1, 2007.

 

11.                               Indemnification. The Company shall
indemnify and hold harmless the Escrow Agent and each director, officer,
employee and agent of the Escrow Agent (collectively, the “Indemnified Parties”)
from and against any and all claims, demands, suits, actions or proceedings
(including any inquiry or investigation) arising directly or indirectly from or
in connection with the negotiation, preparation, execution, performance or
failure of performance of this Agreement or any transactions contemplated
herein, whether or not any such Indemnified Party is a party to any such
action, proceeding, suit or the target of any such inquiry or investigation. This
indemnity and hold harmless agreement shall include indemnity against all
costs, expenses, damages and liabilities, including reasonable attorneys’ fees,
incurred by or

 

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asserted against any of the Indemnified Parties in connection with any
such claims, demands, suits, actions or proceedings, except for any
consequential damages suffered by the Indemnified Parties as a result of any
such claims, demands, suits, actions or proceedings, which consequential
damages are expressly excluded from the foregoing indemnity. Provided, further,
that the foregoing indemnity shall not apply to any claims, demands, suits,
actions or proceedings arising from the bad faith, gross negligence or willful
misconduct of any Indemnified Parties. The provisions of this Section 11 shall
survive the termination of this Agreement, any release, return or distribution
of Subscriptions and Escrow Funds hereunder, and any resignation or removal of
the Escrow Agent.

 

12.                               Securities
Law Matters. The Escrow Agent shall have no duty or responsibility for
determining whether the Units or the offer and sale thereof conform to the
requirements of applicable Federal or state securities laws, including but not
limited to the Securities Act of 1933 and the Securities Exchange Act of 1934. The
Escrow Agent has not participated in the preparation or review of any sales or
offering material relating to the Units described in this Agreement. In
addition to any other indemnities provided for in this Agreement, the Company
shall indemnify and hold harmless the Escrow Agent and each of its officers,
directors, agents and employees from and against all claims, liabilities,
losses and damages (including attorneys’ fees) incurred by the Escrow Agent or
such persons and which directly or indirectly result from any violation or
alleged violation of Federal or state securities laws. The name of the Escrow
Agent or any similar words shall not be used by the Company or reproduced in
any prospectus or offering, sales or similar material utilized by the Company
or anyone acting on the Company’s behalf in connection with the offering or
sale of the Units, other than to state that Subscriptions will be deposited in
an escrow account that it has established with the Escrow Agent and describing
the terms and conditions on which the Subscriptions will be held and released. The
Escrow Agent understands and agrees that this Agreement shall be filed as an
exhibit to the registration statement filed with the Securities and Exchange
Commission relating to the Offering and with state securities authorities. The
Escrow Agent shall cooperate with the Company with respect to any special
requirements of the Securities and Exchange Commission and state securities
authorities regarding this Agreement and the terms of escrow provided herein.

 

13.                               Fees and Expenses of Escrow Agent. The
Escrow Agent shall be entitled to compensation as described in Exhibit C attached hereto, promptly paid by
the Company at such time or times as set forth therein, until the termination
of this Agreement or the resignation or removal of the Escrow Agent, for the
services provided by Escrow Agent hereunder. The fees agreed upon for services
rendered hereunder are intended as full compensation for the Escrow Agent’s
services as contemplated by this Agreement; provided, however, that in the
event the Escrow Agent renders any material service not contemplated in this
Agreement or there is any assignment of interest in the subject matter of this
Agreement, or any material modification hereof, or if any material controversy
arises hereunder, or the Escrow Agent is made a party to any litigation
pertaining to this Agreement, or the subject matter hereof, then the Escrow
Agent shall be reasonably compensated for such extraordinary services and
reimbursed for all costs and expenses, including reasonable attorney’s fees,
occasioned by any delay, controversy, litigation or event, and the same shall
be recoverable from the Company, but not from the Escrow Account.

 

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14.                               Representations
and Warranties.

 

a.                                       The
Company makes the following representations and warranties to the Escrow Agent,
as of the date hereof:

 

1.                                       The
Company is a limited liability company duly organized, validly existing, and in
good standing under the laws of the State of Illinois and has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder;

 

2.                                       This
Agreement has been duly approved by all necessary action of the Company, has
been executed by duly authorized persons of the Company, and constitutes a
valid and binding agreement of the Company, enforceable in accordance with its
terms;

 

3.                                       The
execution, delivery, and performance by the Company of this Agreement will not
violate, conflict with, or cause a default under the Company’s governing
instruments, any applicable law or regulation, any court order or
administrative ruling or decree to which the Company is a party or any of its
property is subject, or any agreement, contract, indenture or other binding
arrangement to which the Company is a party or any of its property is subject;
and

 

4.                                       The
Company hereby acknowledges that the status of the Escrow Agent is that of
agent only for the limited purposes set forth herein, and hereby represents and
covenants that no representations or implications shall be made that the Escrow
Agent has investigated the desirability or advisability of an investment in the
Units or has approved, endorsed or passed upon the merits of the investments
therein and that the name of the Escrow Agent has not and shall not be used in
any manner in connection with the offer or sale of the Units other than to
state that the Escrow Agent has agreed to serve as agent for the limited
purposes set forth herein.

 

b.                                      The
Escrow Agent represents and warrants to the Company, as of the date hereof,
that the Escrow Agent has all necessary powers and authority to act as an
escrow agent as set forth in this Agreement.

 

15.                               Consent to Jurisdiction and Venue. In the
event that any party hereto commences a lawsuit or other proceeding relating to
or arising from this Agreement, the parties hereto agree that the courts of the
state of Illinois shall have sole and exclusive jurisdiction and shall be
proper venue for any such lawsuit or judicial proceeding and the parties hereto
waive any objection to such venue. The parties hereto consent to and agree to
submit to the jurisdiction of the courts specified herein and agree to accept
service or process to vest personal jurisdiction over them in any of these
courts.

 

16.                               Notice. Any notice and other communications
hereunder shall be in writing and shall be deemed to have been validly served,
given or delivered five (5) days after deposit in the United States mail, by
certified or registered mail with return receipt requested and postage prepaid,
at

 

9

 

the time of
delivery when delivered personally, one (1) day after delivery to any overnight
courier, or when transmitted by facsimile transmission facilities, and
addressed to the party to be notified as follows:

 

If to the Company at:

 

Illini Bio-Energy, LLC

Attention: Chair

3600 Wabash Avenue, Suite C

Springfield, IL  62711-9606

Fax:  (217) 726-9527

 

If to the Escrow Agent:

 

Marine Bank, Springfield

Attn: Trust & Wealth Management Division

3050 Wabash Avenue

Springfield, IL  62704

Fax:  (217) 726-0283

 

or to such other address as each party may designate for itself by like
notice.

 

17.                               Amendment or Waiver. This Agreement and any
provision hereof may be amended, changed, waived, discharged, superseded,
cancelled or terminated only by a writing signed by the Company and the Escrow
Agent. No delay or omission by any party in exercising any right with respect
hereto shall operate as a waiver. A waiver on any one occasion shall not be construed
as a bar to, or wavier of, any right or remedy on any future occasion.

 

18.                               Severability. To the extent any provision
of this Agreement is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.

 

19.                               Governing Law. This Agreement shall be
construed and interpreted in accordance with the internal laws of the State of
Illinois without giving effect to the conflict of laws principles thereof.

 

20.                               Entire Agreement. This Agreement
constitutes the entire agreement between the parties relating to the
acceptance, collection, holding, investment, release, return and disbursement
of the Subscriptions and Escrow Funds and sets forth in their entirety the
obligations and duties of the Escrow Agent with respect to the Subscriptions
and Escrow Funds.

 

21.                               Binding Effect. All of the terms of this
Agreement, as amended from time to time, shall be binding upon, inure to the
benefit of and be enforceable by the respective successors and assigns of the
Company and the Escrow Agent; provided, however, that neither this Agreement
nor any rights or obligations hereunder may be assigned by any party hereto
without the express written consent of each of the other party hereto.

 

10

 

22.                               Execution in Counterparts. This Agreement
may be executed in any number of counterparts, which, when so executed, shall constitute
one and the same agreement.

 

23.                               Termination. Upon the first to occur of the
release of all Subscriptions and disbursement of all amounts in the Escrow
Account pursuant to Section 4 or 5 hereof or deposit of all Subscriptions and
all amounts in the Escrow Account into court pursuant to Section 6 hereof, this
Agreement shall terminate and the Escrow Agent shall have no further
responsibilities whatsoever with respect to this Agreement or the Subscriptions
or the Escrow Funds, except that the Escrow Agent may be required to prepare
and issue IRS Forms 1099 to the appropriate party(ies) in the event that an IRS
Form 1099 filing requirement arises with respect to interest or other income
earned on the Escrow Funds.

 

IN
WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and effective as of the date first above written.

 

	
   

  	
  ILLINI BIO-ENERGY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
  Federal Taxpayer I.D. number: 20-3692964

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MARINE BANK, SPRINGFIELD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  	
   

  

 

11

 

EXHIBIT A

 

Form of Notice
of Escrow Closing

 

(To be on
Company letterhead)

 

(date)

 

Marine Bank, Springfield

Attn: Trust & Wealth Management Division

3050 Wabash Avenue

Springfield, IL  62704

 

Re: Illini Bio-Energy, LLC - Notice
of Escrow Closing

 

Dear
Sir/Madam:

 

You are hereby notified that the following conditions to release of
Subscriptions and Escrow Funds being held in the Escrow Account for Illini
Bio-Energy, LLC (the “Company”) have been satisfied:

 

(i)                                     The
Company has received and deposited in escrow Subscriptions (including Payments
and Promissory Notes) for $26,000,000 or more, exclusive of interest;

 

(ii)                                  The
Company has received a written commitment or commitments for senior and
subordinated debt financing which, combined with the total amount of Payments
and Promissory Notes deposited in escrow, would equal at least $117,500,000;
and

 

(iii)                               The
Company has received the air emission source permit necessary to commence
construction of a 50 million gallon per year ethanol plant on a site available
to the Company (by ownership, lease, option or otherwise).

 

 

IN WITNESS
WHEREOF, the
undersigned hereby certifies he is duly authorized to execute this notice on
behalf of Illini Bio-Energy, LLC.

 

 

	
   

  	
  ILLINI
  BIO-ENERGY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  	
   

  

 

1

 

EXHIBIT B

 

Initial
Investment of Escrow Funds

 

Northern Trust U.S. Government Select Premier Shares money market
mutual fund (which will pay to Escrow Agent a monthly shareholder services fee
as a portion of its compensation as described in Exhibit C of this Agreement).

 

2

 

EXHIBIT C

 

Compensation
of Escrow Agent

 

All charges, fees, and costs, including the Escrow Agent’s $500.00
Acceptance Fee due and payable at time of account opening (which shall be the
date on which the Registration Statement for the Offering is effective with the
Securities and Exchange Commission), the Escrow Agent’s $50.00 monthly fee
(commencing on the date of account opening), and attorney fees that may be
incurred by the Escrow Agent with respect to this Escrow Agreement shall be
charged to and be borne by the Company. The Company hereby acknowledges,
confirms, approves and authorizes the Escrow Agent to receive, as part of its
compensation under this Escrow Agreement, a fifty basis point (50 basis point,
or .005 of 1 percent) shareholder services fee to be paid to Escrow Agent
monthly by Northern Trust Company on balances held in the Northern Trust U.S.
Government Select Premier Shares money market mutual fund.

 

3Exhibit 10.1

 

AGREEMENT

 

I.                                        DEFINITIONS AND PURCHASE PRICE

 

1.              Owner

 

As used in
this Agreement, “Owner” refers to:

 

Perry Land
Limited, LLC

Robert V. Perry, Manager

800 North Union Street

Lincoln, IL 62656

 

Fax No.:                          

 

2.              Purchaser

 

As used
herein, “Purchaser” refers to:

 

Illini
Bio-Energy

205 South Walnut St.

Rochester, IL 62563

 

Fax No.: (217)
498-9662

 

3.              The Property

 

As used
herein, the term, “Property” means the real estate located in Logan County,
Illinois and depicted on the plat map attached hereto, consisting of 215.25
acres, more or less in the aggregate, and having the following tax id numbers:

 

08-19-017-00 (137.5 ac.)

08-19-009-00 (76.13 ac.)

08-19-017-00 (1.62 ac.)

 

The legal description of the Property is
attached.

 

4.              Purchase Price   As
used herein, the term “Purchase Price” means the sum of $12,000.00 per acre, or
$2,583,000.

 

II.                                   OPTION AREEMENT

 

1.               Grant
of Initial Option. Upon payment by Purchaser of $20,000.00, (the “Initial
Option Payment”) Owner grants to Purchaser the option to purchase the Property
for the Purchase Price. The term of the option commences upon execution of this
agreement by all parties, and shall continue through a date 15 calendar months
from the date of execution of this agreement by Owner. (the “Option Period”). This
is an exclusive option.

 

 

2.               Extension
of Option Period. The Initial Option Period may be extended by Purchaser
one time only for an additional 9 months from the date of its expiration, with
payment of $10,000.00 on or before the initial expiration date. (“Extension
Payment”). The Initial Option Period may be extended by Purchaser only if
zoning and permitting has not been obtained by Purchaser on or before the end
of the Initial Option Period.

 

3.               Payments.
The Initial Option Payment shall be made within 5 days of Owner’s execution of
this Agreement. Any Extension Payment shall thereafter be made to Owner at the
address given above.

 

4.               Notice.
Purchaser shall notify Owner in writing of all extensions upon making an
Extension Payment; however, failure to give notice will not void an extension
if the extension payment is timely made.

 

5.               Exercise
of Option: Creation of Contract. Purchaser may exercise its option at any
time during the Option Period, by delivering written notice of such exercise to
Owner personally, or by sending written notice of such exercise by regular mail
to Owner at the address set forth above, postmarked on or before expiration
date. Exercise of the option shall give rise to a Contract to Purchase Real
Estate, section III, below.

 

6.               Application
of Option Payments. The sum of $5,000.00 from the Initial Option Payment is
entirely non-refundable except in the case of the failure of the Seller to
obtain the farm tenant’s agreement in accordance with paragraph 11, or except
in the case of an adverse Phase I environmental study and Owner’s decision not
to remediate, as set forth in paragraph 6 of the Contract to Purchase Real
Estate. In the event Purchaser exercises the option, the remaining sum of
$15,000.00 from the Initial Option Payment, and the Extension Payment, if made,
shall be considered as earnest money under the Contract to Purchase Real Estate.
In the event the option is not exercised, the remainder of the initial Option
Payment and the Extension Payment, if made, shall be retained by Owner.

 

7.               Recordation.
Purchaser may at its expense record a memorandum of this option agreement with
the Recorder of Deeds of Logan County, Illinois.

 

8.               Inspection
and Testing. During the Option Period, Purchaser, its agents and consulting
and environmental engineers, shall have free and unrestricted access to the
Property at reasonable times to make soil borings and otherwise investigate
underground conditions, and to conduct nondestructive tests or surveys,
provided that Purchaser shall be liable to Owner for all damages to the
Property or growing crops thereon. Purchaser may, at its expense, have a Phase
One Environmental Study performed with respect to the Property.

 

9.               Assignments.
Purchaser may assign this option to a third party only with the prior written
consent of Seller, which consent may be withheld in Seller’s sole discretion. “Third
Party” does not include an entity under common ownership and control with
Purchaser, to which Purchaser may freely assign this option. If Purchaser
assigns this option contract to a third party, Purchaser shall have no further
obligations with respect to this option or to any contract resulting from the
exercise of option by the assignee.

 

2

 

10.         Zoning
and Permitting. Purchaser shall, during the Initial and any Extension
Period, pursue zoning and acquisition of permits to enable the Property to be
used for an ethanol production plant, with reasonable diligence. Seller shall
cooperate in such zoning and permit acquisition activities, and shall execute
such documents as are reasonably requested by Purchaser.

 

11.         Tenants
in Possession. Pursuant to an oral lease, Seller has rented the Property to
a farm tenant for crop year 2005, and this option is subject to such tenant’s
rights. Seller shall, within 30 days of execution of this option agreement,
procure a written agreement from the lessee stating that lessee will allow
access to the Property in accordance with paragraph 8 of this contract,
provided that Purchaser pays for any crop damage caused thereby. If Seller
fails to procure such agreement from the lessee, this option agreement will
terminate and Seller will return the Initial Option Payment to Purchaser.

 

Seller may, by
oral or written agreement, lease the Property to a farm tenant for crop year
2006. However, any such lease shall terminate no later than December 1, 2006. If
Purchaser has not closed on the purchase of the Property by December 1, 2006,
then Seller may lease the Property for crop year 2007, and any such lease will
terminate no later than December 1,2007. Any farm lease entered into for any
2006 or 2007 crop years shall be subject to the condition that lessee will
allow access to the Property in accordance with paragraph 8 of this contract,
provided that Purchaser pays for any crop damage caused thereby, and subject to
the further condition that if Purchaser takes title to the Property, Purchaser
may destroy growing crops after taking title, provided that Purchaser pays the
tenant the value of the growing crops. This paragraph 11 shall survive any
exercise of option by Purchaser, and shall survive closing.

 

This Option
Agreement is executed by the Purchaser on this 23rd day of February,
2005 and constitutes an offer to Owner, which will remain open until midnight,
on March 10, 2005. If Owner delivers or faxes an executed agreement to
Purchaser by that date and time, this option agreement shall be effective. If
Owner does not deliver or fax an executed agreement to Purchaser by that date
and time, the offer is withdrawn. If Owner faxes the agreement to Purchaser,
Owner shall deliver or mail an agreement containing Owner’s original signatures
to Purchaser within 2 working days.

 

Owner:

 

	
  Perry Land
  Limited, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  /s/

  	
  Robert Perry

  	
   

  	
   

  	
   

  	
   

  	 

	
  By:

  	
   

  	
  Robert
  Perry, Manager

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  /s/Perri
  Roberts

  	
   

  	
   

  	
   

  	
   

  	 

	
  By:

  	
   

  	
  Perri
  Roberts, Manager

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  Purchaser:

  	
   

  	
   

  	
   

  	 

	
  Illini
  Bio-Energy, an Illinois cooperative

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  By:

  	
  /s/ Ernest
  D. Moody, President

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  Authorized
  Officer

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

												

 

3

 

III.                              CONTRACT TO PURCHASE REAL ESTATE

 

Purchaser’s
exercise of the option constitutes an agreement for Purchaser to purchase, and
for Owner to sell, the Property for the Purchase Price in accordance with the
following terms and conditions.

 

1.                                       Owner
shall within 30 days after the exercise of option, furnish at Owner’s expense a
commitment for an Owners Title Guaranty Policy issued by an affiliate of
Chicago Title Insurance Company, or other company acceptable to Purchaser, for
the amount of the purchase price, showing merchantable title to the Property in
Owner, subject only to the following:

 

a.               All
real estate taxes, special assessments and special service area taxes now a
lien, levied, or confirmed after the date hereof, except as hereinafter
provided.

 

b.              Building,
uses and occupancy restrictions, if any.

 

c.               Zoning
laws and ordinances.

 

d.              Easements
of record or in place affecting the premises, if any.

 

e.               Drainage
ditches, feeders and laterals, if any.

 

f.                 Mortgage
or other liens that may be eliminated at closing by application of the purchase
price.

 

g.              Subject
to rights of tenants in possession, as set forth in paragraph 11 of the Option
Agreement.

 

2.               Purchaser
shall, within 15 days after receiving such title evidence, provide Owner or his
agent with any written objections to the merchantability of the title. Purchaser
may in its sole discretion waive any or all objections, and in such case, Owner
shall proceed to closing.

 

3.               This
transaction shall be closed within 45 days after Purchaser’s exercise of the
Option unless the closing must be extended in order to clear title in
accordance with paragraph 2. Owner shall deliver possession on the date of
closing. All prorations, including rents, general real estate taxes and special
service area taxes, shall be made as of the date of closing, based upon latest
available information. Special assessments are not subject to proration. Rather,
at Purchaser’s option, all remaining installments of special assessments shall
be paid by Owner at or prior to closing, or due credit shall be given to
Purchaser at closing. Mortgages and other liens shall be cleared by application
of the purchase price.

 

4.               At
closing Owner shall convey and transfer the Property to Purchaser by recordable
warranty deed, releasing homestead. The Purchase Price, subject to credits and
prorations, shall be paid and all documents relative to the transaction shall
be signed and delivered.

 

5.               Should
Purchaser materially breach this contract, the Owner’s remedy shall be, at
Owner’s option, (a) to retain the earnest money in full satisfaction of all
claims and damages; or

 

4

 

(b) have specific performance. In the event
of Owner’s material breach of this contract, Purchaser may elect, at Purchaser’s
sole option, to (a) void the contract and have a return of its earnest money;
or (b) affirm the contract, and have any available rights and remedies at law
or in equity, including but not limited to specific performance.

 

6.               At
any time prior to closing, Purchaser and its agents and consulting and
environmental engineers shall have free and unrestricted access to the Property
at all times to make soil borings and to conduct tests and surveys of underground
conditions, provided that if Purchaser shall be liable to all damages to the
Property or growing crops thereon. Purchaser may, at its expense, have a Phase
One Environmental Study performed with respect to the Property. If such study,
or if any such study made pursuant to paragraph 8 of the Option Agreement,
discloses the presence or possibility of toxic or hazardous materials requiring
remediation under federal, state and local law, Owner may cause such
remediation to be made at Owner’s expense. If Owner is unwilling or unable to
cause the remediation of the Property, Purchaser may void this Contract, and
all earnest money previously paid shall be returned to Purchaser, except
$5,000.00, which Owner may retain.

 

7.               Time
is of the essence of this Contract. The warranties and agreements herein
contained shall extend to and be obligatory upon the heirs, executors,
administrators, successors and assigns of me parties hereto.

 

8.               All
notices and demands to or by the parties shall be in writing. The mailing of
any such notice or demand to the Owner or to the Purchaser at their respective
addresses set forth above shall be considered sufficient service. If there is
more than one Owner or Purchaser, the mailing of notice or demand to any one
Owner or Purchaser shall be considered to be sufficient notice or demand on all
Owners or Purchasers.

 

9.               Agreement
is the entire agreement of the parties with respect to its subject matter,and
all prior representations and negotiations are expressly disclaimed. This
Agreement may be amended only by a writing signed by all the parties.

 

10.         The
parties represent that no commission is due to any broker as a result of this
transaction. All parties waive any claim of conflict if any party is affiliated
with any broker.

 

11.         All
actions for breach of this contract shall be brought only in a court of
competent jurisdiction in Logan County, Illinois, and the parties agree to such
court’s jurisdiction over the person and that venue is proper therein. In the
event of litigation, the substantially prevailing party shall be entitled to an
award of its costs, expenses and reasonable attorneys fees.

 

5

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