UNIT TRANSFER PROCEDURE MANUAL September 21, 2011 TRANSFER PROCEDURES... 1 TRANSFER CHECKLIST... 1 PARTNERSHIP TAX RULES... 3 IRS FORM 8308... 5 SECURITIES RULES... 5 Rule 144... 5 Regulation of Broker-Dealer Activity... 6 OPERATING AGREEMENT RESTRICTIONS... 6 EXAMPLES OF COMMON TRANSFERS... 7 EXHIBITS... Unit Transfer Application BrownWinick Law Firm Katie Cownie and Britney Schnathorst 666 Grand Ave., Suite 2000 Des Moines, Iowa 50309 (515) 242-2400
TRANSFER PROCEDURES Generally Transfers of membership interests ( units ) of Western Dubuque Biodiesel, LLC ( WDB ) must satisfy three sets of rules: WDB's Second Amended and Operating Agreement (the Operating Agreement ); tax rules and regulations; and securities laws. The rules applicable to unit transfers are complex, and this manual is not designed to provide an exhaustive discussion. If you have questions about whether to permit a particular transfer, please contact us for guidance. Procedure for Transfers 1. Each proposed transfer requires a completed Unit Transfer Application (the "Application"). 2. The transferor and transferee should compete and sign the Application and deliver it to the Board along with supporting documents. 3. The Board then determines whether to permit the proposed transfer using the guidelines provided by this manual. We can assist you with this determination. 4. The Board accepts or denies the transfer by resolution. 5. The Board indicates on the Application whether the transfer is approved or denied. 6. If the transfer is approved, WDB: a. Issues a new unit certificate to the transferee. b. Completes and files IRS Form 8308. c. Updates its membership register. TRANSFER CHECKLIST ALL THREE SETS OF CONDITIONS MUST BE SATISFIED FOR BOARD TO APPROVE TRANSFER. First Set of Conditions - Operating Agreement and Procedural Requirements 1. If the requested transfer is approved, will there be (a) 300 or more Class A unit holders or (b) 500 or more Class B or Class C unit holders? Yes. The transaction cannot be approved. No. Proceed to the next question. 2. If the requested transfer is of Class A Units, does it involve less than 10 units? Yes. The transaction cannot be approved. No. Proceed to the next question. 3. Does the transfer increase the number of WDB unit holders? Yes. Specific board approval or rejection of the transfer is required. The board may withhold approval in its sole discretion. No. Proceed to the next question. Page 1
4. Is the transfer (a) a transfer at death; (b) by operation of law; or (c) a gift or in trust for the Member s descendants? Yes. If the answers to Questions 1, 2 and 3 were no, this is a permitted transfer. Board approval or rejection is not required as long as the other conditions in this checklist are met. No. Specific board approval or rejection of the transfer is required. The board may withhold approval in its sole discretion. 5. Have the Transferor and Transferee completed a Unit Transfer Application? (ALL items must be checked.) The Unit Transfer Application is signed by the Transferor and Transferee. All questions in the Unit Transfer Application have been addressed. Transferee has signed the Member Signature Page for the Operating Agreement. 6. Have all required supporting documents been submitted? (ALL applicable items must be provided.) If transfer is to a trust, trust documents have been provided. If due to death, a certified copy of the death certificate, letters of appointment of executor or administrator, and designation of attorney form have been provided. If Transferee is an entity, resolutions, operating agreement or partnership agreement have been provided. 7. Has the Transferor endorsed the unit certificate? Yes No. The transfer may not be completed until the certificate is endorsed. If the Board must authorize or will permit the transfer under Questions 1 through 4, and Transferor and Transferee have provided all required documents and taken all required actions under Questions 5 through 7, the transfer is allowed under this set of conditions. Proceed to Tax Requirements. Second Set of Conditions - Tax Requirements 1. Private Transfer. Is the transfer one of the following? If so, the transfer is permitted under the Tax Requirements. Check the appropriate box and proceed to the 3rd set of conditions. If not, proceed to question 2. Gift. At death, including transfers from an estate or testamentary trust. Between family members. Family includes brothers and sisters (by whole or half blood), spouse, ancestors and lineal descendants. Issuance of interests by the company in exchange for cash, property, or services. Distributions from a retirement plan qualified under Internal Revenue Code 401(a) or an IRA. Block transfer by a person/related persons of an aggregate of more than 2% of the total outstanding Units in one or more transactions during any 30 day period. Related persons include family members, an individual and an entity majority owned by such individual, 2 entities that are majority owned by the same persons, the grantor and fiduciary of a trust, the fiduciary and beneficiary of a trust, and the executor and beneficiary of an estate. Under a right of redemption or repurchase agreement meeting certain requirements (check with legal counsel on the other requirements). Page 2
Under a closed end redemption plan. A Transfer or series of related Transfers by one or more members of fifty percent (50%) or more of the outstanding Units. 2. If the transfer is not any of the foregoing private transfers, has the Company permitted more than 2% of the total number of outstanding units to be transferred during the tax year? When counting 2%, exclude all private transfers. Yes. Transfer is not allowed. No. Tax requirements have been satisfied. Proceed to Securities Law Requirements. Third Set of Conditions - Securities Law Requirements 1. Were the units issued by WDB more than 1 year ago? Yes (continue to question 3). No (continue to question 2). 2. Were the units initially purchased from WDB in a private placement, e.g. seed capital offering, employee options or another type of private transaction? Yes. Security may be a restricted security subject to the Rule 144 resale provisions. Notify WDB s legal counsel to obtain pre-clearance. No. Continue to question 3. 3. Does the transfer involve a director, officer, or 10% owner? Yes. Security may be a control security subject to the Rule 144 resale provisions. Notify the Company s legal counsel to obtain pre-clearance. No. The transfer is allowed under securities laws. PARTNERSHIP TAX RULES WDB is a limited liability company treated as a partnership for federal income tax purposes. Under Treasury regulations known as "check-the-box" regulations, an unincorporated entity such as a limited liability company with more than one member will be taxed as a partnership unless the entity is considered a publicly traded partnership or the entity elects to be taxed as a corporation. Generally, the Internal Revenue Code (the "Code") provides that a partnership will be considered a publicly traded partnership and thus taxed as a corporation if its interests are traded on an established securities market; or readily tradable on a secondary market (or its substantial equivalent). The Board should only approve transfers that fall within the safe harbor provisions of the Treasury regulations, so that WDB will not be classified as a publicly traded partnership. The safe harbor provisions generally provide that the Units will not be treated as readily tradable on a secondary market or the substantial equivalent thereof if the transfers satisfy one of the safe harbors described below. Private Transfers Safe Harbor Transfers that qualify under the Private Transfers Safe Harbor generally include, among others: Transfers in which the transferee's tax basis in the Unit is determined, in whole or in part, by reference to the transferor's basis or determined under Code Section 732 (e.g., a gift); Page 3
Transfers at death; Transfers between family members as defined in Code Section 267(c)(4) (brothers, sisters, spouse, ancestors, and lineal descendants); Transfers involving the issuance of units by the company in exchange for cash, property, or services; Transfers involving distribution from retirement plans qualified under Code Section 401(a) or an IRA; "Block" transfers by a Unit holder (plus related persons as defined in the Code) in one or more transactions during any 30 calendar-day period that in the aggregate represent more than 2% of the total interest in the capital and profits of the company; Transfers under redemption or repurchase agreements meeting certain requirements as further explained in the Treasury regulations; Transfers under a "closed end redemption plan" as further explained in the Treasury regulations; Transfers of an aggregate of 50% or more of the total interests in the capital and profits of the company in one transaction or a series of related transactions; and Transfers not recognized by the company. Private Placement Safe Harbor This safe harbor is only available if all interests in the company were issued in a transaction that was not required to be registered under the Securities Act of 1933, as amended (the Securities Act ), and the company does not have more than 100 members at any time during the entity's tax year. WDB has more than 100 members. Accordingly, the Private Placement Safe Harbor is not available to members who wish to transfer Units. Redemption/Repurchase Agreement Safe Harbor The redemption and repurchase agreements safe harbor applies only to redemptions and repurchases by the company in certain specific circumstances and where the agreements meet certain detailed requirements. Please contact us for more information about using this safe harbor. 2% Safe Harbor To use this safe harbor, the sum of the interests in the capital and profits of the company transferred during the entity's tax year cannot exceed 2% of the total interests in the capital and profits of the company. In determining whether the 2% limitation has been met, transfers that fit under other safe harbors are excluded. The company should determine the percentage each month based upon the number of units outstanding and the number of transfers in that particular month. The determination should be made on a consistent basis each month (i.e., on the last day of each month). The percentages for each month should be added to determine the total for the entire year. As an example: J F M A M J J A S O N D Issued 100 100 100 100 100 200 200 200 200 200 500 500 Trans. 1 - - - - - 1 - - - 2 - % 1.0% 0.5% 0.4% In the foregoing example, the company issued additional units in June and November, which changes the number used to determine the percentage transferred. Based upon the transfer of one unit in January, one unit in July and two units in November, the total number of transfers for the tax year under the 2% safe harbor would be 1.9%. Qualified Matching Service Safe Harbor To fall within this safe harbor, the transfer must be under a "qualified matching service (QMS). WDB has elected not to use a QMS. Page 4
IRS FORM 8308 A sale of ownership units when the company holds inventory or unrealized receivables generally falls within Code Section 751(a) and is subject to the reporting requirements of IRS Form 8308. Therefore, any exchange of units is likely to require WDB to prepare a Form 8308. Section 751(a) generally ensures that the transferor recognizes a portion of the sale price as ordinary income. Form 8308 is a short form that requires basic information regarding WDB, the transferor, and the transferee and when the transfer occurred. However, the transferor must also attach a statement to his/her/its tax return, indicating the date of the sale, the amount of gain or loss attributable to the Section 751(a) property, and the amount of gain or loss attributable to a capital gain or loss. Form 8308 is included with WDB's annual tax return. WDB must also provide a copy of the completed Form 8308 to both the transferor and the transferee by January 31 of the year following the calendar year in which the exchange occurred. Please review the form's general instructions for more detailed information. Rule 144 SECURITIES RULES Some of WDB s Units may be considered restricted securities or control securities under Rule 144 of the Securities Act. Among others, these include privately-issued units and units held by directors. There are significant limitations on the transferability of these units. Due to the difference in application of Rule 144 to affiliates and nonaffiliates, the threshold question is whether the proposed seller of the securities is an affiliate. An Affiliate is a person that controls, is controlled by, or is under common control with, WDB. Generally, this includes WDB s officers and directors, as well as any person having a 10% or greater interest in WDB. The stricter Rule 144 requirements continue to apply as long as a person is an affiliate, and generally for ninety days after such person ceases to be an affiliate. Rules for Non-Affiliates Before a non-affiliate member can resell restricted securities, the member must own them for at least one year since WDB is not a reporting company. (A shorter 6-month holding period applies to reporting companies.) The one year holding period starts when the member acquires units in an offering of restricted securities or from an affiliate of WDB. Rules for Affiliates The requirements for resales by affiliates are much stricter than those for non-affiliates. Like non-affiliates, affiliates must hold the securities for at least one year. Once the one year holding period is satisfied, affiliates must additionally satisfy ALL conditions listed below. Adequate Public Information. There must be adequate current public information with respect to the issuer, similar to the information available from public companies. Volume Limitations. Securities sold by an affiliate during a 3-month period cannot exceed the greater of (i) 1% of the outstanding units of the class being sold, or (ii) the average weekly reported trading volume in such securities on all national securities exchanges during the 4 calendar weeks before the filing of notice. Manner of Sale. The securities sold under Rule 144 must be sold in brokers transactions, transactions directly with a market maker, or riskless principal transactions. Notice of Proposed Sale. If the amount of securities sold relying on Rule 144 during any three-month period exceeds 5,000 units or has an aggregate sale price exceeding $50,000, three copies of a notice on Form 144 must be filed with the SEC. Page 5
It is generally unlikely that affiliates of nonpublic companies can satisfy the current public information requirement or the manner of sale requirement. It is therefore unlikely that WDB s affiliates can use the Rule 144 safe harbor. As a result, please consult legal counsel for possible alternatives to using Rule 144 to allow the transfer. Regulation of Broker-Dealer Activity WDB should have no role in effecting transactions beyond approval (when required) and issuing certificates. WDB should not maintain any formal or informal list of persons willing to buy or sell units and must not: receive any compensation for matching interested buyers and sellers; become involved in any purchase or sale negotiations; give advice regarding the merits or shortcomings of any particular transaction; directly or indirectly offer to buy or sell securities other than in compliance with the securities laws; or receive, transfer, or hold funds or securities. WDB might consider maintaining a list of members desiring to sell or purchase units (also called bulletin boards ) in the future; however, to avoid having to register as a broker or dealer under federal securities laws, WDB would need to adhere to strict guidelines. For example, unregistered issuers establishing publicly-available bulletin boards must provide public information in the same manner as if its units were registered under the Exchange Act. Instead of operating its own bulletin board, WDB may be able to use an alternative trading system or ATS without being required to register as a broker-dealer or prepare publicly-available information; however, an ATS usually charges fees for its services. Typically, a bulletin board or ATS is structured to satisfy the qualified matching service (QMS) safe harbor under tax laws, which may provide the opportunity for additional transfers. If you would like to explore the possibility of implementing a bulletin board or using an ATS, please let us know and we will provide guidance. OPERATING AGREEMENT RESTRICTIONS In addition to tax and securities rules and regulations, transfers are subject to the requirements of the Operating Agreement. Section 9.1 of the Operating Agreement generally prohibits unit transfers and states that board approval is generally required for all transfers. The board can withhold such approval in its sole discretion. However, Section 9.2 provides for certain Permitted Transfers. Permitted transfers do not require specific board approval (other than verifying that all conditions have been met), but admitting a transferee as a member of the company always requires approval. Under the Permitted Transfers provision, investors may transfer their Units to the following if the transfer does not increase the number of WDB unit holders: (i) (ii) to the Member s administrator or trustee to whom such units are transferred involuntarily or by operation of law (Examples: a member s death, or transfer to a bankruptcy trustee); or to the Member s descendents without consideration (in other words, as a gift) or in trust for them. Section 9.3 provides additional conditions to transfers. These conditions apply to all transfers, even Permitted Transfers. For the most part, the board may waive these conditions in its discretion; however, if a condition is not met, the board should consult with counsel regarding the consequences of waiving any particular condition. The most important conditions to transfers are: All transfers of Class A units must involve at least 10 units. The transfer will not result in increasing the Class A unit holders to 300 or more, or the Class B or Class C unit holders to 500 or more. The transfer will not result in terminating the company s continuing status as a partnership under tax laws (cannot be waived by board without member approval) or make it a publicly-traded partnership. The transferor and transferee must fill out paperwork and pay expenses that the board requires. Page 6
EXAMPLES OF COMMON TRANSFERS Family Transfer. Member Smith wishes to transfer all of his 25 Class A units to his son, Smith, Jr. as a gift. WDB should provide the Unit Transfer Application to Smith, and Smith and Smith, Jr. should sign and return it to the Board. Based on the application, the Board would determine that (1) the transfer is permitted under the Operating Agreement, since it is a transfer without consideration (payment) to a descendant, it doesn t increase the number of members, and it involves at least 10 Class A units; (2) it is permitted under the tax rules because is a private transfer between family members; and (3) it is permitted under securities laws because Smith is not an affiliate and has held his units for more than one year. The Board would authorize the transfer. Transfer to an Entity. Member Smith wishes to transfer a portion of his Class B units to his corporation, Smith Farms, Inc., which is not a current member. WDB should provide the Unit Transfer Application to Smith, and Smith and Smith, Inc. should sign and return it to the Board. Based on the application, the Board would determine that (1) the proposed transfer will be permitted under the Operating Agreement only if the Board decides to specifically approve the transfer first and the transfer does not result in having more than 500 Class B unit holders; (2) it is permitted under the tax rules under the 2% safe harbor (provided the limit has not been met for the year, and depending upon the facts, may be a private transfer where the basis is unchanged); and (3) it is permitted under securities laws because Smith is not an affiliate and has held his units for more than one year. The Board would approve the transfer in its discretion. Transfer to a Third Party. Member Smith wishes to transfer Class B units to Member Jones. WDB should provide the Unit Transfer Application to Smith, and both Smith and Jones should sign and return it to the Board. Based on the application, the Board would determine that (1) the proposed transfer will be permitted under the Operating Agreement only if the Board decides to specifically approve the transfer first; (2) it is permitted under the tax rules if the 2% safe harbor has not been filled; and (3) it is permitted under securities laws because Smith is not an affiliate and has held his Units for more than one year. The Board would approve the transfer in its discretion. Affiliate Transfer to a Third Party. Director Smith wishes to transfer all of his 10 Class A units to Member Jones. WDB should provide the Unit Transfer Application to Smith, and both Smith and Jones should sign and return it to the Board. Based on the application, the Board would determine that (1) the proposed transfer will be permitted under the Operating Agreement only if the Board decides to specifically approve the transfer first; (2) it is permitted under the tax rules if the 2% safe harbor limit has not been met for the year; and (3) it might not be permitted under securities laws because Smith is an affiliate and likely cannot meet the Rule 144 requirements. Before taking further action, the Board should request additional guidance to determine whether the proposed transfer is acceptable under another securities exemption or safe harbor. Member Death. Member Smith, owner of Class C Units, died without a will, and his heirs at law are his 3 children, two of which are already WDB members. WDB should provide the Unit Transfer Application to Smith s Administrator, and both Administrator and Smith s heirs should sign and return it to the Board. The Board should request any other proof it needs to verify Smith s death and the administrator s identity. Based on the application, the Board would determine that (1) the proposed transfer is permitted under the Operating Agreement, since it is an involuntary transfer by operation of law and the number of unit holders will not increase; (2) it is permitted under the tax rules because it falls in the private transfers safe harbor since it is a transfer at death; and (3) it is permitted under securities laws because Smith is not an affiliate and held his Units for more than one year. The Board would approve the transfer, making sure that Smith s heir that is not already a WDB member signs the operating agreement signature page before admittance as a member. Page 7
UNIT TRANSFER APPLICATION A. General Instructions. 1. The person or entity transferring the units ( Transferor ) of Western Dubuque Biodiesel, LLC ( WDB ) and the person or entity acquiring the units ( Transferee ) must complete and sign this Application. 2. Transferee must sign the Signature Page of WDB s Operating Agreement. 3. Transferor must execute the reverse side of the certificate(s) representing Transferor s units. 4. The parties should deliver the original executed documents referenced in Items 1, 2 and 3 to WDB. 5. Notice: This Application is a binding agreement between Transferor and Transferee. Once executed, neither party may cancel or retract this Application, except with WDB s consent. WDB, in its sole discretion, may grant or deny the cancellation of the Application. 6. Estimated Taxes: WDB may be responsible for filing income tax returns in certain states, which, in some cases, may require WDB to pay income taxes on behalf of the members. These payments are typically deducted from a member s distributions. If a Transferor transfers 100% of its interest in WDB, the Transferor must pay to WDB an amount equal to the estimated income tax payments WDB will be responsible for on the Transferor s behalf, and must do so before transferring the units. WDB will approve an Application contingent to the Transferor paying all estimated taxes calculated by WDB. Any excess funds withheld by WDB for tax purposes will be refunded to the Transferor after WDB files its tax return. This provision only applies if the Transferor is selling 100% of their interest in WDB. B. Transferor Information. Please print your individual or entity name and address. Joint owners should provide their respective names. 1. Transferor s Printed Name: 2. Title, if applicable: 3. Transferor s Address Street: City, State, Zip Code: 4. Transferor s Phone Number: 5. Transferor s Email Address: C. Transferee Information. Please print your individual or entity name and address. Joint owners should provide their respective names. 1. Transferee s Printed Name: 2. Title, if applicable: 3. Transferee s Address Street: City, State, Zip Code: 4. Transferee s Phone Number: 5. Transferee s Email Address: Transfer Application - Page 1
D. Transferee Entity Information. If the Transferee is a corporation, partnership, or trust, please provide the following additional information. 1. Tax Year End: 2. State of Residency: E. Transfer Information. 1. Unit certificate(s) numbers affected: 2. Dates of unit certificates affected: 3. Number and Class of Units to be Transferred: 4. Price Per Unit: 5. Total Price: F. Type of Transfer. Transferor should check the appropriate box (or boxes). Involuntary transfer to an administrator or trustee by operation of law (death of a joint tenant, intestacy, divorce, bankruptcy, conservatorship). Lifetime gift To the spouse or descendant(s) of Transferor. Indicate relationship To others Lifetime transfer to a trust For the benefit of the spouse or descendant(s) of Transferor. Indicate relationship For the benefit of others Transfer under a will or trust of a deceased member. Transfer is to spouse or descendant(s) of the deceased member. Indicate relationship Transfer is not to descendants of the deceased member. Transfer to an affiliate or related party of Transferor. Indicate relationship Transfer for value to a third party. Transfer to a trust otherwise disregarded from its creator (revocable or grantor). Other (please explain in detail) If the transfer is to a trust, please provide copies of the following pages of the trust instrument: title page, signature page, and the page that identifies the trustee(s). If the transfer is due to a member s death, please provide a certified copy of the death certificate, letters of appointment of executor or administrator, and designation of attorney form. Transfer Application - Page 2
G. Additional Transferee Information. The Transferee certifies the following under penalties of perjury: 1. Form of Ownership. Check the appropriate box (one only) to indicate form of ownership. Please provide any additional information requested. Individual Joint Tenants with Right of Survivorship (Both must sign) Corporation, Partnership or other Entity (Enclose Corporate Resolutions or Partnership Agreement) Trust (Enclose Signature and title pages of Trust Agreement and all amendments) Trustee s Name: Trust Date: Other: Provide or attach detailed information. 2. Transferee s Taxpayer Information. KEOGHS should provide the taxpayer identification number of the account and the social security number of the accountholder. Trusts should provide their taxpayer identification number. Custodians should provide the minor s social security number. All individual transferees and IRA transferees should provide their social security number. Other entities should provide their taxpayer identification number. Transferees who are concerned about listing their social security number(s) on this form may provide it separately. Transferee s Social Security No. Joint Transferee s Social Security No. Taxpayer Identification No. Check the appropriate box(es) as applicable. Check box if you are a non-resident alien Check box if you are a U.S. citizen residing outside of the United States Check this box if you are subject to backup withholding 3. Member Report Address. If Transferee would like duplicate copies of member reports sent to an address that is different than the address identified above, please complete this section. Address: 4. Transferee s Representations and Warranties. By signing below, Transferee represents and warrants to WDB that he, she or it: a. intends to acquire the units for his/her/its own account without a view to public distribution or resale and has no contract, undertaking, agreement or arrangement to sell or otherwise transfer or dispose of any units or any portion thereof to any other person; b. understands that there is no present market for WDB s units, that the units will not trade on an exchange or automatic quotation system, that no such market is expected to develop in the future and that there are significant restrictions on unit transfers; c. has received a copy of the Operating Agreement, and understands that the Transferee and the units will be bound by the Operating Agreement which contains, among other things, restrictions of unit transfers and terms of allocations of WDB s income, loss and credits; Transfer Application - Page 3
d. understands that the units are subject to substantial restrictions on transfer under state and federal securities laws, tax laws, and the Operating Agreement and agrees that Transferee shall sell or distribute units in the future only under the terms and requirements of the Operating Agreement, tax laws, and applicable federal and state securities laws; e. agrees to indemnify and hold WDB harmless for any damage, loss, cost, or liability (including legal fees and the cost of enforcing this indemnity) arising out of or resulting from the transfer from the Transferor to the Transferee; f. understands that WDB will place a restrictive legend on unit certificates containing substantially the following language, which WDB s directors may amend in their discretion: The transferability of the Units represented by this certificate is restricted. Such Units may not be sold, assigned, or transferred, nor will any assignee, vendee, transferee, or endorsee thereof be recognized as having acquired any such Units for any purposes, unless and to the extent such sale, transfer, hypothecation, or assignment is permitted by, and is completed in strict accordance with, applicable state and federal law and the terms and conditions set forth in the Operating Agreement and agreed to by each Member. The securities represented by this certificate may not be sold, offered for sale, or transferred in the absence of either an effective registration under the Securities Act of 1933, as amended, and under applicable state securities laws, or an opinion of counsel satisfactory to the company that such transaction is exempt from registration under the Securities Act of 1933, as amended, and under applicable state securities laws. g. understands that, to enforce the above legend, WDB may place a stop transfer order with its registrar and any stock transfer agent covering all certificates representing the units; h. understands the high risk of an investment in WDB and the financial hazard involved and can bear economic risk of an investment in WDB, including lack of liquidity and the total loss of the value of Transferee's units, and has such knowledge and experience in business and financial matters to be capable of evaluating the merits and risks of an investment in units, or that the transferee is being advised by representatives such that the representatives and the transferee together are capable of making such evaluation; i. understands that, he/she/it (i) may come into possession of personal information relating or belonging to Transferor as a result of any transfer under this Application; (ii) agrees not to use this information obtained in connection with this Application in any manner except for reporting to applicable government authorities; and (iii) will indemnify WDB against any claim of damages or loss as a result of unauthorized use. 5. Transferor s Representations and Warranties. Transferor must read and certify your representations and warranties and sign and date this Application. By signing below, Transferor represents and warrants to WDB that he, she or it: a. understands that he/she/it (i) may come into possession of personal information relating or belonging to Transferee as a result of this Application; (ii) agrees not to use any information obtained in connection with this Application in any manner except for reporting to applicable government authorities; and (iii) will indemnify WDB against any claim of damages or loss as a result of unauthorized use; b. is authorized to sign this Application and transfer the units requested; and c. agrees to indemnify and hold WDB harmless for any damage, loss, cost, or liability (including legal fees and the cost of enforcing this indemnity) arising out of or resulting from the transfer from the Transferor to the Transferee. Transfer Application - Page 4
Signature of Transferor (Joint Transferor): The undersigned Transferor(s) hereby certifies (certify) that the representations and warranties in this Application are true and correct. The undersigned Transferor(s) does (do) hereby irrevocably constitute and appoint WDB s officers as attorney-in-fact to transfer the units on WDB s books, with full power of substitution in the premises. Transferor(s) acknowledges (acknowledge) that this Application is binding and is irrevocable without WDB s consent, which WDB may, in its sole discretion, grant or withhold. Date: Individuals: Entities: Name of Individual Transferor (Please Print) Name of Entity (Please Print) Signature of Individual Print Name and Title of Officer Name of Joint Individual Transferor (Please Print) Signature of Officer Signature of Joint Individual Transferor Signature of Transferee (Joint Transferee): The undersigned Transferee(s) hereby certifies (certify) that the representations and warranties in this Application are true and correct. Transferee(s) acknowledges (acknowledge) that this Application is binding and is irrevocable without WDB s consent, which WDB may, in its sole discretion, grant or withhold. Date: Individuals: Entities: Name of Individual Transferee (Please Print) Name of Entity (Please Print) Signature of Individual Print Name and Title of Officer Name of Joint Individual Transferee (Please Print) Signature of Officer Signature of Joint Individual Transferee Transfer Application - Page 5
(Use this signature block when the transfer is a Permitted Transfer that does not require approval by the Board of Directors under Section 9.2 of the Operating Agreement) ACKNOWLEDGMENT OF TRANSFER BY Western Dubuque Biodiesel, LLC Western Dubuque Biodiesel, LLC hereby acknowledges the transfer of the units as described in this Application. Dated this day of, 200. Western Dubuque Biodiesel, LLC By: Its: (Use this signature block when the transfer requires approval by the Board of Directors) APPROVAL OR DISAPPROVAL OF TRANSFER BY Western Dubuque Biodiesel, LLC Under Section 9.2 of the Operating Agreement of Western Dubuque Biodiesel, LLC, the transfer to Transferee is: approved disapproved by the Directors by an action taken on, 200. Western Dubuque Biodiesel, LLC By: Its: Transfer Application - Page 6
MEMBER SIGNATURE PAGE ADDENDUM TO THE SECOND AMENDED AND RESTATED OPERATING AGREEMENT OF WESTERN DUBUQUE BIODIESEL, LLC The undersigned does hereby warrant, represent, covenant and agree that: (i) the undersigned, as a condition to becoming a Member in Western Dubuque Biodiesel, LLC, has received a copy of the Second Amended and Restated Operating Agreement dated effective September 21, 2011 (the Operating Agreement ), and, if applicable, all amendments and modifications thereto; (ii) the undersigned, along with the other parties to the Operating Agreement, shall be subject to and comply with all terms and conditions of such Operating Agreement in all respects, as if the undersigned had executed said Operating Agreement on the original date thereof; and (iii) the undersigned is and shall be bound by all of the provisions of said Operating Agreement from and after the date of execution of this Addendum. Individuals: Entities: Name of Individual Member (Please Print) Name of Entity (Please Print) Signature of Individual Print Name and Title of Officer Name of Joint Individual Member (Please Print) Signature of Officer Signature of Joint Individual Member Agreed to and Accepted on Behalf of the Company and its Members: WESTERN DUBUQUE BIODIESEL, LLC By: Its: Transfer Application - Page 7