Heron Lake BioEnergy, LLC (Form: 8-K, Received: 03/25/2021 19:02:32)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 24, 2021


HERON LAKE BIOENERGY, LLC
(Exact name of small business issuer as specified in its charter)

Minnesota	000-51825		41-2002393
(State or other jurisdiction of incorporation or organization)	(Commission File Number)		(I.R.S. Employer Identification No.)

91246 390th Avenue, Heron Lake, MN		56137-1375
(Address of principal executive offices)		(Zip Code)

(507) 793-0077
(Issuer's telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


◻	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
◻	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
◻	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
◻	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENTS

Merger Agreement

On or about March 24, 2021, Granite Falls Energy, LLC, a Minnesota limited liability company (“GFE”), and Heron Lake BioEnergy, LLC, a Minnesota limited liability company (“HLBE”), executed a Merger Agreement, pursuant to which GFE will acquire the minority interest of HLBE (the “Merger”). The structure of the transaction will be a merger in which a wholly owned subsidiary of GFE (the “Merger Sub”) will merge with and into HLBE, with HLBE surviving the transaction as a wholly owned subsidiary of GFE.

A copy of the Merger Agreement is furnished as Exhibit 10.1 to this report. The proposed transaction is further detailed in a Plan of Merger, which is furnished as Exhibit 2.1 to this report.

Prior to the Merger, GFE owns approximately 50.7 percent of the issued and outstanding units of HLBE. Excluding the units owned by GFE, there are 38,456,283 units of HLBE issued and outstanding (the “Minority Interest”). The purchase price for the entire Minority Interest is $14,000,000 in cash payable at the closing of the Merger. Each issued and outstanding unit of the Minority Interest will be canceled and converted into the right to receive $0.36405 per Unit. (the “Merger Consideration”).

The units of HLBE held by GFE immediately prior closing of Merger shall be cancelled with no consideration issued to GFE. GFE will emerge from the transaction as the sole owner of HLBE.

At the time the Merger becomes effective, 100 percent of the membership interest in the Merger Sub shall be converted into and become 100 percent of the membership interests in HLBE, as the surviving company in the Merger.

The Merger is subject to approval by a majority of the Minority Interest of HLBE. A special meeting of the members of HLBE will be called to vote on the Plan of Merger. The Merger is also subject to (i) the consent of GFE’s lender, (ii) GFE’s ability to obtain financing for the transaction, (iii) confirmation that the Merger will not have materially adverse tax consequences for GFE, (iv) the receipt of regulatory approval, including approval by the Securities and Exchange Commission and (v) the receipt of third-party consents.

Pursuant to the Merger Agreement, GFE and HLBE release, acquit, and discharge each other and all related parties from all claims, including, all liabilities, obligations, claims, litigation, actions, causes of action, suits, proceedings, executions, judgments, demands, damages, losses, duties, debts, dues, accounts, fees, costs, expenses and penalties, and agree not to initiate, maintain, prosecute or continue to maintain or prosecute any action, suit or proceeding, or seek to enforce any right or claim against the other or its related parties.

Pursuant to the Merger Agreement, HLBE and GFE shall appoint an exchange agent who shall be responsible for, among other things, dispersing Merger Consideration to holders of Minority Interest units who properly surrender their units. Both HLBE and GFE agree to pay their own transaction expenses related to the Merger.

Voting agreements related to Merger

On or about March 24, 2021, GFE and HLBE entered into a Voting Agreement, pursuant to which GFE agrees to vote its units of HLBE in favor of the proposed Merger (the “GFE Voting Agreement”). The GFE Voting Agreement also provides that GFE will designate HLBE as its proxy for the purposes of voting for the Merger, GFE will refrain from transferring any of its units of HLBE prior to the Merger, and GFE authorizes HLBE to suspend trading of all units until the Merger is complete or is terminated. A copy of the GFE Voting Agreement is furnished as Exhibit 10.2 to this report.

Additionally, on or about March 24, 2021, GFE and the governors of HLBE appointed by HLBE’s Minority Interest (the “Governors”) entered into a Voting Agreement (the “HLBE Voting Agreement”). Pursuant to the HLBE Voting Agreement, the Governors agree to vote for the Merger, recommend the members of HLBE vote for the Merger, and designate HLBE as their proxy for the purpose of voting for the Merger. The Governors additionally agree not to

transfer their units and authorize HLBE to suspend trading of all units until the Merger is complete or is terminated. A copy of the HLBE Voting Agreement is furnished as Exhibit 10.3 to this report.

ITEM 5.07 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On March 24, 2021, Heron Lake BioEnergy, LLC (the “Company”) held its 2021 Annual Meeting of Members (the “Annual Meeting”) for the purpose of electing two governors to its board of governors. Votes were solicited in person and by proxy.

Of the Company’s 77,896,119 Class A and Class B units issued, outstanding and entitled to vote at the Annual Meeting, 51,792,109 Class A and Class B units, or 66.5% of the total units, were present either in person or by proxy. As a result, a quorum was present to conduct business at the Annual Meeting.

With respect to the election of governors, Class A and Class B units held by members entitled to appoint one or more governors under the Company’s Member Control Agreement are not entitled to vote. Therefore, of the total units present in person or by proxy at the meeting, 12,305,285 units were entitled to vote in the election of governors.

There were two nominees for the governor positions, incumbent Douglas Schmitz and incumbent David Woestehoff. The votes were as follows:


Name	Votes For	Votes Withheld/Abstaining
Douglas Schmitz	11,811,035	494,250
David Woestehoff	11,749,535	555,750

As a result, Mr. Schmitz and Mr. Woestehoff were re-elected governor of the Company to serve a three-year term expiring at the 2024 Annual Meeting or until a successor has been elected and qualified or such governor’s earlier death, resignation, or removal.

No other matters were voted upon at the Annual Meeting.

ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS

(a)None.

(b)None.

(c)None.

(d)Exhibits.

Exhibit No.Description

2.1

Plan of Merger between Granite Heron Merger Sub, LLC, and Heron Lake BioEnergy, LLC, dated March 24, 2021.

10.1

Merger Agreement between Granite Falls Energy, LLC, and Heron Lake BioEnergy, LLC, dated March 24, 2021

10.2

Voting Agreement between Granite Falls Energy, LLC, and Heron Lake BioEnergy, LLC, dated March 24, 2021

10.3

Voting Agreement between Granite Falls Energy, LLC, and certain governors of Heron Lake BioEnergy, LLC, dated March 24, 2021

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	HERON LAKE BIOENERGY, LLC

Date: March 25, 2020	/s/ Stacie Schuler
	Stacie Schuler, Chief Financial Officer

PLAN OF MERGER

THIS PLAN OF MERGER (the “Plan”) is dated as of March 24, 2021, and is by and between GRANITE HERON MERGER SUB, LLC (“Merger Sub”) and HERON LAKE BIOENERGY, LLC (“HLBE”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Merger Agreement (as defined below).

WHEREAS, Merger Sub is a Minnesota limited liability company that is organized and existing under Chapter 322C of the laws of the State of Minnesota (as amended, the “Act”), and whose parent company and sole member and 100% owner is Granite Falls Energy, LLC, a Minnesota limited liability company that is organized and existing under Chapter 322C of the Act (“GFE”); and

WHEREAS, HLBE is a Minnesota limited liability company that is organized and existing under Chapter 322C of the Act; and

WHEREAS, on the date hereof, the HLBE and GFE have entered into a Merger Agreement (the “Merger Agreement”) specifying certain of the terms of and establishment and issuance of the consideration given for the Transaction (as defined in the Merger Agreement); and

WHEREAS, the parties have prepared this Plan of Merger and the respective members or equity holders, as the case may be, of the parties each has approved and adopted this Plan and the transactions contemplated hereby in the manner required by the Act and their respective organizational documents.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements of the parties contained herein, the parties hereto agree as follows:

Section 1.The Merger. Upon the terms and subject to the condition of this Agreement and the Merger Agreement, and in accordance with the Act, at the Effective Time (as defined below), the Merger Sub shall merge with and into HLBE (the “Merger”), and HLBE, whose name shall remain “Heron Lake BioEnergy, LLC” and whose Articles of Organization and Limited Liability Company Agreement each shall be amended as further provided herein, shall be the surviving limited liability company under the Act, and shall exist by virtue of, and shall be governed by, the Act.

Section 2.Closing. The closing of the Merger and the other transactions contemplated hereby (the “Closing”) shall take place by electronic exchange of documents, at 9:00 a.m. local time on the third (3rd) business day following the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in Section 5 of the Merger Agreement (other than those conditions that by their terms are to be satisfied at Closing, but subject to such satisfaction or waiver), or at such other time and place as the parties mutually agree in writing. Such date is herein referred to as the “Closing Date”.

Section 3.Articles of Merger. Effective immediately at the Closing, the parties shall each (a) execute articles of merger (the “Articles of Merger”) setting forth the information required by and otherwise in compliance with the Act, in form and substance reasonably acceptable to the parties, which Articles of Merger shall provide that the Merger shall become effective upon the

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filing of the Articles of Merger or at such other time as is agreed by the parties and specified in the Articles of Merger (the time the Merger becomes effective being the “Effective Time”) (b) cause the Articles of Merger to be filed with the Secretary of State of the State of Minnesota, and as otherwise required by the Act, and (c) make such other filings or recordings, if any, required by the Act, and shall take all such further actions as may be required by law to make the Merger effective.

Section 4.Articles of Organization; Name. At Effective Time, by virtue of the Merger and without any further action by the parties or their respective members the articles of organization of HLBE, as the surviving company, shall be amended and restated in its entirety to read as set forth on Exhibit A and the name of HLBE, as the surviving association in the Merger, shall remain “Heron Lake BioEnergy, LLC”.

Section 5.LLC Agreement. Immediately following the Effective Time, without any further action by the parties or their respective members or equity holders, as applicable, the Limited Liability Company Agreement of Merger Sub shall be the Limited Liability Company Agreement of HLBE, as the surviving company in the Merger.

Section 6.Managers. From and after the Effective Time, without any further action by the parties or their respective members or equity holders, as applicable, (a) each member of the Board of Governors HLBE immediately prior to the closing of the Transaction shall cease being a member of the Board of HLBE, and (b) GFE shall be appointed to serve as the manager of HLBE, as the surviving company in the Merger, to serve in accordance with the Articles of Organization and the Limited Liability Company Agreement of HLBE.

Section 7.Merger Consideration; Conversion of Equity Interests. At the Effective Time, by virtue of the Merger:

(a)Membership Interests of Merger Sub. 100% of the membership interests of the Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become 100% of the membership interests in HLBE, as the surviving company in the Merger.

(b)Cancellation of Units. Each Unit of HLBE (other than Units held by GFE or an affiliate of GFE) issued and outstanding immediately prior to the closing of the Merger shall be cancelled and converted into the right to receive $0.36405 per Unit, and each Unit of HLBE held by GFE issued and outstanding immediately prior to the Closing shall be cancelled and no consideration will be issued in respect thereof.

Section 8.Release. Effective as of the Effective Time, HLBE hereby agrees to the Release set forth in Section 4 of the Merger Agreement on behalf of the members or other unitholders of HLBE (other than GFE) as part of the terms of the Transaction, and acceptance of the Merger Consideration by a member or other unitholder of HLBE shall constitute such member or other unitholder’s consent to or ratification of the Release by HLBE and provided, further, that none of HLBE’s governors and officers, including but not limited to the elected governors joining in the execution of the Merger Agreement, make any representation or warranty to GFE or its Related Parties regarding the effectiveness or validity of the Release by HLBE on behalf of its

current, former, and future partners, principals, members, and unitholders, and predecessors and successors in interest, assigns, insurers, heirs, administrators, legatees, executors and estates, and any other individual or entity that acts or has acted on behalf of any of the foregoing.

Section 9.Termination. This Plan shall immediately terminate and be of no further force and effect upon the termination of the Merger Agreement.

Section 10.Miscellaneous. Sections 12, 13, 14, 15 and 16 of the Merger Agreement are hereby incorporated by reference, mutatis mutandis.

[Signature Page Follows]

IN WITNESS WHEREOF, this Plan has been agreed to and executed by the duly authorized representatives of the parties, as of the date first set forth above.

GRANITE HERON SUB, LLCHERON LAKE BIOENERGY, LLC

By: /s/ Paul Enstad By: /s/ Mike Kunerth
Its: Chairman Its: Secretary

EXHIBIT A

Articles of Organization

MERGER AGREEMENT

THIS MERGER AGREEMENT (this "Agreement"), dated effective as of March 24, 2021 (“Effective Date”), sets forth the binding agreement between Granite Falls Energy, LLC, a Minnesota limited liability company ("Buyer"), and Heron Lake BioEnergy, LLC, a Minnesota limited liability company ("Company"), for Buyer’s acquisition of the Company by merger, on the terms and conditions set forth herein. The structure of the acquisition will be by merger of a to-be-formed wholly owned subsidiary of Buyer ("Merger Sub") with and into the Company, with the Company surviving the merger. The merger is referred to as the "Transaction" and Buyer, Merger Sub and the Company are referred to collectively as the "Parties."

1.Merger Structure. Subject to the satisfaction of the conditions described in this Agreement, at the closing of the Transaction (i) Merger Sub will merge with and into the Company, and (ii) the separate corporate existence of Merger Sub will cease and the Company will continue its corporate existence as a limited liability company under Minnesota Chapter 322C as the surviving company in the merger. All of Buyer’s units in the Company will be cancelled and no consideration paid therefor at the closing of the Transaction.

2.Merger Consideration. The purchase price is $14,000,000 (the "Merger Consideration") in cash and payable at the closing of the Transaction. Buyer has calculated the Merger Consideration on the basis of the following assumptions: (i) excluding Buyer’s ownership interest in the Company, the Company has 38,456,283 units outstanding (the “Minority Ownership Interest”), for which Buyer will pay $0.36405 per unit, and (ii) the Merger Consideration will not be adjusted for any changes in the assets or liabilities of the Company following the Effective Date. For clarity, the Merger Consideration will not be adjusted for any changes in the Company’s working capital.

3.Exchange Agent. The Parties appoint _______________ to serve as an exchange agent for closing the Transaction (“Exchange Agent”). Subject to the terms and conditions of a definitive agreement, to be mutually agreed by the Parties, Exchange Agent shall be responsible for: (i) mailing each holder of a Minority Ownership Interest a letter of transmittal providing instructions for the surrender of their certificates representing Company’s units; (ii) receiving and cataloguing each certificate received; (iii) disbursing the Merger Consideration to each holder of a Minority Ownership Interest that properly surrendered their certificates; and (iv) performing such other tasks necessary or related to the closing as provided in the definitive agreement.

4.Plan of Merger. As soon as reasonably practicable after the execution of this Agreement, the Parties shall enter into a plan of merger (the "Plan of Merger") relating to the merger of Merger Sub with and into the Company, substantially in the form attached hereto as Exhibit 1. The Plan of Merger shall include the terms of this Agreement and otherwise meet the requirements of Section 322C.1002, Subd. 3, subsections (1) – (4) of Minnesota Statutes. The Plan of Merger shall provide that the consummation of the Transaction shall be subject to satisfaction of (or waiver thereof by Buyer) the conditions specified in this Agreement.

5.Mutual Release. Effective as of the closing of the Transaction, each of Buyer and Company, on behalf of itself and its respective Related Parties, (i) will irrevocably and

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unconditionally release, acquit, and finally and forever discharge the other and its Related Parties from the Released Claims and (ii) will agree not to initiate, maintain, prosecute or continue to maintain or prosecute any action, suit or proceeding, or seek to enforce any right or claim, that is barred by the releases described in the immediately preceding clause (i) (the “Release”); provided, the Plan of Merger shall provide that the Company agreed to the Release on behalf of the members and other unitholders of the Company as part of the terms of the Transaction, and that approval or acceptance of the Merger Consideration by a member or unitholder of the Company shall constitute such member or unitholder’s consent to or ratification of the Release by the Company on their behalf; and provided, further, that none of the Company’s governors and officers, including but not limited to the elected Governors joining in the execution of this Agreement, make any representation or warranty to Buyer or its Related Parties regarding the effectiveness or validity of the Release by the Company on behalf of its current, former, and future partners, principals, members, and unitholders, and predecessors and successors in interest, assigns, insurers, heirs, administrators, legatees, executors and estates, and any other individual or entity that acts or has acted on behalf of any of the foregoing. As part of the Release, each member of the Company’s Board of Governors (in his or her individual capacity as a member of such board and as a member of the Company) will provide the same release and covenant described in the immediately preceding clauses (i) and (ii). If any releasing party or person or any of his, her or its Related Parties initiates or prosecutes any action, suit or proceeding, or seeks to enforce any right or claim, that is barred by such releasing party’s release set forth above, such releasing party shall pay all of the fees, costs and expenses, including attorneys’ fees, costs and expenses, incurred by the applicable released party or its Related Parties in connection with any such action, suit, proceeding or claim.

For the purposes of Section 4, “Released Claims” means any and all liabilities, obligations, claims, litigation, actions, causes of action, suits, proceedings, executions, judgments, demands, damages, losses, duties, debts, dues, accounts, fees, costs, expenses and penalties (including interest penalties), of any nature whatsoever, whether known or unknown, asserted or unasserted, ascertained or unascertained, suspected or unsuspected, existing or claimed to exist, which the applicable releasing party or person or its Related Parties, as applicable, has had, has as of the closing of the Transaction or may have after the closing of the Transaction against the released Party or person, as applicable, or the Related Parties of such released Party or person, as applicable, by reason of any matter, cause or thing whatsoever arising from or related to the Company from the beginning of time to the closing of the Transaction. However, Released Claims shall not include any claims, rights or obligations arising by virtue of the terms or breach of the Definitive Agreement or fraud.

For the purposes of Section 4, “Related Parties” means, with respect to a Party, any and all of such Party’s current, former, and future parent companies, subsidiaries, affiliates, partners, principals, members, unitholders, Directors, Governors, managers, officers, employees, agents, representatives, attorneys, consultants, independent contractors, predecessors and successors in interest, assigns, insurers, heirs, administrators, legatees, executors and estates, and any other individual or entity that acts or has acted on behalf or any of the foregoing.

6.Conditions. Buyer's obligation to close the Transaction is subject to the following conditions:

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(a)Buyer’s and Company’s receipt of the consent of CoBank, ACB (“CoBank”) to the Transaction, as and to the extent required under (i) the current loan agreement between CoBank and the Company and (ii) the current loan agreement between CoBank and Buyer (collectively, the “CoBank Consent”);

(b)Buyer's receipt of cash proceeds from one or more financing transactions in an amount necessary to finance the Transaction, pay related fees and expenses and provide adequate ongoing working capital for the Company on such terms and conditions reasonably satisfactory to Buyer;

(c)Buyer’s receipt of an opinion by its tax advisor that the structure of the Transaction has no materially adverse tax consequences to Buyer;

(d)the receipt of Regulatory Approval (defined below) on terms reasonably satisfactory to Buyer;

(e)the receipt of any third-party consents (in addition to the CoBank Consent) required to consummate the Transaction which are specified in Exhibit 2 hereto (the “Required Third-Party Consents”); and

(f)approval of the Transaction by a majority in interest of the Minority Ownership Interest.

7.Approvals and Voting Agreements; Access to Information by Buyer. Approval of this Agreement by two-thirds of the Board of Governors of the Company, including approval by the four Governors elected by the Minority Ownership Interest, is a condition precedent of this Agreement. Concurrently with the execution of this Agreement by Company and Buyer, (i) Buyer, in its capacity as the majority member of the Company, will execute and deliver the Buyer Voting Agreement to the Company, in the form attached hereto as Exhibit 3, under which Buyer agrees to vote its units held directly or indirectly in the Company in favor of the Transaction, and (ii) the four Governors on the Board of Governors elected by the Minority Ownership Interest, and the one Alternate appointed to the Board of Governors by the four elected Governors, each will execute and deliver the Elected Governor/Alternate Voting Agreement to the Company, in the form attached hereto as Exhibit 4, under which each agrees to vote its units held in the Company in favor of the Transaction and recommend that the holders of the Minority Ownership Interest in the Company approve the Transaction. Each of Buyer and Company acknowledges that, by management agreement, Buyer’s executive management team also serves as the executive management team of the Company. Company agrees and hereby authorizes Company’s management to allow Buyer and its advisors full access to the Company's facilities, records, key employees, customers, suppliers and advisors for the purpose of (x) satisfying the conditions to Buyer’s obligation to close the Transaction, (y) Buyer completing its internal due diligence review (for clarity, satisfactory completion of Buyer’s internal due diligence review or the results thereof is not a condition to Buyer’s obligation to close the Transaction), and (z) consummation of the Transaction. Company acknowledges that Buyer's internal due diligence review will include, but will not be limited to, a complete review of the Company's financial, legal, tax, environmental, intellectual property and labor records and agreements, and any other matters as Buyer's accountants, tax and legal counsel, and other advisors deem relevant to satisfying the conditions to Buyer’s obligation to close the Transaction and/or consummation of the Transaction.

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8.Covenants of the Company and the Buyer. During the period from the signing of this Agreement through closing of the Transaction, each of Company and Buyer, on behalf of itself and its respective parent companies, subsidiaries, and affiliates, will: (a) conduct its business in the ordinary course in a manner consistent with past practice, and not contrary to its obligations hereunder or to frustrate or hinder the consummation of the Transaction, (b) maintain its properties and other assets in good working condition (normal wear and tear excepted), (c) use its best efforts to maintain its business and employees, customers, assets and operations as an ongoing concern in accordance with past practice, (d) use its best efforts to obtain each of the CoBank Consent, any Required Third Party Consents and the Regulatory Approval, and (e) use its best efforts to satisfy the other conditions to closing of the Transaction and to otherwise consummate the Transaction.

9.Regulatory Approval. From and after the date of this Agreement, the Parties will use best efforts to take, or cause to be taken, all appropriate action necessary, proper or advisable to obtain all necessary actions or nonactions, waivers, consents, clearances, approvals, and expirations or terminations of waiting periods, from all applicable government entities, including but not limited to the Securities and Exchange Commission, for the closing of the Transaction (“Regulatory Approval”).

10.Timing. Subject to receipt of Regulatory Approval, the Parties intend that the Company’s Board of Governors will submit this matter for approval by the Company’s members at a special member meeting on or about April 9, 2021, and that the Transaction will close no later than five (5) business days the date on which the Company receives member approval.

11.Exclusivity. In consideration of the expenses that Buyer has incurred and will incur in connection with the Transaction, the Company agrees that until such time as this Agreement has terminated in accordance with the provisions of Section 11 (such period, the "Exclusivity Period"), neither the Company nor any of its representatives, officers, employees, Governors, agents, members, subsidiaries or affiliates (collectively, the "Company Group") shall initiate, solicit, entertain, negotiate, accept or discuss, directly or indirectly, any proposal or offer from any person or group of persons other than Buyer and its affiliates (an "Acquisition Proposal") to acquire all or any significant part of the business and properties, unit or unit equivalents of the Company, whether by merger, purchase of units, purchase of assets, tender offer or otherwise, or provide any non-public information to any third party in connection with an Acquisition Proposal or enter into any agreement, arrangement or understanding requiring it to abandon, terminate or fail to consummate the Transaction with Buyer. Company agrees to immediately notify Buyer if any member of the Company Group receives any indications of interest, requests for information or offers in respect of an Acquisition Proposal, and will communicate to Buyer (and to the Company for non-Company members of the Company Group) in reasonable detail the terms of any such indication, request or offer, and will provide Buyer and Company with copies of all written communications relating to any such indication, request or offer. Immediately upon execution of this Agreement, the Company shall, and shall cause the Company Group to, terminate any and all existing discussions or negotiations with any person or group of persons other than Buyer and its affiliates regarding an Acquisition Proposal. The Company represents that no member of the Company Group is party to or bound by any agreement with respect to an Acquisition Proposal other than under this Agreement.

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12.Termination. This Agreement will automatically terminate and be of no further force and effect upon the earlier of (a) the failure of the majority in interest of the Minority Ownership Interest to approve the Transaction at the special member meeting called for that purpose, (b) mutual agreement of Buyer and Company (provided Company’s agreement to terminate this Agreement shall require approval by two-thirds of the Board of Governors of the Company, including approval by the four Governors elected by the Minority Ownership Interest), and (c) so long as the Parties have not held the special member meeting due solely to lack of Regulatory Approval or consummated the Transaction due solely to lack of CoBank Consent, 5:00 pm CT on July 31, 2021. Notwithstanding anything in the previous sentence, Sections 13, 14 and 15 shall survive the termination of this Agreement, and the termination of this Agreement shall not affect any rights any Party has with respect to the breach of this Agreement by another Party prior to such termination.

13.GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF MINNESOTA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THOSE OF THE STATE OF MINNESOTA.

14.Confidentiality.

(a)During the term of this Agreement, either Party (as the "Disclosing Party") may disclose or make available to the other Party (as the "Receiving Party") information about its business affairs, customers, products/services, confidential intellectual property, trade secrets, third-party confidential information and other sensitive or proprietary information, whether orally or in written, electronic or other form or media, and whether or not marked, designated or otherwise identified as "confidential" (collectively, "Confidential Information"). Confidential Information includes the existence of this Agreement and the proposed Transaction.

(b)Confidential Information shall not include information that, at the time of disclosure: (i) is or becomes generally available to and known by the public other than as a result of, directly or indirectly, any breach of this Section 13 by the Receiving Party or any of its representatives; (ii) is or becomes available to the Receiving Party on a non-confidential basis from a third-party source, provided that such third party is not and was not prohibited from disclosing such Confidential Information; (iii) was known by, or in the possession of, the Receiving Party or its representatives before being disclosed by or on behalf of the Disclosing Party; (iv) was or is independently developed by the Receiving Party without reference to or use, in whole or in part, of any of the Disclosing Party's Confidential Information; or (v) is required to be disclosed under applicable federal, state or local law, regulation or a valid order issued by a court or governmental agency of competent jurisdiction.

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(c)The Receiving Party shall: (i) protect and safeguard the confidentiality of the Disclosing Party's Confidential Information with at least the same degree of care as the Receiving Party would protect its own Confidential Information, but in no event with less than a commercially reasonable degree of care; (ii) not use the Disclosing Party's Confidential Information, or permit it to be accessed or used, for any purpose other than to exercise its rights or perform its obligations under this Agreement; and (iii) not disclose any such Confidential Information to any person or entity, except to the Receiving Party's representatives who need to know the Confidential Information to assist the Receiving Party, or act on its behalf, to exercise its rights or perform its obligations under this Agreement. The Receiving Party shall be responsible for any breach of this Section 13 caused by any of its representatives.

15.No Third-Party Beneficiaries. Except as specifically set forth or referred to herein, nothing herein is intended or shall be construed to confer upon any person or entity other than the Parties and their successors or assigns, any rights or remedies under or by reason of this Agreement.

16.Expenses. The Parties will each pay their own transaction expenses incurred in connection with the proposed Transaction. The Company agrees to reimburse the four elected Governors and their appointed alternate for and/or pay directly all legal expenses related to representation of the four elected Governors and their appointed alternate in connection with the Transaction, on or before the earlier of the closing of the Transaction or July 31, 2021. For clarity, the Company agrees that its reimbursement and/or direct pay obligation is a transaction expense of the Company, and shall not be deducted from or paid from the Merger Consideration.

17.Miscellaneous. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement. The headings of the various sections of this Agreement have been inserted for reference only and shall not be deemed to be a part of this Agreement.

[signature page follows]

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date set forth above.

HERON LAKE BIOENERGY, LLC

GRANITE FALLS ENERGY, LLC

/s/ Mike Kunerth_________

By: Mike Kunerth, Secretary

/s/ Paul Enstad__________

By: Paul Enstad, Chairman

By signing below, the undersigned Governors of Heron Lake BioEnergy, LLC each agree that (a) they will not disparage Buyer, the Company or any part of the Transaction either privately or publicly, and (b) they will (i) recommend approval of the Transaction at all Board of Governor meetings, member meetings, and in all communications with members of the Company and the public, and (ii) vote those membership interests or units which they and their affiliates control in favor of the Transaction at any member meeting called for that purpose, pursuant to the terms of the Elected Governor/Alternate Voting Agreement in the form attached hereto as Exhibit 4.

/s/ Mike Kunerth_________

Mike Kunerth, Governor

/s/ Doug Schmitz_________

Doug Schmitz, Governor

/s/ Dave Woestehoff______

Dave Woestehoff, Governor

/s/ Robert Ferguson______

Robert Ferguson, Governor

/s/ Jeremy Janssen_______

Jeremy Janssen, Alternate

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VOTING AGREEMENT

This Voting Agreement (this "Agreement"), dated as of March 24, 2021, is entered into by and between Granite Falls Energy, LLC, a Minnesota limited liability company ("Member"), and Heron Lake BioEnergy, LLC, a Minnesota limited liability company (the "Company"). Member and the Company are each sometimes referred to herein individually as a "Party" and collectively as the "Parties."

WHEREAS, concurrently with the execution of this Agreement, the Company and Member have entered into a merger agreement providing for Member’s acquisition of the Company by merger (the "Merger Agreement"), providing for, among other things, the merger of Member’s wholly-owned subsidiary (“Merger Sub”) with and into the Company (the "Merger") pursuant to the terms and conditions of the Merger Agreement;

WHEREAS, in order to induce the Company to enter into the Merger Agreement, Member is willing to make certain representations, warranties, covenants, and agreements as set forth in this Agreement with respect to the units of membership interest of the Company ("Company Interest") Beneficially Owned by Member and set forth below Member's signature on the signature page hereto (the "Original Units" and, together with any additional units of Company Interest pursuant to Section 6 hereof, the "Units"); and

WHEREAS, as a condition to its willingness to enter into the Merger Agreement, the Company has required that Member, and Member has agreed to, execute and deliver this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, and agreements set forth below and for other good and valuable consideration, the receipt, sufficiency, and adequacy of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:

1.Definitions. When used in this Agreement, the following terms in all of their tenses, cases, and correlative forms shall have the meanings assigned to them in this Section 1.

(a)“Beneficially Own” or “Beneficial Ownership” has the meaning assigned to such term in Rule 13d-3 under the Exchange Act of 1934, and a person’s beneficial ownership of securities shall be calculated in accordance with the provisions of such rule (in each case, irrespective of whether or not such rule is actually applicable in such circumstance). For the avoidance of doubt, "Beneficially Own" and "Beneficial Ownership" shall also include record ownership of securities.

(b)"Beneficial Owner" shall mean the person who Beneficially Owns the referenced securities.

2.Representations of Member. Member represents and warrants to the Company that:

(a)Ownership of Units. Member: (i) is the Beneficial Owner of all of the Original Units free and clear of any proxy, voting restriction, adverse claim, or other liens, other than those created by Cobank as administrative agent for Compeer, created by this Agreement, or created under applicable federal or state securities laws; and (ii) has the sole voting power over all of the Original Units. Except pursuant to this Agreement, there are no options, warrants, or other rights, agreements, arrangements, or commitments of any character to which Member is a party relating to the pledge, disposition, or voting of any of the Original Units and there are no voting trusts or voting agreements with respect to the Original Units.

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(b)Disclosure of All Units Owned. Member does not Beneficially Own any Units of the Company other than the Original Units.

(c)Power and Authority; Binding Agreement. Member has full corporate power and authority to enter into, execute, and deliver this Agreement and to perform fully Member's obligations hereunder (including the proxy described in Section 3(b) below). This Agreement has been duly and validly executed and delivered by Member and constitutes the legal, valid, and binding obligation of Member, enforceable against Member in accordance with its terms except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally.

(d)No Conflict. The execution and delivery of this Agreement by Member does not, and the consummation of the transactions contemplated hereby and the compliance with the provisions hereof will not, conflict with or violate any law applicable to Member or result in any breach of or violation of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration, or cancellation of, or result in the creation of any lien on any of the Units pursuant to, any agreement or other instrument or obligation including organizational documents binding upon Member or any of the Units.

(e)No Consents. No consent, approval, order, or authorization of, or registration, declaration, or filing with, any governmental entity or any other person on the part of Member is required in connection with the valid execution and delivery of this Agreement.

(f)No Litigation. There is no action, suit, investigation, or proceeding (whether judicial, arbitral, administrative, or other) (each an “Action”) pending against, or, to the knowledge of Member, threatened against or affecting, Member that could reasonably be expected to materially impair or materially adversely affect the ability of Member to perform Member’s obligations hereunder or to consummate the transactions contemplated by this Agreement on a timely basis.

3.Agreement to Vote Units; Irrevocable Proxy.

(a)Agreement to Vote. Member irrevocably and unconditionally agrees during the term of this Agreement, at any annual or special meeting of the Company called with respect to the following matters, and at every adjournment or postponement thereof, and on every action or approval by written consent or consents of the Company members with respect to any of the following matters, to vote or cause the holder of record to vote the Units: (i) in favor of the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement; and (ii) against any action, proposal, transaction, or agreement that could reasonably be expected to impede, interfere with, delay, discourage, adversely affect, or inhibit the timely consummation of the Merger or the fulfillment of Member’s, the Company's, or Merger Sub's conditions under the Merger Agreement.

(b)Irrevocable Proxy. Member hereby appoints the Company and any designee of the Company, and each of them individually, until the Expiration Time (at which time this proxy shall automatically be revoked), its proxies and attorneys-in-fact, with full power of substitution and resubstitution, to vote or act by written consent during the term of this Agreement with respect to the Units in accordance with Section 3(a). This proxy and power of attorney is given to secure the performance of the duties of Member under this Agreement. Member shall take such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy. This proxy and power of attorney granted by Member shall be irrevocable during the

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term of this Agreement, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy, and shall revoke any and all prior proxies granted by Member with respect to the Units. The power of attorney granted by Member herein is a durable power of attorney and shall survive the bankruptcy of Member. The proxy and power of attorney granted hereunder shall terminate upon the termination of this Agreement.

4.No Voting Trusts or Other Arrangement. Member agrees that during the term of this Agreement Member will not deposit any of the Units in a voting trust or grant any proxies with respect to the Units inconsistent with Section 3(a).

5.Transfer and Encumbrance. Member agrees that during the term of this Agreement, Member will not, directly or indirectly, transfer, sell, offer, exchange, assign, pledge, convey any legal or Beneficial Ownership interest in or otherwise dispose of (by merger (including by conversion into securities or other consideration), by tendering into any tender or exchange offer, by operation of law, or otherwise), or encumber ("Transfer") any of the Units or enter into any contract, option, or other agreement with respect to, or consent to, a Transfer of, any of the Units or Member's voting or economic interest therein. Any attempted Transfer of Units or any interest therein in violation of this Section 5 shall be null and void.

6.Additional Units. Member agrees that all Units of Company Interest that Member purchases, acquires the right to vote, or otherwise acquires Beneficial Ownership of, after the execution of this Agreement and prior to the Expiration Time shall be subject to the terms and conditions of this Agreement and shall constitute Units for all purposes of this Agreement. In the event of any unit split, unit dividend, merger, reorganization, recapitalization, reclassification, combination, exchange of Units, or the like affecting the Units, the terms of this Agreement shall apply to the resulting securities and such resulting securities shall be deemed to be "Units" for all purposes of this Agreement.

7.Termination. This Agreement shall terminate upon the earliest to occur of (the "Expiration Time"): (a) the effective time of the Merger; (b) the date on which the Merger Agreement is terminated in accordance with its terms; and (c) the termination of this Agreement by mutual written consent of the Parties. Nothing in this Section 7 shall relieve or otherwise limit the liability of any Party for any intentional breach of this Agreement prior to such termination.

8.Further Assurances. Member agrees, from time to time, and without additional consideration, to execute and deliver such additional proxies, documents, and other instruments and to take all such further action as the Company may reasonably request to consummate and make effective the transactions contemplated by this Agreement.

9.Stop Transfer Instructions. At all times commencing with the execution and delivery of this Agreement and continuing until the Expiration Time, in furtherance of this Agreement, Member hereby authorizes the Company or its counsel to notify the Company’s transfer agent that there is a stop transfer order with respect to all of the Units (and that this Agreement places limits on the voting and transfer of the Units), subject to the provisions hereof and provided that any such stop transfer order and notice will immediately be withdrawn and terminated by the Company following the Expiration Time.

10.Specific Performance. Each Party hereto acknowledges that it will be impossible to measure in money the damage to the other Party if a Party hereto fails to comply with any of the obligations imposed by this Agreement, that every such obligation is material and that, in the event of any such failure, the other Party will not have an adequate remedy at law or damages. Accordingly, each Party hereto agrees that injunctive relief or other equitable remedy, in addition to remedies at law or damages, is the appropriate remedy for any such failure and will not oppose the seeking of such relief on the basis that the other Party has an adequate remedy at law. Each Party hereto agrees that it will not seek, and

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agrees to waive any requirement for, the securing or posting of a bond in connection with the other Party's seeking or obtaining such equitable relief.

11.Entire Agreement. This Agreement supersedes all prior agreements, written or oral, between the Parties hereto with respect to the subject matter hereof and contains the entire agreement between the Parties with respect to the subject matter hereof. This Agreement may not be amended or supplemented, and no provisions hereof may be modified or waived, except by an instrument in writing signed by both of the Parties hereto. No waiver of any provisions hereof by either Party shall be deemed a waiver of any other provisions hereof by such Party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such Party.

12.Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the addresses in their signature blocks.

13.Miscellaneous.

(a)Governing Law. This Agreement, and all legal actions (whether based on contract, tort, or statute) arising out of or relating to this Agreement or the actions of any of the Parties in the negotiation, administration, performance, or enforcement hereof, shall be governed by and construed in accordance with the internal laws of the State of Minnesota without giving effect to any choice or conflict of law provision or rule (whether of the State of Minnesota or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Minnesota.

(b)Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT: (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION; (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13(b).

(c)Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such cost or expense, whether or not the Merger is consummated.

(d)Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect

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any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

(e)Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

(f)Section Headings. All section headings herein are for convenience of reference only and are not part of this Agreement, and no construction or reference shall be derived therefrom.

(g)Assignment. Neither Party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other Party hereto. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective permitted successors and assigns. Any assignment contrary to the provisions of this Section 13(g) shall be null and void.

(h)No Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to or shall confer upon any person other than the Parties and their respective successors and permitted assigns any legal or equitable right, benefit, or remedy of any nature under or by reason of this Agreement.

[signature page follows]

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IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the date first written above.

MEMBER:

GRANITE FALLS ENERGY, LLC

COMPANY:

HERON LAKE BIOENERGY, LLC

/s/ Paul Enstad___________

By: Paul Enstad, Chairman

/s/ Mike Kunerth_________

By: Mike Kunerth, Secretary

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VOTING AGREEMENT

This Voting Agreement (this "Agreement"), dated as of March 24, 2021, is entered into by and among the undersigned governors (each, a "Governor") of Heron Lake BioEnergy, LLC, a Minnesota limited liability company (the "Company"), and Granite Falls Energy, LLC, a Minnesota limited liability company ("Parent"). Parent and Governor are each sometimes referred to herein individually as a "Party" and collectively as the "Parties."

WHEREAS, concurrently with the execution of this Agreement, the Company and Parent have entered into a merger agreement providing for Parent’s acquisition of the Company by merger (the "Merger Agreement"), providing for, among other things, the merger of Parent’s wholly-owned subsidiary (“Merger Sub”) with and into the Company (the "Merger") pursuant to the terms and conditions of the Merger Agreement;

WHEREAS, in order to induce the Company to enter into the Merger Agreement, Governor is willing to make certain representations, warranties, covenants, and agreements as set forth in this Agreement with respect to the units of membership interest of the Company ("Company Interest") owned and Beneficially Owned by Governor and set forth below Governor's signature on the signature page hereto (the "Units"); and

WHEREAS, as a condition to its willingness to enter into the Merger Agreement, the Company has required that Governor, and Governor has agreed to, execute and deliver this Agreement.

1.Definitions. When used in this Agreement, the following terms in all of their tenses, cases, and correlative forms shall have the meanings assigned to them in this Section 1.

(b)"Beneficial Owner" shall mean the person who Beneficially Owns the referenced securities.

2.Representations of Member. Governor represents and warrants to the Company that:

(a)Ownership of Units. Governor: (i) is the owner or Beneficial Owner of all of the Units free and clear of any proxy, voting restriction, adverse claim, or other liens, other than those created by a financial institution, created by this Agreement, or created under applicable federal or state securities laws; and (ii) has the sole voting power over all of the Units. Except pursuant to this Agreement, there are no options, warrants, or other rights, agreements, arrangements, or commitments of any character to which Governor is a party relating to the pledge, disposition, or voting of any of the Units and there are no voting trusts or voting agreements with respect to the Units.

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(b)Disclosure of All Units Owned. Governor does not own or Beneficially Own any units of the Company other than the Units.

(c)Power and Authority; Binding Agreement. Governor has full corporate power and authority to enter into, execute, and deliver this Agreement and to perform fully Governor's obligations hereunder (including the proxy described in Section 3(c) below). This Agreement has been duly and validly executed and delivered by Governor and constitutes the legal, valid, and binding obligation of Governor, enforceable against Governor in accordance with its terms except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally.

(d)No Conflict. The execution and delivery of this Agreement by Governor does not, and the consummation of the transactions contemplated hereby and the compliance with the provisions hereof will not, conflict with or violate any law applicable to Governor or result in any breach of or violation of, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration, or cancellation of, or result in the creation of any lien on any of the Units pursuant to, any agreement or other instrument or obligation including organizational documents binding upon Governor or any of the Units.

(e)No Consents. No consent, approval, order, or authorization of, or registration, declaration, or filing with, any governmental entity or any other person on the part of Governor is required in connection with the valid execution and delivery of this Agreement.

(f)No Litigation. There is no action, suit, investigation, or proceeding (whether judicial, arbitral, administrative, or other) (each an “Action”) pending against, or, to the knowledge of Governor, threatened against or affecting, Governor that could reasonably be expected to materially impair or materially adversely affect the ability of Governor to perform Governor’s obligations hereunder or to consummate the transactions contemplated by this Agreement on a timely basis.

3.Agreement to Vote Units; Agreement to Recommend; Irrevocable Proxy.

(a)Agreement to Vote. Governor irrevocably and unconditionally agrees during the term of this Agreement, at any annual or special meeting of the Company called with respect to the following matters, and at every adjournment or postponement thereof, and on every action or approval by written consent or consents of the Company members with respect to any of the following matters, to vote or cause the holder of record to vote the Units: (i) in favor of the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement; and (ii) against any action, proposal, transaction, or agreement that could reasonably be expected to impede, interfere with, delay, discourage, adversely affect, or inhibit the timely consummation of the Merger or the fulfillment of Governor’s, the Company's, or Merger Sub's conditions under the Merger Agreement.

(b)Agreement to Recommend. Governor irrevocably and unconditionally agrees during the term of this Agreement, at any annual or special meeting of the members of the Company called with respect to the following matters, and at every adjournment or postponement thereof, and on every action or approval by written consent or consents of the members of the Company, and in all statements, conversations, discussions and other communications, whether in public or in private, orally or in writing, with respect to any of the following matters, to recommend that the members vote: (i) in favor of the Merger Agreement and the Merger and the other transactions contemplated by the Merger Agreement; and (ii) against any action, proposal,

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transaction, or agreement that could reasonably be expected to impede, interfere with, delay, discourage, adversely affect, or inhibit the timely consummation of the Merger or the fulfillment of Parent's, the Company's, or Merger Sub's conditions under the Merger Agreement.

(c)Irrevocable Proxy. Governor hereby appoints the Company and any designee of the Company, and each of them individually, until the Expiration Time (at which time this proxy shall automatically be revoked), its proxies and attorneys-in-fact, with full power of substitution and resubstitution, to vote or act by written consent during the term of this Agreement with respect to the Units in accordance with Section 3(a). This proxy and power of attorney is given to secure the performance of the duties of Governor under this Agreement. Governor shall take such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy. This proxy and power of attorney granted by Governor shall be irrevocable during the term of this Agreement, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy, and shall revoke any and all prior proxies granted by Governor with respect to the Units. The power of attorney granted by Governor herein is a durable power of attorney and shall survive the bankruptcy of Governor. The proxy and power of attorney granted hereunder shall terminate upon the termination of this Agreement.

4.No Voting Trusts or Other Arrangement. Governor agrees that during the term of this Agreement Governor will not deposit any of the Units in a voting trust or grant any proxies with respect to the Units inconsistent with Section 3(a).

5.Transfer and Encumbrance. Governor agrees that during the term of this Agreement, Governor will not, directly or indirectly, transfer, sell, offer, exchange, assign, pledge, convey any legal or Beneficial Ownership interest in or otherwise dispose of (by merger (including by conversion into securities or other consideration), by tendering into any tender or exchange offer, by operation of law, or otherwise), or encumber ("Transfer") any of the Units or enter into any contract, option, or other agreement with respect to, or consent to, a Transfer of, any of the Units or Governor's voting or economic interest therein. Any attempted Transfer of Units or any interest therein in violation of this Section 5 shall be null and void.

6.Additional Units. Governor agrees that all Units of Company Interest that Governor purchases, acquires the right to vote, or otherwise acquires Beneficial Ownership of, after the execution of this Agreement and prior to the Expiration Time shall be subject to the terms and conditions of this Agreement and shall constitute Units for all purposes of this Agreement. In the event of any unit split, unit dividend, merger, reorganization, recapitalization, reclassification, combination, exchange of Units, or the like affecting the Units, the terms of this Agreement shall apply to the resulting securities and such resulting securities shall be deemed to be "Units" for all purposes of this Agreement.

8.Further Assurances. Governor agrees, from time to time, and without additional consideration, to execute and deliver such additional proxies, documents, and other instruments and to take all such further action as the Company may reasonably request to consummate and make effective the transactions contemplated by this Agreement.

9.Stop Transfer Instructions. At all times commencing with the execution and delivery of this Agreement and continuing until the Expiration Time, in furtherance of this Agreement, Governor

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hereby authorizes the Company or its counsel to notify the Company’s transfer agent that there is a stop transfer order with respect to all of the Units (and that this Agreement places limits on the voting and transfer of the Units), subject to the provisions hereof and provided that any such stop transfer order and notice will immediately be withdrawn and terminated by the Company following the Expiration Time.

13.Miscellaneous.

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OF A LEGAL ACTION; (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13(b).

(c)Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such cost or expense, whether or not the Merger is consummated.

(d)Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

(f)Section Headings. All section headings herein are for convenience of reference only and are not part of this Agreement, and no construction or reference shall be derived therefrom.

[signature page follows]

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IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the date first written above.

PARENT:

GRANITE FALLS ENERGY, LLC

GOVERNORS:

/s/ Paul Enstad__________

By: Paul Enstad, Chairman

Address:

/s/ Mike Kunerth_________

Mike Kunerth

Address:

Units:

/s/ Doug Schmitz_______

Doug Schmitz

Address:

Units:

/s/ Dave Woestehoff___

Dave Woestehoff

Address:

Units:

/s/ Robert Ferguson__

Robert Ferguson

Address:

Units:

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