Exhibit 10.5
EXHIBIT B — ADDENDUM #3
to
CENTRAL IOWA ENERGY, LLC TOLL PROCESSING AGREEMENT
Corn Oil
This Exhibit B — Addendum #3 to Central Iowa Energy, LLC Toll Processing
Agreement (“Addendum #3”) is entered into this 4th day of March, 2009, by and
between Central Iowa Energy, LLC, an Iowa limited liability company, of 3426
East 28th Street North, Newton, Iowa 50208 (“CIE”), REG Marketing & Logistics
Group, LLC, an Iowa limited liability company (“REG Marketing”), of 416 S. Bell
Avenue, PO Box 888, Ames, Iowa 50010, and Renewable Energy Group, Inc., a
Delaware corporation (“REG, Inc.”), of 416 S. Bell Avenue, PO Box 888, Ames,
Iowa 50010 (collectively the “Parties”).
Recitals
WHEREAS, REG Marketing is a wholly owned subsidiary of REG, Inc.;
WHEREAS, CIE and REG Marketing entered in to a Central Iowa Energy, LLC Toll
Processing Agreement dated as of January 6, 2009 (“Agreement”), which has been
extended pursuant to the provisions of Exhibit E to the Agreement;
WHEREAS, CIE and REG Marketing desire to supplement and modify the Agreement
with this Addendum #3 specifically pertaining to the toll processing of Corn
Oil;

      ***  
Portions omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

 

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WHEREAS, CIE and REG Marketing recognize and acknowledge that the Corn Oil
processing technology, know-how and particularized application as defined and
discussed below is novel and highly proprietary to REG, Inc., and further intend
that all persons employed by, affiliated with or acquiring knowledge of
Technology by or through CIE shall be bound by the strictest requirements of
trade secret and confidentiality; and
WHEREAS, REG, Inc., with the strictest adherence to the trade secret and
confidentiality provisions of this Addendum #3, is willing to license the use of
Corn Oil processing technology, know-how and particularized application to CIE
under the umbrella of the Central Iowa Energy, LLC Toll Processing Agreement it
has with REG Marketing.
NOW, THEREFORE, in consideration of the covenants contained herein and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
1. Additional Feedstock Specifications. As used in Addendum #3, “Corn Oil” means
any crude corn oil extracted from distillers dried grains in the ethanol process
which meet the quality specifications as appended to Addendum #3 as Attachment
#1. For purposes of the Agreement, Corn Oil constitutes Additional Feedstock
which REG Marketing may deliver to the Facility to be processed by CIE under the
terms of the Agreement as modified herein.

 

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2. Yield Requirement for Additional Feedstock. The Parties agree that for
purposes of processing the Corn Oil, the Agreement at Section 6 is amended by
changing the first sentence to read:
“In consideration of the Toll Fee and handling of co-products agreed upon, CIE
agrees to deliver to REG Marketing not less than 1 Gal of Biodiesel for every
*** pounds of Corn Oil delivered by REG Marketing to the Facility which equates
to a weight yield of ***% (7.35 lbs biodiesel divided by *** lbs of Feedstock).”
3. Economic Adjustment to Agreement. In view of the different characteristics of
the Additional Feedstock (Corn Oil) as set forth in Attachment #1 to this
Addendum #3 as compared to the other Feedstock listed within the various Addenda
of Exhibit B to the Agreement, the Parties agree to adjust the terms of
Section 4 of the Agreement to provide for an incremental By-Product Payment
structure. Specifically, the payments due to REG Marketing by CIE shall be based
upon the following By-Product Payment formula:
(A) For any Order or Nomination, multiply the number of pounds of Additional
Feedstock delivered by REG Marketing to CIE for processing, times the average
free fatty acid composition of such Additional Feedstock as a percentage in
excess of 4% (the composition to be based upon supplier’s Certificate of
Analysis, or as otherwise agreed by the Parties).
(B) Divide the result from “A” above by 80%.

      ***  
Portions omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

 

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(C) Multiply the result from “B” above by the price received for the free fatty
acids sold from such Order or Nomination, which yields the required By-Product
Payment.
(D) CIE agrees to pay such By-Product Payment to REG Marketing by wired funds to
REG Marketing within one (1) business day of delivery of the Biodiesel to REG
Marketing with respect to such Order or Nomination.
4. Trade Secret Protection: Of particular import to this Addendum #3 and the
tolling process for Corn Oil is the corn oil based technology, know-how, and
particularized application of said technology and know-how (more fully defined
as “Technology” below), all of which is confidential and proprietary to REG,
Inc. REG, Inc. may or may not pursue patent protection of all or a portion of
the Technology. For purposes of the Agreement as it relates to Corn Oil tolling,
and specific to this Addendum #3, the Parties specifically acknowledge that all
Technology has economic value and should be protected from disclosure to the
public in general, and prospective competitors in particular. As a result, REG
Marketing and CIE recognize and agree to modify and supplement the
confidentiality provisions of the Agreement found within Section 24 so as to
specifically cover and protect the Technology.

 

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5. Technology Rights, Ownership & Issues.
(A) Definition of Technology. For purposes of this Agreement, “Technology” shall
mean all expertise, knowledge, technology, Production Data (as defined below),
other data, designs, know-how, physical plans, drawings, works of authorship,
inventions, equipment, equipment configuration, processes, techniques, operating
conditions, and, also, any other proprietary and/or intellectual property
including, without limitation, patents pending and patents covering such
property, developed by or licensed to REG, Inc. or its subsidiary corporations
with respect to the processing of Corn Oil for the production of biodiesel. As a
part hereof, it is specifically acknowledged by CIE that the know-how possessed
by REG, Inc., and the particularized application of said know-how in the
refinement of biodiesel from corn oil, constitutes a critical component of
Confidential Information as that term is defined within Addendum #3.
(B) Production Data. Production Data means all data derived from the toll
process of Corn Oil at the CIE tolling facility in Newton, Iowa. CIE agrees that
REG, Inc., or any of its subsidiary corporations, may collect, maintain and
retain all such Production Data. Further, consistent with Product Data
constituting a part of Technology, CIE acknowledges and agrees that all right,
title and interest in and to the Production Data shall belong solely to REG,
Inc.
(C) Ownership of Technology. CIE and REG Marketing acknowledge and agree that
the Technology is fully owned by and is highly proprietary to REG, Inc.

 

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6. Privity of Contract. CIE and REG Marketing acknowledge and agree that REG,
Inc. has a fully vested interest in this Addendum #3 and, further, is in privity
of contract with CIE and its Affiliates (defined below) so as to be able to
enforce the confidentiality provisions or other provisions of this Addendum #3
and, as may be necessary, the Agreement.
7. Definition of Affiliate. For purposes of this Addendum #3, “Affiliate” with
respect to CIE shall mean any Contractor or Consultant of CIE and/or any person
that is employed or otherwise under the direction and control of any Contractor
or Consultant of CIE. For purposes of this definition, the term “direction and
control” shall mean the possession, direct or indirect, of the power or
authority to direct or cause the direction of said entity or said personnel’s
work or production activities, whether by contract or otherwise.
8. Grant of License. Subject to the terms and conditions hereof, REG, Inc.
hereby grants to CIE a limited, non-transferable, non-exclusive, revocable
license to use the Technology for and in connection with the processing of Corn
Oil for the production of biodiesel at its facility located in Newton, Iowa.
This grant is limited to the Term of Addendum #3. CIE shall make use of the
rights granted hereunder only as permitted in Addendum #3, and in compliance
with all laws, rules and regulations applicable to the use of such rights. The
rights granted under this License shall be limited to CIE’s Newton facility.

 

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9. Term of Addendum #3. The duration of this Addendum #3 shall be the duration
of the Agreement, which Agreement has been extended by the execution of
Exhibit E to and including the 30 day of March, 2010. REG Marketing however, may
terminate this Addendum #3 on thirty (30) days written notice for any reason. In
the event, however, that REG, Inc. has concerns regarding the protection
employed and enforced by CIE related to the Technology licensed to it by REG,
Inc., this Addendum #3 may be immediately terminated by REG, Inc. with written
notice.
10. Improvements.
(A) Improvement Defined. Any future improvement, modification, development,
enhancement or derivation of the any aspect of the Technology defined above
shall collectively be referred to as “Improvements”.
(B) Ownership of Improvements. It is acknowledged and agreed that any and all
Improvements are solely and exclusively the property of REG, Inc. Neither CIE,
nor any Affiliate of CIE shall have any ownership right or other right
whatsoever to Improvements.
(C) Improvements — Use Not Automatically Implemented. CIE’s rights to the
Technology shall be limited to the Technology existing as of the Effective Date
and shall not include Improvements unless REG, Inc. at its sole discretion by or
through REG Marketing installs or otherwise implements said Improvements in the
Corn Oil toll processing operation at CIE.

 

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(D) Improvements — Developed or Assisted by CIE or Affiliates of CIE. CIE and
all Affiliates of CIE hereby assign to REG, Inc. all of CIE’s and/or Affiliates
right, title and interest in and to all Improvements resulting in any way from
CIE’s or Affiliates access to, use of, and/or research or experimentation with
the Technology. CIE further covenants to ensure that all of CIE’s Affiliates who
have used, worked with, researched, or otherwise have had access to the
Technology agree to assign to REG, Inc. all right, title and interest in and to
all Improvements. As a part of this obligation, CIE and each Affiliate of CIE
agree to fully cooperate and undertake all actions at the expense of REG, Inc.,
if any, reasonably necessary to perfect said assignment and/or to perfect or
otherwise obtain all further legal protection in the Improvements, including
patents, for the benefit and ownership of REG, Inc.
11. Right to Conduct Research. CIE hereby grants REG, Inc., at its expense, the
right to conduct experiments, tests or research of new technology at CIE’s
Newton facility for the Term of Addendum #3. This authorization is granted based
upon the understanding that such experiments, tests or research will not
unreasonably interfere with production of biodiesel.
(A) Ownership of Research Results. It is acknowledged and agreed that any and
all Improvements, or other newly developed or discovered technical information
that result from any such experiments, tests or research, whether such technical
information falls within or without the definition of Technology, are solely and
exclusively the property of REG, Inc. All data, research findings, equipment
modifications, process modifications, and all other information derived in whole
or part from such experiments, tests, or research shall hereinafter be referred
to as “Research Results”. Neither CIE, nor any Affiliate of CIE shall have any
ownership right or other right or interest whatsoever to Research Results.

 

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(B) Research Results — Use Not Automatically Conferred. CIE’s rights under this
Addendum #3 are limited to the Technology existing as of the Effective Date and
shall not include Research Results. Further, neither REG, Inc., nor any of its
subsidiary corporations shall have any obligation to provide Research Results
for use by CIE. REG, Inc. may, however, incorporate the results of Research
Results into the tolling process for Corn Oil at its sole discretion.
(C) Research Results — Developed or Assisted by CIE or Affiliate of CIE.
(1) To the extent that CIE or any Affiliate of CIE may claim a contribution,
ownership or any other interest in Research Results, CIE and/or Affiliate of CIE
hereby assign to REG, Inc., its successors, assigns, or designees all of CIE’s
or Affiliates right, title and interest in and to Research Results. CIE further
covenants to ensure that all of CIE’s Affiliates who have used, worked with, or
otherwise have had access to the research conducted on behalf of REG, Inc.
and/or any Research Results hereby agree to assign to REG, Inc., its successors,
assigns or designees, any and all right, title and interest in and to all such
Research Results.
(2) As to the obligation conveyed by Section 11(c)(1) above, CIE and each
Affiliate of CIE agree to fully cooperate and undertake all actions at the
expense of REG, Inc., if any, reasonably necessary to perfect said assignment
and/or to perfect or otherwise obtain all further legal protection in the
Research Results, including but not limited to patents, for the benefit and
ownership of REG, Inc.

 

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12. Confidential Information.
(A) Confidentiality. The Technology licensed by REG, Inc. to CIE, and utilized
by CIE under this Addendum #3 is an emerging technology. REG, Inc. has developed
novel and innovative methods and processes for the conversion of Corn Oil into
biodiesel. As a result, the Technology as defined above has significant monetary
value and is of the highest proprietary importance to REG, Inc.
(B) Drawings, Documents and Materials. Any and all drawings, documents, and
materials (hardcopy, electronic, or in any other form) that in any way relate to
or are associated with the Technology and/or are confidential shall be returned
by CIE to REG, Inc. upon the cessation of the biodiesel/corn oil processing
operation under Addendum #3, the termination of Addendum #3, and/or the
termination of the Agreement. Further, CIE shall certify to REG, Inc. in writing
that all such Confidential Information has been returned.
(C) Protection of Technology. CIE acknowledges and agrees that it will only use
Technology for purposes of executing the requirements of the Agreement pursuant
to this Addendum #3 and, further, that it will independently undertake all
reasonable steps to protect the Technology from disclosure or dissemination.

 

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(1) Implementation of Additional Protections. CIE agrees to implement the
following additional protections at the request of REG Marketing:
(a) Restriction of Access. CIE agrees that it will not allow members of the
general public, or others persons not employees of CIE or Affiliate
Contractor/Consultants (collectively referred to as “Public”) from having access
any locations of its facility in Newton wherein the Corn Oil processing
equipment is housed. Further, CIE will not publish or otherwise disseminate
Technology to the Public and will act to reasonably prevent the Public from
gaining access to Technology that is contained or otherwise used within the CIE
Newton facility.
(b) CIE Personnel, Directors and Board Members. CIE agrees that as a condition
of employment, continued or new, it will require each of its employees, each of
its management personnel, each of its Directors and Board Members to execute the
CIE Employee Technology Acknowledgment & Assignment Agreement (“CIE Personnel
Acknowledgment”), a copy of which is appended as Attachment #2.

 

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(c) Contractors & Consultants. The only Contractors and/or Consultants that will
be allowed access to any locations of CIE’s facility in Newton wherein the Corn
Oil processing equipment is housed, or who will have access to design and
process drawings or other Technology will be those Contractors and/or
Consultants which by virtue of their respective contracts with CIE have accepted
duties and responsibilities conferred by CIE that compel each said Contractor
and/or Consultant to be allowed such access. CIE agrees that as a condition of
awarding any contract to a Contractor or Consultant, or as a condition of
continuing with contracts already awarded, CIE shall require each entity through
their respective management personnel, duly authorized in advance, to execute
the Contractor/Consultant Employee Technology Acknowledgment & Assignment
Agreement (“Contractor/Consultant Acknowledgment”), a copy of which is appended
as Attachment #3.
(d) Contractors & Consultants Personnel. CIE agrees that as a condition of
awarding a contract to any Contractor or Consultant, or as a condition of
continuing with contracts already awarded, CIE shall require all personnel of
each Contractor or Consultant to execute the Contractor/Consultant Employee
Technology Acknowledgment & Assignment Agreement (“Contractor/Consultant
Acknowledgment”), a copy of which is appended as Attachment #4.
(e) Contractor or Consultant Refusal. CIE acknowledges that any Contractor or
Consultant that refuses or otherwise fails to execute the Contractor/Consultant
Acknowledgment shall be denied access to CIE’s Newton facility and shall be
denied access to any Technology. CIE further acknowledges that any employee or
other personnel of a Contractor or Consultant that refuses or otherwise fails to
execute the Contractor/Consultant Acknowledgment shall be denied access to CIE’s
Newton facility and shall be denied access to any Technology.

 

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(2) Delivery & Possession of Acknowledgments. CIE shall deliver to REG, Inc. all
original executed Acknowledgments (Attachments #2 — #4 to this Addendum #3)
without delay.
(3) Audit. REG, Inc. shall have the right at its expense to conduct annual
audits, or audits on a more frequent basis, of the personnel records and
contractor/consultant records of CIE for the purpose of confirming that all
corporate entities and individuals have duly executed the Acknowledgments as
required above.
(4) Exit Communications. CIE agrees that with any of its personnel who should
leave employment with the company over the course of the next ten (10) years:
(a) It will timely provide a letter to each former employee reminding them of
their obligations of confidentiality under the CIE Personnel Acknowledgment.
With this correspondence, CIE shall also provide to such individuals a copy of
their executed CIE Personnel Acknowledgment.
(b) Should CIE learn that any departed employee has obtained new employment with
a company that is involved or has the capability to be involved in the
production of biofuels, CIE shall without delay have delivered to the new
employing entity a copy of said former employee’s executed CIE Personnel
Acknowledgment with a caution that it be honored by the new employing entity.

 

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(c) Copies of all correspondence shall be timely provided to REG, Inc. in a
timely fashion.
13. Equitable Relief. CIE acknowledges that any violation of the provisions of
Sections 4, 5, 10, 11 and 12 of Addendum #3 would cause REG, Inc. and its
subsidiary corporations immediate and irreparable harm for which there is no
adequate compensation afforded by monetary damages. Therefore, in the event of
any such breach, REG, Inc., or any of its subsidiary corporate entities, shall
be entitled to seek preliminary and permanent injunctive relief, an order for
specific performance, and/or any other equitable relief that a court may
determine to be appropriate. Such relief shall be granted to REG, Inc. or any of
its subsidiary corporations, as provided in the appropriate Acknowledgment and
Assignment (Addendum #3, Attachments #2 — #4).
14. Other Terms, Provisions, and Language Unchanged. Except as expressly
modified or supplemented within this Addendum #3, all other terms, provisions,
and/or Language of the Agreement shall remain in full force and effect.
15. Conflict of Terms. In the event of a conflict between the terms and
provisions of this Addendum #3 and the terms and provisions of the Agreement,
the terms and conditions of this Addendum #3 shall control.

 

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16. Survival. Any and all duties, responsibilities and obligations associated
with or related to the acknowledgments, assignments, protection of Technology,
and the confidentiality requirements as set forth within this Addendum #3 and/or
as contained within the Agreement shall survive any expiration or termination of
the Agreement and/or this Addendum #3 to the Agreement.
IN WITNESS WHEREOF, Central Iowa Energy, LLC, REG Marketing & Logistics Group,
LLC, and Renewable Energy Group, Inc. have fully authorized the below
representative to fully bind them and, further, each has duly and appropriately
executed this Addendum #3 as of the date first shown above.

                      CENTRAL IOWA ENERGY, LLC       REG MARKETING &
LOGISTICS GROUP, LLC    
 
                   
By:
  /s/ James Johnston
 
Name: James Johnston       By:   /s/ Nile D. Ramsbottom
 
Name: Nile D. Ramsbottom    
 
  Title:   Chairman           Title:   President    

 

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          RENEWABLE ENERGY GROUP, INC.    
 
       
By:
  /s/ Nile D. Ramsbottom
 
Name: Nile D. Ramsbottom    
 
  Title:   President    

 

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Attachment #1 to

Exhibit C — Addendum #3
REG Feedstock Specifications

                                              Free Fatty Acid            
Insoluble             Color (FAC       (as Olecic)     Moisture     Impurities  
  Total MIU     Scale)  
Analytical Method
                                       
 
  AOCS Ca 5a-40     AOCS Ca 2c-25     AOCS Ca 3a-46             AOCS Cc 13a-43  
Feedstock Type
                                       
DDG Corn Oil
  < 15     < 1.0     < 0.5     < 2.5     Typical  

 

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