Document:

Unassociated Document

    INGERSOLL-RAND
      COMPANY LIMITED

    INCENTIVE
      STOCK PLAN OF 2007

    

    1.  Purpose
      of the Plan

     

    The
      purpose of the Plan is to aid the Company and its Affiliates in recruiting
      and
      retaining key employees and directors and to motivate such employees and
      directors to exert their best efforts on behalf of the Company and its
      Affiliates by providing incentives through the granting of Awards. The Company
      expects that it will benefit from the added interest which such key employees
      and directors will have in the welfare of the Company as a result of their
      proprietary interest in the Company’s success.

     

    2.  Definitions

     

    The
      following capitalized terms used in the Plan have the respective meanings set
      forth in this Section:

     

    	(a)  	
            Act:
              The Securities Exchange Act of 1934, as amended, or any successor
              thereto.

          

     

    	(b)  	
            Affiliate:
              With respect to the Company, any Person or entity directly or indirectly
              controlling, controlled by, or under common control with, the Company
              or
              any other Person or entity designated by the Board in which the Company
              or
              an Affiliate has an interest.

          

     

    	(c)  	
            Associate:
              With respect to a specified Person, means (i) any corporation,
              partnership, or other organization of which such specified Person is
              an
              officer or partner; (ii) any trust or other estate in which such specified
              Person has a substantial beneficial interest or as to which such specified
              Person serves as trustee or in a similar fiduciary capacity; (iii)
              any
              relative or spouse of such specified Person, or any relative of such
              spouse who has the same home as such specified Person, or who is a
              director or officer of the Company or any of its Subsidiaries; and
              (iv)
              any Person who is a director, officer, or partner of such specified
              Person
              or of any corporation (other than the Company or any wholly-owned
              Subsidiary), partnership or other entity which is an Affiliate of such
              specified person.

          

     

    	(d)  	
            Award:
              An Option, Stock Appreciation Right or Other Stock-Based Award granted
              pursuant to the Plan.

          

    	 	 

    	(e)  
            	
            Beneficial
              Owner:
              A
              “beneficial owner”, as such term is defined in Rule 13d-3 under the Act
              (or any successor rule thereto) provided,
              however,
              that any individual, corporation, partnership, group, association or
              other
              Person or entity which has the right to acquire any of the Company’s
              outstanding securities entitled to vote generally in election of directors
              at any time in the future, whether such right is contingent or absolute,
              pursuant to any agreement, arrangement or understanding or upon exercise
              of conversion rights, warrants or options, or otherwise, shall be deemed
              the Beneficial Owner of such
              securities. 

          

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    	(f)  	
            Board:
              The Board of Directors of the
              Company. 

          

    	 	 

    	(g)  	
            Change
              in Control:
              The date (i) any individual, corporation, partnership, group, association
              or other person or entity, together with its Affiliates and Associates
              (other than a trustee or other fiduciary holding securities under an
              employee benefit plan of the Company or Ingersoll-Rand Company, a New
              Jersey corporation), is or becomes the Beneficial Owner of securities
              of
              the Company representing 30% or more of the combined voting power of
              the
              Company’s Voting Securities; (ii) the Continuing Directors fail to
              constitute a majority of the members of the Board; (iii) of consummation
              of any transaction or series of transactions under which the Company
              is
              merged or consolidated with any other company which is not an Affiliate;
              (iv) of any sale, lease, exchange or other transfer, in one transaction
              or
              a series of related transactions, of all, or substantially all, of
              the
              assets of the Company, other than any sale, lease, exchange or other
              transfer to any Person or entity where the Company owns, directly or
              indirectly, at least 80% of the combined voting power of the Voting
              Securities of such Person or entity or its parent corporation after
              any
              such transfer; or (v) any other event that the Continuing Directors
              determine to be a Change in Control; provided,
              however,
              that in the case of a transaction described in (i), (iii) or (v), above,
              there shall not be a Change in Control if the shareholders of the Company
              immediately prior to any such transaction own (or continue to own by
              remaining outstanding or by being converted into Voting Securities
              of the
              surviving entity or parent entity) more than 50% of the combined voting
              power of the Voting Securities of the Company, the surviving entity
              or any
              parent of either immediately following such transaction, in substantially
              the same proportion to each other as prior to such
              transaction. 

          

    	 	 

    	(h)  	
            Code:
              The Internal Revenue Code of 1986, as amended, or any successor
              thereto.

          

     

    	(i)  	
            Committee:
              The Compensation Committee of the Board (or a subcommittee thereof),
              or
              such other committee of the Board (including, without limitation, the
              full
              Board) to which the Board has delegated power to act under or pursuant
              to
              the provisions of the Plan.

          

     

    	(j)  	
            Company:
              Ingersoll-Rand Company Limited, a Bermuda
              company.

          

     

    	(k)  	
            Continuing
              Directors:
              A
              director who either was a member of the Board on December 1, 2006 or
              who
              became a member of the Board subsequent to such date and whose election,
              or nomination for election by the Company’s shareholders, was Duly
              Approved by the Continuing Directors on the Board at the time of such
              nomination or election, either by a specific vote or by approval of
              the
              proxy statement issued by the Company on behalf of the Board in which
              such
              person is named as nominee for director, without due objection to such
              nomination, but excluding, for this purpose, any such individual whose
              initial assumption of office occurs as a result of an actual or threatened
              election contest with respect to the election or removal of directors
              or
              other actual or threatened solicitation of proxies or consents by or
              on
              behalf of a person or entity other than the
              Board.

          

     

    
      
         

      

      
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    	(l)  	
            Duly
              Approved by the Continuing Directors:
              An action approved by the vote of at least two-thirds of the Continuing
              Directors then on the Board.

          

     

    	(m)  	
            Effective
              Date:
              June 1, 2007.

          

     

    	(n)  	
            Fair
              Market Value:
              On a given date, (i) if there should be a public market for the
              Shares on such date, the average between the high and low price of
              the
              Shares as reported on such date on the Composite Tape of the principal
              national securities exchange on which such Shares are listed or admitted
              to trading, or, if the Shares are not listed or admitted on any national
              securities exchange, the arithmetic mean of the per Share closing bid
              price and per Share closing asked price on such date as quoted on the
              National Association of Securities Dealers Automated Quotation System
              (or
              such market in which such prices are regularly quoted)(the “NASDAQ”), or,
              if no sale of Shares shall have been reported on the Composite Tape
              of any
              national securities exchange or quoted on the NASDAQ on such date,
              then
              the immediately preceding date on which sales of the Shares have been
              so
              reported or quoted shall be used, and (ii) if there should not be a
              public market for the Shares on such date, the Fair Market Value shall
              be
              the value established by the Committee in good
              faith.

          

     

    	(o)  	
            Full
              Value Awards:
              Awards of Shares under the Plan (including any future grants of restricted
              stock or phantom stock) that are not awards of Options, Stock Appreciation
              Rights or other similar awards.

          

     

    	(p)  	
            ISO:
              An Option that is also an incentive stock option granted pursuant to
              Section 6(d) of the Plan.

          

     

    	(q)  	
            Option:
              A
              stock option granted pursuant to Section 6 of the
              Plan.

          

     

    	(r)  	
            Option
              Price:
              The purchase price per Share of an Option, as determined pursuant to
              Section 6(a) of the Plan.

          

     

    	(s)  	
            Other
              Stock-Based Awards:
              Awards granted pursuant to Section 8 of the
              Plan.

          

     

    	(t)  	
            Participant:
              An employee or director who is selected by the Committee to participate
              in
              the Plan.

          

     

    	(u)  	
            Performance-Based
              Awards:
              Certain Other Stock-Based Awards granted pursuant to Section 8(b) of
              the
              Plan.

          

     

    
      
         

      

      
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    	(v)  	
            Person:
              A
              “person”, as such term is used for purposes of Section 13(d) or 14(d) of
              the Act (or any successor section thereto), including any Affiliate
              or
              Associate of the Company.

          

     

    	(w)  	
            Plan:
              The Ingersoll-Rand Company Limited Incentive Stock Plan of
              2007.

          

     

    	(x)  	
            Shares:
              Class A common shares of the Company.

          

     

    	(y)  	
            Stock
              Appreciation Right:
              A
              stock appreciation right granted pursuant to Section 7 of the
              Plan.

          

     

    	(z)  	
            Subsidiary:
              A
              subsidiary corporation, as defined in Section 424(f) of the Code (or
              any
              successor section thereto).

          

     

    	(aa)  	
            Voting
              Securities:
              The outstanding securities entitled to vote generally in election of
              directors.

          

     

    3.  Shares
      Subject to the Plan

     

    Subject
      to Section 9, the total number of Shares which may be issued under the Plan
      is
      14,000,000 and the maximum number of Shares for which ISOs may be granted is
      20%
      of the total number of Shares which may be issued under the Plan. Of the total
      available Shares which may be issued under the Plan, not more than 25% shall
      be
      in the form of Full Value Awards. The Shares may consist, in whole or in part,
      of unissued Shares or treasury Shares. The issuance of Shares upon the exercise
      of an Award or in consideration of the cancellation or termination of an Award
      shall reduce the total number of Shares available under the Plan, as applicable.
      Shares which are subject to Awards that terminate or lapse without the payment
      of consideration may be granted again under the Plan.

    
      
         

      

      
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    4.  Administration

     

    The
      Plan
      shall be administered by the Committee, which may delegate its duties and powers
      in whole or in part to any subcommittee thereof consisting solely of at least
      two individuals who are intended to qualify as “Non-Employee Directors” within
      the meaning of Rule 16b-3 under the Act (or any successor rule thereto),
“independent directors” within the meaning of The New York Stock Exchange’s
      listed company rules and “outside directors” within the meaning of Section
      162(m) of the Code (or any successor section thereto). Additionally, the
      Committee may delegate the authority to grant Awards under the Plan to any
      employee or group of employees of the Company or an Affiliate; provided,
      however,
      that
      such delegation and grants are consistent with applicable law and guidelines
      established by the Committee from time to time. Awards may, in the discretion
      of
      the Committee, be made under the Plan in assumption of, or in substitution
      for,
      outstanding awards previously granted by a company acquired by the Company
      or
      with which the Company and/or any of its Affiliates combines. The number of
      Shares underlying such substitute awards shall be counted against the aggregate
      number of Shares available for Awards under the Plan. The Committee is
      authorized to interpret the Plan, to establish, amend and rescind any rules
      and
      regulations relating to the Plan, and to make any other determinations that
      it
      deems necessary or desirable for the administration of the Plan. The Committee
      may correct any defect or supply any omission or reconcile any inconsistency
      in
      the Plan in the manner and to the extent the Committee deems necessary or
      desirable. Any decision of the Committee in the interpretation and
      administration of the Plan, as described herein, shall lie within its sole
      and
      absolute discretion and shall be final, conclusive and binding on all parties
      concerned (including, but not limited to, Participants and their beneficiaries
      or successors). The Committee shall have the full power and authority to
      establish the terms and conditions of any Award consistent with the provisions
      of the Plan and to waive any such terms and conditions at any time (including,
      without limitation, accelerating or waiving any vesting conditions). The
      Committee shall require payment of any amount it may determine to be necessary
      for federal, state, local or other taxes as a result of the exercise, grant
      or
      vesting of an Award. The Committee shall not be required to issue any Award
      under the Plan until such obligations described in the previous sentence have
      been satisfied in full. In no event shall the Committee cancel any outstanding
      Option or Stock Appreciation Right for the purpose of reissuing such Option
      or
      Stock Appreciation Right to the Participant at a lower exercise price nor shall
      the Committee reduce the exercise price of an outstanding Option or Stock
      Appreciation Right.

     

    5.  Limitations

     

    No
      Award
      may be granted under the Plan after the tenth anniversary of the Effective
      Date,
      but Awards theretofore granted may extend beyond that date.

     

    6.  Terms
      and Conditions of Options

     

    Options
      granted under the Plan shall be, as determined by the Committee, non-qualified
      or incentive stock options for United States federal income tax purposes, as
      evidenced by the related Award letters, and shall be subject to the foregoing
      and the following terms and conditions and to such other terms and conditions,
      not inconsistent therewith, as the Committee shall determine:

    
      
         

      

      
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    	(a)  	
            Option
              Price.
              The Option Price per Share shall be determined by the Committee, but
              shall
              not be less than 100% of the Fair Market Value of a Share on the date
              an
              Option is granted (other than as described in Section
              4).

          

     

    	(b)  	
            Exercisability.
              Options granted under the Plan shall be exercisable at such time and
              upon
              such terms and conditions as may be determined by the Committee, but
              in no
              event shall an Option be exercisable more than ten years after the
              date it
              is granted. 

          

     

    	(c)  	
            Exercise
              of Options.
              Except as otherwise provided in the Plan or in an Award letter, an
              Option
              may be exercised for all, or from time to time any part, of the Shares
              for
              which it is then exercisable. For purposes of Section 6 of the Plan,
              the
              exercise date of an Option shall be the later of the date a notice
              of
              exercise is received by the Company or its designee or administrative
              agent in the form and manner satisfactory to the Company and, if
              applicable, the date payment is received by the Company or its designee
              or
              administrative agent in accordance with the following sentence. The
              purchase price for the Shares as to which an Option is exercised shall
              be
              paid to the Company as designated by the Committee, pursuant to one
              or
              more of the following methods: (i) in cash or its equivalent (e.g.,
              by
              personal check) or (ii) if there is a public market for the Shares
              underlying the Options at such time, through the delivery of irrevocable
              instructions to a broker to sell Shares obtained upon the exercise
              of the
              Option and to deliver promptly to the Company an amount out of the
              proceeds of such sale equal to the aggregate Option Price for the Shares
              being purchased. 

          

     

    	(d)  	
            ISOs.
              The Committee may grant Options under the Plan that are intended to
              be
              ISOs. Such ISOs shall comply with the requirements of Section 422 of
              the
              Code (or any successor section thereto). No ISO may be granted to any
              Participant who at the time of such grant, owns more than ten percent
              of
              the total combined voting power of all classes of stock of the Company
              or
              of any Subsidiary, unless (i) the Option Price for such ISO is at
              least 110% of the Fair Market Value of a Share on the date the ISO
              is
              granted and (ii) the date on which such ISO terminates is a date not
              later than the day preceding the fifth anniversary of the date on which
              the ISO is granted. Any Participant who disposes of Shares acquired
              upon
              the exercise of an ISO either (A) within two years after the date of
              grant of such ISO or (B) within one year after the transfer of such
              Shares to the Participant, shall notify the Company of such disposition
              and of the amount realized upon such disposition. All Options granted
              under the Plan are intended to be nonqualified stock options, unless
              the
              applicable Award letter expressly states that the Option is intended
              to be
              an ISO. If an Option is intended to be an ISO, and if for any reason
              such
              Option (or portion thereof) shall not qualify as an ISO, then, to the
              extent of such nonqualification, such Option (or portion thereof) shall
              be
              regarded as a nonqualified stock option granted under the Plan;
              provided
              that such Option (or portion thereof) otherwise complies with the Plan’s
              requirements relating to nonqualified stock options. In no event shall
              any
              member of the Committee, the Company or any of its Affiliates (or their
              respective employees, officers or directors) have any liability to
              any
              Participant (or any other Person) due to the failure of an Option to
              qualify for any reason as an ISO.

          

     

    
      
         

      

      
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    	(e)  	
            Rights
              with Respect to Shares.
              No Participant shall have any rights to dividends or other rights of
              a
              shareholder with respect to Shares subject to an Option until the
              Participant has given written notice of exercise of the Option, paid
              in
              full for such Shares and, if applicable, has satisfied any other
              conditions imposed by the Committee pursuant to the
              Plan.

          

     

    7.  Terms
      and Conditions of Stock Appreciation Rights

     

    	(a)  	
            Grants.
              The Committee may grant (i) a Stock Appreciation Right independent of
              an Option or (ii) a Stock Appreciation Right in connection with an
              Option, or a portion thereof. A Stock Appreciation Right granted pursuant
              to clause (ii) of the preceding sentence (A) may only be granted
              at the time the related Option is granted, (B) shall cover the same
              number of Shares covered by an Option (or such lesser number of Shares
              as
              the Committee may determine) and (C) shall be subject to the same
              terms and conditions as such Option except for such additional limitations
              as are contemplated by this Section 7 (or such additional limitations
              as
              may be included in an Award letter).

          

     

    	(b)  	
            Terms.
              The exercise price per Share of a Stock Appreciation Right shall be
              an
              amount determined by the Committee but in no event shall such amount
              be
              less than the Fair Market Value of a Share on the date the Stock
              Appreciation Right is granted (other than as described in Section 4);
              provided,
              however,
              that in the case of a Stock Appreciation Right granted in conjunction
              with
              an Option, or a portion thereof, the exercise price may not be less
              than
              the Option Price of the related Option. Each Stock Appreciation Right
              granted independent of an Option shall entitle a Participant upon exercise
              to a number of Shares equal to (1) an amount that is (i) the excess
              of (A) the opening price of the Shares (as reported on the Composite
              Tape of the principal national securities exchange on which such shares
              are listed or admitted to trading) on the exercise date of one Share
              (the
              “Opening Price”) over (B) the exercise price per Share, multiplied by
              (ii) the number of Shares covered by the Stock Appreciation Right,
              divided by (2) the Opening Price. Each Stock Appreciation Right granted
              in
              conjunction with an Option, or a portion thereof, shall entitle a
              Participant to surrender to the Company the unexercised Option, or any
              portion thereof, and to receive from the Company in exchange therefore
              a
              number of Shares equal to (1) an amount that is (i) the excess of
              (A) the Opening Price over (B) the Option Price per Share,
              multiplied by (ii) the number of Shares covered by the Option, or
              portion thereof, which is surrendered, divided by (2) the Opening Price.
              Payment shall be made in Shares. Stock Appreciation Rights may be
              exercised from time to time upon actual receipt by the Company or its
              designee or administrative agent of written notice of exercise in the
              form
              and manner satisfactory to the Company stating the number of Shares
              with
              respect to which the Stock Appreciation Right is being exercised. The
              date
              a notice of exercise is received by the Company shall be the exercise
              date. No fractional Shares will be issued in payment for Stock
              Appreciation Rights, but instead the number of Shares will be rounded
              downward to the next whole Share. 

          

     

    
      
         

      

      
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    	(c)  	
            Limitations.
              The Committee may impose, in its discretion, such conditions regarding
              the
              exercisability of Stock Appreciation Rights as it may deem fit, but
              in no
              event shall a Stock Appreciation Right be exercisable more than ten
              years
              after the date it is granted.

          

     

    8.  Other
      Stock-Based Awards

     

    	(a)  	
            Generally.
              The Committee, in its sole discretion, may grant or sell Awards of
              Shares
              (including (i) Awards of Shares in lieu of any incentive or variable
              compensation to which a Participant is entitled to from the Company
              or its
              Subsidiaries and (ii) Awards of Shares granted to non-employee directors
              as all or a part of their retainer or other fees for services), Awards
              of
              restricted Shares and Awards that are valued in whole or in part by
              reference to, or are otherwise based on the Fair Market Value of, Shares
              (“Other Stock-Based Awards”). Such Other Stock-Based Awards shall be in
              such form, and dependent on such conditions, as the Committee shall
              determine, including, without limitation, the right to receive, or
              vest
              with respect to, one or more Shares (or the equivalent cash value of
              such
              Shares) upon the completion of a specified period of service, the
              occurrence of an event and/or the attainment of performance objectives.
              Other Stock-Based Awards may be granted alone or in addition to any
              other
              Awards granted under the Plan. Subject to the provisions of the Plan,
              the
              Committee shall determine to whom and when Other Stock-Based Awards
              will
              be made, the number of Shares to be awarded under (or otherwise related
              to) such Other Stock-Based Awards, and all other terms and conditions
              of
              such Awards (including, without limitation, the vesting provisions
              thereof
              and provisions ensuring that all Shares so awarded and issued shall
              be
              fully paid and non-assessable).

          

     

    	(b)  	
            Performance-Based
              Awards.
              Notwithstanding anything to the contrary herein, certain Other Stock-Based
              Awards, Options and Stock Appreciation Rights granted under this
              Section 8 may be granted in a manner which is intended to be
              deductible by the Company under Section 162(m) of the Code (or any
              successor section thereto) (“Performance-Based Awards”). A Participant’s
              Performance-Based Award shall be determined based on the attainment
              of
              written performance goals approved by the Committee for a performance
              period established by the Committee (i) while the outcome for that
              performance period is substantially uncertain and (ii) no more than
              90 days after the commencement of the performance period to which the
              performance goal relates or, if less, the number of days which is equal
              to
              25 percent of the relevant performance period. The performance goals,
              which must be objective, shall be based upon one or more of the following
              criteria: (i) consolidated earnings before or after taxes (including
              earnings before interest, taxes, depreciation and amortization); (ii)
              net
              income; (iii) operating income; (iv) earnings per Share; (v) book value
              per Share; (vi) return on shareholders’ equity; (vii) expense management;
              (viii) return on invested capital; (ix) improvements in capital structure;
              (x) profitability of an identifiable business unit or product; (xi)
              maintenance or improvement of profit margins or revenue; (xii) stock
              price; (xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi)
              available cash flow; (xvii) working capital; (xviii) return on assets;
              (xix) total shareholder return, (xx) productivity ratios, and (xxi)
              economic value added. In addition, to the degree consistent with
              Section 162(m) of the Code (or any successor section thereto), the
              performance goals may be calculated without regard to extraordinary
              items.
              The maximum amount of a Performance-Based Award during a calendar year
              to
              any Participant shall be: (x) with respect to Performance-Based Awards
              that are Options or Stock Appreciation Rights, 750,000 Shares and (y)
              with
              respect to Performance-Based Awards that are not Options or Stock
              Appreciation Rights, $10,000,000 on the date of the award. No
              Performance-Based Awards will be paid for a performance period until
              certification is made by the Committee that the criteria described
              in this
              Section 8(b) has been attained. The amount of the Performance-Based
              Award
              actually paid to a given Participant may be less than (but not greater
              than) the amount determined by the applicable performance goal formula,
              at
              the discretion of the Committee. The amount of the Performance-Based
              Award
              determined by the Committee for a performance period shall be paid
              to the
              Participant at such time as determined by the Committee in its sole
              discretion after the end of such performance period; provided,
              however,
              that a Participant may, if and to the extent permitted by the Committee
              and consistent with the provisions of Sections 162(m) and 409A of the
              Code, elect to defer payment of a Performance-Based
              Award.

          

     

    
      
         

      

      
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    9.  Adjustments
      Upon Certain Events

     

    Notwithstanding
      any other provisions in the Plan to the contrary (except for Section 17), the
      following provisions shall apply to all Awards granted under the
      Plan:

     

    	(a)  	
            Generally.
              In the event of any change in the outstanding Shares after the Effective
              Date by reason of any reorganization, recapitalization, merger,
              consolidation, spin-off, combination, combination or transaction or
              exchange of Shares or other corporate exchange, or any distribution
              to
              shareholders of Shares other than regular cash dividends or any
              transaction similar to the foregoing, the Committee in its sole discretion
              and without liability to any person shall make such substitution or
              adjustment, if any, as it deems to be equitable (subject to Section
              17),
              as to (i) the number or kind of Shares or other securities issued or
              reserved for issuance pursuant to the Plan or pursuant to outstanding
              Awards, (ii) the maximum number of Shares for which Options or Stock
              Appreciation Rights may be granted during a calendar year to any
              Participant (iii) the maximum amount of a Performance-Based Award that
              may
              be granted during a calendar year to any Participant, (iv) the Option
              Price or exercise price of any stock appreciation right and/or (v)
              any
              other affected terms of such Awards. In the event of any change in
              the
              outstanding Shares after the Effective Date by reason of any stock
              split
              (forward or reverse) or any stock dividend, all adjustments described
              in
              the preceding sentence shall occur automatically in accordance with
              the
              ratio of the stock split or stock dividend, unless otherwise determined
              by
              the Committee.

          

     

    
      
         

      

      
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      	(b)  	
              Change
                in Control.
                The
                provisions of this Section 9(b) shall apply in the event of a Change
                in Control, unless otherwise determined by the Committee in connection
                with the grant of an Award as reflected in the applicable Award letter.
                

            

    

     

    (i) All
      outstanding Options and Stock Appreciation Rights shall become immediately
      vested and exercisable; 

     
      

    (ii) All
      Other Stock-Based Awards shall become immediately vested and payable; and

     
      

    (iii) The
      performance period applicable to Performance-Based Awards shall lapse and the
      performance goals associated with such awards shall be deemed to have been
      met
      at their target level.

    

    Notwithstanding
      the foregoing, the Committee may (subject to Section 17), in its sole
      discretion, but shall not be obligated to, (A) cancel such Awards for fair
      value
      (as determined in the sole discretion of the Committee) which, in the case
      of
      Options and Stock Appreciation Rights, shall equal the excess, if any, of value
      of the consideration to be paid in the Change in Control transaction to holders
      of the same number of Shares subject to such Options or Stock Appreciation
      Rights (or, if no consideration is paid in any such transaction, the Fair Market
      Value of the Shares subject to such Options or Stock Appreciation Rights) over
      the aggregate exercise price of such Options or Stock Appreciation Rights,
      (B)
      provide for the issuance of substitute awards that will substantially preserve
      the otherwise applicable terms of any affected Awards previously granted
      hereunder as determined by the Committee in its sole discretion or (C) provide
      that for a period of at least 15 days prior to the Change in Control, such
      Options and Stock Appreciation Rights shall be exercisable as to all shares
      subject thereto and that upon the occurrence of the Change in Control, such
      Options and Stock Appreciation Rights shall terminate and be of no further
      force
      and effect.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    10.  No
      Right to Employment or Awards

     

    The
      granting of an Award under the Plan shall impose no obligation on the Company
      or
      any Affiliate to continue the employment or service of a Participant and shall
      not lessen or affect the Company’s or Affiliate’s right to terminate the
      employment or service of such Participant. No Participant or other Person shall
      have any claim to be granted any Award, and there is no obligation for
      uniformity of treatment of Participants, or holders or beneficiaries of Awards.
      The terms and conditions of Awards and the Committee’s determinations and
      interpretations with respect thereto need not be the same with respect to each
      Participant (whether or not such Participants are similarly
      situated).

     

    11.  Successors
      and Assigns

     

    The
      Plan
      shall be binding on all successors and assigns of the Company and a Participant,
      including without limitation, the estate of such Participant and the executor,
      administrator or trustee of such estate, or any receiver or trustee in
      bankruptcy or representative of the Participant’s creditors.

     

    12.  Nontransferability
      of Awards

     

    Unless
      otherwise determined by the Committee, an Award shall not be transferable or
      assignable by the Participant otherwise than by will or by the laws of descent
      and distribution. An Award exercisable after the death of a Participant may
      be
      exercised by the legatees, personal representatives or distributees of the
      Participant.

     

    13.  Amendments
      or Termination

     

    The
      Board
      may amend, alter or discontinue the Plan, but no amendment, alteration or
      discontinuation shall be made, (a) without the approval of the shareholders
      of the Company, if such action would (except as is provided in Section 9 of
      the Plan), increase the total number of Shares reserved for the purposes of
      the
      Plan or change the maximum number of Shares for which Awards may be granted
      to
      any Participant or (b) without the consent of a Participant, if such action
      would diminish any of the rights of the Participant under any Award theretofore
      granted to such Participant under the Plan; provided,
      however,
      that
      the Committee may amend the Plan in such manner as it deems necessary to permit
      the granting of Awards meeting the requirements of the Code or other applicable
      laws (including, without limitation, to avoid adverse tax consequences to the
      Company or to Participants).

     

    14.  International
      Participants

     

    With
      respect to Participants who reside or work outside the United States of America
      and who are not (and who are not expected to be) “covered employees” within the
      meaning of Section 162(m) of the Code, the Committee may, in its sole
      discretion, amend the terms of the Plan or Awards with respect to such
      Participants in order to conform such terms with the requirements of local
      law
      or to obtain more favorable tax or other treatment for a Participant, the
      Company or an Affiliate.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    15.  Choice
      of Law

     

    The
      Plan
      shall be governed by and construed in accordance with the laws of the State
      of
      New Jersey without regard to conflicts of laws.

     

    16.  Effectiveness
      of the Plan

     

    The
      Plan
      shall be effective as of the Effective Date, subject to the approval of the
      shareholders of the Company.

     

    17.  Section
      409A

     

    Notwithstanding
      other provisions of the Plan or any Award letter thereunder, no Award shall
      be
      granted, deferred, accelerated, extended, paid out or modified under this Plan
      in a manner that would result in the imposition of an additional tax under
      Section 409A of the Code upon a Participant. In the event that it is reasonably
      determined by the Committee that, as a result of Section 409A of the Code,
      payments in respect of any Award under the Plan may not be made at the time
      contemplated by the terms of the Plan or the relevant Award letter, as the
      case
      may be, without causing the Participant holding such Award to be subject to
      taxation under Section 409A of the Code, the Company will make such payment
      on
      the first day that would not result in the Participant incurring any tax
      liability under Section 409A of the Code.

     

    Without
      limiting the generality of the foregoing, to the extent applicable,
      notwithstanding anything herein to the contrary, this Plan and Awards issued
      hereunder shall be interpreted in accordance with Section 409A of the Code
      and
      Department of Treasury regulations and other interpretative guidance issued
      thereunder, including without limitation any such regulations or other guidance
      that may be issued after the Effective Date. Notwithstanding any provision
      of
      the Plan to the contrary, in the event that the Committee determines that any
      amounts payable hereunder will be taxable to a Participant under Section 409A
      of
      the Code and related Department of Treasury guidance prior to payment to such
      Participant of such amount, the Company may (a) adopt such amendments to the
      Plan and Awards and appropriate policies and procedures, including amendments
      and policies with retroactive effect, that the Committee determines necessary
      or
      appropriate to preserve the intended tax treatment of the benefits provided
      by
      the Plan and Awards hereunder and/or (b) take such other actions as the
      Committee determines necessary or appropriate to avoid the imposition of an
      additional tax under Section 409A of the Code.

     

    
      
         

      

      
        12AMENDED
        AND RESTATED ESCROW AGREEMENT

      

      This
        Amended and Restated Escrow Agreement (the "Agreement") dated as of June
        6, 2007
        is by and between, Southern Iowa BioEnergy LLC, an Iowa limited liability
        company (the “Company”) and Great Western Bank of Omaha, Nebraska (the “Escrow
        Agent”), (the “Escrow Agent” and the “Company” may also be hereinafter referred
        to as the “Parties”).

      

      RECITALS

      

      WHEREAS,
        the Parties entered into an Escrow Agreement on April 27, 2006; and

      

      WHEREAS,
        Section 10(d) of the Escrow Agreement allows modification of the Escrow
        Agreement through an amendment; and 

      

      WHEREAS,
        the Parties desire to amend and restate the Escrow Agreement to revise and
        to
        set forth their respective rights, duties, and responsibilities with respect
        to
        the Escrow Agreement; and

      

      WHEREAS,
        the Company proposes to offer a minimum of 17,600 and a maximum of 30,000
        of its
        Membership Units (the "Units") at a price of $1,000 per Unit, with a required
        minimum investment of 20 Units and in additional increments of 1 Unit, in
        an
        offering in the states of Alaska, Illinois, Iowa Kansas, Missouri and Wisconsin,
        and possibly other states, made pursuant to a federal registration under
        the
        provisions of the Securities Act of 1933, as amended (the "Offering") or
        an
        available exemption from registration;

      

      WHEREAS,
        the Company has filed a registration statement (as may be amended), (the
        "Registration Statement") registering the Units with the Securities and Exchange
        Commission (the “Commission”) and the states of Alaska, Illinois, Iowa Kansas,
        Missouri and Wisconsin ; 

      

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

      

      WHEREAS,
        the Company desires to comply with the requirements of the Securities Act
        of
        1933 and of the various state regulatory statutes and regulations, and desires
        to protect the investors in the Offering by providing, under the terms and
        conditions herein set forth, for the return to subscribers (collectively
        referred to herein as the “Subscribers” or individually referred to herein as a
“Subscriber”) of the money which they may pay on account of purchases of Units
        in the Offering if the Minimum Escrow Deposit (hereinafter defined) is not
        deposited with the Escrow Agent; and

      

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

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      
 

      1. ACCEPTANCE
        OF APPOINTMENT:
        Escrow
        Agent hereby agrees to act as escrow agent under this Agreement. The Escrow
        Agent shall have no duty to enforce any provision hereof requiring performance
        by any other party hereunder.

      

      2. ESTABLISHMENT
        OF ESCROW ACCOUNT:
        An
        escrow account (the "Escrow Account") is hereby established with the Escrow
        Agent for the benefit of the investors in the Offering. Except as specifically
        provided in this Agreement, the Escrow Account shall be created and maintained
        subject to the customary rules and regulations of the Escrow Agent pertaining
        to
        such accounts.

      

      3. OWNERSHIP
        OF ESCROW ACCOUNT:
        Until
        such time as the funds deposited in the Escrow Account (the "Deposited Funds")
        shall equal the Minimum Escrow Deposit (as hereinafter defined), all funds
        deposited in the Escrow Account by the Company shall not become the property
        of
        the Company or be subject to the debts of the Company or any other person
        but
        shall be held by the Escrow Agent solely for the benefit of the
        Subscribers.

      

      4. ESCROW
        FEES:
        The
        Company hereby agrees to pay the Escrow Agent an advance payment for ordinary
        services rendered hereunder in the amount of $1,000.00 (the "Escrow Fee").
        Notwithstanding the foregoing, no fee paid under this Agreement shall exceed
        the
        amount of interest on the Escrow Account and shall be paid from interest
        only
        and not from principal. 

      

      5. DEPOSIT
        OF PROCEEDS:
        All
        proceeds from subscriptions for Units in the Offering shall be delivered
        by the
        Company to the Escrow Agent, within forty-eight hours of the receipt thereof
        from Subscribers, endorsed (if appropriate) to the order of the Escrow Agent,
        together with an appropriate written statement setting forth the name, address
        and social security number/taxpayer identification number of each person
        or
        entity subscribing for Units, the number of Units subscribed for, and the
        amount
        paid by each such Subscriber. Any such proceeds deposited with the Escrow
        Agent
        in the form of uncollected checks shall be promptly presented by the Escrow
        Agent for collection through customary banking and clearing house facilities.
        As
        the proceeds of each sale are deposited with the Escrow Agent, the Company
        shall
        reserve the number of Units confirmed to the Subscriber thereof in connection
        with such subscription. All such deposited proceeds are referred to herein
        as
        the "Escrow Funds."

      

      6. INVESTMENT
        OF ESCROW FUNDS:
        The
        Escrow Funds shall be credited by Escrow Agent and recorded in the Escrow
        Account. In accordance with Rule 15c2-4 of the Securities Regulations, the
        Escrow Agent shall be permitted, and is hereby authorized to deposit transfer,
        hold and invest all funds received under this Agreement, including principal
        and
        interest, in savings accounts, bank money market accounts, short term
        certificates of deposit or short term securities issued or guaranteed by
        the
        U.S. Government. Any
        interest received by Escrow Agent with respect to the Escrow Funds shall
        be paid
        pursuant to the terms of this Agreement.

      

      7. TERMINATION
        OF ESCROW: This
        Agreement and the Escrow created hereunder shall be terminated as provided
        in
        paragraph 8 hereof or as of the date one year and one day following the date
        upon which the Commission authorizes the Offering (the "Offering's Effective
        Date") or longer if the Commission, upon the request of the Company, extends
        the
        effectiveness of the Offering beyond the initial one year and one day period
        of
        effectiveness (the “Termination Date”), provided; however, if the Company has
        filed for an extension of the offering with the Commission prior to the
        termination date and the application has not been rejected, this Agreement
        shall
        not terminate until such time as the Commission rejects the application for
        extension or for 180 days after the Commission grants such application. Prior
        to
        the Termination Date, the Company has received subscription agreements for
        membership units equal to the minimum offering amount and the Company has
        advised the Subscribers of those membership units to remit to the Escrow
        Agent
        the balance of the purchase price, then the Escrow may continue beyond the
        Termination Date until all Funds have been paid and the conditions for releasing
        the Funds have been satisfied. In no event shall this date be later than
        three
        (3) months following the Termination Date. The Company shall notify Escrow
        Agent
        of the Offering's Effective Date or extension thereof, within thirty (30)
        days
        of the receipt of notice of the Offering's Effective Date or extension from
        the
        Securities and Exchange Commission. 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      8. DISPOSITION
        OF ESCROW FUNDS:
        The
        Escrow Agent shall have the following duties and obligations under this
        Agreement:

      

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

      

      B. The
        Escrow Agent shall give the Company prompt written notice when the Deposited
        Funds equal $1,760,000 (exclusive of interest), provided that the Company
        has
        subscriptions for not less than $17,600,000 and has provided Escrow Agent
        written confirmation of said subscriptions. Following receipt of such notice,
        the Company will advise the Subscribers to remit to the Escrow Agent the
        balance
        of the purchase price within thirty (30) days. Thereafter, Escrow Agent shall
        give the Company written notice acknowledging the receipt of the Deposited
        Funds
        every seven days. The Escrow Agent shall give the Company prompt written
        notice
        when the Deposited Funds total $17,600,000 (exclusive of interest).

      

      C. At
        the
        time (and in the event) that: (a) the Deposited Funds shall, during the term
        of
        this Agreement, equal $17,600,000 in subscription proceeds (exclusive of
        interest) (the "Minimum Escrow Deposit"); (b) the Escrow Agent
        shall
        have received written confirmation from the Company that the Company has
        obtained a written debt financing commitment for debt financing of at least
        $31,000,335; (c) the Company has affirmatively elected in writing to terminate
        this Agreement; and (d) the
        Escrow
        Agent shall have provided the Company an affidavit that the Company may file
        in
        the states in which the Units have been registered stating that the foregoing
        requirements (a), (b) and (c) of this subsection 8C have been satisfied,
        then
        this Agreement shall terminate, and the Escrow Agent shall promptly disburse
        the
        funds on deposit, including interest, to the Company to be used in accordance
        with the provisions set out in the Registration Statement. The Company will
        deliver a copy of the Registration Statement to the Escrow Agent upon execution
        of this Agreement. The Escrow Agent will have no responsibility to examine
        the
        Registration Statement with regard to the Escrow Account or otherwise, nor
        shall
        Escrow Agent have any duty to ensure that Company complies with the Registration
        Statement. Upon the making of such disbursement, the Escrow Agent shall be
        completely discharged and released of any and all further responsibilities
        hereunder.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      D. In
        the
        event the Deposited Funds do not equal or exceed the Minimum Escrow Deposit
        on
        or before the Termination Date or if the Company has not received a written
        debt
        financing commitment as described herein on or before the Termination Date,
        the
        Escrow Agent shall return to each of the Subscribers, as promptly as possible
        after such Termination Date and on the basis of its records pertaining to
        the
        Escrow Account: (a) the sum which each Subscriber initially paid in on account
        of subscriptions for the Units in the Offering and (b) each Subscriber’s portion
        of the total interest earned on the Escrow Account as of the Termination
        Date,
        (c) reduced by the transaction fees provided in paragraph 10 hereof. Computation
        of any Subscriber’s share of the net interest earned will be a weighted average
        based on the proportion of such Subscriber’s deposit in the Escrow Account from
        the Offering to all such Subscribers’ deposits held by the Escrow Agent and upon
        the length of time in days such deposit was held in the Escrow Account as
        compared to all such deposits. All computations with respect to each
        Subscriber’s allocable share of net interest shall be made by the Escrow Agent,
        which determinations shall be final and conclusive. Any amount paid or payable
        to a Subscriber pursuant to this paragraph shall be deemed to be the property
        of
        such Subscriber, free and clear of any and all claims of the Company or its
        agents or creditors; and the respective subscriptions for the Units made
        and
        entered into in the Offering shall thereupon be deemed, ipso facto, to be
        cancelled without any further liability of the Subscribers or any of them
        to pay
        for the Units. At such time as the Escrow Agent shall have made all the payments
        called for in this paragraph, the Escrow Agent shall be completely discharged
        and released of any and all further responsibilities hereunder, and the Units
        reserved (as provided in paragraph 5) shall be released from such reservation,
        except that Escrow Agent shall be required to prepare and issue a single
        IRS
        Form 1099 to each Subscriber in the event that funds are returned to
        Subscribers.

      

      E. In
        the
        event the Company offers its Subscribers the right to withdraw and terminate
        their subscription agreements pursuant to a rescission offer (“Rescission
        Offer”), upon
        written notice from the Company identifying the Subscribers who have accepted
        the Rescission Offer, the
        Escrow
        Agent shall return to each rescinding Subscriber, as promptly as
        possible on
        the
        basis of its records pertaining to the Escrow Account: (a) the sum which
        each
        rescinding Subscriber initially paid in on account of subscriptions for the
        Units in the Offering and (b) each rescinding Subscriber's portion of the
        total
        interest earned on the Escrow Account as of the Rescission Offer termination
        date, (c) reduced by the transaction fees provided in paragraph 10 hereof.
        Computation of any rescinding Subscriber’s share of the net interest earned will
        be a weighted average based on the proportion of such rescinding Subscriber’s
        deposit in the Escrow Account from the Offering to all such rescinding
        Subscribers' deposits held by the Escrow Agent and upon the length of time
        in
        days such deposit was held in the Escrow Account as compared to all such
        deposits. All computations with respect to each rescinding Subscriber’s
        allocable share of net interest shall be made by the Escrow Agent, which
        determinations shall be final and conclusive. Any amount paid or payable
        to a
        rescinding Subscriber pursuant to this paragraph shall be deemed to be the
        property of such rescinding Subscriber, free and clear of any and all claims
        of
        the Company or its agents or creditors; and the respective purchases of the
        Units made and entered into in the Offering shall thereupon be deemed, ipso
        facto, to be cancelled without any further liability of the rescinding
        Subscribers or any of them to pay for the Units. At such time as the Escrow
        Agent shall have made all the payments called for in this paragraph, the
        Escrow
        Agent shall continue to be bound by the other provisions of this Agreement,
        and
        the Units reserved for each rescinding Subscriber (as provided in paragraph
        5)
        shall be released from such reservation, except that the Escrow Agent shall
        be
        required to prepare and issue a single IRS Form 1099 to each rescinding
        Subscriber. 

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

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

      

      10. FEES
        AND EXPENSES:
        In the
        event the Deposited Funds do not equal or exceed the Minimum Escrow Deposit
        before the Termination Date or the Company does not receive a written debt
        financing commitment as described herein before the Termination Date, or
        the
        Company offers its Subscribers the right to withdraw and terminate their
        subscription agreements pursuant to a Rescission Offer, the Escrow Agent
        shall
        be entitled to a fee of $10.00 per Subscriber
        receiving an IRS Form 1099,
        which
        fees shall be paid from the interest on the Escrow Account only and not from
        principal. In the event the Escrow Agent renders any service not provided
        for in
        this Agreement, or if the Company requests a substantial modification of
        its
        terms, or if any controversy arises, or if the Escrow Agent is made a party
        to,
        or intervenes in, any litigation pertaining to this escrow or its subject
        matter, the Escrow Agent shall be reasonably compensated for such extraordinary
        services and reimbursed for all costs, attorney's fees, including allocated
        costs of in-house counsel, and expenses occasioned by such default, delay,
        controversy or litigation and the Escrow Agent shall have the right to retain
        all documents and/or other things of value at any time held by the Escrow
        Agent
        in this escrow until such compensation, fees, costs and expenses are paid.
        The
        Company promises to pay these sums upon demand. Unless otherwise provided,
        the
        Company will pay all of the Escrow Agent's usual charges and the Escrow Agent
        may deduct such sums from the interest on the Escrow Account only and not
        from
        principal deposited to the Escrow Account.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

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

      

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

      

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

      

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

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      15. MISCELLANEOUS: 

      

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

      

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

      

      (c)
        NOTICES:
        All
        instructions, notices and demands herein provided for shall be in writing
        and
        shall be deemed to have been duly given (a) on the date of service if served
        personally on the party to whom notice is to be given; (b) on the day of
        transmission if sent by facsimile transmission to the facsimile number given
        below and telephonic confirmation of receipt is promptly obtained after
        completion of transmission; (c) on the next day on which such deliveries
        are
        made to the respective party, when delivery is to Federal Express or similar
        overnight courier or the Express Mail service maintained by the United States
        Postal Service; or (d) on the fifth day after mailing if mailed to the party
        to
        whom notice is to be given, by first class mail, registered or certified,
        postage prepaid and properly addressed, return receipt requested, to the
        party
        as follows: 

       

      

        
          	
                  If
                    to the Company:

                	
                  If
                    to the Escrow Agent:

                
	 	 
	
                  Southern
                    Iowa BioEnergy

                	
                  Great
                    Western Bank

                
	
                  Attention:
                    President

                	
                  ATTN:
                    Trust Department

                
	
                  115
                    South Linden Street

                	
                  P.O.
                    Box 4070

                
	
                  Lamoni,
                    Iowa 50140

                	
                  Omaha,
                    NE 68107

                
	 	
                  Fax:
                    (402) 554-7346

                

        

      

      
        	 	 

      

       

      With
        a
        required copy to:

      

      Christopher
        R. Sackett

      Brown,
        Winick, Graves, Gross, Baskerville   

      and
        Schoenebaum, P.L.C.    

      666
        Grand
        Avenue, Suite 2000   

      Des
        Moines, IA 50309    

      Fax:
        (515) 283-0231     

      Telephone:
        (515) 242-2400    

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

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

      

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

      

      (f) NON-ENDORSEMENT: The
        Company represents and agrees that it has not made nor will it in the future
        make any representation that states or implies that the Escrow Agent has
        endorsed, recommended or guaranteed the purchase, value, or repayment of
        the
        Securities offered for sale by the Company. 

      

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

       

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

      

        
          	
                  The
                    Company

                	 	
                  Escrow
                    Agent

                
	 	 	 	 	 
	 	 	 	 	 
	
                  By:
                    

                	
                  /s/
                    Alan Elefson

                	 	
                  By: 

                	
                  /s/
                    Tom V. VanRobays

                
	 	 	 	 	 
	
                   

                	 	 	 	 
	
                  Its:
                    

                	
                  Treasuer

                	 	
                  Its:
                     

                	
                  Vice
                    President & Trust Officer

                

        

      

       

      
        
          
          

        

        
          8

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