Document:

exv10w1

 

	 	 	 	 	 

EXHIBIT 10.1

EXECUTIVE RECOGNITION AGREEMENT

          THIS EXECUTIVE RECOGNITION AGREEMENT (this “Agreement”) between FIRST FINANCIAL BANKSHARES,
INC., a Texas corporation (the “Company”), and                                                              (the “Employee”) is dated
effective July 1, 2006 (the “Effective Date”).

WITNESSETH:

          WHEREAS, the Company considers it essential to the best interests of its stockholders to
foster the continuous employment of key executives of the Company; and

          WHEREAS, the Employee is a key executive of the Company; and

          WHEREAS, the Employee and the Company agree to terminate their current Executive Recognition
Agreement, which is set to expire on October 1, 2006, and replace such agreement with this
Agreement; and

          WHEREAS, the parties recognize that, as is the case with many publicly-held corporations, the
possibility of a “Change in Control” (as such term is defined in Section 1 hereof) may exist and
that such possibility, and the uncertainty and questions which it may raise among management, may
result in the departure or distraction of a key executive at a critical time, and to the detriment
of the Company and its stockholders; and

          WHEREAS, the Company recognizes that the Employee, as a key executive, could suffer financial
and professional detriments if a Change in Control of the Company were to occur; and

          WHEREAS, in order to protect the Employee in the event of a Change in Control of the Company,
the Company agrees that the Employee shall receive the benefits set forth in this Agreement in the
event the Employee’s employment with the Company is terminated subsequent to a Change in Control of
the Company under the circumstances described below;

          NOW, THEREFORE, the parties hereby agree as follows:

          1.      Employment in General; Change in Control. This Agreement does not affect the
Employee’s employment arrangements with the Company except for the conditions contained herein
pertaining to a Change in Control of the Company. Absent a Change in Control of the Company, the
Employee’s continued employment with the Company shall at all times be subject to the will of the
Board of Directors of the Company. For purposes of this Agreement, a “Change in Control” of the
Company shall be deemed to have occurred at the time (a) a report on Schedule 13D is filed with the
Securities and Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) disclosing that any Person (as hereinafter defined) is the
beneficial owner (as such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly of securities of the Company representing more than fifty percent (50%) of the combined
voting power entitled to vote generally in the election of directors of the then outstanding
securities of the Company; or (b) any Person shall purchase securities pursuant to a tender offer
or exchange offer to acquire any common stock of the Company (or securities convertible into common
stock) for cash, securities or any other consideration, provided that after consummation of the
offer, the person in question is the beneficial owner (as such term is defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the combined voting power entitled to vote generally in the election of
directors of the then outstanding securities of the Company; or (c) the

 

 

stockholders of the Company shall approve a reorganization, merger, consolidation,
recapitalization, exchange offer, purchase of assets or other transaction, in each case, with
respect to which the persons who were the beneficial owners of the Company immediately prior to
such a transaction do not, immediately after consummation thereof, own more than fifty percent
(50%) of the combined voting power entitled to vote generally in the election of directors of the
reorganized, merged, recapitalized or resulting company’s then outstanding securities; or (d) the
stockholders of the Company shall approve a liquidation or dissolution of the Company; or (e) the
Company shall sell or otherwise transfer (or one or more of its subsidiaries shall sell or
otherwise transfer), in one or more related transactions, assets aggregating fifty percent (50%) or
more of the book value of the assets of the Company and its subsidiaries (taken as a whole). For
purposes of this Agreement, the term “Person” shall mean and include any individual, corporation,
partnership, group, association or other “person”, as such term is used in Sections 13(d) and 14(d)
of the Exchange Act, other than the Company, a wholly owned subsidiary of the Company or any
employee benefit plan(s) sponsored by the Company or a subsidiary of the Company.

          2. Term of Agreement. Unless extended pursuant to the provisions of this Section 2,
the term of this Agreement shall be for the period commencing as of the Effective Date and
continuing thereafter until the earliest to occur of (a) the Employee’s death, Disability (as
defined in Subsection 3(i) hereof) or Retirement (as defined in Subsection 3(ii) hereof), (b) the
termination of the Employee’s employment with the Company prior to a Change in Control of the
Company, or (c) the second anniversary of this Agreement. The foregoing notwithstanding, if a
Change in Control of the Company shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of two (2) years from the date of any such Change
in Control of the Company; and further, if a second Change in Control occurs within a period of two
(2) years from the date of the first Change in Control, this Agreement shall continue in effect for
a period of two (2) years from the date of the second Change in Control of the Company; and if any
benefit accrues and remains unpaid at the time this Agreement would otherwise have terminated, this
Agreement shall remain in effect until such benefit is paid in full solely for the purpose of
permitting the Employee to enforce the full payment of such benefit.

          3. Termination Following Change in Control. If a Change in Control of the Company
occurs, the Employee shall be entitled to the benefits provided in Subsection 4(iii) hereof upon
the subsequent termination of the Employee’s employment during the term of this Agreement, unless
such termination is (a) because of the Employee’s death, Disability or Retirement, (b) by the
Company for Cause, or (c) by the Employee other than for Good Reason. The parties hereto expressly
acknowledge and agree that notwithstanding anything contained in this Agreement to the contrary,
the Employee is entitled to any and all benefits due to the Employee as determined in accordance
with the terms of the Company’s benefit plans (without reference to this Agreement), including,
without limitation, all qualified and nonqualified deferred compensation plans, and all medical,
dental, disability, accident and insurance plans, then in effect whether the Employee is terminated
by the Company for Cause or for other than Cause, by the Employee for Good Reason or for other than
Good Reason, because of the Retirement, Disability or death of the Employee or for any other
reason, and the benefits provided in Subsection 4(iii) hereof shall be determined in accordance
with this Agreement without any impact, impairment, reduction or other effect on the Employee’s
rights or benefits under such benefit plan(s). For purposes of this Agreement the following
definitions shall apply:

 

 

          (i) Disability. Termination by the Company of the Employee’s employment
based on “Disability” shall mean termination because of the Employee’s absence from
his duties with the Company on a full-time basis for ninety (90) consecutive days as a
result of the Employee’s physical or mental incapacity due to injury or illness,
unless within thirty (30) days after Notice of Termination (as hereinafter defined) is
given to the Employee following such absence the Employee shall have returned to the
full-time performance of his duties.

          (ii) Retirement. Termination by the Employee of the Employee’s
employment based on “Retirement” shall mean termination on or after the normal
retirement date established under the terms of any qualified plan or plans of the
Company in effect prior to a Change in Control.

          (iii) Cause. Termination by the Company of the Employee’s employment
for “Cause” shall mean termination upon (A) the willful and continued failure by the
Employee to substantially perform his duties with the Company (other than any such
failure resulting from the Employee’s physical or mental incapacity due to injury or
illness) after written demand for substantial performance is delivered to the Employee
by the Company, which demand specifically identifies the manner in which the Employee
has not substantially performed his duties, or (B) the willful engaging by the
Employee in conduct which is demonstrably injurious to the Company, monetarily or
otherwise. For purposes of this Subsection (iii), no act, or failure to act, on the
Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the
Employee in bad faith and without “reasonable belief” (as hereinafter defined) that
his action or omission was in, or not opposed to, the best interests of the Company.
The phrase “reasonable belief” shall mean the belief that a reasonable and prudent man
would have had in the same or similar circumstances as to the act or failure to act.
Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Employee in good
faith, and in the best interests of the Company. Notwithstanding the foregoing the
Employee shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the Board at
a meeting of the Board called for such purpose (after reasonable notice to the
Employee and an opportunity for the Employee, together with counsel, to be heard
before the Board), finding that in the good faith opinion of the Board the Employee
was guilty of the conduct set forth above in (A) or (B) of this Subsection (iii) and
specifying the particulars thereof in detail.

 

 

     (iv) Good Reason. The Employee shall be entitled to terminate his
employment for Good Reason. Termination by the Employee of his employment for “Good
Reason” shall mean termination based on:

     (A) a determination by the Employee, made in good faith and based on the
Employee’s reasonable belief, that there has been a materially adverse
change in his status or position as an executive officer of the Company as in
effect immediately prior to the Change in Control, including, without
limitation, any material change in the Employee’s status or position as a result
of a diminution in the Employee’s duties or responsibilities or the assignment
to the Employee of any duties or responsibilities which are inconsistent with
such status or position(s), or any removal of the Employee from or any failure
to reappoint or reelect the Employee to such position(s) (except in connection
with the termination of the Employee’s employment for Cause, Disability or
Retirement or as a result of the Employee’s death or by the Employee other than
for Good Reason). The phrase “reasonable belief” shall mean the belief that a
reasonable and prudent man would have had in the same or similar circumstances
as to the change in status or position;

     (B) a reduction by the Company in the Employee’s annual base salary in
effect immediately prior to the Change in Control;

     (C) the relocation of the Employee’s principal office outside of the city
or metropolitan area in which the Employee is residing at the time of any Change
in Control of the Company;

     (D) the failure by the Company to continue in effect any Plan (as
hereinafter defined) in which the Employee participates at the time of the
Change in Control of the Company (or Plans providing the Employee with at least
substantially similar benefits) other than as a result of the normal expiration
of any such Plan in accordance with its terms as in effect at the time of the
Change in Control. For purposes of this Agreement, “Plan” shall mean any
compensation plan such as an incentive, stock option or restricted stock plan or
any benefit plan, including, without limitation, all qualified and nonqualified
deferred compensation plans; all medical, dental, disability, accident and life
insurance plans; and any relocation plan or policy or any other material plan,
program or policy of the Company intended to benefit employees;

     (E) the failure by the Company to provide and credit the Employee with the
number of paid vacation days to which the Employee is then entitled in
accordance with the Company’s normal vacation policy as in effect immediately
prior to the Change in Control;

 

     (F) the failure by the Company to obtain from any Successor (as
hereinafter defined) the assent to this Agreement contemplated by Section 5
hereof; or

     (G) any purported termination by the Company of the Employee’s employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (v) below (and, if applicable, Subsection (iii)
above); and for purposes of this Agreement, no such purported termination shall
be effective.

     (v) Notice of Termination. Any purported termination of the Employee’s
employment by the Company or by the Employee following a Change in Control of the
Company shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 9 hereof. For purposes of this Agreement, a “Notice
of Termination” shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and, if the termination provision is claimed
to relieve the Company of its obligation to pay the benefits provided by this
Agreement, the notice shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for the denial of the payment of the benefits provided by
this Agreement.

     (vi) Date of Termination. “Date of Termination” following a Change in
Control shall mean (A) if the Employee’s employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given (provided that the
Employee shall not have returned to the performance of his duties on a full-time basis
during such thirty (30) day period), (B) if the Employee’s employment is to be
terminated by the Company for Cause or by the Employee for Good Reason, the date
specified in the Notice of Termination, or (C) if the Employee’s employment is to be
terminated by the Company for any reason other than Cause, the date specified in the
Notice of Termination, which in no event shall be a date earlier than sixty (60) days
after the date on which a Notice of Termination is given, unless an earlier date has
been expressly agreed to by the Employee in writing.

4. Compensation Upon Termination; Other Agreements.

     (i) If the Employee’s employment shall be terminated for Disability following a
Change in Control of the Company, the Company shall pay the Employee’s salary through
the Date of Termination at the rate in effect just prior to the time a Notice of
Termination is given plus any benefits or awards under any Plans which pursuant to the
terms of any Plans have been earned or become payable, but which have not been paid to
the Employee. Thereafter, benefits shall be determined in accordance with the Plans
then in effect.

     (ii) If the Employee’s employment shall be terminated for Cause following a
Change in Control of the Company, the Company shall pay the Employee’s salary through
the Date of Termination at the rate in effect just prior to the time a Notice of
Termination is given plus any benefits or awards (including both the cash and stock
components) which pursuant to the terms of any Plans have been earned or become
payable, but which have not yet been paid to the Employee. Thereupon the Company
shall have no further obligations to the Employee under this Agreement.

 

     (iii) Subject to Section 7 hereof, if, within twenty-four (24) months following a
Change in Control of the Company, employment by the Company shall be terminated by the
Company other than for Cause, death, Disability or Retirement, or shall be terminated
by the Employee for Good Reason, then the Company shall pay or provide to the
Employee, no later than the 15th day of the third month following the
Employee’s Date of Termination, without regard to any contrary provisions of any Plan,
the following:

     (A) two-hundred-eight percent (208%) of the Employee’s annual base salary
payable by the Company immediately preceding the Date of Termination; and

     (B) a lump sum payment of Employee’s accrued vacation pay.

     (iv) Notwithstanding, subparagraph (iii), if an employee is a Key Employee, who
shall have terminated employment with the Company for Good Reason, then pursuant to
Section 409A (a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended from time
to time (the “Code”), distribution to such Key Employee upon termination of employment
shall not commence earlier than six (6) months following the Date of Termination. A
“Key Employee” is defined in Section 416 (i) of the Code and includes officers of a
publicly traded corporation having annual compensation greater than $130,000 (as
hereafter adjusted from year to year by the Secretary of the Treasury), five percent
owners, and one percent owners having annual compensation from the publicly traded
corporation greater than $150,000.

     (v) The amount of any payment provided for in this Section 4 shall not be
reduced, offset or subject to recovery by the Company by reason of any compensation
earned by the Employee as the result of employment by another employer after the Date
of Termination, or otherwise.

5. Successors; Binding Agreement.

     (i) The Company will seek, by written request at least five (5) business days
prior to the time a Person becomes a Successor (as hereinafter defined), to have such
Person assent to the fulfillment of the Company’s obligations under this Agreement.
Failure of such Person to furnish such assent by the later of (A) three (3) business
days prior to the time such Person becomes a Successor or (B) two (2) business days
after such Person receives a written request to so assent shall constitute Good Reason
for termination by the Employee of his employment if a Change in Control of the
Company occurs or has occurred. For purposes of this Agreement, “Successor” shall
mean any Person that succeeds to, or has the practical ability to control (either
immediately or with the passage of time), the Company’s business directly, by merger
or consolidation, or indirectly, by purchase of the Company’s Voting Securities or
otherwise.

     (ii) This Agreement shall inure to the benefit of and be enforceable by the
Employee’s personal or legal representatives, executors, administrators, heirs,
distributees, and legatees. If the Employee should die while any amount would still
be payable to him hereunder if the Employee had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Employee’s legatee or other designee or, if there is no such
designee, to the Employee’s estate.

 

     (iii) For purposes of this Agreement, the “Company” shall include any
corporation or other entity which is the surviving or continuing entity in respect of
any merger, consolidation or form of business combination in which the Company ceases
to exist.

     6. Fees and Expenses. The Company shall reimburse the Employee for all reasonable
legal fees and related expenses, if any, incurred by the Employee in the successful enforcement of
any right or benefit provided by this Agreement.

     7. Taxes.

     (i) All payments to be made to the Employee under this Agreement will be subject
to required withholding of federal, state and local income and employment taxes.

     (ii) Notwithstanding anything in the foregoing to the contrary, if any of the
payments provided for in this Agreement, together with any other payments which the
Employee has the right to receive from the Company or any corporation which is a
member of an “affiliated group” (as defined in Section 1504(a) of the Code without
regard to Section 1504(b) of the Code) of which the Company is a member, would
constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), the
payments pursuant to this Agreement shall be reduced to the largest amount as will
result in no portion of such payments being subject to the excise tax imposed by
Section 4999 of the Code; provided, however, that the determination as to whether any
reduction in the payments under this Agreement pursuant to this Subsection (ii) is
necessary shall be made by the Employee in good faith, and such determination shall be
conclusive and binding on the Company with respect to its treatment of the payment for
tax reporting purposes and, provided further that the Employee may determine in his
discretion what payment or payments provided for herein shall be reduced.

     8. Survival. The respective obligations of, and benefits afforded to, the Company and
the Employee as provided in Sections 4, 5, 6, 7, 11 and 15 of this Agreement shall survive
termination of this Agreement.

     9. Notice. For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or when mailed by United States registered mail, return receipt requested, postage
prepaid to the address set forth below:

	 	 	 	 	 	 	 
	 

	 	Employee Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Company Address:
	 	400 Pine Street	 	 
	 

	 	 	 	Abilene, Texas 79601	 	 

provided that all notices to the Company shall be directed to the attention of an executive officer
of the Company other than Employee, with a copy to the Secretary of the Company, or to such other
address as either party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.

 

     10. Employment with Subsidiaries. Employment with the Company for purposes of this
Agreement includes employment with any corporation in which the Company has a direct or indirect
ownership interest of fifty percent (50%) or more of the total combined voting power of all classes
of stock in such corporation.

     11. Confidential Information. The Employee shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses, which shall have
been obtained by the Employee during the Employee’s employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other than by acts by the
Employee or his representatives in violation of this Agreement). After termination of the
Employee’s employment with the Company, the Employee shall not, without the prior written consent
of the Company, communicate or divulge any such information, knowledge or data to anyone other than
the Company and those designated by it. In no event shall an asserted violation of the provisions
of this Section 11 constitute a basis for deferring or withholding any amounts otherwise payable to
the Employee under this Agreement.

     12. Miscellaneous; Governing Law. No provision of this Agreement may be amended,
waived or discharged following a Change in Control of the Company unless such amendment, waiver or
discharge is agreed to in writing and signed by all of the parties affected thereby. No waiver by
either party at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party shall be deemed to be
a waiver of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Texas.

     13. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

     14. Headings. The headings of Sections of this Agreement are included solely for
convenience of reference and shall not control the meaning or interpretation of any of the
provisions of this Agreement.

     15. Arbitration. Any dispute or controversy arising under or in connection with this
Agreement shall be settled by arbitration, conducted by a panel of three arbitrators in a location
selected by the Employee within fifty (50) miles from the location of his job with the Company, in
accordance with the rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrators’ award in any court having jurisdiction; provided, however, that the
Employee shall be entitled to seek specific performance of his right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or in connection with
this Agreement.

     16. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.

 

     IN WITNESS WHEREOF, the undersigned have executed this Agreement to be effective as of the
date first written above.

	 	 	 	 	 	 	 
	 	 	FIRST FINANCIAL BANKSHARES, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	“Company”	 	 

ACCEPTED AND AGREED TO

THIS 1st DAY OF

July, 2006.

	 	 	 	 	 
	By:
	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	 

	 	“Employee”exv4w3

 

EXHIBIT 4.3

ESCROW AGREEMENT

     This Escrow Agreement (the “Agreement”) dated as of      , 2006 is by
and between Agassiz Energy, LLC, a Minnesota limited liability company (the “Company”) and
                     (the “Escrow Agent”), (the “Escrow Agent” and the “Company” may also be
hereinafter referred to as the “Parties”).

RECITALS

     WHEREAS, the Company intends to conduct an offering of a minimum of 42,500,000 and a maximum
of 58,500,000 of its membership units (the “Units”) at a price of $1.00 per Unit, in minimum blocks
of twenty thousand (20,000) Units, subject to waiver, with a 5,000
additional Unit minimum purchase requirement, in an offering
in the States of North Dakota, South Dakota, Minnesota and possibly other states, made pursuant to
a federal registration under the provisions of the Securities Act of 1933, as amended (the
“Offering”);

     WHEREAS, the Company
desires to retain the Escrow Agent to act as escrow agent and to hold the
cash proceeds received in the Offering pursuant to the terms hereof.

     NOW, THEREFORE, in consideration of the premises the Parties agree as follows:

     1. ACCEPTANCE OF APPOINTMENT: Escrow Agent 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 cash proceeds deposited in the Escrow
Account (the “Deposited Funds”) shall equal the Minimum Escrow Deposit (as hereinafter defined),
all cash proceeds deposited in the Escrow Account by the Company shall not become the property of the
Company or be subject to the debts of the Company or any other person but shall be held by the
Escrow Agent solely for the benefit of the investors who have purchased Units in the Offering.

     4. ESCROW FEES: The Company hereby agrees to pay the Escrow Agent an advance payment
for ordinary services rendered hereunder in the amount of $___(the “Escrow Fee”). Thereafter,
Company shall pay to Escrow Agent a monthly fee during the term of this Agreement in the amount of
___% of the balance of the Escrow Account on the eighth day of each month divided by twelve (the
“Monthly Fee”). Notwithstanding the foregoing, the Monthly Fee shall in no event exceed the amount
of interest on the Escrow Account and shall be paid from interest only and not from principal.

 

 

     5. DEPOSIT OF PROCEEDS: All proceeds from sales of Units in the Offering shall be
delivered by the Company 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 the name, address and social security number/taxpayer
identification number of each person or entity 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.
Checks are not considered full payment until the fund collection,
as the proceeds of each sale are deposited with
the Escrow Agent, the Company 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.”

     6. INVESTMENT OF ESCROW FUNDS: The Escrow Funds shall be credited by Escrow Agent and
recorded in the Escrow Account. The Escrow Agent shall be permitted, and is hereby authorized to
deposit transfer, hold and invest all funds received under this Agreement, including principal and
interest, in short term certificates of deposits by the Escrow Agent or
short term securities issued by the United States government, at the Escrow Agent’s reasonable discretion. Any interest
received by Escrow Agent with respect to the Escrow Funds shall be paid pursuant to the terms of
this Agreement.

     7. TERMINATION OF ESCROW: This Agreement and the Escrow created hereunder shall be
terminated as provided in paragraph 8 hereof or as of the date (the “Termination Date”) one year
and one day following the date upon which the Securities and Exchange Commission authorizes the
Offering (the “Offering’s Effective Date”), provided; however, that if prior to Termination Date,
the Company has sold membership units equal to the minimum offering amount and the Company has
advised the purchasers of those membership units to remit to the Escrow Agent the balance of the
purchase price, then the Escrow may continue beyond the Termination Date until all Funds have been
paid and the conditions for releasing the Funds have been satisfied. In no event shall this date be
later than three (3) months following the Termination Date and
shall not exceed one year from the Offering’s Effective Date in any
event. The Company 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.

     8. 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 the Company.

	 	B.	 	The Escrow Agent shall give the Company prompt written notice when the
Deposited Funds equal $4,250,000 (exclusive of interest). Following receipt of such
notice, the Company will advise the purchasers of Units to remit to the Escrow Agent
the balance of the purchase price within thirty (30) days. Thereafter, Escrow Agent
shall give the Company written notice acknowledging the receipt of the Deposited Funds
every seven days. The Escrow Agent shall give the Company prompt written notice when the Deposited Funds total $42,500,000
(exclusive of interest).

 

 

	 	C.	 	At the time (and in the event) that: (a) the Deposited Funds shall, during the
term of this Agreement, equal $42,500,000 in subscription proceeds (exclusive of
interest) (the “Minimum Escrow Deposit”); (b) the Escrow Agent shall have received
written confirmation from the Company that the Company has obtained a written debt
financing commitment for debt financing ranging from a minimum of approximately
$50,000,000 to a maximum of $66,000,000; (c) the Company has affirmatively elected in
writing to terminate this Agreement; and (d) the Escrow Agent shall have provided the
states in which the Company has registered an affidavit stating that the foregoing
requirements (a), (b) and (c) of this subsection 8C have
been satisfied, and has provided to the Minnesota Department of
Commerce a copy of the written debt financing commitment, then this
Agreement shall terminate, and the Escrow Agent shall promptly disburse the funds on
deposit, including interest, to the Company to be used in accordance with the
provisions set out in the Registration Statement. The Company will deliver a copy of
the 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, nor shall Escrow Agent have any duty to
ensure that Company complies with the Registration Statement. 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 the Company 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 Escrow Account: (a) the sum which each purchaser initially paid in on
account of purchases of the Units in the Offering and (b) each purchaser’s portion of
the total interest earned on the Escrow Account as of the Termination Date, (c) reduced
by the transaction fees provided in paragraph 10 hereof. 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 the Company 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 5) 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.

     9. LIABILITY OF ESCROW AGENT: In performing any duties under the Escrow Agreement, the
Escrow Agent shall not be liable to the Company, any subscriber/purchaser or any Party for damages,
losses, or expenses, except for gross negligence or willful misconduct on the part of the Escrow
Agent. The Escrow Agent shall not incur any such liability for (I) any act or failure to act made
or omitted in good faith, or (II) any action taken or omitted in reliance upon any instrument,
including any written statement or affidavit provided for in this Agreement that the Escrow Agent
shall in good faith believe to be genuine, nor will the Escrow Agent be liable or responsible for
forgeries, fraud, impersonations, or determining the scope of any representative’s authority. In
addition, the Escrow Agent may consult with legal counsel in connection with the Escrow Agent’s
duties under this Agreement and shall be fully protected in any action taken, suffered, or
permitted by it in good faith in accordance with the advice of counsel. The Escrow Agent is not
responsible for determining and verifying the authority of any person acting or purporting to act
on behalf of any party to this Agreement.

     10. FEES AND EXPENSES: In the event the Deposited Funds do not equal or exceed the
Minimum Escrow Deposit before the Termination Date or the Company does not receive a written debt
financing commitment as described herein before the Termination Date, the Escrow Agent shall be
entitled to a fee of $10.00 per purchaser, which fees shall be paid from the interest on the Escrow
Account only and not from principal. In the event the Escrow Agent renders any service not provided
for in this Agreement, or if the Company requests a substantial modification of its terms, or if
any controversy arises, or if the Escrow Agent is made a party to, or intervenes in, any litigation
pertaining to this escrow or its subject matter, the Escrow Agent shall be reasonably compensated
for such extraordinary services and reimbursed for all costs, attorney’s fees, including allocated
costs of in-house counsel, and expenses occasioned by such default, delay, controversy or
litigation and the Escrow Agent shall have the right to retain all documents and/or other things of
value at any time held by the Escrow Agent in this escrow until such compensation, fees, costs and
expenses are paid. The Company promises to pay these sums upon demand. Unless otherwise provided,
the Company will pay all of the Escrow Agent’s usual
charges and the Escrow Agent may deduct such sums from the interest on the Escrow Account only and
not from principal deposited to the Escrow Account.

     11. CONTROVERSIES: If any controversy arises between the Parties to this Agreement, or
with any other Party, concerning the subject matter of this Agreement, its terms or conditions, the
Escrow Agent will not be required to determine the controversy or to take any action regarding it.
The Escrow Agent may hold all documents and funds and may wait for settlement of any such
controversy by final appropriate legal proceedings or other means as, in the Escrow Agent’s
discretion, the Escrow Agent may require, despite what may be set forth elsewhere in this
Agreement. In such event, the Escrow Agent will not be liable for interest or damage. Furthermore,
the Escrow Agent may at its option file an action of interpleader requiring the Parties to answer
and litigate any claims and rights among themselves. The Escrow Agent is

 

 

authorized to deposit with the clerk of the court all documents and funds held in escrow, except
all costs, expenses, charges and reasonable attorney fees incurred by the Escrow Agent due to the
interpleader action and which the Company agrees to pay. Upon initiating such action, the Escrow
Agent shall be fully released and discharged of and from all obligations and liability imposed by
the terms of this Agreement.

     12. INDEMNIFICATION OF ESCROW AGENT: The Company and its successors and assigns agree
jointly and severally to indemnify and hold the Escrow Agent harmless against any and all losses,
claims, damages, liabilities, and expenses, including reasonable costs of investigation, counsel
fees, including allocated costs of in-house counsel and disbursements that may be imposed on the
Escrow Agent or incurred by the Escrow Agent in connection with the performance of its duties under
this Agreement, including but not limited to any litigation arising from this Agreement or
involving its subject matter. The Escrow Agent shall have a first lien on the property and papers
held under this Agreement for such compensation and expenses.

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

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

15. MISCELLANEOUS:

	 	(a)	 	GOVERNING LAWS: This Agreement is to be construed and interpreted
according to Minnesota law.

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

 

 

	 	 	 	transmitted by facsimile shall be deemed to be their original signatures for all
purposes.

	 	(c)	 	NOTICES: All instructions, notices and demands herein provided for
shall be in writing and shall be deemed to have been duly given (a) on the date of
service if served personally on the party to whom notice is to be given; (b) on the
day of transmission if sent by facsimile transmission to the facsimile number given
below and telephonic confirmation of receipt is promptly obtained after completion of
transmission; (c) on the next day on which such deliveries are
made in Crookston, 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 the Company:

	 	If to the Escrow Agent:
	 
	 	 
	Agassiz Energy, LLC
	 	 
	510 County Road 71
	 	 
	Valley Technology Park
	 	 
	Crookston, MN 56716
	 	 
	(218) 281-8442
	 	 
	 
	 	 
	With a required copy to:
	 	 
	 
	 	 
	Todd A. Taylor, Esq.
	 	 
	Leonard, O’Brien
	 	 
	Spencer, Gale & Sayre, Ltd.
	 	 
	100 South Fifth Street
	 	 
	Suite 2500
	 	 
	Minneapolis, MN 55402
	 	 
	(612) 332-1030
	 	 

	 	(d)	 	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.

	 	(e)	 	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.

 

 

	 	(f)	 	NON-ENDORSEMENT: The Company represents and agrees that it has not made
nor will it in the future make any representation that states or implies that the
Escrow Agent has endorsed, recommended or guaranteed the purchase, value, or repayment
of the Securities offered for sale by the Company. The Company further agrees that it
will insert in any prospectus, offering circular, advertisement, subscription agreement
or other document made available to prospective purchasers of the Securities the
following statement in bold face type: “                     is acting only as an
escrow agent in connection with the Offering described herein, and has not endorsed,
recommended or guaranteed the purchase, value or repayment of such Securities,” and
will furnish to the Escrow Agent a copy of each such prospectus, offering circular,
advertisement, subscription agreement or other document at least 5 business days prior
to its distribution to prospective Subscribers.

The undersigned acknowledges that                      is acting only as an escrow agent in
connection with the offering of the Securities described herein, and has not endorsed, recommended
or guaranteed the purchase, value or repayment of such Securities.

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

	 	 	 	 	 	 	 
	The Company	 	Escrow Agent
	 
	 	 	 	 	 	 
	Agassiz Energy, LLC	 	                                        
	 
	 	 	 	 	 	 
	By:

	 	 
 

	 	By:
	 	 
 

	 

	 	Donald Sargeant, President	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Its:

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