Appendix B KAAPA Ethanol, L.L.C. Membership Unit Redemption Agreement This Membership Unit Redemption Agreement ("Agreement") is entered into as of this day of, 20 by and between (whether one or more referred to herein as "Seller") and KAAPA Ethanol, L.L.C., a Nebraska limited liability company (the "Company"). WHEREAS, Seller is the beneficial and record owner of membership units ("Membership Units") of the Company, which Seller has offered to sell to the Company in accordance with the KAAPA Ethanol, L.L.C. Redemption Plan Rules and Procedures ("Redemption Rules"); and WHEREAS, on the terms and conditions set forth in this Agreement and in accordance with the Redemption Rules and the Operating Agreement, as amended, of the Company, Seller and Company have agreed to the sale to the Company of that number of Seller's Membership Units set forth herein (the "Redemption"), upon the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual promises, covenants, representations, warranties and agreements herein contained, the parties agree as follows: 1. Redemption of Membership Units. (a) Type of Membership: Seller currently holds the following type of membership in the Company (check appropriate box): Membership Units only (without Corn Delivery Agreement or Distillers Grain Purchase Agreement) Membership Units, and Corn Delivery Agreement (a copy of which is attached to this Agreement as Attachment I, and incorporated herein by reference). Membership Units, and Distillers Grain Purchase Agreement (a copy of which is attached to this Agreement as Attachment II, and incorporated herein by reference). For purposes of this Agreement the reference to Membership Units shall include, where appropriate, references to Seller's Corn Delivery Agreement and/or Distillers Grain Purchase Agreement. (b) In accordance with the terms and conditions of this Agreement, and expressly subject to the conditions set forth in Section 2 below, the parties hereby agree that upon Closing (the definition of "Closing" as used in this Agreement is defined in Section II(D) of the Redemption Rules) Seller shall convey, transfer, assign and deliver to the Company, free and clear of all liens, encumbrances, equities and claims of any nature whatsoever, that number of Membership Units approved and accepted by the Company Board of Managers, which may be up to and including the maximum number of units submitted by Seller to the Company on Seller's Redemption Offer Form, upon payment by the Company of the following purchase price ("Purchase Price"):
Membership Unit(s) x $ per Unit, for a total Purchase Price of: Dollars ($ ). (Seller agrees that the number of units (up to the maximum offered by Seller on Seller's Redemption Offer Form) and resultant total Purchase Price may filled out by the Company after determination and approval by the Company's Board of Managers.) Such Purchase Price shall be payable to Seller in cash by Company check made payable to Seller, delivered at Closing. (c) Seller and Company agree that in accordance with the Redemption Rules (Section II(C)), that no consideration (including any down payment or earnest deposit) will be paid by the Company to Seller until after this Agreement has been approved by the KAAPA Ethanol, L.L.C. Board of Managers and (even if KAAPA Ethanol Board approval has been given) no earlier than the Closing Date as set forth in Section 3 below. 2. Conditions to Closing. (a) Mutual Conditions to Closing. The obligations of Seller and the Company under this Agreement are subject to fulfillment prior to or at the time of Closing of the following conditions, which cannot be waived by either party: (i) The transaction set forth in this Agreement shall have received approval from the Company's Board of Managers. (ii) All documentation required to complete the Redemption hereunder shall be accurately and fully completed. (iii) No claim, suit, action, or other proceeding shall be pending before any court or governmental body to restrain or prohibit the consummation of the transaction hereunder. (b) Seller s Conditions to Closing. The obligations of Seller under this Agreement are subject to the fulfillment prior to or at the time of Closing of the following conditions: (i) Each of the representations and warranties of the Company contained in this Agreement shall be accurate as of the time of Closing, and the Company shall have performed all covenants and agreements required to be performed by the Company and shall not be in default under any of the provisions of this Agreement; (ii) The Company shall have paid Seller the Purchase Price in accordance with the terms and conditions of Section 1 above; and (iii) Seller shall have received all necessary approvals and consents required from third parties with respect to this transaction, including any approvals required under lending or other agreements applicable to Seller. (c) Company's Conditions to Closing. The obligations of the Company under this Agreement are subject to the fulfillment prior to or at the time of Closing of the following conditions: 2
(i) Each of the representations and warranties of Seller contained in this Agreement shall be accurate as of the time of Closing, and Seller shall have performed all covenants and agreements required to be performed by Seller and shall not be in default under any of the provisions of this Agreement; (ii) Seller shall have complied in all respects with the Company's Redemption Rules; (iii) On or before the Closing, Seller shall have executed and delivered to the Company the certificate(s) representing all of the Membership Units being redeemed, duly endorsed in blank or with duly executed blank stock powers attached thereto, or as otherwise determined by the Company and in form and substance reasonably satisfactory to the Company; and (iv) The Company shall have received all necessary approvals and consents required from third parties with respect to this transaction, including any approvals required under lending or other agreements applicable to the Company. 3. Closing; Closing Date. (a) After all conditions to Closing set forth in Section 2 above have been met, and in accordance with Section 1(b) above, the Closing shall take place at the office of the Company and shall be effective as of the following dates: (1) For the semiannual period commencing April 1: July 1 st, or such later date as may be mutually agreed to in writing by Seller and Company; and (2) For the semiannual period commencing October 1: January 1 st, or such later date as may be mutually agreed to in writing by Seller and the Company. (b) At the Closing, upon receipt of the Purchase Price from the Company, Seller shall deliver certificate(s) representing the Membership Units, with the certificate(s) being endorsed in blank for transfer or as otherwise determined by the Company and in form and substance reasonably satisfactory to the Company. (c) Unless otherwise provided in written notice from the Company, the effective date of the transfer of title to the Membership Units redeemed by the Company hereunder shall be the day upon which the Membership Units are transferred to the Company on the official membership register maintained by the Company. (d) In the event Seller is currently a party to either a current Corn Delivery Agreement or Distillers Grain Purchase Agreement as indicated in Section 1(a) above, Seller and Company agree that upon Closing such Corn Delivery Agreement and/or Distillers' Grain Purchase Agreement shall terminate without further obligations by either party following Closing. 4. Representations and Warranties. (a) Seller Representations and Warranties. Seller represents and warrants to the Company as follows: (i) If the Seller is a natural person, that he or she is the sole owner of the Membership Units, has not transferred any portion of the Membership Units, holds the Membership Units free and clear of all claims and encumbrances, and has the power and authority to transfer the Membership Units; 3
(ii) If the Seller is an entity, that it is duly formed, validly existing, and in good standing under the laws of its jurisdiction of formation and is duly authorized and qualified to do all things required of it under this Agreement and that Seller has not transferred any portion of the Membership Units, and holds the Membership Units free and clear of all claims and encumbrances; (iii) No authorization, approval or consent of any court, governmental body or other third party is or will be necessary in order to make the execution and delivery of this Agreement or the consummation of the transaction contemplated herein legally enforceable against Seller; and (iv) Neither the execution or delivery of this Agreement, nor the consummation of the transaction contemplated herein will violate any provision of any agreement or instrument to which Seller is a party. (b) Company Representations and Warranties. The Company represents and warrants to Seller as follows: (i) This Agreement is a valid and binding obligation of the Company, enforceable in accordance with its terms, and the Company has the power and authority to execute and deliver this Agreement and to consummate the purchase of Membership Units contemplated herein. (ii) No authorization, approval or consent of any court, governmental body or other third party is or will be necessary in order to make the execution and delivery of this Agreement or the consummation of the transaction contemplated herein legally enforceable against the Company; (iii) Neither the execution or delivery of this Agreement, nor the consummation of the transaction contemplated herein will violate any provision of any agreement or instrument to which the Company is a party; and (iv) The Company has obtained all requisite and necessary consents, approvals, or other assurances for it to enter into this Agreement, including the consent required under any other agreement to which it is a party. (c) Closing. The representations and warranties of Seller and Buyer herein shall survive 5. Tax Consequences. Seller acknowledges and agrees that the Company has not made any warranty or representation regarding the tax consequences of the transaction contemplated by this Agreement. Seller shall be fully responsible for reporting this transaction and paying all taxes of any nature owed with respect to the ownership of Membership Units through Closing and the sale of the Membership Units hereunder. 6. Termination of Membership Interest. If the Seller has sold Membership Units representing all of such Member's interest in the Company, as of the Closing Seller shall be terminated as a member of the Company and shall have no further rights of a member of the Company in accordance with the Operating Agreement and applicable law. 4
7. Waiver of Inconsistencies With Operating Agreement. To the extent any provision of this Agreement is inconsistent with any provision of the Operating Agreement and/or Redemption Rules, the parties hereto agree that this Agreement shall be deemed modified to make the transactions contemplated in this Agreement consistent with the Operating Agreement and/or Redemption Rules. 8. Disclosure of Purchase Terms. Seller understands and acknowledges that the terms of this Agreement, including the Purchase Price of the Membership Units and name of Seller may be disclosed by the Company pursuant to the Redemption Rules and that this covenant shall survive Closing hereunder. 9. Miscellaneous. This Agreement constitutes the entire agreement and understanding among the parties hereto and is a final expression of their agreement, and no evidence or oral or other written promises shall be binding. This Agreement shall be subject to and governed by the laws of the State of Nebraska without regard to its conflict of law principles. No amendment or modification of this Agreement shall be effective unless signed in writing by both parties. This Agreement shall be binding on the parties hereto and their respective heirs, legal representatives and permitted assigns. Each provision of this Agreement shall be viewed as separate and divisible and in the event that any provision hereof shall be held to be invalid or unenforceable, the remaining provisions shall continue to be in full force and effect. This Agreement is the result of an arms-length bargain between the parties. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one in the same instrument. IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date first above written. SELLER KAAPA ETHANOL, L.L.C. (the "Company") (Print Name) By Its Signature of Seller Signature of Seller Address of Seller 5
Attachment I [If applicable, attach Seller's Corn Delivery Agreement to be terminated as of Closing pursuant to the Membership Unit Purchase Agreement.] 6
Attachment II [If applicable, attach Seller's Distillers Grain Purchase Agreement to be terminated as of Closing pursuant to the Membership Unit Purchase Agreement.] DOCS/785965.2 7