Document:

exv4w2

 

Exhibit 4.2

MINNERGY, LLC

SUBSCRIPTION AGREEMENT 

Limited Liability Company Membership Units

$1.00 per Unit

Minimum Investment of 20,000 Units ($20,000)

5,000 Unit Increments Thereafter ($5,000)

The undersigned subscriber (“Subscriber”), desiring to become a member of MinnErgy, LLC
(“MinnErgy”), a Minnesota limited liability company, with its principal place of business at 4455
Theurer Boulevard, PO Box 186, Winona, Minnesota 55987 hereby subscribes for the purchase of
membership units of MinnErgy, and agrees to pay the related purchase price, identified below.

A. SUBSCRIBER INFORMATION. Please print your individual or entity name and address. If we accept
your subscription, the units will be titled in the name of the subscriber as it appears below.
Joint subscribers should provide both names. Your name and address will be recorded exactly as
printed below. Please provide your home, business and/or mobile telephone number. If desired,
please also provide your e-mail address.

	 	 	 	 	 	 	 
	     1.

	 	Subscriber’s Printed Name
	 	 	 	 
	 

	 	 	 	 	 	 
	     2.

	 	Title, if applicable	 	 	 	 
	 

	 	 	 	 	 	 
	     3.

	 	Subscriber’s Address	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	     Street	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	     City, State, Zip Code	 	 	 	 
	 

	 	 	 	 	 	 
	     4.

	 	E-mail Address	 	 	 	 
	 

	 	 	 	 	 	 
	     5.

	 	Home Telephone Number	 	 	 	 
	 

	 	 	 	 	 	 
	     6.

	 	Business Telephone Number	 	 	 	 
	 

	 	 	 	 	 	 
	     7.

	 	Mobile Telephone Number	 	 	 	 
	 

	 	 	 	 	 	 

B. NUMBER OF UNITS PURCHASED. You must purchase at least 20,000 units. The minimum number of units
to be sold is 63,000,000 and the maximum number of units to be sold in the offering is 83,000,000.

		 	 
		Unit(s)    	 

C. PURCHASE PRICE. Indicate the dollar amount of your investment (minimum investment is
$20,000).

	 	 	 	 	 	 	 	 	 
	1. Total Purchase Price

	 	=
	 	2. 1st Installment
	 	+
	 	3. 2nd Installment
	($1.00 per unit multiplied

	 	 	 	(10% of Total Purchase Price)
	 	 	 	(90% of Total Purchase Price)
	by number of units)
	 	 	 	 	 	 	 	 
	 

	 	=
	 	 	 	+	 	 

D. GENERAL INSTRUCTIONS FOR SUBSCRIBERS:

You should read the Prospectus dated [DATE OF EFFECTIVENESS] (the “Prospectus”) in its entirety
including the exhibits for a complete explanation of an investment in MinnErgy.

INSTRUCTIONS IF YOU ARE SUBSCRIBING PRIOR TO THE COMPANY’S RELEASE OF FUNDS FROM ESCROW:
If you are subscribing prior to the Company’s release of funds from escrow, you must follow the
instructions contained in paragraphs 1 through 5 below:

     1. Complete all information required in this Subscription Agreement, and date and sign the
Subscription Agreement on page 6 and the Member Signature Page to our Amended and Restated Member
Control Agreement attached to this Subscription Agreement as Exhibit A.

1

 

     2. Immediately provide a personal (or business) check for the first installment of ten percent
(10%) of your investment amount. The check should be made payable to “Winona National Bank, escrow
agent for MinnErgy, LLC.” You will determine this amount in box C.2 on page 1 of this Subscription
Agreement.

     3. Execute
the Promissory Note and Security Agreement on page 7 of this Subscription Agreement
evidencing your commitment to pay the remaining ninety percent (90%) due for the units. The
Promissory Note and Security Agreement is attached to this Subscription Agreement and grants
MinnErgy, LLC a security interest in your units.

     4. Deliver the original executed documents referenced in paragraphs 1 and 3 of these
instructions, together with a personal or business check as described in Paragraph 2 of these
instructions to:

MinnErgy, LLC

4455 Theurer Boulevard, PO Box 186

Winona, Minnesota 55987

     5. Within 20 days of written notice from MinnErgy that your subscription has been accepted,
you must remit an additional personal (or business) check for the second installment of ninety
percent (90%) of your investment amount made payable to “Winona National Bank, escrow agent for
MinnErgy, LLC” in satisfaction of the Promissory Note and Security Agreement. You will determine
this amount in box C.3 on page 1 of this Subscription Agreement. You must deliver this check to
the same address set forth above in paragraph 4 within twenty (20) days of the date of MinnErgy’s
written notice. If you fail to pay the second installment pursuant to the Promissory Note and
Security Agreement, MinnErgy shall be entitled to retain your first installment and to seek other
damages, as provided in the Promissory Note and Security Agreement. This means that if you are
unable to pay the 90% balance of your investment amount within 20 days of our notice, you may have
to forfeit the 10% cash deposit.

     Your funds will be placed in MinnErgy’s escrow account at Winona National Bank. The funds
will be released to MinnErgy or returned to you in accordance with the escrow arrangements
described in the Prospectus. MinnErgy may, in its sole discretion, reject or accept any part or
all of your subscription. If MinnErgy rejects your subscription, your Subscription Agreement and
investment will be promptly returned to you, plus nominal interest, minus escrow fees. MinnErgy
may not consider the acceptance or rejection of your subscription until a future date near the end
of this offering.

INSTRUCTIONS IF YOU ARE SUBSCRIBING AFTER THE COMPANY’S RELEASE OF FUNDS FROM ESCROW: If
you are subscribing after the Company’s release of funds from escrow, you must follow the
instructions contained in paragraphs 1 through 3 below:

     1. Complete all information required in this Subscription Agreement, and date and sign the
Subscription Agreement on page 6 and the Member Signature Page to our Amended and Restated Member
Control Agreement attached to this Subscription Agreement as Exhibit A.

     2. Immediately provide your personal (or business) check for the entire amount of your
investment (as determined in box C.1 on page 1) made payable to “MinnErgy, LLC.”

     3. Deliver the original executed documents referenced in paragraph 1 of these instructions,
together with your personal or business check as described in paragraph 2 to:

MinnErgy, LLC

4455 Theurer Boulevard, PO Box 186

Winona, Minnesota 55987

     If you are subscribing after we have released funds from escrow and we accept your investment,
your funds will be immediately at-risk as described in the Prospectus. MinnErgy may, in its sole
discretion, reject or accept any part or all of your subscription. If MinnErgy rejects your
subscription, your Subscription Agreement and investment will be returned to you promptly, plus
nominal interest, minus escrow fees. MinnErgy may not consider the acceptance or rejection of your
subscription until a future date near the end of this offering.

     You may direct your questions to the governors listed below or to MinnErgy at (507) 858-0022.

2

 

	 	 	 	 	 
	NAME	 	POSITION	 	PHONE NUMBER
	Dan Arnold

	 	Chairman of the Board and Governor
	 	 (507) 858-1010
	Ron Scherbring

	 	President/CEO and Governor
	 	(507) 858-1011
	Chris Arnold

	 	Secretary, CFO and Governor
	 	(507) 858-1012
	Dave Arnold

	 	Governor
	 	(507) 858-1013
	Mike Daley

	 	Governor
	 	(507) 858-1014
	Harland Knight

	 	Governor
	 	(507) 858-1016
	Bea Koch

	 	Governor
	 	(507) 858-1017
	Glen Lutteke

Rich Mikrut

	 	Governor

Governor
	 	(507) 858-1018
(507) 858-1019
	Bob Pennington

	 	Governor
	 	(507) 858-1020
	Tony Wasinger

	 	Governor
	 	(507) 858-1021

E. Additional Subscriber Information. Subscriber, named above, certifies the following under
penalties of perjury:

	 	1.	 	Form of Ownership. Check the appropriate box (one only) to indicate form of
ownership. If the subscriber is a Custodian, Corporation, Partnership or Trust, please
provide the additional information requested.

	 	 	 	 	 
	 

	 	o 
	 	Individual
	 

	 	o 
	 	Joint Tenants with Right of
Survivorship (Both signatures must appear on page 6.)
	 

	 	o 
	 	Corporation, Limited Liability Company or Partnership (Corporate
Resolutions, Operating Agreement or Partnership Agreement must be enclosed.)
	 

	 	o 
	 	Trust
	 

	 	 	 	     Trustee’s Name:                                                    
	 

	 	 	 	     Trust Date:                                                             
	 

	 	o
	 	Other: Provide detailed information in the space immediately below.
	 

	 	 	 	                               
             
                   
                    
	 

	 	 	 	                               
             
                   
                    

	 	2.	 	Subscriber’s Taxpayer Information. Check the appropriate box if you are a
non-resident alien, a U.S. Citizen residing outside the United States, and/or subject
to backup withholding. All individual subscribers should provide their Social Security
Numbers. Trusts should provide the trust’s taxpayer identification number. Custodians
should provide the minor’s Social Security Number. Other entities should provide the
entity’s taxpayer identification number.

	 	o 	 	Check box if you are a non-resident alien
	 	o 	 	Check box if you are a U.S. citizen residing outside of the United States
	 	o 	 	Check this box if you are subject to backup withholding

	 	Subscriber’s Social Security No.	 	                            
                                            
	 	Joint Subscriber’s Social Security No.	 	                            
                                            
	 	Taxpayer Identification No.	 	                            
                                            

	 	3.	 	Member Report Address. If you would like duplicate copies of member reports
sent to an address that is different than the address identified in section A, please
complete this section.

	 	Address: 	 	                     
                     
                     
             
                     
                     
	 	 	 	                     
                     
                     
             
                     
                     

	 	4.	 	State of Residence.

	 	 	State of Principal Residence:
	                      
                     
                     
             
	 	 	State where driver’s license is issued:	                      
                     
                     
             
	 	 	State where resident income taxes are filed:	                      
                     
                     
             

3

 

	 	 	 	State(s) in which you have maintained your principal residence during the past three
years:

	 	 	 	 
	 	 a.
	 b.
	 c.
 

	 	5.	 	Suitability Standards and Confidential Investor Information. You cannot invest
in MinnErgy unless you meet one of the following suitability tests a) or b) or the
heightened standards for Iowa investors set forth in c) set forth below. Please review
the suitability tests and check the box next to the following suitability test that you
meet. For husbands and wives purchasing jointly, the tests below will be applied on a
joint basis.

	 	a.  o  	 	I (We) have annual income from whatever source of at least
$45,000 and a net worth of at least $45,000, exclusive of home,
furnishings and automobiles; or
	 
	 	b.  o  	 	I (We) have a net worth of at least $150,000, exclusive of
home, furnishings and automobiles.
	 
	 	c.  o  	 	I (We) reside in Iowa and I (We) have a net worth of $60,000
(exclusive of home, auto and furnishings) and annual income of $60,000 or, in
the alternative, a net worth of $150,000 (exclusive of home, auto and
furnishings).

	 	6.	 	Subscriber’s Representations and Warranties. You must read and certify your
representations and warranties by placing your initials where indicated and by signing
and dating this Subscription Agreement. Joint subscribers are also required to
initial and sign as indicated.

	 	 	 	 	 	 	 
	(Initial here) 	 	(Joint initials) 	 	By signing below the subscriber represents and warrants to MinnErgy
that he, she or it:
 
	______	 	______	 	 
	 	a. has received a copy of MinnErgy’s Prospectus dated [DATE
OF EFFECTIVENESS] and the exhibits thereto or has
received notice that this sale has been made pursuant to
a registration statement in which a final prospectus
would have been required to have been delivered in the
absence of Rule 172;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	b. has been informed that the units of MinnErgy are offered
and sold in reliance upon a federal securities
registration; state registrations in Iowa, Minnesota,
and Wisconsin; and exemptions from securities
registrations in various other states, and understands
that the units to be issued pursuant to this
subscription agreement can only be sold to a person
meeting requirements of suitability;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	c. has been informed that the securities purchased pursuant
to this Subscription Agreement have not been registered
under the securities laws of any state other than Iowa,
Minnesota, and Wisconsin and that MinnErgy is relying in
part upon the representations of the undersigned
Subscriber contained herein;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	d. has been informed that the securities subscribed for
have not been approved or disapproved by the SEC, or the
Iowa, Minnesota, and Wisconsin Securities Departments or
any other regulatory authority, nor has any regulatory
authority passed upon the accuracy or adequacy of the
Prospectus;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	e. intends to acquire the units for his/her/its own account
without a view to public distribution or resale and that
he/she/it has no contract, undertaking, agreement or
arrangement to sell or otherwise transfer or dispose of
any units or any portion thereof to any other person;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	f. has been informed that there is no present market for
MinnErgy’s membership units, that the membership units
will not trade on an exchange or automatic quotation
system, that no such market is expected to develop in
the future and that there are significant restrictions
on the transferability of the membership units;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	g. has been encouraged to seek the advice of his legal
counsel and accountants or other financial advisers with
respect to investor-specific tax and/or other
considerations relating to the purchase and ownership of
units;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	h. has received a copy of MinnErgy’s Amended and Restated
Member Control Agreement, dated May 4, 2007, and
understands that upon closing the escrow by MinnErgy,
the subscriber and the membership units will be bound by
the provisions of the Amended and Restated Member
Control Agreement which contains, among other things,
provisions that restrict the transfer of membership
units;

4

 

	 	 	 	 	 	 	 
	______	 	______
	 	 
	 	i. has been informed that the units are subject to
substantial restrictions on transfer under certain tax
and securities laws along with restrictions in
MinnErgy’s Amended and Restated Member Control
Agreement, and agrees that if the membership units or
any part thereof are sold or distributed in the future,
the subscriber shall sell or distribute them pursuant to
the terms of the Member Control Agreement, and the
requirements of the Securities Act of 1933, as amended,
and applicable tax and securities laws;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	j. meets the suitability test marked in Item E.5 above;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	k. is capable of bearing the economic risk of this
investment, including the possible total loss of the investment;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	l. has been informed that MinnErgy will place
a restrictive legend on any certificate representing any unit containing
substantially the following language as the same may be amended by the
Governors of MinnErgy in their sole discretion:

THE TRANSFERABILITY OF THE COMPANY UNITS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED. SUCH UNITS MAY NOT BE SOLD, ASSIGNED,
OR TRANSFERRED, AND NO ASSIGNEE, VENDEE, TRANSFEREE, OR ENDORSEE
THEREOF WILL BE RECOGNIZED AS HAVING ACQUIRED ANY SUCH UNITS FOR
ANY PURPOSES, UNLESS AND TO THE EXTENT SUCH SALE, TRANSFER,
HYPOTHECATION, OR ASSIGNMENT IS PERMITTED BY, AND IS COMPLETED IN
STRICT ACCORDANCE WITH, THE TERMS AND CONDITIONS SET FORTH IN THE
MEMBER CONTROL AGREEMENT OF THE COMPANY, AS AMENDED FROM TIME TO
TIME.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
OFFERED FOR SALE, OR TRANSFERRED IN ABSENCE OF AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
UNDER APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND UNDER
APPLICABLE STATE SECURITIES LAWS.

	 	 	 	 	 	 	 
	______	 	______
	 	 
	 	m. has been informed that, to enforce the above legend,
MinnErgy may place a stop transfer order with its
registrar and stock transfer agent (if any) covering all
certificates representing any of the membership units;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	n. may not transfer or assign this Subscription Agreement,
or any of the subscriber’s interest herein without the
prior written consent of MinnErgy;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	o. has written his, her, or its correct taxpayer
identification number under Item E.2 on this
Subscription Agreement;
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	p. is not subject to back up withholding either because he,
she or it has not been notified by the Internal Revenue
Service (“IRS”) that he, she or it is subject to backup
withholding as a result of a failure to report all
interest or dividends, or the IRS has notified him, her
or it that he is no longer subject to backup withholding
(Note this clause (p) should be crossed out if the
backup withholding box in Item E.2 is checked);
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	q. has been informed that execution of the attached
Promissory Note and Security Agreement will allow
MinnErgy or its assigns to pursue the obligor for
payment of the amount due thereon by any legal means,
including, but not limited to, acquisition of a judgment
against the obligor in the event that the subscriber
defaults on that Promissory Note and Security Agreement;
and
	 
	 	 	 	 	 	 
	______	 	______
	 	 
	 	r. acknowledges that MinnErgy may retain possession of
certificates representing subscriber’s units to perfect
its security interest in those units.

5

 

	 	 	 
	Signature of Subscriber/Joint Subscriber:
	 	 
	 
	 	 
	Date:

	 	 
	 

	 	 
	 
	 	 
	Individuals:

	 	Entities:
	 
	 	 
	 

	 	 
	Name of Individual Subscriber (Please Print)

	 	Name of Entity (Please Print)
	 
	 	 
	 
	 	 
	 

	 	 
	Signature of Individual

	 	Print Name and Title of Officer
	 
	 	 
	 
	 	 
	 

	 	 
	Name of Joint Individual Subscriber (Please Print)

	 	Signature of Officer
	 
	 	 
	 
	 	 
	 

	 	 
	Signature of Joint Individual Subscriber
	 	 

ACCEPTANCE OF SUBSCRIPTION BY MINNERGY, LLC:

MinnErgy, LLC hereby accepts Subscriber’s subscription for                      units.

Dated this                      day of                                            
                  , 200   .

	 	 	 	 	 
	MINNERGY, LLC

 	 	 
	 
	 	 
	By:  	 	 	 
	 	 	 	 
	Its: 	 	 	 

6

 

	 	 	 	 	 

PROMISSORY NOTE AND SECURITY AGREEMENT

Date of Subscription Agreement: 
                                                              
                   , 200   .

$1.00 per Unit

Minimum Investment of 20,000 Units ($20,000); Units Sold in 5,000 Unit Increments Thereafter
($5,000 each)

	 	 	 
	 

	 	Number of Units Subscribed
	 

	 	 
	 

	 	Total Purchase Price ($1.00 per unit multiplied by number of units subscribed)
	 

	 	 
	(                      )

	 	Less Initial Payment (10% of Principal Amount)
	 

	 	 
	 

	 	Principal Balance
	 

	 	 

FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of MinnErgy, LLC, a
Minnesota limited liability company (“MinnErgy”), at its principal office located at 4455 Theurer
Boulevard, PO Box 186, Winona, Minnesota 55987, or at such other place as required by MinnErgy, the
Principal Balance set forth above in one lump sum to be paid without interest within 20 days
following the call of the MinnErgy Board of Governors, as described in the Subscription Agreement.
In the event the undersigned fails to timely make any payment owed, the entire balance of any
amounts due under this full recourse Promissory Note and Security Agreement shall be immediately
due and payable in full with interest at the rate of 12% per annum from the due date and any
amounts previously paid in relation to the obligation evidenced by this Promissory Note and
Security Agreement may be forfeited at the discretion of MinnErgy.

The undersigned agrees to pay to MinnErgy on demand, all costs and expenses incurred to collect any
indebtedness evidenced by this Promissory Note and Security Agreement, including, without
limitation, reasonable attorneys’ fees. This Promissory Note and Security Agreement may not be
modified orally and shall in all respects be governed by, construed, and enforced in accordance
with the laws of the State of Minnesota.

The provisions of this Promissory Note and Security Agreement shall inure to the benefit of
MinnErgy and its successors and assigns, which expressly reserves the right to pursue the
undersigned for payment of the amount due thereon by any legal means in the event that the
undersigned defaults on obligations provided in this Promissory Note and Security Agreement.

The undersigned waives presentment, demand for payment, notice of dishonor, notice of protest, and
all other notices or demands in connection with the delivery, acceptance, performance or default of
this Promissory Note and Security Agreement.

The undersigned grants to MinnErgy, and its successors and assigns (“Secured Party”), a purchase
money security interest in all of the undersigned’s membership units of MinnErgy now owned or
hereafter acquired. This security interest is granted as non-exclusive collateral to secure payment
and performance on the obligation owed Secured Party from the undersigned evidenced by this
Promissory Note and Security Agreement. The undersigned further authorizes Secured Party to retain
possession of certificates representing such membership units and to take any other actions
necessary to perfect the security interest granted herein.

Dated:                     , 200   .

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	OBLIGOR/DEBTOR:	 	JOINT OBLIGOR/DEBTOR:
	 
	 	 	 	 	 	 
	 	 	 
	Printed or Typed Name of Obligor	 	Printed or Typed Name of Joint Obligor
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 

	 	(Signature)
	 	 	 	(Signature)

	 	 	 
	 
	 	 
	 

	 	 
	Officer Title if Obligor is an Entity
	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	Address of Obligor
	 	 

7

 

Exhibit A

MEMBER SIGNATURE PAGE

ADDENDUM TO THE

AMENDED AND RESTATED MEMBER CONTROL AGREEMENT

OF MINNERGY, LLC

     The undersigned does hereby warrant, represent, covenant and agree that: (i) the undersigned,
as a condition to becoming a Member in MinnErgy, LLC, has received a copy of the Amended and
Restated Member Control Agreement dated May 4, 2007, and, if applicable, all amendments and
modifications thereto; (ii) the undersigned shall be subject to and comply with all terms and
conditions of such Member Control Agreement in all respects, as if the undersigned had executed
said Member Control Agreement on the original date thereof; and (iii) the undersigned is and shall
be bound by all of the provisions of said Member Control Agreement from and after the date of
execution of this Addendum.

	 	 	 
	 
	 	 
	Individuals:

	 	Entities:
	 
	 	 
	 

	 	 
	Name of Individual Member (Please Print)

	 	Name of Entity (Please Print)
	 
	 	 
	 
	 	 
	 

	 	 
	Signature of Individual

	 	Print Name and Title of Officer
	 
	 	 
	 
	 	 
	 

	 	 
	Name of Joint Individual Member (Please Print)

	 	Signature of Officer
	 
	 	 
	 
	 	 
	 

	 	 
	Signature of Joint Individual Member
	 	 

Agreed to and accepted on behalf of the

Company and its Members:

	 	 	 	 	 
	MINNERGY, LLC
 	 	 
	By:  	 	 	 
	 	 	 	 
	Its:exv4w3

 

EXHIBIT 4.3

ESCROW AGREEMENT

     THIS ESCROW AGREEMENT (this “Agreement”) is made this  9th  day of
May, 2007, by and between MinnErgy, LLC a Minnesota limited liability company (“MinnErgy”) and
Winona National Bank as escrow agent (the “Escrow Agent”).

W I T N E S S E T H:

     WHEREAS, MinnErgy proposes to offer a minimum of 63,000,000 and a maximum of 83,000,000
of its Membership Units (the “Units”) at a price of $1.00 per Unit, in minimum blocks of twenty
thousand (20,000) Units in an offering registered with the Securities and Exchange Commission and
in the states of Iowa, Minnesota, Wisconsin and possibly offered in other states pursuant to state
securities registration exemptions and under the provisions of the Securities Act of 1933, as
amended (the “Offering”);

     WHEREAS, MinnErgy will file a registration statement to register the Units with the Securities
and Exchange Commission, the states of Iowa, Minnesota, Wisconsin, and possibly other states;

     WHEREAS, MinnErgy will allow investors in the Offering to deliver the purchase price of the
subscribed Units in installments; and

     WHEREAS, MinnErgy desires to comply with the requirements of federal and state securities laws
and regulations, and desires to protect the investors in the Offering by providing, under the terms
and conditions herein set forth, for the return to subscribers of the money which they may pay on
account of purchases of Units in the Offering if the Minimum Escrow Deposit (hereinafter defined)
is not deposited with the Escrow Agent.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good
and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties agree
as follows:

     1. Acceptance of Appointment. Winona National Bank hereby agrees to act as Escrow
Agent under this Agreement. The Escrow Agent shall have no duty to enforce any provision hereof
requiring performance by any other party hereunder.

     2. Establishment of Escrow Account. An escrow account (the “Escrow Account”) is
hereby established with the Escrow Agent for the benefit of the investors in the Offering. 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 the funds deposited in the Escrow
Account (the “Deposited Funds”) shall equal the Minimum Escrow Deposit (as hereinafter defined),
all funds deposited in the Escrow Account by MinnErgy shall not become the property of MinnErgy or
be subject to the debts of MinnErgy or any other person but shall be held by the Escrow Agent
solely for the benefit of the investors who have purchased Units in the Offering until the
Deposited Funds are released by the Commissioner of the Minnesota Department of Commerce.

     4. Deposit of Proceeds. All proceeds from sales of Units in the Offering shall be
delivered by MinnErgy to the Escrow Agent, within forty-eight hours of the receipt thereof from
investors, endorsed (if appropriate) to the order of the Escrow Agent, together with an appropriate
written statement setting forth name, address and social security number of each person purchasing
Units, the number of Units purchased, and the amount paid by each such purchaser. Any such
proceeds deposited with the Escrow Agent in the form of uncollected checks shall be promptly
presented by the Escrow Agent for collection through customary banking and clearing house
facilities. As the proceeds of each sale are deposited with the Escrow Agent, MinnErgy shall
reserve the number of Units confirmed to the purchaser thereof in connection with such sale. All
such deposited proceeds are referred to herein as the “Escrow Funds”.

1

 

     5. Investment of Escrow Account. The Escrow Funds shall be credited by the 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, in those investments directed, in writing by MinnErgy. The Escrow Agent is
hereby authorized to invest Escrow Funds in the Federated Government Obligations Fund (CUSIP
60934N807) for temporary investment without written direction. Any interest received by the Escrow
Agent with respect to the Escrow Funds shall be paid to MinnErgy, or the investors, as indicated
elsewhere in this Agreement.

     6. Termination of Escrow. This Agreement and the Escrow created hereunder shall be
terminated as provided in paragraph 7 hereof or as of the date in calendar year 2008 (the
“Termination Date”), which is one year and one day following the date in calendar year 2007 upon
which the Securities and Exchange Commission authorizes the Offering (the “Offering’s Effective
Date”). MinnErgy shall notify Escrow Agent of the Offering’s Effective Date within thirty (30)
days of the receipt of notice of the Offering’s Effective Date from the Securities and Exchange
Commission.

     7. Disposition of Escrow Funds. The Escrow Agent shall have the following duties and
obligations under this Agreement:

     A. The Escrow Agent shall send a written notice acknowledging the receipt of the
Deposited Funds every seven days to MinnErgy.

     B. The Escrow Agent shall give MinnErgy prompt written notice when the Deposited Funds
equal $6,300,000 (exclusive of interest). Following receipt of such notice, MinnErgy will
advise the purchasers of Units to remit to the Escrow Agent the balance of the purchase
price within twenty (20) days. Thereafter, Escrow Agent shall give MinnErgy written notice
acknowledging the receipt of the Deposited Funds every seven days. The Escrow Agent shall
give MinnErgy prompt written notice when the Deposited Funds total $63,000,000 (exclusive of
interest).

     C. At the time (and in the event) that: (i) the Deposited Funds shall, during the term
of this Agreement, equal $63,000,000 in subscription proceeds (exclusive of interest) (the
“Minimum Escrow Deposit”); (ii) the Escrow Agent shall have received written confirmation
from MinnErgy that MinnErgy has obtained a written debt financing commitment for debt
financing ranging from a minimum of $47,800,000 to a maximum of $67,800,000 depending on the
amount necessary to fully capitalize the project; (iii) MinnErgy has affirmatively elected
in writing to terminate this Agreement; (iv) MinnErgy has signed a definitive design build
agreement with Fagen, Inc.; (v) MinnErgy has been issued the environmental permits necessary
to construct the ethanol plant (vi) the Escrow Agent shall have provided to each state
securities department in which MinnErgy has registered its securities for sale, as
communicated to the Escrow Agent by MinnErgy, an affidavit stating that the foregoing
requirements (i), (ii), (iii), (iv) and (v) of this subsection 7C have been satisfied and
shall have provided to the Commissioner of the Minnesota Department of Commerce
documentation that the foregoing conditions have been met; and (vii) in each state in which
consent is required, the state securities commissioners have consented to release of the
funds on deposit, provided, however, that none of the Deposited Funds, regardless of the
state of residence of the investor contributing such funds, shall be released until the
Commissioner of the Minnesota Department of Commerce has authorized the release of the
Deposited Funds, then this Agreement shall terminate, and the Escrow Agent shall promptly
disburse the funds on deposit, including interest, to MinnErgy to be used in accordance with
the provisions set out in MinnErgy’s registration statement. MinnErgy will deliver a copy
of its registration statement to the Escrow Agent upon execution of this Agreement. The
Escrow Agent will have no responsibility to examine the registration statement with regard
to the Escrow Account or otherwise and the registration statement shall contain a provision
to such effect. Upon the making of such disbursement, the Escrow Agent shall be completely
discharged and released of any and all further responsibilities hereunder.

     D. In the event the Deposited Funds do not equal or exceed the Minimum Escrow Deposit
on or before the Termination Date or if MinnErgy has not received a written debt financing
commitment as described herein on or before the Termination Date, the Escrow Agent shall
return to each of the purchasers of the Units in the Offering, as promptly as possible after
such Termination Date and on the basis of its records pertaining to the

2

 

Escrow Account: (i) the sum which each purchaser initially paid in on account of
purchases of the Units in the Offering and (ii) each purchaser’s portion of the total
interest earned on the Escrow Account as of the Termination Date. Computation of any
purchaser’s share of the net interest earned will be a weighted average based on the
proportion of such purchaser’s deposit in the Escrow Account from the Offering to all such
purchasers’ deposits held by the Escrow Agent and upon the length of time in days such
deposit was held in the Escrow Account as compared to all such deposits. All computations
with respect to each purchaser’s allocable share of net interest shall be made by the Escrow
Agent, which determinations shall be final and conclusive. Any amount paid or payable to a
purchaser pursuant to this paragraph shall be deemed to be the property of such purchaser,
free and clear of any and all claims of MinnErgy or its agents or creditors; and the
respective purchases of the Units made and entered into in the Offering shall thereupon be
deemed, ipso facto, to be cancelled without any further liability of the purchasers or any
of them to pay for the Units purchased. At such time as the Escrow Agent shall have made
all the payments called for in this paragraph, the Escrow Agent shall be completely
discharged and released of any and all further responsibilities hereunder, and the Units
reserved (as provided in paragraph 4) shall be released from such reservation, except that
Escrow Agent shall be required to prepare and issue a single IRS Form 1099 to each investor
in the event that funds are returned to investors.

     8. Agreement with Escrow Agent. To induce Escrow Agent to act hereunder, it is agreed
by MinnErgy that:

     A. The sole duty of the Escrow Agent, other than as herein specified, shall be to
receive the Escrow Funds and hold them subject to release, in accordance herewith, and the
Escrow Agent shall be under no duty to determine whether MinnErgy is complying with the
requirements of this Agreement in tendering to the Escrow Agent said proceeds of the sale of
said Units. The Escrow Agent may conclusively rely upon and shall be protected in acting
upon any statement, certificate, notice, request, 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 in respect of any question arising under this Agreement and the Escrow Agent shall
not be liable for any action taken or omitted in good faith upon advice of such counsel.

     B. MinnErgy hereby indemnifies and holds harmless the Escrow Agent from and against any
and all loss, liability, cost, damage and expense, including, without limitation, reasonable
counsel fees, which the Escrow Agent may suffer or incur by reason of any action, claim or
proceeding brought against the Escrow Agent arising out of or relating in any way to this
Agreement or any transaction to which this Agreement relates unless such action, claim or
proceeding is the result of the gross negligence or willful misconduct of the Escrow Agent.

     9. Resignation and Removal of Escrow Agent Successors. The Escrow Agent may resign
upon thirty (30) days advance written notice to MinnErgy. If a successor Escrow Agent is not
appointed within the 30-day period following such notice, Escrow Agent may petition any court of
competent jurisdiction to name a successor Escrow Agent. Any commercial banking institution or
trust company with which Escrow Agent may merge or consolidate, and any commercial banking
institution or trust company to which Escrow Agent transfers all or substantially all of its
corporate trust business shall be the successor Escrow Agent without further act.

     10. Fees and Expenses of Escrow Agent. MinnErgy agrees to pay the Escrow Agent the
fees specified in the Escrow Agent’s fee schedule attached hereto as Exhibit A, in the manner set
forth therein, unless otherwise agreed to by the parties in writing. The parties further agree
that MinnErgy shall be solely responsible for the payment of such fees and the Escrow Agent shall
not seek payment of the fees from investors or apply any principal deposited by investors in the
escrow account or interest on the escrow account against such fees. The fee agreed upon herein is
intended as full consideration 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

3

 

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 MinnErgy, but not from the escrow account.

     11. Notices. All notices, requests, demands, and other communications under this
Agreement 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 obtained promptly after completion of transmission, (c) on the next day
on which such deliveries are made in Lamberton, Minnesota, when delivery is to Federal Express or
similar overnight courier or the Express Mail service maintained by the United States Postal
Service, or (d) on the fifth day after mailing, if mailed to the party to whom notice 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 Escrow Agent:

Winona National Bank

204 Main Street, P.O. Box 499

Winona, MN 55987

Attn: Thomas Kieffer, Senior Vice President

Fax: (507) 454-9201

Phone: (507 ) 454-9218

          If to MinnErgy:

MinnErgy, LLC

4455 Theurer Boulevard, P.O. Box 186

Winona, Minnesota 5597

Attn: Ron Scherbring, President/CEO

Fax: (507) 858-0022

          with a required copy to:

Brown, Winick, Graves, Gross, Baskerville and Schoenebaum, P.L.C.

666 Grand Avenue, Suite 2000

Des Moines, IA 50309

Attention: Miranda L. Hughes

Fax: (515) 323-8477

     12. Governing Law. This Agreement shall be construed, performed, and enforced in
accordance with, and governed by, the internal laws of the State of Minnesota, without giving
effect to the principles of conflict of laws thereof.

     13. Successors and Assigns. Except as otherwise provided in this Agreement, no party
hereto shall assign this Agreement or any rights or obligations hereunder without the prior written
consent to the other parties hereto and any such attempted assignment without such prior written
consent shall be void and of no force and effect. This Agreement shall inure to the benefit of and
shall be binding upon the successors and permitted assigns of the parties hereto.

     14. Severability. In the event that any part of this Agreement is declared by any
court or other judicial or administrative body to be null, void, or unenforceable, said provision
shall survive to the extent it is not so declared, and all of the other provisions of this
Agreement shall remain in full force and effect.

     15. Further Assurances. Each of the parties shall execute such documents and other
papers and take such further actions, as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.

4

 

     16. Amendments. This Agreement may be amended or modified, and any of the terms,
covenants, representations, warranties, or conditions hereof may be waived, only by 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 such conditions, or
of the breach of any other provision, term, covenant, representation, or warranty of this
Agreement.

     17. 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.

     18. Section Headings. The section headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this Agreement.

     19. 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.

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

	 	 	 	 	 	 	 	 	 
	MINNERGY:	 	 	 	ESCROW AGENT
	 
	 	 	 	 	 	 	 	 
	MINNERGY, LLC	 	 	 	WINONA NATIONAL BANK
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Daniel H. Arnold
	 	 	 	By:
	 	/s/ Katherine Solum
	 

	 	 
	 	 	 	 	 	 
	Dan Arnold	 	 	 	Katherine Solum
	Chairman	 	 	 	Assistant Vice President

Authorized by:

Minnesota Department of Commerce

	 	 	 	 
	By:	 	 	 
	Chet Jorgenson
Commissioner	 

5

 

Exhibit A

Winona National Bank

Escrow Agent Fee Schedule

	 	 	 	 	 	 	 
	Escrow Agreement Review and Adoption Fee

	 	 	 	$	300*	 
	 
	Weekly Escrow Sub-Accounting Fee @ $75/hour

	 	weekly maximum
	 	$	450*	 
	 

	 	one year Escrow maximum
	 	$	22,500*	 
	Escrow Asset Custody Fee
	 	 	 	 	waived  	 
	 
	Investment Return Disbursement Fee (per
disbursement generated)

	 	 	 	$	25	 

 

			
	*	 	These fees will be waived if the balance is over $60,000,000.00

Revenue Sharing Arrangement between Winona National Bank & PrimeVest:

	 	 	 
	Based on the Proposed Government Money Market Fund Temporary Investment
Federated Government Obligations Fund SS (annual 10 bps on avg. daily balances)

	 	No fee

	 	 	 	 	 
	          Note:

	 	This Revenue Sharing arrangement does not decrease the
stated money market fund return to the client or increase
the internal fees charged against the money market fund.
See Fund Prospectus for complete fee disclosure.
	 	 

6

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