THIRD AMENDED AND RESTATED ESCROW AGREEMENT
EXHIBIT
4.3
THIRD
AMENDED AND RESTATED ESCROW
AGREEMENT
This
Third Amended and Restated Escrow Agreement (the "Agreement") dated as of April
25, 2008 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 a Second Amended and Restated Escrow Agreement on
November 20, 2007; and
WHEREAS,
Section 15(d) of the Second Amended and Restated Escrow Agreement allows
modification of the Amended and Restated Escrow Agreement through an amendment;
and
WHEREAS,
the Parties desire to amend and restate the Second Amended and Restated Escrow
Agreement to revise and to set forth their respective rights, duties, and
responsibilities with respect to the Second Amended and Restated Escrow
Agreement; and
WHEREAS,
the Company proposes to offer a minimum of 9,000 and a maximum of 14,500 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 Colorado,
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 Colorado;
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:
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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.
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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.
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
Company shall give notice to the Escrow Agent when it has completed a rescission
offering to its current investors. After the notice from the Company regarding
the completion of the rescission offering, the Escrow Agent shall give the
Company prompt written notice when the Deposited Funds equal $900,000 (exclusive
of interest). Following receipt of such notice, if the Company has received
subscriptions for at least 9,000 of its membership units in the Registered
Offering, it 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 $9,000,000 (exclusive of interest).
C. At
the
time (and in the event) that: (a) the Deposited Funds shall, during the term
of
this Agreement, equal or exceed $9,000,000 in subscription proceeds (exclusive
of interest) (the "Minimum Escrow Deposit"); (b) the Company has given written
notice to Escrow Agent that it has
completed a private placement of 11,000 membership units with SAFER Energy,
LLC
("Safer") to perform design, engineering and construction services for certain
parts of the proposed biodiesel plant as described in the Safer memorandum
of
understanding; (c)
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
$25,850,335; (d) the Company has affirmatively elected in writing to terminate
this Agreement; and (e) 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), (c) and (d) 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.
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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 or completed a private placement with Safer 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.
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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.
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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.
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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:
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If
to the Company:
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If
to the Escrow Agent:
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Southern
Iowa BioEnergy
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Great
Western Bank
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Attention:
President
|
ATTN:
Trust Department
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000
Xxxxx Xxxxxx Xxxxxx
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P.O.
Box 4070
|
|
Lamoni,
Iowa 50140
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Xxxxx,
XX 00000
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|
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Fax: (000) 000-0000 |
With
a
required copy to:
Xxxxxxxxxxx
X. Xxxxxxx
Brown,
Winick, Graves, Gross, Xxxxxxxxxxx
and
Schoenebaum, P.L.C.
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxxxx, XX 00000
Fax:
(000) 000-0000
Telephone:
(000) 000-0000
(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.
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(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.
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The
Company
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Escrow
Agent
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By:
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/s/
Xxxxxxx X. Xxxxxx
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By:
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/s/
Xxxxxx Xxx Xxxxxx
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Its:
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President
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Its:
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VP
& Trust Officer
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