Document:

Exhibit 10.1

 

AON CORPORATION 2011 INCENTIVE PLAN

 

SECTION 1

General

 

1.1  Purpose.  Aon Corporation, a Delaware corporation (“Aon”), has established the Plan to advance the interests of Aon and the Subsidiaries (collectively, the “Company”) by providing a variety of equity-based and cash incentives designed to motivate, retain and attract employees, directors, consultants, independent contractors, agents, and other persons providing services to the Company through the acquisition of a larger personal financial interest in Aon.

 

1.2  Effect on Prior Plans.  After the Approval Date, no further awards will be made under the 2001 Aon Stock Incentive Plan, as amended from time to time (the “2001 Plan”) or the Hewitt Associates, Inc. Amended and Restated Global Stock and Incentive Plan, as amended from time to time (the “Hewitt Plan”), and Shares reserved for issuance thereunder will not be available for future awards thereunder after the Approval Date.

 

SECTION 2

Defined Terms

 

The meaning of capitalized terms used in the Plan are set forth below if not otherwise defined in the text of the Plan.

 

(a)                                  “Affiliate” will have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act.

 

(b)                                 “Agreement” will have the meaning set forth in subsection 9.9.

 

(c)                                  “Approval Date” means the date on which the Plan is approved by Aon’s stockholders.

 

(d)                                 “Award” means any award described in Sections 6 through 8 of the Plan.

 

(e)                                  “Beneficiary” means the legal representative of the Participant’s estate entitled by will or the laws of descent and distribution to receive the benefits under a Participant’s Award in the event the Participant’s Termination Date occurs on account of death, regardless whether the Participant designated a person or person to receive the balance of his or her benefits under the 2001 Plan, the Hewitt Plan or any other Company plan or program.

 

(f)                                    “Board” means the Board of Directors of Aon.

 

(g)                                 “Cash Incentive Award” has the meaning set forth in subsection 8.1.

 

(h)                                 “Change in Control” means:

 

(1)                                  the acquisition by any individual, entity or group (a “Person”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Common Stock”) or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 1(c); provided further, that for purposes of clause (B), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of 30% or more of the Outstanding Common Stock or 30% or more of the Outstanding Voting Securities by reason of an acquisition by the Company, and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the Outstanding Common Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control;

 

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(2)                                  individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board;

 

(3)                                  the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Corporate Transaction”); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 30% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 30% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

 

(4)                                  the consummation of a plan of complete liquidation or dissolution of the Company.

 

(i)                                     “Code” means the United States Internal Revenue Code of 1986, as amended, and references to any provision of the Code will be deemed to include successor provisions and regulations.

 

(j)                                     “Committee” has the meaning set forth in subsection 4.1.

 

(k)                                  “Effective Date” has the meaning set forth in subsection 9.1.

 

(l)                                     “Eligible Individual” means any officer, director, or other employee of Aon or a Subsidiary, consultants, independent contractors or agents of Aon or a Subsidiary, and persons who are expected to become officers, employees, directors, consultants, independent contractors or agents of Aon or a Subsidiary, including in each case, directors who are not employees of Aon or a Subsidiary.

 

(m)                               “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(n)                                 “Expiration Date” has the meaning set forth in subsection 6.9.

 

(o)                                 “Fair Market Value” of a Share means, as of any date and except as otherwise provided by the Committee, the closing sale price of a Share as reported on the New York Stock Exchange Composite Tape (or if the Shares are not traded on the New York Stock Exchange, the closing sale price on the exchange on which they are traded or as reported by an applicable automated quotation system) (“Composite Tape”) on the applicable date or, if no sales of Shares are reported on such date, the closing sale price of a Share on the date a sale was last reported on the Composite Tape (or such other exchange or automated quotation system, if applicable). For purposes of

 

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determining the Fair Market Value of Shares that are sold pursuant to a cashless exercise program, Fair Market Value will be the price at which such Shares are sold.

 

(p)                                 “Full Value Award” has the meaning set forth in subsection 7.1(a).

 

(q)                                 “Incentive Stock Option” means an Option that is intended to satisfy the requirements applicable to an “incentive stock option” described in section 422 of the Code.

 

(r)                                    “Non-Qualified Stock Option” means an Option that is not intended to be an Incentive Stock Option.

 

(s)                                  “Option” has the meaning set forth in subsection 6.1(a).

 

(t)                                    “Outside Director” means a director of Aon who is not an officer or employee of Aon or any Subsidiary.

 

(u)                                 “Participant” will have the meaning set forth in Section 3.

 

(v)                                 “Performance-Based Compensation” will have the meaning set forth in subsection 7.3.

 

(w)                               “Performance Criteria” means performance targets based on one or more of the following criteria: (i) revenues or net revenues; (ii) operating profit or margin; (iii) expenses, operating expenses, marketing and administrative expense, restructuring or other special or unusual items, interest, tax expense, or other measures of savings; (iv) operating earnings, earnings before interest, taxes, depreciation, or amortization, net earnings, earnings per share (basic or diluted) or other measure of earnings; (v) cash flow, including cash flow from operations, investing, or financing activities, before or after dividends, investments, or capital expenditures; (vi) balance sheet performance, including debt, long or short term, inventory, accounts payable or receivable, working capital, or stockholders’ equity; (vii) return measures, including return on invested capital, sales, assets, or equity; (viii) stock price performance or stockholder return; (ix) economic value created or added; (x) implementation or completion of critical projects, including acquisitions, divestitures, and other ventures, process improvements, attainment of other strategic objectives, including market penetration, geographic expansion, product development, regulatory or quality performance, innovation or research goals, or the like. In each case, performance may be measured (A) on an aggregate or net basis; (B) before or after tax or cumulative effect of accounting changes; (C) relative to other approved measures, on an aggregate or percentage basis, over time, or as compared to performance by other companies or groups of other companies; or (D) by product, product line, business unit or segment, or geographic unit. The performance targets may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur). Where applicable, each of the foregoing performance targets will be determined in accordance with generally accepted accounting principles and will be subject to certification by the Committee; provided that the Committee will have the authority to exclude the impact of charges for restructurings, discontinued operations, extraordinary items, and other unusual, special, or non-recurring events and the cumulative effects of tax or accounting principles as identified in the financial results filed with or furnished to the Securities and Exchange Commission.

 

(x)                                   “Person” will have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term will not include (i) Aon or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of Aon or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of Aon in substantially the same proportions as their ownership of stock of Aon.

 

(y)                                 “Plan” means this Aon Corporation 2011 Incentive Plan, as it may be duly amended from time to time.

 

(z)                                   “SAR” or “Stock Appreciation Right” has the meaning set forth in subsection 6.1(b).

 

(aa)                            “Share” means a share of common stock, $1.00 par value, of Aon.

 

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(bb)                          “Subsidiary” means any corporation, partnership, joint venture or other entity during any period in which a controlling interest in such entity is owned, directly or indirectly, by Aon (or by any entity that is a successor to Aon), and any other business venture designated by the Committee in which Aon (or any entity that is a successor to Aon) has, directly or indirectly, a significant interest (whether through the ownership of securities or otherwise), as determined in the discretion of the Committee. Notwithstanding the foregoing, in the case of an Incentive Stock Option or any determination relating to an Incentive Stock Option, “Subsidiary” means a corporation that is a subsidiary of Aon within the meaning of section 424(f) of the Code.

 

(cc)                            “Substitute Award” means an Award granted or Shares issued by the Company in assumption of, or in substitution or exchange for, an award previously granted, or the right or obligation to make a future award, in all cases by a company acquired by the Company or any Subsidiary of the Company or with which the Company or a Subsidiary combines.

 

(dd)                          “Termination Date” means the date on which a Participant both ceases to be an employee of the Company and ceases to perform material services for the Company (whether as a director or otherwise), regardless of the reason for the cessation; provided that a “Termination Date” will not be considered to have occurred during the period in which the reason for the cessation of services is a leave of absence approved by Aon or the Subsidiary which was the recipient of the Participant’s services; and provided, further that, with respect to an Outside Director, “Termination Date” means date on which the Outside Director’s service as an Outside Director terminates for any reason.

 

SECTION 3

Participation

 

Subject to the terms and conditions of the Plan, a “Participant” in the Plan is any Eligible Individual to whom an Award is granted under the Plan. Subject to the terms and conditions of the Plan, the Committee will determine and designate, from time to time, from among the Eligible Individuals those persons who will be granted one or more Awards under the Plan. Subject to the terms and conditions of the Plan, a Participant may be granted any Award permitted under the provisions of the Plan and more than one Award may be granted to a Participant. Except as otherwise agreed by Aon and the Participant, or except as otherwise provided in the Plan, an Award under the Plan will not affect any previous Award under the Plan or an award under any other plan maintained by Aon or any Subsidiary.

 

SECTION 4

Committee

 

4.1  Administration By Committee.  The authority to control and manage the operation and administration of the Plan will be vested in the committee described in subsection 4.2 (the “Committee”) in accordance with this Section 4. If the Committee does not exist, or for any other reason determined by the Board, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee.

 

4.2  Selection of Committee.  So long as Aon is subject to Section 16 of the Exchange Act, the Committee will be selected by the Board and will consist of not fewer than two members of the Board or such greater number as may be required for compliance with Rule 16b-3 issued under the Exchange Act and will be comprised of persons who are independent for purposes of applicable stock exchange listing requirements. Any Award granted under the Plan that is intended to constitute Performance-Based Compensation (including Options and SARs) will be granted by a Committee consisting solely of two or more “outside directors” within the meaning of section 162(m) of the Code and applicable regulations; provided, however, that as of the Effective Date and continuing thereafter unless and until otherwise specified by the Board, the Committee will be the Organization & Compensation Committee of the Board.

 

Notwithstanding any other provision of the Plan to the contrary, with respect to any Awards to Outside Directors, the Committee for purposes of this Section 4 will be the Board.

 

4.3  Powers of Committee.  The authority to manage and control the operation and administration of the Plan will be vested in the Committee, subject to the following:

 

(a)                                  Subject to the provisions of the Plan (including subsection 4.3(e)), the Committee will have the authority and discretion to (i) select Eligible Individuals who will receive Awards under the Plan, (ii) determine the time or times of receipt of Awards, (iii) determine the types of Awards and the number of Shares covered by the

 

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Awards, (iv) establish the terms, conditions, performance targets, restrictions, and other provisions of such Awards, (v) modify the terms of, cancel, or suspend Awards; (vi) reissue or repurchase Awards, and (vii) accelerate the exercisability or vesting of any Award. In making such Award determinations, the Committee may take into account the nature of services rendered by the respective individual, the individual’s present and potential contribution to Aon’s or a Subsidiary’s success and such other factors as the Committee deems relevant.

 

(b)                                 Subject to the provisions of the Plan, the Committee will have the authority and discretion to determine the extent to which Awards under the Plan will be structured to conform to the requirements applicable to Performance-Based Compensation, and to take such action, establish such procedures, and impose such restrictions at the time such Awards are granted as the Committee determines to be necessary or appropriate to conform to such requirements.

 

(c)                                  Subject to the provisions of the Plan, the Committee will have the authority and discretion to conclusively interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, to remedy any defect or omission and reconcile any inconsistency in the Plan or any Award, and to make all other determinations that may be necessary or advisable for the administration of the Plan including the termination thereof.

 

(d)                                 Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons.

 

(e)                                  Except as otherwise expressly provided in the Plan, where the Committee is authorized to make a determination with respect to any Award, such determination will be made at the time the Award is made, except that the Committee may reserve the authority to have such determination made by the Committee in the future (but only if such reservation is made at the time the Award is granted is expressly stated in the Agreement reflecting the Award and is permitted by applicable law).

 

4.4  Delegation by Committee.  Except to the extent prohibited by applicable law or the rules of any stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, except that Awards to individuals who are designated as “officers” under Rule 16a-1(f) of the Exchange Act may be made solely by the Committee. Any such allocation or delegation may be revoked by the Committee at any time.

 

4.5  Information to be Furnished to Committee.  The Company will furnish the Committee such data and information as may be required for it to discharge its duties. The records of the Company as to an individual’s employment or provision of services, termination of employment or cessation of the provision of services, leave of absence, reemployment and compensation will be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.

 

4.6  Liability and Indemnification of Committee.  No member or authorized delegate of the Committee will be liable to any person for any action taken or omitted in connection with the administration of the Plan unless attributable to his own fraud or willful misconduct; nor will Aon or any Subsidiary be liable to any person for any such action unless attributable to fraud or willful misconduct on the part of a director or employee of Aon or a Subsidiary. The Committee, the individual members thereof, and persons acting as the authorized delegates of the Committee under the Plan, will be indemnified by Aon against any and all liabilities, losses, costs and expenses (including legal fees and expenses) of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Committee or its members or authorized delegates by reason of the performance of a Committee function if the Committee or its members or authorized delegates did not act dishonestly or in willful violation of the law or regulation under which such liability, loss, cost or expense arises. This indemnification will not duplicate but may supplement any coverage available under any applicable insurance.

 

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SECTION 5

Shares Reserved and Limitations

 

5.1  Shares and Other Amounts Subject to the Plan.  The Shares for which Awards may be granted under the Plan will be subject to the following:

 

(a)                                  The Shares with respect to which Awards may be made under the Plan will be shares currently authorized but unissued or currently held or subsequently acquired by Aon as treasury shares, including shares purchased in the open market or in private transactions.

 

(b)                                 Subject to the provisions of subsection 5.2, the number of Shares which may be issued with respect to Awards under the Plan will be equal to 25 million Shares (the “Share Pool”). Except as otherwise provided herein, any Shares subject to an Award under this Plan which for any reason expires or is forfeited, cancelled, surrendered, or terminated without issuance of Shares will again be available under the Plan. Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such Shares are: (i) Shares that were subject to a stock-settled SAR and were not issued or delivered upon the net settlement of such SAR; (ii) Shares delivered to or withheld by Aon to pay the exercise price or the withholding taxes related to an outstanding Award; and (iii) Shares repurchased on the open market with the proceeds of an Option exercise.

 

(c)                                  Substitute Awards will not reduce the Shares that may be issued under the Plan or that may be covered by Awards granted to any one Participant during any calendar year pursuant to subsection 5.1(e) or subsection 5.1(f).

 

(d)                                 Except as expressly provided by the terms of this Plan, the issuance by Aon of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property or for labor or services, either upon direct sale, upon the exercise of rights or warrants to subscribe therefor or upon conversion of shares or obligations of Aon or any Subsidiary convertible into such shares or other securities, will not affect, and no adjustment by reason thereof, will be made with respect to Awards then outstanding hereunder.

 

(e)                                  Subject to the following provisions of this subsection 5.1, the maximum number of Shares that may be delivered to Participants and their Beneficiaries with respect to Incentive Stock Options under the Plan will be 15 million; provided, however, that to the extent that shares not delivered must be counted against this limit as a condition of satisfying the rules applicable to Incentives Stock Options, such rules will apply to the limit on Incentive Stock Options granted under the Plan.

 

(f)                                    The maximum number of Shares that may be covered by Awards granted to any one Participant during any one calendar-year period pursuant to this Plan will be 1,500,000. For purposes of this subsection 5.1(g), if an Option is in tandem with an SAR, such that the exercise of the Option or SAR with respect to a Share cancels the tandem SAR or Option right, respectively, with respect to such share, the tandem Option and SAR rights with respect to each Share will be counted as covering but one Share for purposes of applying the limitations of this subsection 5.1(f).

 

5.2  Adjustments to Shares.  In the event there is a change in the capital structure of the Company as a result of any stock dividend or split, recapitalization, issuance of a new class of common stock, merger, consolidation, spin-off or other similar corporate change, or any distribution to stockholders holding Shares other than regular cash dividends, the Committee shall make an equitable adjustment (in the manner and form determined in the Committee’s sole discretion) in the number of Shares and forms of the Awards authorized to be granted under the Plan, including any limitation imposed on the number of Shares of Common Stock with respect to which an Award may be granted in the aggregate under the Plan or to any Participant, and make appropriate adjustments (including exercise price) to any outstanding Awards.

 

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SECTION 6

Options and SARS

 

6.1  Definitions.

 

(a)                                  The grant of an “Option” under the Plan entitles the Participant to purchase Shares at an Exercise Price established by the Committee at the time the Option is granted. Options granted under this Section 6 may be either Incentive Stock Options or Non-Qualified Stock Options, as determined in the discretion of the Committee; provided, however, that Incentive Stock Options may only be granted to employees of Aon or a Subsidiary. An Option will be deemed to be a Non-Qualified Stock Option unless it is specifically designated by the Committee as an Incentive Stock Option.

 

(b)                                 A grant of a “stock appreciation right” or “SAR” entitles the Participant to receive, in cash or Shares (as determined in accordance with the terms of the Plan), value equal to the excess of: (i) the Fair Market Value of a specified number of Shares at the time of exercise; over (ii) an Exercise Price established by the Committee at the time of grant.

 

(c)                                  An Option may but need not be in tandem with an SAR, and an SAR may but need not be in tandem with an Option (in either case, regardless of whether the original award was granted under this Plan or another plan or arrangement). If an Option is in tandem with an SAR, the Exercise Price of both the Option and SAR will be the same, and the exercise of the Option or SAR with respect to a Share will cancel the corresponding tandem SAR or Option right with respect to such share.

 

6.2  Eligibility.  The Committee will designate the Participants to whom Options or SARs are to be granted under this Section 6 and will determine the number of Shares subject to each such Option or SAR and the other terms and conditions thereof, not inconsistent with the Plan.

 

6.3  Limits on Incentive Stock Options.  If the Committee grants Incentive Stock Options, then to the extent that the aggregate fair market value of Shares with respect to which Incentive Stock Options are exercisable for the first time by any individual during any calendar year (under all plans of the Company) exceeds $100,000, such Options will be treated as Non-Qualified Stock Options to the extent required by section 422 of the Code.

 

6.4  Exercise Price.  The “Exercise Price” of an Option or SAR will be established by the Committee at the time the Option or SAR is granted; provided, however, in no event will such price be less than 100% of the Fair Market Value of a Share on such date.

 

6.5  Exercise/Vesting.  Except as otherwise expressly provided in the Plan, an Option or SAR granted under the Plan will be exercisable in accordance with the following:

 

(a)                                  An Option or SAR granted under this Section 6 will be exercised, in whole or in part (but with respect to whole Shares only) by giving notice to Aon or its designee prior to the Expiration Date applicable thereto. Such notice will specify the number of Shares being exercised and such other information as may be required by the Committee or its designee.

 

(b)                                 No Option or SAR may be exercised prior to the date on which it is exercisable (or vested) or after the Expiration Date.

 

(c)                                  The terms and conditions relating to exercise and vesting of an Option or SAR will be established by the Committee to the extent not inconsistent with the Plan, and may include, without limitation, conditions relating to completion of a specified period of service, achievement of performance standards prior to exercise or the achievement of Share ownership objectives by the Participant. Notwithstanding the foregoing, in no event will an Option or SAR granted to any employee become exercisable or vested prior to the first anniversary of the date on which it is granted (subject to acceleration of exercisability and vesting, to the extent permitted by, and subject to such terms and conditions determined by the Committee, in the event of the Participant’s death, disability, retirement, or involuntary termination or in connection with a change in control).

 

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6.6  Method of Exercise; Payment of Exercise Price.  A Participant may exercise an Option (i) by giving notice to the Committee or its designee specifying the number of whole Shares to be purchased and accompanying such notice with payment therefor in full, and without any extension of credit, either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Committee or its designee) to the Committee or its designee of previously owned whole Shares having a Fair Market Value, determined as of the date immediately preceding the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) authorizing the Committee to withhold whole Shares which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date of exercise, equal to the amount necessary to satisfy such obligation, provided that the Committee determines that such withholding of Shares does not cause the Company to recognize an increased compensation expense under applicable accounting principles, (D) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company to whom the Participant has submitted an irrevocable notice of exercise or (E) a combination of (A), (B) and (C) and (ii) by executing such documents as the Committee may reasonably request. Any fraction of a Share which would be required to pay such purchase price will be disregarded and the remaining amount due will be adjusted through the federal tax withholding mechanism. No Shares will be issued and no certification representing Common Stock will be delivered until the full purchase price therefor and any withholding taxes thereon, as described in Section 9.5, have been paid.

 

6.7  Post-Exercise Limitations.  The Committee, in its discretion, may provide in an Award such restrictions on Shares acquired pursuant to the exercise of an Option as it determines to be desirable, including, without limitation, restrictions relating to disposition of the shares and forfeiture restrictions based on service, performance, Share ownership by the Participant and such other factors as the Committee determines to be appropriate.

 

6.8  No Repricing.  Except for adjustments pursuant to subsection 5.2 (Adjustments to Shares) or reductions of the Exercise Price approved by Aon’s stockholders, the Exercise Price for any outstanding Option or SAR may not be decreased after the date of grant nor may an outstanding Option or SAR granted under the Plan be surrendered to Aon as consideration for the grant of a new Award, cash, or replacement Option or SAR with a lower exercise price. In addition, no repricing of an Option or SAR will be permitted without the approval of Aon’s stockholders if such approval is required under the rules of any stock exchange on which Shares are listed; provided, however, that the foregoing prohibition shall not apply to the actions permitted under subsection 9.2 (Change in Control).

 

6.9  Expiration Date.  The “Expiration Date” with respect to an Option or SAR means the date established as the Expiration Date by the Committee at the time of the grant; provided, however, that in no event will the Expiration Date of an Option or SAR be later than the date that is ten years after the date on which the Option or SAR is granted (or such shorter period required by law or the rules of any stock exchange).

 

SECTION 7

Full Value Awards

 

7.1  Definitions.

 

(a)                                  A “Full Value Award” is a grant of one or more Shares or a right to receive one or more Shares in the future (including restricted shares, restricted share units, deferred shares, deferred share units, performance shares and performance share units), with such grant subject to one or more of the following, as determined by the Committee:

 

(i)                                     The grant may be in consideration of a Participant’s previously performed services, or surrender of other compensation that may be due.

 

(ii)                                  The grant may be contingent on the achievement of performance or other objectives during a specified period.

 

(iii)                               The grant may be subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Participant or achievement of performance or other objectives.

 

(iv)                              The grant may also be subject to such other conditions, restrictions and contingencies, as determined by the Committee, including provisions relating to dividend or dividend equivalent rights and deferred payment or settlement.

 

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7.2  Special Vesting Rules.  If an employee’s right to become vested in a Full Value Award is conditioned on the completion of a specified period of service with Aon or one or more Subsidiaries, without achievement of performance targets or other performance objectives (whether or not related to performance measures) being required as a condition of vesting, and without it being granted in lieu of other compensation, then the required period of service for full vesting will be not less than one year (subject, to the extent provided by, and subject to such terms and conditions determined by, the Committee, to prorated vesting over the course of such one-year period and to acceleration of vesting in the event of the Participant’s death, disability, involuntary termination or otherwise in connection with a change in control, or retirement). The foregoing requirements will not apply to (a) grants made to newly eligible Participants to replace awards from a prior employer and (b) grants that are a form of payment of earned performance awards or other incentive compensation.

 

7.3  Performance-Based Full Value Awards.  Any Full Value Award granted to any Participant may constitute “Performance-Based Compensation” within the meaning of section 162(m) of the Code and regulations thereunder. If any such award is intended to satisfy the requirements for Performance-Based Compensation under section 162(m) of the Code, then to the extent required by section 162(m), any Full Value Award so designated will be conditioned on the achievement of one or more performance targets as determined by the Committee and the following additional requirements will apply:

 

(a)                                  The performance targets established for the performance period established by the Committee will be objective (as that term is described in regulations and other guidance under section 162(m) of the Code), and will be established in writing by the Committee not later than 90 days after the beginning of the performance period (but in no event after 25% of the performance period has elapsed), and while the outcome as to the performance targets is substantially uncertain. The performance targets established by the Committee will be based on one or more of the Performance Criteria.

 

(b)                                 A Participant otherwise entitled to receive a Full Value Award for any performance period will not receive a settlement or payment of the Award until the Committee has determined that the applicable performance target(s) have been attained. To the extent that the Committee exercises discretion in making the determination required by this subsection 7.3(b), such exercise of discretion may not result in an increase in the amount of the payment unless such discretion is exercised pursuant to Section 9.2 hereof.

 

(c)                                  Except as otherwise provided by the Committee, if a Participant’s Termination Date occurs because of death or disability, the Participant’s Full Value Award will become vested without regard to whether the Full Value Award would be Performance-Based Compensation.

 

Nothing in this Section 7 will preclude the Committee from granting Full Value Awards under the Plan or the Committee, Aon or any Subsidiary from granting any cash incentive awards outside of the Plan that are not intended to be Performance-Based Compensation; provided, however, that to the extent that the provisions of this Section 7 reflect the requirements applicable to Performance-Based Compensation, such provisions will not apply to the portion of the Award, if any, that is not intended to constitute Performance-Based Compensation.

 

SECTION 8

Cash Incentive Awards

 

8.1  Grant of Cash Incentive Awards.  Subject to the terms of the Plan, the Committee may grant to a Participant the right to receive a payment in cash (or, in the discretion of the Committee, in Shares equivalent in value to the cash otherwise payable) at any time and from time to time, as determined by the Committee (“Cash Incentive Award”). Each Cash Incentive Award will have a value as determined by the Committee, and the Committee may subject an Award to Performance Criteria or any other conditions, restrictions or contingencies, as determined in the Committee’s discretion. Payment of earned Cash Incentive Awards will be as determined by the Committee and evidenced in the Award Agreement. Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Cash Incentive Awards in the form of cash or Shares (or in a combination thereof) that have an aggregate Fair Market Value equal to the value of the earned Award. The determination of the Committee with respect to the time and form of payout of such Awards will be set forth in the Award Agreement pertaining to the grant of the Award.

 

8.2  Performance-Based Cash Incentive Awards.  Any Cash Incentive Award granted to any Participant may constitute “Performance-Based Compensation” within the meaning of section 162(m) of the Code and regulations thereunder. If any such award is intended to satisfy the requirements for Performance-Based Compensation under section 162(m) of the Code, then to the extent required by section 162(m), any Cash Incentive Award so designated will be conditioned on the

 

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achievement of one or more performance targets as determined by the Committee and the following additional requirements will apply:

 

(a)                                  The performance targets established for the performance period established by the Committee will be objective (as that term is described in regulations under section 162(m) of the Code), and will be established in writing by the Committee not later than 90 days after the beginning of the performance period (but in no event after 25% of the performance period has elapsed), and while the outcome as to the performance targets is substantially uncertain. The performance targets established by the Committee will be based on one or more of the Performance Criteria.

 

(b)                                 A Participant otherwise entitled to receive a Cash Incentive Award for any performance period will not receive a settlement or payment of the Award until the Committee has determined that the applicable performance target(s) have been attained. To the extent that the Committee exercises discretion in making the determination required by this subsection 8.2, such exercise of discretion may not result in an increase in the amount of the payment, unless such discretion is exercised pursuant to Section 9.2 hereof.

 

(c)                                  Except as otherwise provided by the Committee, if a Participant’s Termination Date occurs because of death or disability, the Participant’s Cash Incentive Award will become vested without regard to whether the Cash Incentive Award would be Performance-Based Compensation.

 

(d)                                 The maximum amount payable pursuant to a Cash Incentive Award to any Participant in any calendar year is $10,000,000.

 

Nothing in this Section 8 will preclude the Committee from granting Cash Incentive Awards under the Plan or the Committee, Aon or any Subsidiary from granting any cash incentive awards outside of the Plan that are not intended to be Performance-Based Compensation; provided, however, that to the extent that the provisions of this Section 8 reflect the requirements applicable to Performance-Based Compensation, such provisions will not apply to any Cash Incentive Award that is not intended to constitute Performance-Based Compensation. Except as otherwise provided in the applicable program or arrangement, distribution of any Cash Incentive Awards by the Company for a performance period ending in a calendar year will be made to the Participant not later than March 15 of the following calendar year.

 

SECTION 9

Operation and Administration

 

9.1  Effective Date and Approval Date.  The Plan will be effective as of the date it is adopted by the Board (the “Effective Date”); provided, however, that Awards granted under the Plan prior to the Approval Date will be contingent on approval of the Plan by Aon’s stockholders. The Plan will be unlimited in duration and, in the event of Plan termination, will remain in effect as long as any Shares awarded under it are outstanding and not fully vested; provided, however, that no new Awards will be made under the Plan on or after the tenth anniversary of the date on which the Plan is adopted by the Board.

 

9.2  Change in Control.  (a) Notwithstanding any provision of this Plan or Award agreement, in the event of a Change in Control, the Board (as constituted prior to such Change in Control) may, in its discretion:

 

(i)                                     require that (A) some or all outstanding Options and SARs will immediately become exercisable in full or in part, (B) the vesting period applicable to some or all outstanding restricted shares and restricted stock units will lapse in full or in part, (C) the performance period applicable to some or all outstanding Awards will lapse in full or in part, and (D) the performance targets applicable to some or all outstanding Awards will be deemed to be satisfied at the target, maximum or any other level;

 

(ii)                                  require that Shares of Common Stock of the Company resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, be substituted for some or all of the Shares subject to an outstanding Award, with an appropriate and equitable adjustment to such Award as determined by the Board in accordance with Section 5.2;

 

(iii)                               require outstanding Awards, in whole or in part, to be surrendered to the Company by the holder, and to be immediately cancelled by the Company, and to provide for the holder to receive (A) a cash payment in an amount equal to (x) in the case of an Option or a SAR, the number of Shares then subject to the portion of such Option or SAR surrendered, to the extent such Option or SAR is then exercisable or becomes exercisable pursuant to

 

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Section 6.5 above, multiplied by the excess, if any, of the Fair Market Value of a Share as of the date of the Change in Control, over the purchase price or base price per Share subject to such Option or SAR, (y) in the case of restricted shares or restricted stock units, the number of Shares then subject to the portion of such Award surrendered, to the extent the vesting period and performance period, if any, on such Award have lapsed or will lapse pursuant to Section 7.2 above and to the extent that the performance targets, if any, have been satisfied or are deemed satisfied pursuant to Sections 7.2 or 7.3 above, multiplied by the Fair Market Value of a Share as of the date of the Change in Control, and (z) in the case of performance shares and performance share units, the Fair Market Value of the Shares then subject to the portion of such Award surrendered, to the extent the performance period applicable to such Award has lapsed or will lapse pursuant to Section 7.3 above and to the extent the performance targets applicable to such Award have been satisfied or are deemed satisfied pursuant to Section 7.3 above; (B) Shares of Common Stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (A) above; or (C) a combination of the payment of cash pursuant to clause (A) above and the issuance of shares pursuant to Clause (B) above; and/or

 

(iv)                              take such other action as the Board deems appropriate, in its sole discretion.

 

9.3  Special Director Provisions.  Notwithstanding any other provision of the Plan to the contrary, unless otherwise provided by the Board, awards to non-employee directors will be made in accordance with the terms of the Aon Corporation Non-Employee Directors’ Deferred Stock Unit Plan, as amended, and all such awards will be deemed to be made under the Plan.

 

9.4  Limit on Distribution.  Distribution of Shares or other amounts under the Plan will be subject to the following:

 

(a)                                  Notwithstanding any other provision of the Plan, Aon will have no liability to deliver any Shares under the Plan or make any other distribution of benefits under the Plan unless such delivery or distribution would comply with all applicable laws and the applicable requirements of any securities exchange or similar entity.

 

(b)                                 In the case of a Participant who is subject to Section 16(a) and 16(b) of the Exchange Act, the Committee may, at any time, add such conditions and limitations to any Award to such Participant, or any feature of any such Award, as the Committee, in its sole discretion, deems necessary or desirable to comply with Section 16(a) or 16(b) and the rules and regulations thereunder or to obtain any exemption therefrom.

 

(c)                                  To the extent that the Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

 

9.5  Withholding.  All Awards and other payments under the Plan are subject to withholding of all applicable taxes, which withholding obligations may be satisfied, with the consent of the Committee, through the surrender of Shares which the Participant already owns or to which a Participant is otherwise entitled under the Plan; provided, however, with the consent of the Committee, previously-owned Shares that have been held by the Participant or Shares to which the Participant is entitled under the Plan may only be used to satisfy the minimum tax withholding required by applicable law (or other rates that will not have a negative accounting impact).

 

9.6  Transferability.  Awards under the Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution or, to the extent provided by the Committee, pursuant to a qualified domestic relations order (within the meaning of the Code and applicable rules thereunder). To the extent that the Participant who receives an Award under the Plan has the right to exercise such Award, the Award may be exercised during the lifetime of the Participant only by the Participant. Notwithstanding the foregoing provisions of this subsection 9.6, the Committee may permit Awards under the Plan to be transferred to or for the benefit of the Participant’s family (including, without limitation, to a trust or partnership for the benefit of a Participant’s family), subject to such procedures as the Committee may establish. In no event will an Incentive Stock Option be transferable to the extent that such transferability would violate the requirements applicable to such option under section 422 of the Code.

 

9.7  Notices.  Any notice or document required to be filed with the Committee or the Company under the Plan will be properly filed if delivered or mailed by registered mail, postage prepaid, to the Committee or the Company, in care of Aon at its principal executive offices. The Committee may, by advance written notice to affected persons, revise such notice procedure from time to time. Any notice required under the Plan (other than a notice of election) may be waived by the person entitled to notice.

 

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9.8  Form and Time of Elections.  Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation thereof, will be in writing filed with the Committee at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee requires.

 

9.9  Agreement With Aon or Subsidiary.  At the time of an Award to a Participant under the Plan, the Committee may require a Participant to enter into an agreement with Aon or the Subsidiary, as applicable (the “Agreement”), in a form specified by the Committee, agreeing to the terms and conditions of the Plan and to such additional terms and conditions, not inconsistent with the Plan, as the Committee may, in its sole discretion, prescribe.

 

9.10  Limitation of Implied Rights.

 

(a)                                  Neither a Participant nor any other person will, by reason of the Plan, acquire any right in or title to any assets, funds or property of the Company whatsoever, including without limitation, any specific funds, assets, or other property which the Company, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant will have only a contractual right to the amounts, if any, payable under the Plan, unsecured by any assets of the Company. Nothing contained in the Plan constitutes a guarantee by the Company or any Subsidiary that the assets of such companies will be sufficient to pay any benefits to any person.

 

(b)                                 The Plan does not constitute a contract of employment or continued service, and selection as a Participant will not give any employee the right to be retained in the employ or service of the Company, nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. Except as otherwise provided in the Plan, no Award under the Plan will confer upon the holder thereof any right as a stockholder of Aon prior to the date on which he fulfills all service requirements and other conditions for receipt of such rights and Shares are registered in his name. Without limiting the generality of the foregoing, to the extent permitted or required by law, as determined by the Committee, Participants holding Shares of restricted stock granted under the Plan may be granted the right to exercise full voting rights with respect to those Shares during the vesting period. A Participant will have no voting rights with respect to any restricted stock units granted hereunder.

 

(c)                                  During the vesting period, Participants holding Shares of restricted stock, restricted stock units, performance Shares or performance share units granted hereunder may, if the Committee so determines, be credited with dividends paid with respect to the underlying Shares or dividend equivalents while they are so held in a manner determined by the Committee in its sole discretion. The Committee may apply any restrictions to the dividends or dividend equivalents that the Committee deems appropriate. The Committee, in its sole discretion, may determine the form of payment of dividends or dividend equivalents, including, but not limited to, cash or Shares.

 

9.11  Forfeiture Events.  The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award will be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but are not limited to, termination of employment for cause, violation of material Company, Affiliate or Subsidiary policy, breach of noncompetition, non-solicitation or confidentiality provisions that apply to the Participant, a determination that the payment of the Award was based on an incorrect determination that financial or other criteria were met or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates or the Subsidiaries.

 

9.12  Clawback Policy.  Any compensation earned or paid pursuant to this Plan is subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

 

9.13  Evidence.  Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.

 

9.14  Action by Aon or Subsidiary.  Any action required or permitted to be taken by Aon or any Subsidiary will be by resolution of its board of directors or by action of one or more members of the board (including a committee of the board) who are duly authorized to act for the board or (except to the extent prohibited by applicable law or the rules of any stock exchange) by a duly authorized officer of Aon.

 

9.15  Gender and Number.  Where the context allows, words in any gender include any other gender, words in the singular include the plural and the plural includes the singular, and the term “or” also means “and/or” and the term “including” means “including but not limited to”.

 

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9.16  Applicable Law.  The provisions of the Plan will be construed in accordance with the laws of the State of Delaware, without giving effect to choice of law principles.

 

9.17  Foreign Participants.  Notwithstanding any other provision of the Plan to the contrary, the Committee may grant Awards to eligible persons who are foreign nationals on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan. In furtherance of such purposes, the Committee may make such modifications, amendments, procedures and subplans as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which Aon or a Subsidiary operates or has employees.

 

9.18  Construction.  If any provision of the Plan or any Award agreement relating to an award intended to satisfy the requirements for Performance-Based Compensation under section 162(m) of the Code does not comply or is inconsistent with such requirements of section 162(m) of the Code, such provision will be construed or deemed amended to the extent necessary to conform to such requirements.

 

SECTION 10

Amendment and Termination

 

The Board may, at any time, amend or terminate the Plan, and the Board or the Committee may amend any Agreement, provided that no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living and if applicable, the Beneficiary), adversely affect the rights of any Participant or, if applicable, Beneficiary under any Award granted under the Plan prior to the date such amendment is adopted by the Board (or the Committee, if applicable); and further provided that adjustments pursuant to subsection 5.2 will not be subject to the foregoing limitations of this Section 10; and further provided no amendment will be made to the provisions of subsection 6.8 (relating to Option and SAR repricing) without the approval of Aon’s stockholders; and provided further, that no other amendment will be made to the Plan without the approval of Aon’s stockholders if the approval of Aon’s stockholders of such amendment is required by law or the rules of any stock exchange on which Shares are listed.

 

SECTION 11

Section 409A of the Code

 

11.1  Intent to Comply with Section 409A of the Code.  Notwithstanding anything in this Plan to the contrary (for purposes of this section, “Plan” includes all Awards under the Plan), the Plan will be construed, administered or deemed amended as necessary to comply with the requirements of Section 409A of the Code to avoid taxation under Section 409A(a)(1) of the Code to the extent subject to Section 409A of the Code. The Committee, in its sole discretion, will determine the requirements of Section 409A of the Code applicable to the Plan and will interpret the terms of the Plan consistently therewith. Under no circumstances, however, will the Company or any Subsidiary or Affiliate or any of its employees, officers, directors, service providers or agents have any liability to any person for any taxes, penalties or interest due on amounts paid or payable under the Plan, including any taxes, penalties or interest imposed under Section 409A of the Code. Any payments to Award holders pursuant to this Plan are also intended to be exempt from Section 409A of the Code to the maximum extent possible, first, to the extent such payments are scheduled to be paid and are in fact paid during the short-term deferral period, as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and then, if applicable, under the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii), and for this purpose each payment will be considered a separate payment such that the determination of whether a payment qualifies as a short-term deferral will be made without regard to whether other payments so qualify and the determination of whether a payment qualifies under the separation pay exemption will be made without regard to any payments which qualify as short-term deferrals. To the extent any amounts under this Plan are payable by reference to an Award holder’s “termination of employment,” such term will be deemed to refer to the Award holder’s “separation from service,” within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Plan, if an Award holder is a “specified employee,” as defined in Section 409A of the Code, as of the date of the Award holder’s separation from service, then to the extent any amount payable under this Plan (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the Award holder’s separation from service and (iii) under the terms of this Plan would be payable prior to the six-month anniversary of the Award holder’s separation from service, such payment will be delayed until the earlier to occur of (a) the six-month anniversary of the separation from service or (b) the date of the award holder’s death.

 

11.2  Prohibition on Acceleration of Payments.  The time or schedule of any settlement or amount scheduled to be paid pursuant to the terms of the Plan or any Agreement may not be accelerated except as otherwise permitted under Code Section 409A and the guidance and Treasury regulations issued thereunder.

 

12EXHIBIT 10.1

 

HERON LAKE BIOENERGY, LLC

 

SUBSCRIPTION AGREEMENT

INCLUDING INVESTMENT REPRESENTATIONS

 

THIS SUBSCRIPTION AGREEMENT is entered into and made effective on May 19, 2011, by and between Heron Lake BioEnergy, LLC, a Minnesota limited liability company with its principal executive office located at 91246 390th Avenue, P.O. Box 198, Heron Lake, Minnesota 56137 (the “Company”), and Project Viking, L.L.C., a Minnesota limited liability company, (“Subscriber”).

 

W I T N E S S E T H

 

In consideration of the mutual promises contained herein, and other good and valuable consideration, Subscriber hereby agrees, represents and warrants as follows:

 

1.                                      Agreement of Subscription.

 

a.                                       Subscriber hereby subscribes to purchase ** 7,000,000 ** Class B capital units of the Company (the “Units”), which Units quantify membership interests in the Company, at a purchase price of $0.50 per Unit, upon the terms and conditions as set forth in this Subscription Agreement, for a Total Purchase Price for the Units of ** $3,500,000.00 **.  (All capitalized terms used in this Subscription Agreement and not otherwise defined herein shall have the meaning ascribed to such terms in the prospectus of the Company dated September 17, 2004.)

 

b.                                      Upon the acceptance of this Subscription Agreement, Subscriber agrees to deliver by wire transfer on the same business day of the acceptance the amount of the Total Purchase Price for the Units (100% payment is due upon Subscription).  Subscriber agrees that the Units shall be governed by and that Subscriber is bound by the Company’s Member Control Agreement dated effective September 23, 2004, as amended, (the “Member Control Agreement”).  Subscriber acknowledges that Subscriber is a current member of the Company and therefore has received a copy of the Member Control Agreement.

 

c.                                       This subscription is irrevocable.  The Company will accept this subscription by having one of its officers countersign this Subscription Agreement and return a copy of the signature page to you to confirm acceptance.

 

d.                                      Upon acceptance, this Subscription Agreement is binding on Subscriber, and the obligations of Subscriber hereunder are unconditional.

 

e.                                       Subscriber acknowledges and agrees that 100% of Subscriber’s purchase price of the Units constitutes “AT-RISK” capital and will not be placed into any type of escrow.  Immediately following acceptance of this Subscription by the Company and tender of the payment for the Units, the Company will use such funds for general working capital and other corporate purposes, as determined by or under the direction of the Board of Governors of the Company at its sole discretion.  Subscriber acknowledges that there is no specified use of the funds from this subscription.

 

f.                                         Upon acceptance of this Subscription Agreement and tender of full payment of the entire subscription amount, the Company will issue the Units to Subscriber for the Units purchased hereunder and issue a certificate to Subscriber for the Units purchased hereunder.  Subscriber acknowledges and agrees that Subscriber is bound by the Company’s Articles of Organization (the “Articles”) and the Member Control Agreement.

 

 

2.                                      Representations and Warranties of Subscriber.

 

In consideration of the Company’s offer to sell the Units, and in order to induce the Company to sell the Units to Subscriber, Subscriber hereby represents and warrants to the Company and its agents as follows:

 

a.                                       SEC Reporting Obligations; Information About the Company and the Units.  Subscriber acknowledges that the Company is a public reporting company under the Securities Exchange Act of 1934, and that Subscriber has immediate reporting obligations under such Act of its purchase of the Units hereunder, as a result of Subscriber’s ownership of membership interests in the Company and the number of Units purchased.  Subscriber, or its representative(s), has received, read and understands the business, financial and operating information, and the risk factors affecting the Company and its business and the value of the Units being purchased hereunder,  as described in or set forth in the periodic reports and schedules filed by the Company with the SEC (including all exhibits and financial statement schedules attached thereto or included therewith), including but not limited to: (1) FORM 10-K Annual Report filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “34’ Act”) for the fiscal year ended October 31, 2010; (2) FORM 10-Q Quarterly reports under Section 13 or 15(d) of the Act for the fiscal quarter ended January 31, 2011; and (3) all FORM 8-K reports filed in the past twelve months, including Form 8-K reports filed in connection with the first, second, and third amendments to the forbearance agreement and related loan agreements between the Company and AgStar Financial Services, PCA on January 6, 2011, March 7, 2011, and May 3, 2011.  In addition, Subscriber acknowledges it has received the Company’s unaudited, non-public, financial statements for March 31, 2011 and the 5-month period then ended, by reason of its appointees to the Company’s Board of Governors.  Without limiting the foregoing, Subscriber acknowledges that the Company may remain out of compliance with one or more covenants in its loan agreements with AgStar Financial Services, PCA, and that there are no assurances that the covenant(s) violations can be cured or that the Company will not violate additional loan covenants in the near future, or that the Senior lenders will not declare an event of default and exercise all of their rights and remedies under the loan agreement if the Company cannot cure such defaults or violations.  Subscriber, or its representative, has had an opportunity to obtain, and has received, any additional information and has had an opportunity to ask such questions of, and receive answers from, the Company or an agent or representative of the Company, to the extent deemed necessary by Subscriber in order to form a decision concerning an investment in the Company.  As a result, Subscriber believes it has sufficient knowledge about the business, management and financial affairs of the Company and the ethanol plant and the Company’s planned use of the proceeds of this subscription, and the terms and conditions of the purchase of Units contemplated hereby.

 

b.                                       High Degree of Risk.  Subscriber realizes that an investment in the Units involves a high degree of risk, including, but not limited to, the risks of receiving no return on the investment and of losing Subscriber’s entire investment in the Company.

 

c.                                       Ability to Bear the Risk.  Subscriber is able to bear the economic risk of investment in the Units, including the total loss of such investment.

 

d.                                       No Market for Units; Restrictions on Transfer.  Subscriber realizes that (i) there are substantial restrictions on the transfer of the Units, both under the Securities Act and State Laws, as well as under the Articles and the Member Control Agreement; (ii) there is not currently, and it is unlikely that in the future there will exist, a public market for the Units; and (iii) accordingly, for the above and other reasons, Subscriber may not be able to liquidate an investment in the Units for an indefinite period.  Subscriber realizes that the Units have not been registered for sale under the Securities Act of 1933, as amended (the “Securities Act”) or applicable state securities laws (the “State Laws”).  Subscriber acknowledges and agrees that the Units may be sold only pursuant to registration under the Securities Act and State Laws, or an opinion of counsel acceptable to the Company that such registration is not required, and in accordance with the Articles and the Member Control Agreement.

 

e.                                       Suitability.  Subscriber believes that the investment in the Units is suitable for the undersigned based upon Subscriber’s investment objectives and financial needs, and Subscriber has adequate means for providing for his, her or its current financial needs and personal contingencies and has no need for liquidity of investment with respect to the Units.  Subscriber has such knowledge and experience in financial and business matters that he, she or it is capable of evaluating the merits and risks of an investment in the Units or Subscriber has obtained, to the extent Subscriber deems necessary, his, her or its own professional advice with respect to the risks inherent in the

 

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investment in the Units, and the suitability of the investment in the Units in light of Subscriber’s financial condition and investment needs.

 

f.                                         Investment Intent.  Subscriber has been advised that the Units are not being registered under the Securities Act or the relevant State Laws but are being offered and sold pursuant to exemptions from such laws and that the Company’s reliance upon such exemptions is predicated in part on Subscriber’s representations to it as contained herein.  Subscriber represents and warrants that the Units are being purchased for Subscriber’s own account and for Subscriber’s investment and without the intention of reselling or redistributing the same, that Subscriber has made no agreement with others regarding any of the Units and that Subscriber’s financial condition is such that it is not likely that it will be necessary to dispose of any of the Units in the foreseeable future.  Subscriber is aware that, in the view of the Securities and Exchange Commission, a purchase of the Units with an intent to resell by reason of any foreseeable specific contingency or anticipated change in market values, or any change in the condition of the Company, or in connection with a contemplated liquidation or settlement of any loan obtained for the acquisition of the Units and for which the Units were pledged as security, would represent an intent inconsistent with the representations set forth above.  Subscriber further represents and agrees that if, contrary to the foregoing stated intentions, Subscriber should later desire to dispose of or transfer any of the Units in any manner, he, she or it shall not do so without first obtaining the consent of the Company as required by the Company’s Articles and the Member Control Agreement and (i) the opinion of counsel satisfactory to the Company that such proposed disposition or transfer lawfully may be made without the registration of the Units pursuant to the Securities Act and applicable State Laws, or (ii) such registration (it being expressly understood that the Company shall not have any obligation to register such Units for such purpose).

 

g.                                      Brokers or Finders.  Subscriber has not taken any action that will cause the Company to incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Subscription Agreement.

 

h.                                      Tax Liability.  Subscriber has reviewed with Subscriber’s own tax advisors the tax consequences of this investment and the transactions contemplated by this Subscription Agreement, and has and will rely solely on such advisors and not on any statements or representations of the Company or any of its agents.  Subscriber understands that Subscriber (and not the Company) shall be responsible for Subscriber’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Subscription Agreement.

 

i.                                         Residency.  Subscriber has its principal place of business in the following State:

 

MINNESOTA        (please write in your principal place state of residency).

 

3.                                      Accredited Status.

 

SECTION 3 IS REQUIRED IN CONNECTION WITH THE EXEMPTIONS FROM THE SECURITIES ACT AND STATE LAWS BEING RELIED ON BY THE COMPANY WITH RESPECT TO THE OFFER AND SALE OF THE UNITS.  SUBJECT TO SECURITIES LAWS REQUIREMENTS, ALL FINANCIAL INFORMATION IN SECTION 3 WILL BE KEPT CONFIDENTIAL, AND WILL BE REVIEWED ONLY BY THE COMPANY AND ITS COUNSEL, EXCEPT AS DISCLOSURE MAY BE REQUIRED OR COMPELLED UNDER APPLICABLE SECURITIES LAWS.  The undersigned agrees to furnish any additional information that the Company or its counsel deems reasonably necessary in order to verify the responses set forth below.

 

Subscriber represents and warrants as follows (EACH SUBSCRIBER MUST COMPLETE. PLEASE CHECK ALL THAT APPLY — YOU MUST BE AN ACCREDITED INVESTOR TO PURCHASE THE UNITS):

 

INDIVIDUALS

 

o            (a)          Subscriber (hereinafter in this Section 3, “the undersigned”) is an individual with a net worth, or a joint net worth together with his or her spouse, in excess of $1,000,000.  (In calculating net worth, you may include equity in personal property and real estate, including your principal residence,

 

3

 

cash, short-term investments, stock and securities.  Equity in personal property and real estate should be based on the fair market value of such property minus debt secured by such property.)

 

o            (b)         The undersigned is an individual that had an individual income in excess of $200,000 in each of the prior two years and reasonably expects an income in excess of $200,000 in the current year.

 

o            (c)          The undersigned is an individual that had with his/her spouse joint income in excess of $300,000 in each of the prior two years and reasonably expects joint income in excess of $300,000 in the current year.

 

o            (d)         The undersigned is a director or executive officer or general partner (or its equivalent) of the Company.

 

ENTITIES

 

o            (e)          The undersigned, if other than an individual, is an entity all of whose equity owners meet one of the tests set forth in (a) through (d) above.  (If relying on this category alone, each equity owner must complete a separate copy of this Subscription Agreement.)

 

x          (f)            The undersigned is an entity, and is an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the Securities Act.  This representation is based on the following (check one or more, as applicable):

 

o             (i)            The undersigned (or, in the case of a trust, the undersigned trustee) is a bank or savings and loan association as defined in Sections 3(a)(2) and 3(a)(5)(A), respectively, of the Securities Act acting either in its individual or fiduciary capacity.

 

o             (ii)         The undersigned is an insurance company as defined in Section 2(13) of the Securities Act.

 

o             (iii)      The undersigned is an investment company registered under the Investment Company Act of 1940 or a business development Company as defined in Section 2(a)(48) of that Act.

 

o             (iv)     The undersigned is a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958.

 

o             (v)        The undersigned is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 and either (check one or more, as applicable):

 

o            (aa)                            the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance Company, or registered investment adviser; or

 

o            (bb)                          the employee benefit plan has total assets in excess of $5,000,000; or

 

o            (cc)                            the plan is a self-directed plan with investment decisions made solely by persons who are “Accredited Investors” as defined under the Securities Act.

 

o             (vi)     The undersigned is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

 

4

 

x      (vii)           The undersigned has total assets in excess of $5,000,000, was not formed for the specific purpose of acquiring securities of the Company and is one or more of the following (check one or more, as appropriate):

 

o            (aa)                    an organization described in Section 501(c)(3) of the Internal Revenue Code; or

 

x          (bb)                  a corporation or limited liability company; or

 

o            (cc)                    a Massachusetts or similar business trust; or

 

o            (dd)                  a partnership.

 

o        (viii)        The undersigned is a trust with total assets exceeding $5,000,000, which was not formed for the specific purpose of acquiring securities of the Company and whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the investment in the Units.

 

4.                                      Entities.

 

If Subscriber is an entity, the individual signing on behalf of such entity and the entity jointly and severally agree and certify that:

 

a.                                       if entity is accredited solely by reason of the category described in Section 3(f)(vii) or (viii) above, then the undersigned entity was not organized for the specific purpose of acquiring the Units; and

 

b.                                      this Subscription Agreement has been duly authorized by all necessary action on the part of the undersigned entity, has been duly executed by an authorized officer or representative of the undersigned entity, and each is a legal, valid, and binding obligation of the undersigned entity enforceable in accordance with its terms.

 

5.                                      Relationship to Brokerage Firms.

 

(Please answer the following questions by checking the appropriate response.)

 

a.                                       o  YES  x  NO:  Are you a director, officer, partner, branch manager, registered representative, employee, shareholder of, or similarly related to or employed by a brokerage firm?

 

b.                                      o  YES  x  NO:  Is your spouse, father, mother, father-in-law, mother-in-law, or any of your brothers, sisters, brothers-in-law, sisters-in-law or children, or any relative which you support, a director, officer, partner, branch manager, registered representative, employee, shareholder of, or similarly related to or engaged by, a brokerage firm?

 

c.                                       o  YES  x  NO:  Does Subscriber own voting securities of any brokerage firm?

 

d.                                      o  YES  x  NO:  If the undersigned is an entity, is any director, officer, partner or 5% owner of the undersigned also a director, officer, partner, branch manager, registered representative, employee, shareholder of, or similarly related to or employed by, a brokerage firm?

 

e.                                       If the answer to any of the above items is “YES”, please supply details below:

 

 

 

 

5

 

6.                                      Securities Law Exemptions.

 

Subscriber acknowledges that the offer and sale of the Units has not been registered under the Securities Act, or any state securities laws and that the Company will offer and sell the Units and the Units will be issued to Subscriber in reliance on exemptions from the registration requirements of the Securities Act and exemptions under applicable state securities laws and in reliance on the representations, warranties and agreements made by Subscriber herein.

 

7.                                      Restrictive Legend.

 

In addition to the restrictions to transfer on the Units contained in the Articles and Member Control Agreement, and any corresponding restrictive legends required thereunder, Subscriber also agrees that the Company shall place a restrictive legend on any statement of interest prepared by the Company with respect to the Units containing substantially the following language:

 

The securities represented by this statement have not been registered under the Securities Act of 1933, as amended (the “Act”) or under applicable state securities laws and are also subject to a Subscription and Investment Representation Agreement.  The securities may not be sold, transferred or pledged in the absence of such registration, unless pursuant to an exemption from the registration requirements of the Act and applicable state securities laws.  The Company reserves the right to require an opinion of counsel satisfactory to it before effecting any transfer of the securities.

 

8.                                      Miscellaneous.

 

a.                                       Survival of Representations and Warranties; Indemnification.  Subscriber understands the meaning and legal consequences of the agreements, representations and warranties contained herein, agrees that such agreements, representations and warranties shall survive and remain in full force and effect after the execution hereof and payment for the Units, and further agrees to indemnify and hold harmless the Company and each current and future employee, agent and member of the Company from and against any and all loss, damage or liability due to, or arising out of, a breach of any agreement, representation or warranty of the undersigned contained herein.

 

b.                                       No Assignment or Revocation; Binding Effect.  Neither this Subscription Agreement, nor any interest herein, shall be assignable by Subscriber without prior written consent of the Company.  Subscriber hereby acknowledges and agrees that Subscriber is not entitled to cancel, terminate or revoke this Subscription Agreement and that it shall survive the death, incapacity, dissolution or bankruptcy of Subscriber.  The provisions of this Subscription Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective heirs, legal representatives, successors and assigns.

 

c.                                       Choice of Law.  This Subscription Agreement shall be construed and interpreted in accordance with Minnesota law, without regard to its choice of law or conflicts of law provisions.

 

d.                                       Issue Date of Units.  Upon acceptance of this Subscription Agreement by the Company, the issuance of the Units subscribed for hereunder shall be the date of acceptance and full tender of the purchase price by Subscriber.

 

9.                                      Representations and Warranties of the Company.

 

In consideration of Subscriber’s agreement to purchase the Units, the Company represents and warrants to Subscriber as follows:

 

a.                                       Existence.  The Company is a duly organized and validly existing limited liability company under the laws of the State of Minnesota.

 

b.                                       Good Standing.  The Company is in good standing under the laws of the State of Minnesota and there are no proceedings or actions pending to limit or impair any of its powers, rights, privileges, or to dissolve it.

 

c.                                       Due Authorization and Approval.  The execution and delivery of this Subscription Agreement and the consummation of the transactions contemplated hereby have been duly authorized by proper corporate action of the Company.

 

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d.                                       Units.  Upon receipt of full payment for the Units, the Units shall be duly authorized, fully-paid, validly issued and non-assessable Class B Units of the Company.

 

10.                               Additional Agreements.

 

a.                                       Guaranty of Natural Gas Pipeline Company Indebtedness.  As a material part of the consideration for the Company’s acceptance of this Subscription Agreement, and in order to induce the Company to sell the Units to Subscriber hereunder, Subscriber agrees to guarantee (or shall cause its affiliates to guarantee) the repayment and performance of up to $1,000,000 of indebtedness that a lender or lenders may provide to Agrinatural Gas, LLC, the pipeline company that is constructing a natural gas pipeline from an interconnection with the Northern Border interstate natural gas transmission line approximately seven miles southwest of Jeffers, Minnesota and terminating within the city limits of Heron Lake, Minnesota, and which pipeline will provide natural gas to the Company’s ethanol facility.  As a condition to the financial guaranty, the indebtedness shall be secured indebtedness with a first lien on the assets of Agrinatural Gas, LLC.  The financial guaranty provided by Subscriber or its affiliates shall be on commercially reasonable terms acceptable to the lender, Subscriber or its affiliates, and Agrinatural Gas, LLC, which acceptance shall not be unreasonably withheld by Subscriber or its affiliates, provided that Subscriber agrees that, notwithstanding any default by Agrinatural Gas, LLC under the terms of the loan or any other event which triggers Subscriber’s or its affiliate’s obligations under the guaranty (except for the bankruptcy of Agrinatural Gas, LLC), or any demand or action by lender against Subscriber or its affiliates on the guaranty, or the payment by Subscriber or its affiliate to the lender on the guaranty, Subscriber or its affiliates shall not accelerate the indebtedness and/or demand payment of the indebtedness or on the note, and instead shall carry the indebtedness and the note according to its original repayment terms which shall not be less than 6-months of interest only payments during the construction period followed by a 3-year term loan with equal quarterly payments of interest and principal.  In consideration of providing the financial guaranty up-front, Company agrees that the terms of the additional unit offer to existing unit holders will require unit holders who subscribe for additional units to also cover their pro rata share of the financial guaranty, pursuant to the procedures and terms described in paragraph 10.c. below, by reimbursing Subscriber or its affiliate and taking an assignment of its proportionate rights under the financial guaranty or by other method reasonably acceptable to the Company and Subscriber.  The aggregate amount of the financial guaranty to be shared in by unit holders who subscribe in the additional unit offer shall be in the same proportion as the amount of the capital raised in the additional unit offer bears to the total amount of capital raised from Subscriber’s investment in the Units hereunder and the additional unit offer.  For sake of clarity and the avoidance of doubt, if $1.50 million of additional capital is raised on the additional unit offer, then the proportion would be 1.50 / (3.50 + 1.50) or 30%, and the unit holders who subscribed in the offering would share in the aggregate in 30% of the Subscriber’s or its affiliate’s responsibility and obligations and rights under the financial guaranty.  If $3.50 million of additional capital is raised, then the unit holders who subscribed would share in the aggregate in 50% of the financial guaranty.

 

b.                                       Board Appointment Rights.  As a result of the purchase of Units under this Subscription Agreement, Subscriber will have the right to appoint four Governors to the Company’s Board of Governors under the Member Control Agreement, before giving effect to any additional units issued pursuant to the additional unit offer contemplated by paragraph 10.c. below.  Subscriber agrees that, notwithstanding such right, Subscriber shall only appoint three Governors to the Board until the next annual or special member meeting of the Company, which meeting shall be held by August 31, 2011 or as soon as reasonably practicable after the SEC clears the proxy materials for such meeting.  Further, Subscriber agrees that all appointed Governors shall meet and perform the Governor qualifications and duties and obligations under and in accordance with the Member Control Agreement.  The Company agrees that the number of Governors serving on the Board immediately following the next annual or special member meeting shall be nine (9) Governors including appointed and elected Governors.  The Company agrees to submit an amendment to the Member Control Agreement for approval at such next annual or special member meeting to establish the number of Governors including appointed and elected Governors serving on the Board at nine (9), provided such amendment shall maintain a Board appointment right of one Governor for every 9% of units held.  Notwithstanding the foregoing appointment right or any provision in the Member Control Agreement to the contrary, Subscriber understands and agrees that Subscriber shall not be entitled to appoint a majority of the Governors to the 9-person Board unless Subscriber owns a majority of the units outstanding, and specifically Subscriber agrees that it shall not be entitled to appoint five (5) Governors if it holds 45% or more of the units outstanding (but less than a majority), provided the foregoing is subject to the terms and conditions of any subsequent subscription agreement to purchase units from the Company that the Company and Subscriber may enter into.

 

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c.                                       Consent to Additional Unit Offer.  Subscriber hereby consents to and approves (and shall cause any Governors appointed by Subscriber to consent to and approve) the Company’s offer and sale of up to 16,500,000 capital units to its existing unit holders only (other than Subscriber) at a price of $0.50 per unit, provided that the offer and sale to Minnesota-resident unit holders must be completed by the earlier of 45 days following the date of the next member meeting or October 31, 2011, and provided further that no unit holder may purchase more than 77.73% of the units currently held by the unit holder in the additional unit offer, subject to customary and reasonable rounding procedures to whole lots in increments of 25.  Subscriber and Company agree that the terms of the offer and sale of the additional units shall require unit holders who subscribe for units to also cover their pro rata share of the financial guaranty contemplated by paragraph 10.a., as follows:

 

(1) In order to subscribe for units in the additional unit offer, unit holders will also have to write a separate second check into an escrow account to cover their pro rata share of the financial guaranty if called;

 

(2) The pro rata share of subscribers in the financial guaranty will be calculated based on the amount of additional capital raised in the additional unit offer divided by the total amount of the Subscriber’s subscription hereunder + the amount of the additional capital raised, as further provided in paragraph 10.a. above;

 

(3) The Company will require a second check equal to 25% of the subscription amount to be deposited into escrow to cover the subscriber’s pro rata share of the financial guaranty if called; the escrow account will be settled up at the end of the additional unit offer once the actual aggregate share of the financial guaranty is determined, and any excess escrow funds will be returned promptly to the subscribers;

 

(4) Once the financial guaranty is released, the escrowed funds will be returned promptly to subscribers with interest; if the financial guaranty is reduced by its terms, a proportionate amount of the escrow funds will be returned promptly to subscribers;

 

(5) The Company will cause Agrinatural Gas, LLC to contribute money from time to time to the escrow account to enable the escrowed funds to be paid interest at the rate of 6% per annum.  Interest shall be paid to subscribers from time to time as provided by the terms of the escrow.

 

For the sake of clarity and the avoidance of doubt, (1) if a unit holder held 11,000 units, such unit holder would have the right to purchase 8,550 additional capital units in the offer and sale of the additional units, (2) in order to subscribe for units, such unit holder would have to write a separate check equal to 25% of its subscription amount for deposit into the financial guaranty escrow account for ownership in their pro rata share of the financial guaranty, and (3) Subscriber agrees that Subscriber shall have no right to participate in any such offer of additional units.

 

d.                                       Company Assurance.  Company acknowledges that it initiated contact with Subscriber related to this subscription.  As of the date hereof, the Company represents and warrants to Subscriber that (i) it has no contractual obligations, relationships, or understandings that will in any way impact or interfere with Subscriber’s ability to take and quietly enjoy title to the Units and (ii) neither the execution and delivery of this Subscription Agreement nor the consummation of the sale of Units hereunder by the Company will conflict with or result in a breach of any agreement to which the Company is a party or by which it is bound.  The Company agrees to indemnify and hold harmless Subscriber against any third party claims or actions against Subscriber that arise as a result of the Subscriber’s purchase of Units or execution of this Subscription Agreement.  The indemnity afforded under the foregoing shall exclude indemnity against any indirect, consequential, special, exemplary or punitive damages of any nature whatsoever that Subscriber may suffer as a result of any such claim or action brought by a third party, provided reasonable legal fees and related costs and expenses shall not be considered consequential damages.  Further, this indemnity shall not apply to any claim or action arising under or related to (1) the financial guaranty contemplated hereunder or any agreement, contractual obligation, relationship or understanding to which Subscriber or its affiliates is a party or by which it or its affiliates is bound (except this Subscription Agreement) or (2) any act or failure to act of Subscriber or its affiliates, other than the subscribing for the Units hereunder.

 

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

 

8

 

SIGNATURE

 

 

	
/s/   Ron Fagen
    	
 
    	
 
    
	
Subscriber   (Signature)
    	
 
    	
Subscriber   (Signature, if more than one investor)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Project   Viking, L.L.C.
    	
 
    	
 
    
	
Print   Name of Subscriber
    	
 
    	
Print   Name of Subscriber (If more than one investor)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Ron   Fagen, Managing Member
    	
 
    	
 
    
	
Name   and Title of Signatory (for entities)
    	
 
    	
 
    

 

Address:

 

 

501 W. Hwy 212

 

 

P.O. Box 159

 

 

Granite Falls, MN 56241

 

NOTE:   Please be certain to complete the Subscriber Information Page attached hereto and, if Subscriber is an entity, the attached Certificate of Signatory.

 

ACCEPTANCE OF SUBSCRIPTION

 

The Company hereby accepts the subscription evidenced by this Subscription Agreement including Investment Representations as of May 19, 2011.

 

 

	
 
    	
HERON   LAKE BIOENERGY, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Robert J. Ferguson
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Its: 
    	
Chief   Executive Officer
    

 

9

 

SUBSCRIBER INFORMATION

 

[omitted and available to the Securities and Exchange Commission upon request]

 

CERTIFICATE OF SIGNATORY

 

(To be completed if Units are being subscribed for by an Entity)

 

I, Ron Fagen, am the Managing Member of Project Viking, L.L.C. (the “Entity”).

 

I certify that I am empowered and duly authorized by the Entity to execute and carry out the terms of this Subscription Agreement and to purchase and hold the Units pursuant to the Company’s Articles and the Member Control Agreement, and to act on behalf of the Entity with respect to any actions or consents of the Entity required thereunder or this Subscription Agreement.  I further certify that this Subscription Agreement and such actions or consents been duly and validly executed on behalf of the Entity and each constitutes a legal and binding obligation of the Entity.

 

IN WITNESS WHEREOF, I have set my hand hereto this 19th day of May, 2011.

 

 

	
 
    	
/s/   Ron Fagen
    
	
 
    	
(Signature)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Managing   Member
    
	
 
    	
(Title)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Ron   Fagen
    
	
 
    	
(Please   Print Name)
    

 

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