RULES & PROCEDURES

I.	Northeast Nebraska Biodiesel Bulletin Board
2.	Trading Periods
3.	Selling Membership Units
4.	Buying Membership Units
5.	Matching of Buyers and Sellers
6.	General Rules concerning Company Trading System

The following sets forth the Northeast Nebraska Biodiesel, LLC (“Company”) rules and procedures which govern the trading of its membership units ("Units") through the Company qualified trading system ("Trading System"), adopted in accordance with IRS regulations regarding qualified matching services, and constitutes a Qualified Matching Services Program as defined in Section 10.2 of the Northeast Nebraska Biodiesel Operating Agreement, as amended ("Operating Agreement").  These rules and procedures may be modified by the Company from time to time. 

I. Northeast Nebraska Biodiesel Bulletin Board

A. Location:  The Company Bulletin Board used in the Trading System will be located at the principal business office of the Company’s biodiesel plant located at 137 Pebble Street, Scribner, Nebraska.  Interested buyers or sellers of Units will be required to provide the required information either through a personal visit to the Company office, calling into the office (____) ____-______ or through facsimile transmission to the Company at (___) ___-____ (Attention: _______).  Company personnel will transcribe the information received onto the Trading System Bulletin Board.

The Company may also post the Bulletin Board information on its website, _________________, available for viewing to Company members with a secure password.  The website posting will be a "view only" screen, and members will not be able to directly post offers to buy or sell on the website. 

B. Non-Firm Quotations:  The Trading System displays only quotes by sellers or buyers that do not commit any person to buy or sell a Unit at the quoted price (nonfirm price quotes).  All references to "offers to buy" or "offers to sell" Units in these Rules and Procedures are qualified by reference to this Section I(B).  The display of a bid or ask price from either a potential seller or buyer does not constitute a firm commitment or obligation by such person to sell or buy at such price, and is subject to the execution of a written purchase agreement between the seller and buyer, and to the approval of the Company Board of Directors, in compliance with the Company Operating Agreement.

Buyer participation in the Trading System in any semiannual trading period is limited to current Company members, and other qualified buyers. [Review who is eligible to participate?  What qualifications required for non-member buyers?]

II. Trading Periods

A. Semiannual Periods:  Buyers and sellers may list "offers to buy" or "offers to sell" Units on the Trading System on a semiannual basis with the respective semiannual periods commencing April 1st and October 1st of each year.  The initial trading period will commence [October 1, 2008.]

The two trading periods are intended to follow the availability of semiannual financial reports by the Company.  The company's audited annual financial report will be available no later than March 31 following the end of the fiscal year.  The semiannual unaudited financial reports  will be available no later than September 30 of each year.  An annual report, containing a summary of audited year-end financial information, will be mailed by the Company to its members, as well as a semiannual report containing a summary of unaudited six-month financial information.  In addition, the full audited year-end financial statements and unaudited six-month financial statements will be available to Company members and potential purchasers upon request.  Potential buyers and sellers of Units are strongly urged to review such reports and other information made available by the Company prior to submitting a listing on the Trading System or entering into an agreement to buy or sell Units.  

B.  Listing Period:  Each trading period will begin with a 30 day listing period during which sellers may submit and post "offers to sell" containing an asking price, and buyers may submit and post "offers to buy" containing a bid price.  The first day of each Semiannual Period is the “Initial Posting Date” and the date that the seller's or buyer's respective offer to sell or offer to buy is posted on the Bulletin Board will constitute the "Posting Date," for purposes of compliance with the Trading System Rules.  The posting of "offers to sell" and "offers to buy" are permitted solely during the 30 calendar days following the Initial Posting Date. After such 30 calendar days have passed, the Listing Period is terminated, and all further activity on the Trading System Bulletin Board is suspended until the commencement of the next Semiannual Period.  The information posted on the Bulletin Board will remain on the Board for an additional 15 calendar days following the end of the Listing Period, after which all seller and buyer postings will be removed from the Bulletin Board, pending the commencement of the next Semiannual Period.

C. Timing Requirements for Purchase Agreements:  Sellers and buyers of Units cannot enter into a purchase agreement to sell Units until the 15th calendar day after the Posting Date in effect for the Units to be sold.  The Posting Date in effect for the Units to be sold is the later of the seller's or the buyer's Posting Date.  For example, if either a seller's "offer to sell" or buyer's "offer to buy" is not posted until the 24^th day following the Initial Posting Date of the Semiannual Period, seller and buyer cannot enter into a purchase agreement to sell Units until the 39^th calendar day following the Initial Posting Date.  All agreements between sellers and buyers with respect to the Units must be subject to Company Board of Directors approval, and submitted to the Company Board for approval in accordance with the time periods described below.

D. Timing Requirements for Approval of Purchase Agreements:  A purchase agreement in written form executed by both buyer and seller ("Purchase Agreement") must be submitted to the Company Board of Directors for approval by the following deadlines:

The Company Board of Directors will then consider the Purchase Agreement and the accompanying request for transfer of Units at the next regularly scheduled Board meeting following the submission date.  In most instances, this will be the June Board meeting for the April 1st Semiannual Period, and  the December Board meeting for the October 1st Semiannual Period.  The Company Board may also consider submitted Purchase Agreements and requests for transfer at specially held meetings of the Board, but is under no obligation to call a special meeting for the consideration of such agreements.

In making its determination for approval, the Company Board will consider whether the Transfer Request Form requesting transfer of Units and accompanying Purchase Agreement have complied in all respects with the Trading System Rules and Procedures, the Operating Agreement requirements, as well as compliance with applicable laws and regulations, including IRS regulations governing publicly traded partnerships, and federal and state securities laws.  All references to Purchase Agreements in these Rules and Procedures are qualified by reference to the foregoing requirements.

E. Closing Dates for Approved Purchase Agreements:  Under IRS regulations, the closing of the sale effected through the Trading System cannot occur prior to the 45th day following the Posting Date for such sale.  "Closing" is defined as the earlier of (i) the passage of title to the Units (which will occur upon transfer of the Units on the official membership register maintained by the Company), or (ii) the payment of the purchase price from buyer to seller for the purchase of the Units.

In accordance with the Company Operating Agreement, and as a general rule, the transfer of title to the Units sold pursuant to the Trading System will be effective as of July 1st for the Semiannual Period commencing April 1st, and January 1st for the Semiannual Period commencing October 1st.  As such buyers and sellers should recognize that the transfer of title date will be used for purposes of making allocations of profits and losses and distributions to members, in accordance with the Company’s Operating Agreement.  Distributions with a record date before the date of transfer of title to the Units sold will be made to the transferor, and distributions with a record date on or after the date of transfer of title will be made to the transferee.

To ensure that the IRS regulatory requirement is met, the Company will require that the payment of the purchase price from buyer to seller under the terms of the Purchase Agreements not occur until after the Purchase Agreement has been approved by the Company Board of Directors and no earlier than the following dates:

III. Selling Membership Units

A. Contacting the Company for Placement on the Bulletin Board.  A seller must first contact the Company as described in Section I above, and complete a Seller Registration Form.  A copy of the Seller Registration Form is attached as Appendix A.  The information on the Seller Registration Form will require the seller to provide:

Name
Address, City, State, Zip Code
Telephone Number
E-mail Address
Number of Units proposed to be sold
Seller's Nonfirm Price Quote (on a per Unit basis)

B. Posting of Offer to Sell.

IV. Buying Membership Units

A. Contacting the Company for Placement on the Bulletin Board.  A buyer must first contact the Company as described in Section I above and complete a Buyer Registration Form.  [All buyers must be current members of the Company, or otherwise qualified as potential buyers.]  A copy of the Buyer Registration Form is attached as Appendix B.  The information on the Buyer Registration Form will require the buyer to provide:

Name
Address, City, State, Zip Code
Telephone Number
E-mail Address
Number of Units proposed to be bought
Buyer's Nonfirm Price Quote (on a per Unit basis)

B. Posting of an Offer to Buy.

V. Matching of Buyers and Sellers

A. Seller and Buyer Responsibility to Reach Agreement.  The Company Trading System is intended solely to match a list of interested buyers with a list of interested sellers, along with the nonfirm price quotes of buyers and sellers.  The Trading System will not automatically effect "matches" between potential sellers and buyers, nor will Company personnel contact buyers or sellers about "matches" occurring on the Bulletin Board.  It is the sole responsibility of those sellers and buyers listed on the Trading System to track the relevant information on the Bulletin Board and to contact each other using the contact information provided and make a determination as to whether an agreement as to price and terms may be reached.  Only those sellers and buyers who have listed "offers to sell" or "offers to buy" on the Trading System during the Listing Period will be eligible for Company Board of Directors approval of any Purchase Agreement reached between a seller and buyer.

B. Execution of Purchase Agreements.

Buyer and seller are responsible for negotiating and finalizing the terms and conditions of the form of Purchase Agreement for the purchase and sale of Company Units.  The Company will have available for sellers and buyers upon request a base form of purchase agreement which contains the Trading System requirements, and to which the parties can add their specific provisions.  Buyers and sellers are responsible for obtaining their own legal or other representation in connection with such transaction.   While the terms and conditions of the executed form of Purchase Agreements may vary based on the mutual agreement of buyers and sellers, the Company will require that the following terms be included in all Purchase Agreements.  Failure to include such terms will result in non-approval of the proposed transaction under the Trading System Rules and Procedures.
• The Purchase Agreement, and closing of the sale of Unit transaction represented therein, must be subject to compliance with the Company Trading System Rules and Procedures, and the approval of the Company Board of Directors.
• The Purchase Agreement must describe the precise terms and conditions of the sale transaction, including the number of Units to be sold, and the price per Unit, and total price at which the transaction will occur, as well as the precise legal name and taxpayer identification number of the seller and buyer.
• The Purchase Agreement must provide that, in compliance with the Company Trading System Rules,  no consideration will be paid by the buyer to the seller until after the Purchase Agreement has been approved by the Company Board of Directors, and within the time periods permitted pursuant to Section II(E) of the Trading System Rules and Procedures.
Delivery of the Purchase Agreement and Transfer Request Form to the Company.  After execution of the Purchase Agreement, a copy of the executed agreement and a Transfer Request Form executed by the proposed seller(s) and proposed buyer(s) must be submitted to the Company for approval in accordance with the deadlines set forth in Section II(D).  A copy of the Transfer Request Form is attached as Appendix C.  Failure to submit the executed Purchase Agreement and Transfer Request Form by the appropriate deadlines may disqualify the proposed sale transaction for approval by the Company Board of Directors.  The Company Board of Directors or management may request additional information or documentation, as deemed necessary or appropriate, as a condition to reviewing or approving the Transfer Request Form and Purchase Agreement.

After the Company Board either approves or disapproves the request for transfer and Purchase Agreement, Company personnel will promptly notify the buyer and seller of such decision and provide information concerning processing of the documentation to complete the transaction.  All trades shall become effective upon such date as the Board of Directors designates in its resolution of approval.  Generally, such effective date will be July 1st for the Semiannual Period commencing April 1st and January 1st for the Semiannual Period commencing October 1st.
Trading Timetable Summary:  A Trading Timetable Summary is attached.

VI. General Rules concerning Company Trading System

A. Availability of Past Trading System Records:  The Company will retain records of the buyer and seller quotations listed on the Trading System, and information concerning finalized sales of Units, including buyer, seller, price and number of Units sold, (all of which is referred to herein as "Trading Information") for at least three years and make them available to the SEC and to the Nebraska Department of Banking and Finance upon request.  The three-year Trading System history will also be made available to participants in the Trading System upon request.  Those buyers and sellers participating on the Company Trading System consent by such participation to the publication of all Trading Information by the Company.  Only those sellers and buyers who have listed "offers to sell" or "offers to buy" on the Trading System during the Listing Period will be eligible for Company Board of Directors approval of any Purchase Agreement reached between a seller and buyer.

B. No Compensation to be Paid to the Company or Affiliates:  Neither the Company nor any affiliate (including members of the Board and officers) of the Company will (i) receive any compensation for creating or maintaining the Trading System; (ii) receive any compensation for the use of the Trading System; (iii) be involved in any purchase or sale negotiations arising from the Trading System; (iv) give advice regarding the merits or shortcomings of any particular trade; (v) use the Trading System directly or indirectly, to offer to buy or sell securities, except in compliance with the securities laws, including any applicable registration requirements (absent an available exemption therefrom); or (vi) receive, transfer or hold funds or securities as an incident of operating the Trading System.

Notwithstanding the foregoing, Board members, officers and employees of the Company may participate as buyers or sellers in the Trading System on their own behalf with respect to Units which they beneficially own, provided they comply in all respects with these Trading System Rules and Procedures.  In any such transaction, such Company Board member, officer or employee is acting solely on his or her own behalf, and is not acting in his or her capacity as a director, officer or employee of the Company.

C. Limitation on Amount of Membership Units Traded in Calendar Year: Under IRS regulations, the total of Company membership units which may be transferred during any taxable year (which for the Company is the calendar year) cannot exceed 10% of the total of Company Units (including private transfers which may have occurred during the same year, and which may equal up to 2%).  The Company Trading System may be suspended at any time during a calendar year in which the maximum allowable percentage has been met.

In the event the number of Company membership units proposed to be transferred pursuant to Purchase Agreements submitted to the Company Board of Directors in any Semiannual Period would exceed the maximum allowable percentage under the IRS qualified matching services regulations, the Company Board of Directors intends to accept such Purchase Agreements which meet the Trading System requirements on a "first come, first served" basis, based on the date of submission of the Purchase Agreement to the Company.

D.  Additional Information concerning the Company Trading System:  Participants in the Trading System should be aware of the following information.