Document:

exv4w2

 

Exhibit 4.2

AGASSIZ ENERGY, LLC

SUBSCRIPTION AGREEMENT

Limited Liability Company Membership Units

$1.00 per Unit

Minimum Investment of 20,000 Units ($20,000), Subject to Waiver

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

The undersigned subscriber, desiring to become a member of Agassiz Energy, LLC (“Agassiz Energy”),
a Minnesota limited liability company, with its principal place of business at 510 County Road 71,
Valley Technology Park, Crookston, Minnesota 56716, hereby subscribes for the purchase of the
membership interests of Agassiz Energy, and agrees to pay the related purchase price, identified
below.

     A. SUBSCRIBER INFORMATION. Please print your individual or entity name and address. Joint
subscribers should provide their respective names. Your name and address will be recorded exactly
as printed below.

	 	 	 	 	 	 	 
	1.

	 	Subscribers’ Printed Name	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 	 	 
	2.

	 	Title, if applicable:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 
	3.

	 	Subscriber’s Address:	 	 

	 	 	 	 	 	 	 
	 

	 	Street	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	City, State, Zip Code	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 	 	 
	4.

	 	Telephone:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 	 	 
	5.

	 	Email Address:	 	 	 	 
	 

	 	 	 	 

	 	 

     B. NUMBER OF UNITS PURCHASED. You must purchase at least 20,000 units. We presently have
4,636,500 units outstanding. The maximum number of units to be sold
is 77,878,000.

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

	 	 	 	 	 	 	 	 	 	 	 
	1. Total Purchase Price

	 	=	 	2. 1st Installment
	 	+	 	3. 2nd Installment	 	 
	 

$1.00 Per Unit multiplied by the

	 	 	 
(10% of the Total Purchase Price)
	 	 	 
(90% of the Total)	 	 
	number in box B above)
	 	 	 	 	 	 	 	 	 	 

 

 

     D. GENERAL INSTRUCTIONS FOR SUBSCRIBERS: You should read the Prospectus dated [Date of
Effectiveness] (the “Prospectus”) in its entirety including exhibits for a complete explanation of
an investment in Agassiz Energy, LLC. To subscribe, you must:

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

     1. Complete all information required in this Subscription Agreement, and date and sign the
Subscription Agreement on page 8 and the Member Signature Page to our Amended and Restated Member
Control Agreement attached to this Subscription Agreement as Exhibit A.

     2. Immediately provide your personal (or business) check for the first installment of ten
percent (10%) of your investment amount made payable to “(Escrow Name).” You will determine this
amount in box C.2 on page 1 of this Subscription Agreement.

     3. Execute the Promissory Note and Security Agreement on page 9 of this Subscription Agreement
evidencing your commitment to pay the remaining ninety percent (90%) due for the Units that is
attached to this Subscription Agreement and grant Agassiz Energy a security interest in your Units.

     4. Deliver each of the original executed documents referenced in Items 1 and 3 of these
Instructions, together with your personal or business check described in Item 2 of these
Instructions to:

	 	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

     5. Upon written notice from Agassiz Energy stating that its sales of Units have exceeded the
Minimum Offering amount of $50,000,000, you must, within thirty (30) days, secure an additional
personal (or business) check for the second installment of ninety percent (90%) of your investment
amount made payable to “(Escrow Name)” in satisfaction of the Promissory Note and Security
Agreement. You will determine this amount in box C.3 on page 1 of this Subscription Agreement.
You must deliver this check to the same address set forth above in Instruction 4 within thirty (30)
days of the date of Agassiz Energy’s written notice. If you fail to pay the second installment
pursuant to the Promissory Note and Security Agreement, Agassiz Energy shall be entitled to retain
your first installment and to seek other damages, as provided in the Promissory Note and Security
Agreement.

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

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

     1. Complete all information required in this Subscription Agreement, and date and sign the
Subscription Agreement on page 8 and the Member Signature Page to our Amended and Restated Member
Control Agreement attached to this Subscription Agreement as Exhibit A.

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

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

	 	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

     If you are subscribing after we have released funds from escrow and we accept your investment,
your funds will be immediately at-risk as described in the Prospectus. Agassiz Energy may, in its
sole discretion, reject or accept any part or all of your subscription. If Agassiz Energy rejects
your subscription, your Subscription Agreement and investment will be returned to you promptly,
plus nominal interest, minus escrow fees. Agassiz Energy may not consider the acceptance or
rejection of your subscription until a future date near the end of this offering. You may direct
your questions to one of our governors listed below or to Agassiz Energy at 218-281-8442.

	 	 	 
	Governor

	 	Cell Number
	 

	 	 
	Donald Sargeant

	 	218-281-8442
	Wayne Wagner

	 	218-281-6914
	John Vallager

	 	218-281-3789

     If you are a North Dakota resident or entity, you should contact:

          Gary Bridgeford at 701-775-8480 or Larry Altringer at 218-281-6911.

	 	E.	 	AGASSIZ ENERGY DISCLOSURES
	 	 
	 	1.	 	The Units of Agassiz Energy are offered and sold in reliance upon a federal
securities registration; South Dakota, North Dakota and Minnesota securities
registrations; and exemptions from securities registrations in various other states,
and the Units to be issued pursuant to this subscription agreement can only be sold to
a person meeting requirements of suitability;
	 	 
	 	2.	 	The securities purchased pursuant to this Subscription Agreement have not been
registered under the securities laws of any state other than the States of South

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	 	 	Dakota, North Dakota and Minnesota, and Agassiz Energy is relying in part upon the
representations of the undersigned Subscriber contained herein;
	 
	3.	 	The securities subscribed for have not been approved or disapproved by the
South Dakota, North Dakota or Minnesota Securities Departments or any other regulatory
authority, nor has any regulatory authority passed upon the accuracy or adequacy of the
Prospectus;
	 
	4.	 	To enforce transfer restrictions, Agassiz Energy may place a stop transfer
order with its registrar and stock transfer agent (if any) covering all certificates
representing any of the membership units.

F. ADDITIONAL SUBSCRIBER INFORMATION. The subscriber, named above, certifies the following
under penalties of perjury:

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

	 	 	 	 	 
	 

	 	o
	 	Individual
	 

	 	o
	 	Joint Tenants with Right of Survivorship (Both signatures must appear
on Page 8.)
	 

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

	 	o
	 	Trust

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Trustee’s Name:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Trust Date:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

	 	 	 	 	 
	 

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

	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 

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

	 	 	 	 	 
	 

	 	o
	 	Check box if you are a non-resident alien
	 

	 	o
	 	Check box if you are a U.S. citizen residing outside of the United
States
	 

	 	o
	 	Check this box if you are subject
to backup withholding Subscriber’s Social Security No.
________________

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	 	 	 	Joint Subscriber’s Social Security No.	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Taxpayer Identification No.	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

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

	 	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 

	4.	 	State of Residence.

	 	 	 	 	 	 	 
	 

	 	  State of Principal Residence:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 	 	 
	 

	 	State where driver’s license is issued:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 	 	 
	 

	 	State where resident income taxes are filed:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 
	 

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

	 	 	 	 

	5.	 	Suitability Standards. You cannot invest in Agassiz Energy unless you meet
one, or more, of the following suitability tests (a or b) set forth below. Please
review the suitability tests and check the box(es) next to the following suitability
test that you meet. For husbands and wives purchasing jointly, the tests below will be
applied on a joint basis:

	 	 	 	 	 	 	 
	 

	 	a.
	 	o
	 	I (We) have annual income from whatever source of at least $45,000 and
a net worth of at least $45,000, exclusive of home, furnishings and
automobiles; or

	 	 	 	 	 	 	 
	 

	 	b.
	 	o
	 	I (We) have a net worth of at least $150,000, exclusive of
home, furnishings and automobiles.

	 	 	 	 	 	 	 
	 

	 	c.
	 	o
	 	I am a North Dakota resident and my total investment does not
exceed 10% of my net worth, exclusive of my home furnishings and automobiles.

	6.	 	Subscriber’s Representations and Warranties. You must read and certify your
representations and warranties and sign and date this Subscription Agreement.
	 
	 	 	By signing below the subscriber represents and warrants to Agassiz Energy that he,
she or it:

	 	a.	 	has received a copy of Agassiz Energy’s Prospectus dated
[effective date] and the exhibits thereto;
	 
	 	b.	 	intends to acquire the Units for his/her/its own account
without a view to public distribution or resale and that he/she/it has no
contract, undertaking, agreement or arrangement to sell or otherwise transfer
or dispose of any Units or any portion thereof to any other person;

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	 	c.	 	understands that there is no present market for Agassiz
Energy’s membership units, that the membership units will not trade on an
exchange or automatic quotation system, that no such market is expected to
develop in the future and that there are significant restrictions on the
transferability of the membership units;
	 
	 	d.	 	has received a copy of the Agassiz Energy Second Amended and
Restated Member Control Agreement, dated September 6, 2006, and understands
that upon closing the escrow by Agassiz Energy, the subscriber and the
membership units will be bound by the provisions of the Member Control
Agreement which contains, among other things, provisions that restrict the
transfer of membership units;
	 
	 	e.	 	understands that the Units are subject to substantial
restrictions on transfer under state securities laws along with restrictions in
the Agassiz Energy Member Control Agreement and agrees that if the membership
units or any part thereof are sold or distributed in the future, the subscriber
shall sell or distribute them pursuant to the terms of the Member Control
Agreement, and the requirements of the Securities Act of 1933, as amended, and
applicable state securities laws;
	 
	 	f.	 	meets the suitability test marked in Item 5 above;
	 
	 	g.	 	understands that Agassiz Energy will place a restrictive legend
on any certificate representing any unit containing substantially the following
language as the same may be amended by the Governors of Agassiz Energy in their
sole discretion:
	 
	 	 	 	THE TRANSFERABILITY OF THE MEMBERSHIP UNITS REPRESENTED BY THIS CERTIFICATE
IS RESTRICTED. SUCH UNITS MAY NOT BE SOLD, ASSIGNED, OR TRANSFERRED, AND NO
ASSIGNEE, VENDEE, TRANSFEREE OR ENDORSEE THEREOF WILL BE RECOGNIZED AS
HAVING ACQUIRED ANY SUCH UNITS FOR ANY PURPOSES, UNLESS AND TO THE EXTENT
SUCH SALE, TRANSFER, HYPOTHECATION, OR ASSIGNMENT IS PERMITTED BY, AND IS
COMPLETED IN STRICT ACCORDANCE WITH, APPLICABLE FEDERAL AND STATE LAW AND
THE TERMS AND CONDITIONS SET FORTH IN THE MEMBER CONTROL AGREEMENT OF THE
COMPANY, AS AMENDED FROM TIME TO TIME.
	 
	 	 	 	THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, OFFERED FOR
SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND UNDER APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH

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	 	 	 	TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND UNDER APPLICABLE STATE SECURITIES LAWS.
	 
	 	h.	 	may not transfer or assign this subscription agreement, or any
of the subscriber’s interest herein;
	 
	 	i.	 	has written his, her, or its correct taxpayer identification
number under Item E.2 on this subscription agreement;
	 
	 	j.	 	is not subject to back up withholding either because he, she or
it has not been notified by the Internal Revenue Service (“IRS”) that he, she
or it is subject to backup withholding as a result of a failure to report all
interest or dividends, or the IRS has notified him, her or it that he is no
longer subject to backup withholding (Note this clause (p) should be crossed
out if the backup withholding box in Item E.2 is checked);
	 
	 	k.	 	understands that execution of the attached Promissory Note and
Security Agreement will allow Agassiz Energy or its assigns to pursue the
obligor for payment of the amount due thereon by any legal means, including,
but not limited to, acquisition of a judgment against the obligor in the event
that the subscriber defaults on that Promissory Note and Security Agreement;
and
	 
	 	l.	 	acknowledges that Agassiz Energy may retain possession of
certificates representing subscriber’s Units to perfect its security interest
in those Units.

- 7 -

 

Signature of Subscriber/ Joint Subscriber:

	 	 	 
	Date:

 

	 	 
	 
	 	 
	Individuals:

	 	Entities:
	 
	 	 
	 

	 	 
	Name of Individual Subscriber (Please Print)

	Name of Entity (Please Print)
	 
	 	 
	 

	 	 
	Signature of Individual

	 	Print Name and Title of Officer
	 
	 	 
	 

	 	 
	Name of Joint Individual Subscriber (Please Print)

	Signature of Officer
	 
	 

	 	 
	Signature of Joint Individual Subscriber
	 	 

ACCEPTANCE OF SUBSCRIPTION BY

AGASSIZ ENERGY, LLC:

Agassiz Energy, LLC hereby accepts the subscription for the above Units.

Dated this                      day of                                        , 200__

AGASSIZ ENERGY, LLC

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Its:
	 	 	 	 
	 

	 	 

	 	 

If you are a Minnesota resident, Agassiz Energy cannot complete a sale of the Units to you until at
least five business days after you receive the Prospectus.

- 8 -

 

PROMISSORY NOTE AND SECURITY AGREEMENT

     Date of Subscription Agreement:                                         , 200                    .

$1.00 per Unit

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

20,000 Unit Subject to Waiver Increments Thereafter ($5,000)

	 	 	 
	                                        

	 	Number of Units subscribed
	 
	 	 
	                                        

	 	Total Purchase Price ($1.00 per Unit multiplied by number of
units Subscribed)
	 
	 	 
	(                                          )

	 	Initial Payment (10% of Principal Amount)
	 
	 	 
	                                        

	 	Principal Balance

FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of Agassiz Energy, LLC, a
Minnesota limited liability company (“Agassiz Energy”), at its principal office located 510 County
Road 71, Technology Park, Crookston, MN 56716, or at such other place as required by Agassiz
Energy, the Principal Balance set forth above in one lump sum to be paid without interest within 30
days following the call of the Agassiz Energy Board of Governors, as described in the Subscription
Agreement. In the event the undersigned fails to timely make any payment owed, the entire balance
of any amounts due under this full recourse Promissory Note and Security Agreement shall be
immediately due and payable in full with interest at the rate of 12% per annum from the due date
and any amounts previously paid in relation to the obligation evidenced by this Promissory Note and
Security Agreement may be forfeited at the discretion of Agassiz Energy.

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

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

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

The undersigned grants to Agassiz Energy, and its successors and assigns (“Secured Party”), a
purchase money security interest in all of the undersigned’s Membership Units of Agassiz Energy now
owned or hereafter acquired. This security interest is granted as non-exclusive

 

 

collateral to secure payment and performance on the obligation owed Secured Party from the
undersigned evidenced by this Promissory Note and Security Agreement. The undersigned further
authorizes Secured Party to retain possession of certificates representing such Membership Units
and to take any other actions necessary to perfect the security interest granted herein.

Dated:                                         , 200                    

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

	 	 	 	Printed
 or Typed Name of Joint Obligor	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

(Signature)
	 	 	 	 	 	 

(Signature)
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Officer Title if Obligor is an Entity	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Address of Obligor	 	 	 	 	 	 	 	 

-2-

 

EXHIBIT “A”

MEMBER SIGNATURE PAGE ADDENDA

TO THE AMENDED AND RESTATED

MEMBER CONTROL AGREEMENT OF AGASSIZ ENERGY, LLC

     The undersigned does hereby represent and warrant that the undersigned, as a condition to
becoming a Member in Agassiz Energy, LLC, has received a copy of the Amended and Restated Member
Control Agreement, dated, and, if applicable, all amendments and modifications thereto, and does
hereby agree that the undersigned, along with the other parties to the Amended and Restated Member
Control Agreement, shall be subject to and comply with all terms and conditions of said Amended and
Restated Member Control Agreement in all respects as if the undersigned had executed said Amended
and Restated Member Control Agreement on the original date thereof and that the undersigned is and
shall be bound by all of the provisions of said Amended and Restated Member Control Agreement from
and after the date of execution hereof.

	 	 	 	 	 
	Individuals:

	 	Entities:	 	 
	 
	 	 	 	 
	 

Name of Individual Member (Please Print)

	 	 

Name of Entity (Please Print)
	 	 
	 
	 	 	 	 
	 

Signature of Individual

	 	 

Print Name and Title of Officer
	 	 
	 
	 	 	 	 
	 

Name of Joint Individual Member (Please Print)

	 	 

Signature of Officer
	 	 
	
	 	 	 	 

Signature
                                                                                    
   

Agreed and accepted on behalf of the Company and its Members:

AGASSIZ ENERGY, LLC

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Its:exv4w3

 

Exhibit 4.3

IMPOUNDMENT AGREEMENT

THIS
IMPOUNDMENT AGREEMENT, made and entered into June ___, 2007, by and between Agassiz Energy, LLC,
a Minnesota limited liability company (hereinafter called the “Issuer”) and Bremer Bank, N.A. (a
national banking association) with principal offices in Crookston, Minnesota (hereinafter called
the “Impoundment Agent”);

WITNESSETH:

WHEREAS, Issuer has applied to the Commissioner of Commerce for the State of Minnesota (hereinafter
called the “Commissioner”), as well as with the U.S. Securities and Exchange Commission and other
states, for registration of 77,878,000 membership units for sale to the residents of the State of
Minnesota; and

WHEREAS, as a condition of registration of such offering under the Securities Laws of the State of
Minnesota, the Commissioner requires that the Issuer provide for the impoundment of the proceeds to
be received from such offering of securities; and

WHEREAS, the Issuer and the Impoundment Agent desire to enter into an agreement with respect to the
same impoundment of proceeds.

NOW, THEREFORE, in consideration of the premises and agreements set forth herein, the parties
hereto agree as follows:

	1.	 	PROCEEDS TO BE PLACED IN ESCROW: All proceeds received from the sale of the securities
subject to this Impoundment Agreement on or after the date hereof shall be paid to the
Impoundment Agent within two (2) business days from the date of sale, and deposited by
Impoundment Agent in an escrow account. During the term of this Impoundment Agreement, the
Issuer shall cause all checks received by it in payment for such securities to be either
payable to the Impoundment Agent or endorsed forthwith to the Impoundment Agent.

	2.	 	IDENTITY OF SUBSCRIBERS: The Issuer shall cause to be delivered to the Impoundment Agent two
(2) signed counterparts of each Subscription Agreement which shall contain, among other
things, the name and address of each subscriber thereto, the date and amount subscribed, and
the amount paid, or, in the alternative, shall furnish to the Impoundment Agent with each
deposit of funds in the impoundment a list of the persons who have subscribed the money,
showing the name, address, date and amount of subscription, and amount of money paid. All
proceeds so deposited shall remain the property of the subscriber and shall not be subject to
any liens or charges by the Impoundment Agent, or judgments or creditors’ claims against the
Issuer until released to the Issuer as hereinafter provided.

	3.	 	DISBURSEMENT OF FUNDS: The disbursements of funds is conditioned upon the receipt by the
Impoundment Agent of:

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	 	(a)	 	cash proceeds from unit sales deposited in the escrow account from received and
accepted subscriptions for a minimum of $50,000,000 in equity capital in the offering
or any subsequent offering;
	 
	 	(b)	 	a signed commitment letter for the debt financing from reputable lender(s) with
demonstrated ability to fulfill their obligations under the commitment letter(s) in an
amount which, when added to the amount of equity proceeds and commitments having been
received and all grant proceeds having been received or awarded will yield at least
$126,408,000;
	 
	 	(c)	 	an executed definitive design-build agreement with a reputable design builder
with demonstrated ability to fulfill its obligations under the design-build agreement
to construct the proposed ethanol plant; and
	 
	 	(d)	 	written verification that the Company has received all permits necessary to
begin construction of its proposed ethanol plant.

The disbursement of funds is further conditioned that, upon the receipt by the Impoundment
Agent of a through d, above, the Impoundment Agent notifying the Commissioner in writing of
a) the impoundment of such cash proceeds, b) the receipt of the signed commitment letter for
the debt financing and c) written verification that the Company has received all permits
necessary to begin construction. The Company must also not be subject to any legal orders
prohibiting the offering or the construction or operation of the proposed ethanol plan or
orders from the Minnesota Department of Commerce, Securities Division, revoking the
effectiveness of the registration of the units being offered in the offering. The
Commissioner must also be provided either by the Company or the Impoundment Agent with a
copy of the executed construction agreement and the written debt financing commitment
agreement.

Upon receipt of these items, the Commissioner will determine whether the minimum
requirements of impoundment have been met subject to the escrow assets verification of cash
proceeds in escrow. The Commissioner will direct the release of fund or return of the
proceeds according.

Upon receipt by the Impoundment Agent of written authorization from the Commissioner, then
the Impoundment Agent, on demand of the Issuer, shall pay over to the Issuer all impounded
funds.

If the specified minimum amount of proceeds have not been impounded during the term of
impoundment or any of the other conditions have not been satisfied, then, within three (3)
business days after the last day of the term of impoundment, the Impoundment Agent shall
notify the Commissioner in writing that the conditions of impoundment have not been
satisfied. The Impoundment Agent shall, within a reasonable time, but in no event not more
than thirty (30) days after the last day of the term of impoundment, refund to each
subscriber at the address appearing on the Subscription Agreement or list of subscribers, or
at such other address as shall be furnished to the Impoundment Agent by

- 2 -

 

the subscriber in writing, all sums paid pursuant to the subscription, and shall then notify
the Commissioner in writing of such refund.

	4.	 	TERM OF IMPOUNDMENT: This impoundment shall terminate on the three hundred sixty-fifth
(365th) day following the effective date of the registration of the Issuer’s securities in the
State of Minnesota, unless extended by the consent in writing of the parties hereto and all
subscribers to the securities subscribed to date and the Commissioner. Upon termination
hereof, whether after extension or otherwise, the Impoundment Agent shall disburse the funds
in the impoundment account in the manner and upon the terms directed in paragraph 3 hereof.
The Issuer may abandon the sale of securities any time prior to the date above. Upon the
receipt of a copy of the Resolution authorizing said abandonment, duly attested to by the
Secretary of the Issuer, accompanied by the written consent of the Commissioner, Impoundment
Agent shall be authorized to refund the moneys received from the subscribers.

	5.	 	TERMINATION BY REVOCATION OR SUSPENSION: If at any time prior to the termination under
paragraph 4 of this Impoundment Agreement, said Impoundment Agent is advised by the
Commissioner that the registration to sell securities has been revoked or suspended, said
Impoundment Agent shall thereupon return all funds to the respective subscribers.

	6.	 	CONSENT OF COMMISSIONER TO RELEASE FUNDS: No funds shall be released to the Issuer hereunder
except upon the express written authorization of the Commissioner. If the Commissioner finds
that any conditions of this Impoundment Agreement have not been satisfied, or that any
provisions of the Minnesota Securities Laws or regulations have not been complied with, then
the Commissioner may withhold such authorization for release of funds by the Impoundment Agent
to the Issuer and may direct the Impoundment Agent to return the funds to the subscribers. In
making a determination hereunder, the Commissioner may require from the Issuer a statement of
all expenses and/or all amounts paid into the escrow, certified by an independent certified
public accountant or an officer of the Issuer and any further financial or other information
as the Commissioner may deem appropriate or helpful in making such determination.

	7.	 	INSPECTION OF RECORDS: The Commissioner may, at any time, inspect the records of the
Impoundment Agent, insofar as they relate to this Impoundment Agreement, for the purpose of
determining compliance with and conformance to the provisions of this Impoundment Agreement.

	8.	 	DUTY AND LIABILITY OF THE IMPOUNDMENT AGENT: The sole duty of the Impoundment Agent, other
than as herein specified, shall be to receive said funds and hold them subject to release, in
accordance with the written instructions of the Commissioner, and the Impoundment Agent shall
be under no duty to determine whether the Issuer is complying with requirements of the
Commissioner in tendering to the Impoundment Agent said proceeds of the sale of said
securities.
	 
	 	 	The Impoundment Agent may conclusively rely upon and shall be protected in acting upon any
statement, certificate, notice, request, consent, order or other document believed

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	 	 	by it to be genuine and to have been signed or presented by the proper party or parties.
The Impoundment Agent shall have no duty or liability to verify any such statement,
certificate, notice, request, consent, order or other document and its sole responsibility
shall be to act only as expressly set forth in this Impoundment Agreement. The Impoundment
Agent shall be under no obligation to institute or defend any action, suit or proceeding in
connection with this Impoundment Agreement unless first indemnified to its satisfaction.
The Impoundment Agent may consult counsel in respect of any question arising under this
Impoundment Agreement and the Impoundment Agent shall not be liable for any action taken or
omitted in good faith upon advice of such counsel. All funds held by Impoundment Agent
pursuant to this Impoundment Agreement shall constitute trust property for the purposes for
which they are held and the Impoundment Agent shall not be liable for any interest thereon.

	9.	 	IMPOUNDMENT AGENT’S FEE: The Impoundment Agent shall be entitled to reasonable compensation
for its services. The fee agreed upon for services rendered hereunder is intended as full
compensation for the Impoundment Agent’s services as contemplated by this Impoundment
Agreement; provided, however, in the event that the conditions of this Impoundment Agreement
are not fulfilled, or the Impoundment Agent renders any material service not contemplated in
this Impoundment Agreement, or there is any assignment of interest in the subject matter of
this Impoundment Agreement, or any material modification hereof, or if any material
controversy arises hereunder, or the Impoundment Agent is made a party to or justifiably
intervenes in any litigation pertaining to this Impoundment Agreement, or the subject matter
hereof, the Impoundment Agent shall be reasonably compensated for such extraordinary services
and reimbursed for all costs and expenses, including reasonable attorneys’ fees, occasioned by
any delay, controversy, litigation, or event, and the same may be recoverable from the Issuer
only.

	10.	 	BINDING AGREEMENT AND SUBSTITUTION OF IMPOUNDMENT AGENT: The terms and conditions of this
Impoundment Agreement shall be binding on the heirs, executors and assigns, creditors or
transferees, or successors in interest, whether by operation of law or otherwise, of the
parties hereto. If, for any reason, the Impoundment Agent named herein should be unable or
unwilling to continue as such Impoundment Agent, then the other parties to this Impoundment
Agreement may substitute, with the consent of the Commissioner, another Impoundment Agent.
Any apportionment of the fees provided for in paragraph 9 will be subject to agreement of the
parties.

	11.	 	ISSUANCE OF CERTIFICATES: Until the terms of this Impoundment Agreement have been met and
the funds hereunder released to the Issuer, the Issuer may not issue any certificates or other
evidences of securities, except subscription agreements.

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IN WITNESS WHEREOF, the parties hereto have executed this Impoundment Agreement on the date first
above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ISSUER:	 	 	 	 	 	IMPOUNDMENT AGENT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	AGASSIZ ENERGY, LLC	 	 	 	BREMER BANK, N.A.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Its:
	 	 	 	 	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 	 

	 	 

Accepted for filing:

	 	 	 
	 

Commissioner of Commerce

	 	 

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