Exhibit
10.5


 


CONTRACT FOR SERVICES


 


This Contract
for Services (“Services Contract”) is made and entered into as of the 1st day
of August, 2006, by and between West Central Cooperative, a cooperative
association organized and existing under the laws of the state of Iowa, with
offices at Ralston, Iowa (“West Central”), and Renewable Energy Group, Inc., a
corporation organized and existing under the laws of the state of Delaware,
with offices at Ralston, Iowa (“REG”).


 


RECITALS:  West Central, REG, LLC (f/k/a Renewable
Energy Group, LLC) (“REG LLC”), and InterWest, L.C. (“InterWest”) have
contributed assets from their respective biodiesel operations to REG, forming
REG to combine and expand upon their collective strengths in the biodiesel
business (the “Business”). A number of West Central personnel are moving to
employment by REG. Certain assets will remain owned by West Central, but which
West Central has agreed to make available for use by REG pursuant to the Asset
Use Agreement executed by the parties hereto concurrently herewith. West
Central may lease certain of its employees to REG on a part or full time basis.


 


West Central
also has been requested to provide certain corporate services to REG to
facilitate the operation of its Business. The parties recognize that the
services to be provided will change over time, as REG’s needs change within the
operation of its Business. West Central and REG have discussed the general
terms and conditions under which West Central would provide such services, and
the parties wish to set forth such agreement in writing in this Contract for
Services.


 


NOW, THEREFORE,
in consideration of the foregoing, and the respective covenants and agreements
of the parties contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:


 


1.                                       Services. Upon the terms and conditions set forth herein, West Central
agrees to provide to REG certain services (the “Services”) which are listed on
Exhibit A attached hereto (as the same may be amended by the parties from time
to time). West Central hereby agrees to use its reasonable efforts to provide
REG with Services of the same general quality which West Central provides to
itself and has provided prior to the date hereof with respect to the biodiesel
business of West Central and REG LLC. The parties agree to work together in
planning for the Services as they change from time to time because of the needs
of REG’s Business. To the extent it is discovered that any services necessary
for REG to conduct its Business in substantially the same manner such business
was conducted by West Central or REG LLC prior to the date hereof are not
listed on Exhibit A, the parties agree to amend Exhibit A and to recalculate
the payment being made by REG to West Central hereunder, all if so requested by
REG.


 


2.                                       Compensation. REG, in consideration for the
performance of the Services by West Central, agrees to pay West Central REG’s
share of costs associated with the providing of the Services, plus a 15% margin
(the “Compensation”).


 


Exhibit B attached hereto provides the method
by which West Central calculated the costs associated with the providing of
Services to REG, and the method by which REG’s share of such


 


 

















 


costs was computed. Exhibit B further sets
out the addition of a 15% margin, resulting in an initial monthly Compensation
charge of $180,501.04. Such monthly Compensation figure shall apply beginning
with commencement of the term of this Agreement (with any portion of a month
prorated based upon the number of days the Services are provided) and continue
to apply through the month of September, 2006. The parties agree that a new
Compensation figure shall be computed beginning with the month of October, 2006,
based upon the same method of calculation of costs as set out on Exhibit B (and
including a 15% margin), updated as to changes in the proportionate use of the
personnel being utilized to provide the Services, and actual costs associated
therewith and changes in the scope of Services provided, if applicable. The new
Compensation figure arrived at shall be utilized for the three (3) months
comprising the fourth (4th) quarter of 2006. The parties agree to recalculate
the Compensation figure on a quarterly basis thereafter utilizing the same
method or such alternate methods as may be mutually agreed. The parties will
work together to resolve any differences or disputes in such calculation. In
the event the parties cannot agree on a new Compensation figure on a timely
basis for its utilization and billing by the end of the first month for the
change, REG will continue to pay the Compensation figure for the month prior to
the change, West Central agreeing to perform the services required hereunder
during the time that the parties work to resolve such dispute, and including
arbitration of the issue as provided for herein.


 


The parties
agree that the Compensation figure shall generally change only at the beginning
of a new quarter, except as follows. In the event that REG anticipates either
an increase or decrease in the Services which they reasonably anticipate would
cause greater than a 3% change in the Compensation figure if recalculated to
take into such change, then the parties agree to attempt to calculate in
advance the projected change resulting from the increase or decrease in
Services requested, to allow REG an opportunity to know in advance the impact
upon the Compensation figure, in order to allow REG to determine how it would
wish to be fulfilling its corporate needs, and as well provide staffing
information for planning purposes for West Central. In the event REG determines
to implement such increase or decrease in Services, then upon the effective
date of such implementation the parties agree to modify the Compensation figure
accordingly.


 


3.                                       Payment. West Central will invoice REG at the end of each month for the
Services. REG’s payment of all undisputed amounts will be made within twenty
(20) days of receipt of the bill. If a payment amount not disputed by REG in
good faith is not received by West Central by such due date, then a late
payment charge equal to 1.0% per month will be paid by REG on all undisputed
payment amounts due but not received by West Central on or before the due date.
If REG disputes in good faith any amounts invoiced by West Central hereunder,
REG will promptly so notify West Central in writing of the nature of such
dispute and the affected portion of the invoiced amount. The parties will work
together to resolve such dispute.


 


4.                                       Commencement Date, Term and Termination. The obligations of West Central and
REG under this Services Contract shall commence on the 1st day of August, 2006
(the “Effective Date”) and continue until one party provides written notice of
termination to the other party of a proposed termination date at least six (6)
months in advance of the proposed termination date (subject to early
termination as set out hereafter); provided, however, that West Central agrees
not to give any such notice of termination prior to the first (1st)
anniversary of the Effective Date..


 


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5.                                       Insurance. The parties shall carry the following insurance coverages. All
insurance shall be written through companies authorized to do business in Iowa.


 


A.                                   Worker’s Compensation. Insured worker’s compensation coverage for
all full and part-time employees. The party paying and reporting wages is the
party responsible for worker’s compensation coverage. Worker’s compensation
insurance shall comply with requirements of Iowa law.


 


B.                                     Comprehensive Liability Insurance. Each party shall purchase and carry
adequate comprehensive general liability insurance, including auto coverage for
owned, non-owned and hired vehicles, insuring such party against liability for
personal or bodily injury to third parties. Such policy or policies shall name
the party seeking the coverage as insured, and the other party as an additional
insured.


 


C.                                     Proof of Coverages. Such policies
shall provide for thirty (30) days prior written notice to the parties of any
cancellation or material change. Upon request, the party responsible for
procuring insurance shall provide the other party with copies of policies or
certificates thereof, evidencing coverage being provided hereunder.


 


D.                                    Waiver of Subrogation. West
Central and REG each hereby waive any and all rights of recovery against the
other, its officers, employees and agents, occurring or arising out of the
providing of Services to the extent such loss or damage is covered by proceeds
received from insurance required under this Contract for Services to be carried
by the other party. This waiver of subrogation provision shall be limited to
(i) loss or damage to the property of West Central and REG, and (ii) the
officers and employees of West Central and REG. Inasmuch as the above mutual
waivers will preclude the assignment of any aforesaid claim by way of
subrogation to an insurance company, West Central and REG agree immediately to
give to each insurance company providing a policy as described herein, written
notice of the terms of said mutual waivers, and to have said insurance policies
properly endorsed, if necessary, to prevent the invalidation of said insurance
coverages by reason of said waivers.


 


6.                                       Independent Status. Subject to the terms and conditions
of this Services Contract, West Central is authorized to perform services for
REG as set out in this Services Contract as an independent contractor and as an
agent with such authority as is necessary to carry out the services herein
provided except that after the Effective Date West Central shall not have the
authority to enter into contracts on behalf of REG unless specifically
authorized in writing to do so by REG. Nothing in this Services Contract or in
the course of dealing by the parties thereunder shall be construed to
constitute REG and West Central as partners, joint venturors, or as guarantors
for one another or as authorizing either party to obligate the other in any
manner except as is necessary for West Central to fulfill the services provided
for hereunder.


 


7.                                       Early Termination. Notwithstanding
the provisions of Section 4 hereof, this Services Contract may be terminated in
accordance with the following provisions:


 


A.                                   Upon mutual agreement of the parties.


 


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B.                                     A
party hereto may (but is not required to) terminate this Services Contract if
the other party breaches any provision of this Services Contract and fails to
remedy such breach within thirty (30) days after delivery of written notice
from the non-breaching party describing the alleged breach and the proposed
remedy (provided that, if the nature of such default is such that the same
cannot be cured within such 30-day period, a party shall not be deemed to be in
default if such party shall within such period commence such cure and
thereafter diligently pursue the same to completion).


 


C.                                     Either
party hereto may terminate this Services Contract effective immediately upon
delivery of written notice to the other party, if the other party (I) is unable
to pay its debts as they mature or admits in writing its inability to pay its
debts as they mature, (ii) makes a general assignment for the benefit of its
creditors, (iii) files a voluntary petition for bankruptcy, or (iv) applies for
the appointment of a receiver or trustee for all or substantially all of its
assets or permits the appointment of any such receiver or trustee who is not
discharged within a period of one hundred eighty (180) days after such
appointment.


 


D.                                    Notwithstanding
any termination of this Services Contract, the obligations and rights of the
parties which have accrued as of the time of such termination shall survive.


 


8.                                       Remedies in the Event of Default. Where
a party commits a material breach of this Services Contract (“Breaching Party”),
and:


 


A.                                   If
except as set out herein such material breach continues beyond the allowable
cure period after the receipt of written demand for cure of such breach by the
party not in breach (“Non-Breaching Party”) as set out in Section 7(B) hereof;
or


 


B.                                     If
such material breach cannot be cured within such period and the Breaching Party
does not within such cure period start to cure the breach and thereafter
proceed diligently with the cure thereof,


 


then the Non-Breaching Party
may terminate this Services Contract and may recover its money damages
allowable hereunder and caused by such material breach (including arbitration
fees, court costs, litigation expenses, and reasonable attorney fees) on
written notice and demand to the Breaching Party for payment. Such payment
shall be without prejudice to any other right or remedy that the Non-Breaching
Party may have against the Breaching Party under this Services Contract, at law
or in equity, including injunctive relief and rights of specific performance.


 


9.                                       Arbitration.
Should any controversy, claim, dispute or difference arise between the parties
hereunder, out of or relating to this Services Contract, including, without
limitation, its formation, validity, binding effect, interpretation,
performance, breach or termination, then each and every such controversy,
claim, dispute or difference shall be submitted and settled by arbitration in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association, and shall be conducted in Des Moines, Iowa. Judgment
upon the award rendered by the arbitrator or arbitrators may be entered in any
court of competent jurisdiction.


 


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10.                                 Limited Warranty; Limitation of Liability. West Central represents that it will
use reasonable efforts to provide or cause to be provided the Services to be
provided in a workman like manner. EXCEPT AS SET FORTH IN THE IMMEDIATELY
PRECEDING SENTENCE AND IN SECTION 1 HEREOF, WEST CENTRAL MAKES NO (AND HEREBY
DISCLAIMS AND NEGATES ANY AND ALL) REPRESENTATIONS AND WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES RENDERED TO REG. West Central
and its shareholders, directors, officers, employees and agents shall not be
liable to REG or to any other person for any act or omission in the course of
performance of their duties hereunder except for their gross negligence,
willful misfeasance, or reckless disregard of duty or their not having acted in
good faith in the reasonable belief that their action was in the best interests
of REG.


 


11.                                 Indemnification. West Central shall indemnify, defend
and hold harmless REG, its shareholders, directors, officers, employees and
agents, from and against any and all claims, demands, costs and expenses
(including reasonable attorneys’ fees) arising directly or indirectly, in whole
or in part, out of any acts or omissions of West Central, its shareholders,
directors, officers, employees or agents, in connection with West Central’s
obligations under this Services Contract, which constitute gross negligence,
willful misfeasance, reckless disregard of duty or bad faith in the conduct of
their duties under or by reason of this Services Contract.


 


REG shall
indemnify, defend and hold harmless West Central, its shareholders, directors,
officers, employees and agents, from and against any and all claims, demands,
costs and expenses (including reasonable attorneys’ fees) arising directly or
indirectly, in whole or in part, out of this Services Contract; provided,
however, there shall be no such indemnification for claims, demands, costs and
expenses incurred by any such person or entity by reason of their gross
negligence, willful misfeasance, reckless disregard of duty or bad faith in the
conduct of their duties under or by reason of this Services Contract.


 


12.                                 Non-Solicitation
of Employees. Each party agrees that during the term of this Services
Contract neither party (nor any affiliate, successor or permitted assign
thereof) shall solicit for employment or consulting an employee of the other
while such employment by the other continues, except as consented to by the
other party.


 


13.                                 Access to Books and Records. This
Services Contract provides for payment by REG based upon expenses being
incurred by West Central with respect to the furnishing of Services hereunder. For
that reason, West Central agrees to make available those portions of its books
and records for inspection and copying which are reasonably necessary for
purposes of verifying appropriate cost items, and West Central’s compliance
with its obligations hereunder.


 


14.                                 Force Majeure. Any failure or
delay by either party in performing its obligations under this Services
Contract shall be excused if such failure or delay is due to causes beyond its
reasonable control, including, without limitation, acts of God, governmental
acts or omissions, war, riot, vandalism, sabotage, fires, floods, strikes,
labor disputes, mechanical breakdowns, shortages or delays in obtaining
suitable parts or equipment, or interruption of utility services.


 


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15.                                 Assignment and Subcontracts. Neither REG nor West Central may
assign this Services Contract, or any portion hereof or any monies due or to
become due hereunder, or delegate any of its duties or obligations arising
hereunder, either voluntarily or involuntarily, or by operation of law, without
the prior written consent of the other party, which shall not be unreasonably
withheld.


 


16.                                 Miscellaneous.


 


A.                                   Notices.
All notices, requests, demands, claims and other communications that are
required or may be given pursuant to this Services Contract must be in writing
and delivered personally against written receipt, by reputable overnight
courier, by telecopy or facsimile or by registered or certified mail, return
receipt requested, postage prepaid, to the parties at the following addresses:


 


	
   

  	
  If to REG,
  to:

  	
  Renewable
  Energy Group, Inc.

  
	
   

  	
   

  	
  406 1st
  Street, PO Box 128

  
	
   

  	
   

  	
  Ralston, IA
  51459

  
	
   

  	
   

  	
  Attn: CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  If to West
  Central, to:

  	
  West Central
  Cooperative

  
	
   

  	
   

  	
  406 1st
  Street, PO Box 68

  
	
   

  	
   

  	
  Ralston, IA
  51459

  
	
   

  	
   

  	
  Attn:
  Executive Vice President - Administration

  



 


Any such
notice or other communication will be deemed to have been given; (a) if
personally delivered, when so delivered, against written receipt; (b) if sent
by reputable national overnight courier, three (3) business days after being so
sent with confirmation of receipt; or (c) if mailed by registered or certified
mail, return receipt requested, postage prepaid and addressed to the intended
recipient as set forth above, upon confirmation of receipt. Any notice,
request, demand, claim or other communication given hereunder using any other
means (including ordinary mail or electronic mail) shall not be deemed to have
been duly given unless and until such notice, request, demand, claim or other
communication actually is received by the individual for whom it is intended.


 


B.                                     Governing
Law. This Services Contract shall be governed, construed and enforced in
accordance with the laws of the State of Iowa, notwithstanding any
conflicts-of-law doctrines or laws of any jurisdiction to the contrary.


 


C.                                     Survival.
The provisions of Section 10 of this Service Contract shall indefinitely
survive the expiration and termination of this Services Contract.


 


D.                                    Successors
and Assigns. This Services Contract shall be binding upon, and shall inure
to the benefit of, the parties and their permitted successors and assigns.


 


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E.                                      Counterparts.
This Services Contract may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


 


F.                                      No
Strict Construction. This Services Contract shall not be interpreted in
favor of or against either party on account of such party having drafted this
Services Contract.


 


G.                                     No
Waiver. Neither the failure nor any delay on the part of either party to
exercise any right, remedy, power or privilege under this Services Contract
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence.


 


H.                                    Covenant
of Further Cooperation. Each of the parties agrees to execute and deliver
such further documents and to cooperate in such manner as may be necessary to
implement and give effect to the provisions contained herein. Notwithstanding
the future termination of the Services Contract, both parties agree to
cooperate with each other in assembling, providing or explaining information
related to the performance of the Services provided under the Services
Contract.


 


I.                                         Entire
Agreement. This Services Contract and the attached exhibits and schedules
contains the entire understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous agreements
and understandings, inducements or conditions, express or implied, oral or
written, except as herein contained. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Services Contract may not be modified or amended
other than by an agreement in writing.


 


J.                                        Headings.
The headings of the sections herein are inserted for convenience of reference
only and shall be ignored in the construction and interpretation hereof.


 


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                                                IN
WITNESS WHEREOF, the parties hereto have executed this Contract for Services
by affixing their authorized signatures, effective the date and year first
above written.


 


 


	
  WEST CENTRAL COOPERATIVE

  	
  RENEWABLE ENERGY GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
    /s/ JEFFREY STROBURG

  	
   

  	
  By

  	
   /s/ NILE RAMSBOTTOM

  
	
   

  	
  Jeffrey Stroburg, CEO

  	
   

  	
   

  	
  Nile Ramsbottom, President

  



 


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