Exhibit 10.2


 


REDEMPTION AGREEMENT


 


This Redemption
Agreement (this “Agreement”) is made as of
this 4th day of November, 2005, between Ethanol Products, LLC, a South Dakota
limited liability company (“Ethanol Products”)
and Dakota Ethanol, LLC, a South Dakota limited liability company (referred to
herein as the “Member”).  Capitalized terms used, but not otherwise
defined herein, shall have the meaning assigned to such terms in the Operating
Agreement (as defined hereinbelow).


 


RECITALS:


 


Whereas, the Member currently owns 200,000 Class B Capital
Units and 131,750 Class B Income Units (collectively, the “Class
B Membership Interests”) of Ethanol Products, which interests
are governed by the Amended and Restated Operating Agreement of Ethanol
Products, LLC, dated as of July 2, 2001 (the “Operating
Agreement”);


 


Whereas, Ethanol Products has an option to purchase
the Class B Class B Membership Interests pursuant to the terms set forth in the
Class B Member Agreement of Ethanol Products, LLC, dated as of June 7, 2000
(the “Class B Member Agreement”),
upon the occurrence of certain events, including a termination of its marketing
contract with Ethanol Products or a termination of its management agreement
with Broin Management, LLC;


 


Whereas, the
Member terminated the Marketing Agreement dated October 7, 1999 (the “Marketing Agreement”), between
Dakota Ethanol, LLC and Ethanol Products, LLC, effective as of December 31,
2005, pursuant to the terms and conditions of the Ethanol Marketing Contract
Termination, dated of even date herewith (the “Termination
Agreement”);


 


Whereas, as
a result of the termination of the Marketing Agreement, pursuant to the terms
of Section 5 of the Class B Member Agreement, Ethanol Products has elected its
option to purchase, and the Member has agreed to sell, the Member’s Class B
Membership Interests on the terms and conditions set forth herein.


 


In consideration
of the mutual promises and covenants of the parties, and subject to the terms
and conditions set forth herein, the parties agree as follows:


 


AGREEMENT:


 


I. Redemption of the Class B Membership Interests


 


A.            Purchase
and Sale of Class B Membership Interests.  
Pursuant to Section 5 of the Class B Member Agreement, Ethanol Products
hereby exercises its right to purchase, and the Member agrees to sell to
Ethanol Products, on the terms and conditions set forth herein, the Member’s
Class B Membership Interests, free and clear of all security interests,
pledges, liens, charges and encumbrances, on the Closing Date (as hereinafter
defined).   At the Closing (as
hereinafter defined), the Member shall transfer good, valid and marketable
title to the Class B Membership Interests and shall deliver to Ethanol Products
an assignment of such Class B Membership Interests.


 





















 


B.            Consideration.  In accordance with Section 9 of the Class B
Member Agreement, the purchase price (the “Purchase Price”)
for the redemption of the Class B Membership Interests is an amount equal to
$1.00 per Class B Capital Unit, or Two Hundred Thousand Dollars
($200,000).  The Member shall further be
entitled to receive profits or be responsible for losses occurring through the
Closing Date.


 


C.            Payment.  In connection with the termination of the
Marketing Contract, the Member has agreed to pay Ethanol Products a termination
payment as set forth in the Termination Agreement in the amount of Four Hundred
Thirty-Five Thousand Fifty Dollars ($435,050) (the “Termination
Payment”).  The Purchase
Price shall be credited toward Dakota Ethanol’s payment of the Termination
Payment, and the balance of the Termination Payment shall be paid in accordance
with the Termination Agreement.  The
parties acknowledge that such credit shall be in full payment of the Purchase
Price obligations of Ethanol Products hereunder.


 


                D.            Effect
of Redemption.   Upon consummation of
the transactions at Closing, the Member shall cause any of its representatives
to resign from any manager or officer positions of Ethanol Products, and it no
longer shall no longer have any right or authority to bind Ethanol Products,
contractually or otherwise.  Likewise,
Ethanol Products shall have no rights or authority to bind Dakota Ethanol,
contractually or otherwise.


 


II. Representations and Warranties.


 


A.            Representations
and Warranties – Member. 
The Member represents and warrants to Ethanol Products, as follows:


 


1.             Organization
and Standing of the Member. The Member is duly organized, validly existing
and in good standing under the laws of South Dakota. The Member has full power
and authority to carry out the transactions contemplated hereunder.


 


2.             Title.    The Class B Membership Interests represent
all of the Capital Units and Income Units of the Member in Ethanol Products,
and the Member is the sole legal and equitable owner of the Class B Membership
Interests, free and clear of any encumbrances, and such Class B Membership
Interests are fully paid and non-assessable. 
There are no understandings of any kind affecting or relating to the
voting, issuance, purchase, redemption, repurchase or transfer of Class B
Membership Interests, except as contemplated herein and in the Operating
Agreement.


 


3.             Authority.   The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary actions of the Member,
none of which actions has been modified or rescinded and all of which actions
are in full force and effect. This Agreement constitutes and, upon execution
and delivery will constitute, a valid and binding agreement and obligation of
the Member, enforceable in accordance with its terms.


 


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4.             No
Conflicts.  The execution and
delivery of this Agreement, and the performance of the obligations of the
Member hereunder do not and will not conflict with or constitute a default
under the Articles of Incorporation, Operating Agreement or other
organizational agreement of the Member, or any contract, agreement, lease,
commitment or understanding to which the Member is a party or its assets or
business are subject, or any law, ordinance, regulations, order, award,
judgment, injunction or decree applicable to the Member or its assets or
business.


 


5.             Litigation
and Proceedings.   There are no
actions, suits or proceedings pending or overtly threatened against or
affecting the Member, at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, that relates directly or indirectly
to the Class B Membership Interests or the transactions contemplated by this
Agreement.


 


6.             No
Consent.   Excepting registration or
approvals required under South Dakota law, no authorization, consent or
approval of any person, entity, court or governmental body or authority is
necessary to the validity of the transfer of the Class B Membership Interests
to Ethanol Products.


 


7.             Distributions.   On or before January 31, 2006, the Member
will have received all distributions of earnings or profits and dividends that
have been declared or have accrued and become payable or allocated to the
Member in respect of its Class B Membership Interests through the Termination
Date as paid by Ethanol Products to all Members in the ordinary course of
business.


 


8.             Loans.   Except as provided in this Agreement and the
Termination Agreement, Ethanol Products has no outstanding loans, promissory
notes or other amounts payable to the Member, nor is the Member entitled to
receive any reimbursement of expenses or other amounts from Ethanol Products.


 


9.             Independent
Decision.  The Member has conducted
its own due diligence in determining whether to undertake the transactions
contemplated herein, and has been represented by legal counsel in the
negotiation of this Agreement and it has made an independent and informed
decision to proceed with the redemption of its Class B Membership Interests as
set forth in this Agreement.


 


B.            Representations
and Warranties of Ethanol Products. 
Ethanol Products hereby represents and warrants as follows:


 


1.             Organization
and Standing of Ethanol Products. Ethanol Products is duly organized,
validly existing and in good standing under the laws of South Dakota. Ethanol
Products has full power and authority to carry out the transactions contemplated
hereunder.


 


2.             Authorization.  The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary actions of Ethanol
Products, none of which actions has been modified or


 


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rescinded and all of
which actions are in full force and effect. This Agreement constitutes and,
upon execution and delivery will constitute, a valid and binding agreement and
obligation of Ethanol Products enforceable against it in accordance with its
terms.


 


3.             No
Conflicts.  The execution and
delivery of this Agreement, and the performance of the obligations of Ethanol
Products hereunder do not and will not conflict with or constitute a default
under the Articles of Incorporation, Operating Agreement or other
organizational agreement of Ethanol Products, or any contract, agreement,
lease, commitment or understanding to which Ethanol Products is a party or its
assets or business are subject, or any law, ordinance, regulations, order,
award, judgment, injunction or decree applicable to Ethanol Products or its
assets or business.


 


4.             Litigation
and Proceedings.   There are no
actions, suits or proceedings pending or overtly threatened against or
affecting Ethanol Products, at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind, that relates
directly or indirectly to the redemption of the Class B Membership Interests by
Ethanol Products as contemplated herein.


 


5.             No
Consent.   Excepting registration or
approvals required under South Dakota law, no authorization, consent or
approval of any person, entity, court or governmental body or authority is
necessary to the validity of the transfer of the Class B Membership Interests
to Ethanol Products.


 


6.             Distributions.   On or before January 31, 2006, Ethanol
Products will have paid to the Member all distributions of earnings or profits
and dividends that have been declared or have accrued and become payable or
allocated to the Member in respect to its Class B Membership Interests through
the Termination Date as paid by Ethanol Products to all its Members in the
ordinary course of business.


 


7.             Loans.   Except as provided in this Agreement and the
Termination Agreement, Ethanol Products has no outstanding loans, promissory
notes or other amounts receivable from the Member, nor is Ethanol Products
entitled to receive any reimbursement of expenses or other amounts from the
Member.


 


8.             Independent
Decision.  Ethanol Products has
conducted its own due diligence in determining whether to undertake the
transactions contemplated herein, and has been represented by legal counsel in
the negotiation of this Agreement and it has made an independent and informed
decision to proceed with the redemption of the Member’s Class B Membership
Interests as set forth in this Agreement.


 


III.           Additional Covenants


 


A.            Delivery
of Books and Records.  At the
Closing, the Member will deliver to Ethanol Products any limited liability
company books, records, data and papers, or other assets of Ethanol Products in
the possession or control of the Member, including, without limitation, any
board


 


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packets, minutes of
meetings or similar information, but may keep copies of such documents as the
Member deems necessary for tax, regulatory and other purposes.


 


B.            Between
the date of this Agreement and the Closing Date, the Member will not (i)
solicit any offer from or negotiate with any third party for the direct or
indirect acquisition or Transfer (as defined in the Class B Member Agreement)
of its Class B Membership Interests, (ii) grant any options, warrants or similar
rights to acquire any direct or indirect interest, whether legal or beneficial,
in the Class B Membership Interests, or (iii) pledge, hypothecate, mortgage or
otherwise encumber said Class B Membership Interests.


 


IV.  The
Closing.


 


A.            Closing
Date.  The closing on the
transactions contemplated herein (the “Closing”)
shall take place at the offices of Ethanol Products on or before December 31,
2005 (the “Closing Date”), at 9:00 o’clock
a.m. or at such other date, time and place as may be mutually agreed upon by
the parties.  The Member waives any
provision in the Member Agreement requiring a closing prior to such date and
time.


 


B.            Closing.  At the Closing, Ethanol Products shall credit
the Purchase Price toward the Termination Payment, and shall pay to Ethanol
Products as soon as practicable following Closing, in good and available funds,
any accrued and unpaid distributions or allocations or profit, and the Member
shall deliver an assignment of the Class B Membership Interests, duly endorsed.   The Member shall further deliver the
resignations of any officer or manager appointed or elected by the Member.


 


V. Nature and Survival of Representations and
Warranties.


 


All
representations and warranties set forth herein will remain operative and in
full force and effect, and will survive the Closing and the Closing Date and
the delivery of all consideration and documents under to this Agreement for a
period of three (3) years.


 


VI. Release; Indemnification.


 


A.           The
Member hereby releases Ethanol Products and agrees to Ethanol Products and its
officers, directors, employees, and agents harmless from any and all claims,
right to contribution or indemnity, suits, damages, injuries, demands, causes
of action, obligations, agreements, debts, and liabilities whatsoever, both at
law and in equity, that the Member may have against Ethanol Products, except
for any claims for breach of this Agreement.


 


B.            Ethanol
Products hereby releases the Member and agrees to indemnify and hold the Member
and its officers, directors, employees, and agents harmless from any and all
claims, right to contribution or indemnity, suits, damages, injuries, demands,
causes of action, obligations, agreements, debts, and liabilities whatsoever,
both at law and in equity, that Ethanol Products may have against the Member,
except for any claims for breach of this Agreement.


 


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C.            With respect
to any third party claim or demand which might be subject to a claim for
indemnification under this Agreement, the party(ies) potentially entitled to
indemnification (“Indemnitee”) will promptly notify the party(ies) potentially
required to indemnify under this Agreement (“Indemnitor”), and the Indemnitor
may defend, in good faith and at its expense, any such claim or demand, and the
Indemnitee, at its expense, will have the right to participate in the defense
in any such third party claim. So long as the Indemnitor is defending in good
faith any such third party claim, the Indemnitee will not settle or compromise
such third party claim. The Indemnitee will make available to the Indemnitor or
its representatives, all records and other materials reasonably required by
them for its use in contesting any third party claim and will cooperate fully
with the Indemnitor in the defense of all such claims. If the Indemnitor does
not so elect to defend any such third party claim, the Indemnitee will have no
obligation to do so.


 


VII. Expenses.


 


 Ethanol Products and
the Member will pay their own expenses (including without limitation counsel
and accounting fees and expense) incident to the preparation and carrying out
of this Agreement and the consummation of the transactions contemplated herein.


 


VIII. Notices.


 


The parties agree
that all notices under this Agreement will be in writing and will either be
delivered personally to a party, transmitted by facsimile transmission, or sent
by overnight courier or certified mail, to the address set forth below, or to
such other address as may be furnished by either party to the other from time
to time:


 


If to Dakota Ethanol:


 


Dakota Ethanol, LLC


PO Box 100


Wentworth, SD 57075


Telephone: 
(605) 483-2676


Facsimile:  
(605) 483-2681


 


With a copy to (which shall not constitute notice):


 


Douglas J. Hajek


Davenport, Evans, Hurwitz & Smith, LLP


P.O. Box 1030


Sioux Falls, SD 57101-1030


Telephone: 
(605) 336-2880


Facsimile:  
(605) 335-3639


 


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If to Ethanol Products, LLC


 


Ethanol Products, LLC.


9530 E. 37th Street North


Wichita, KS 67226


Telephone:  (316) 303-1380


Facsimile:   (316) 267-1071


 


With a copy to (which shall not constitute notice):


 


Gregg S. Greenfield


Boyce, Greenfield, Pashby & Welk, L.L.P.


P.O. Box 5015


Sioux Falls, SD 57117-5015


Telephone: 
(605) 336-2424


Facsimile:  
(605) 334-0618


 


or to such other address as the parties may specify in writing by
sending notice thereof to the opposite party.


 


Receipt of notice shall be deemed to be the
earlier of the following dates: (1) the date notice was received by the named
recipient or his agent; or (2) if the recipient refuses or fails to accept
notice, the date of such refusal, which shall include, but not be limited to,
the date the notice was returned by the postal or other service as
undeliverable, refused or otherwise returned pursuant to actions on behalf of
the recipient.


 


Either party may
designate a different address by written notice given to the other party.


 


IX. Miscellaneous.


 


A.            Binding
Effect.  This Agreement will be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns and the heirs, executors, administrators and
personal representatives.


 


B.            Section
and Paragraph Headings.  The section
and paragraph headings of this Agreement are for reference purposes only and
will not affect in any way the meaning or interpretation of this Agreement.


 


C.            Amendment.
 This Agreement may be amended only
by an instrument in writing executed by the parties.


 


D.            Entire
Agreement.  This Agreement and the
exhibits, schedules, certificates and documents referred to herein constitute
the entire agreement of the parties and supersede all understandings of the
parties.


 


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E.             Waiver.  No waiver will be valid against any party
hereto unless made in writing and signed by the party against whom enforcement
of such waiver is sought and then only to the extent of such writing. No delay
or failure on the part of any party in exercising any right, power or privilege
under this Agreement or any document contemplated hereby will impair any such
right, power or privilege or be construed as a waiver of any default or any
acquiescence therein.


 


F.             Benefit
and Assignment.  No party hereto will
assign this Agreement, in whole or in part, whether by operation of law or
otherwise, without the prior written consent of the other party, and any
purported assignment contrary thereto will be null and void and of no force or
effect. No person or entity other than the parties is or will be entitled to
bring any action to enforce the provisions of this Agreement, and the covenants
and agreements set forth herein will be solely for the benefit of, and will be
enforceable only by, the parties or their respective successors and assigns as
permitted hereunder.


 


G.            Counterparts.  This Agreement may be executed in
counterparts, each of which will be deemed an original, but all of which will
constitute one and the same instrument.


 


H.            Governing
Law; Forum. This Agreement will be construed in accordance and governed by
the laws of the State of South Dakota. 
The parties hereby agree that the Circuit Court situated in Lake or
Minnehaha Counties, South Dakota, shall be the exclusive jurisdiction and venue
of any disputes relating to this Agreement.


 


I.              
Reformation.  It is agreed that if
any part, term, paragraph, or provision of this Agreement is determined by the
courts or any tribunal to be illegal, void, or unenforceable, or to be in
conflict of any law of the State of South Dakota, the validity of the remaining
portions or provisions shall not be affected, and the rights and obligations of
the parties shall be construed and enforced as if this Agreement did not
contain the particular part, term, paragraph, or provision determined to be
invalid, illegal, void, or unenforceable and that such particular part, term,
paragraph or provision be reformed to the minimum extent necessary for such
particular part, term, paragraph or provision to be enforceable.


 


 


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Intentionally Omitted]


 


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IN WITNESS WHEREOF, this
Redemption Agreement has been duly executed by the parties as of the date first
above written.


 


	
   

  	
  DAKOTA ETHANOL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Woldt

  
	
   

  	
   

  	
  Brian Woldt, Its Chairman of Board of
  Managers

  
	
   

  	
   

  	
   

  
	
   

  	
  ETHANOL PRODUCTS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bob Casper

  
	
   

  	
   

  	
  Bob Casper, Its President

  
				



 


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