Exhibit 10.3


 


REG, LLC CONTRIBUTION AGREEMENT


 


This REG, LLC Contribution Agreement (“Agreement”) is made as of this
31st day of July, 2006, between REG, LLC, an Iowa limited liability company,
f/k/a Renewable Energy Group, LLC (the “Transferor”), having its main office at
406 1st Street, PO Box 68, Ralston, Iowa 51459, and Renewable Energy Group,
Inc. (“Corporation”), having its main office at 406 1st Street, PO Box 128,
Ralston, Iowa 51459.


 


Recitals


 


Transferor is engaged in the business of constructing biodiesel
facilities and performing related services in the biodiesel industry (“Biodiesel
Business”). Transferor desires to join with West Central Cooperative (“West
Central”) and other businesses and entities in transferring property into the
Corporation in exchange for shares of stock in the Corporation, in a tax-free
transfer qualifying under Section 351 of the Internal Revenue Code. Corporation
desires to receive certain properties from the Transferor and from other
entities and businesses, to consolidate and expand upon their biodiesel
operations.


 


NOW THEREFORE, in consideration of the covenants set forth herein, and
intending to be legally bound, the parties agree as follows:


 


1.             Transfer
of Assets.


 


A.            Assets to be
Transferred. Subject to the terms and conditions of this Agreement, at the
Closing, Transferor shall irrevocably convey, assign, transfer and deliver to
Corporation all of Transferor’s interests in the following assets utilized in
Transferor’s Biodiesel Business:


 


(i)            Fixed
Assets. All improvements, fixed assets and fixtures described on Schedule
1(A)(i) (“Fixed Assets”);


 


(ii)           Equipment.
All equipment described in Schedule 1(A)(ii) (“Equipment”);


 


(iii)          Inventory.
All inputs, raw materials, product and related inventory described in Schedule
1(A)(iii) (“Inventory”);


 


(iv)          Accounts
Receivable. Accounts receivable described in Schedule 1(A)(iv) (“Accounts
Receivable”);


 


(v)           Contract
Rights. All contract rights described in Schedule 1(A)(v) (“Contract Rights”);


 


(vi)          Intellectual
Property. All intellectual property described in Schedule 1(A)(vi) (“Intellectual
Property”);


 


(vii)         Other
Assets. All other assets of Transferor described in Schedule 1(A)(vii), and
utilized in Transferor’s Biodiesel Business (“Other Assets”).


 

















 


The Fixed Assets, Equipment, Inventory, Accounts
Receivable, Contract Rights, Intellectual Property, and Other Assets shall be
referred to herein collectively as the “Assets.”


 


B.            Excluded Assets.
All other properties of the Transferor not included in the Assets as listed on the
attached schedules are excluded from this Agreement and will be retained by
Transferor (“Excluded Assets”). Without limiting the generality thereof, the
Excluded Assets shall specifically include the properties listed in Schedule
1(B).


 


2.             Assumed
Liabilities. At the Closing, the
Corporation shall assume all obligations of the Transferor after the Closing
for future performance under all Contract Rights set forth on Schedule 1(A)(v)
(“Contract Obligations”), all debts and other obligations described in Schedule
2 (“Debts”), and all liabilities and obligations arising from the ownership of
the Assets or operation of the Biodiesel Business from and after the Closing (“Post-Closing
Liabilities”), Contract Obligations, Debts, and Post-Closing Liabilities referred
to herein collectively as “Assumed Liabilities.”  Except for the Assumed Liabilities, the
Corporation shall not assume and shall not in any way be responsible for any
liabilities or obligations of any kind, nature or description including,
without limitation, any liabilities or obligations arising from the ownership
of the Assets or operation at the Biodiesel Business at any time prior to the
Closing, which liabilities and obligations remain the liabilities and
obligations of Transferor. The Transferor will discharge all of its known
liabilities related to its Biodiesel Business on or in connection with the
Closing, except the Assumed Liabilities.


 


3.             Issuance of Shares. In exchange for the Assets being transferred to
the Corporation by Transferor, Corporation agrees to issue, execute and deliver
to Transferor at Closing 2,036,506 shares of the Corporation’s common stock (“Shares”).


 


4.             Closing.


 


A.            Time and Place.
The consummation of the transactions contemplated hereby shall take place at a
closing (the “Closing”) to be held at the offices of the Corporation at a time
to be mutually agreed upon by Corporation and Transferor (such date, the “Closing
Date”).


 


B.            Deliveries by the
Transferor. At the Closing, and upon satisfaction or waiver of the conditions
set forth in Section 11(B) herein, Transferor will deliver or cause to be
delivered to Corporation the instruments, consents, certificates and other
documents required by Section 11(A)(iv).


 


C.            Deliveries by the
Corporation. At the Closing, and upon satisfaction or waiver of the
conditions set forth in Section 11(A) herein, Corporation will deliver or cause
to be delivered to Transferor the instruments, certificates and other documents
required of it by Section 11(B)(iv).


 


D.            Transfer of
Possession. Possession of the Assets shall be delivered to Corporation at
Closing (“Transfer of Possession”).


 


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5.             Assignment
of Contracts and Licenses. To the
extent that transfer or assignment hereunder by Transferor to Corporation of
any contract or license is not permitted or is not permitted without the
consent or approval of another person, this Agreement shall not be deemed to
constitute an assignment, an attempted assignment or an undertaking to assign
such contract or license if such consent or approval is not given or if such an
assignment, attempted assignment or undertaking otherwise would constitute a
breach thereof or cause a loss of benefits thereunder. Prior to the Closing,
Transferor shall use all reasonable efforts to obtain any and all such third
party consents or approvals under all contracts or licenses to be transferred. If
any such third party consent or approval is not obtained before the Closing,
Transferor shall cooperate with Corporation in any reasonable arrangement
designed to provide for Corporation after the Closing the benefits intended to
be assigned to Corporation under the applicable contract or license, including
enforcement at the cost and for the account of Corporation of any and all rights
of Transferor against the other party thereto arising out of the breach or
cancellation thereof by such other party or otherwise. If and when any such
consents or approvals shall be obtained after the Closing, then Transferor
shall promptly assign its rights and obligations thereunder to Corporation
without payment of additional consideration and Corporation shall assume such
rights and obligations. Transferor shall act as agent on behalf of Corporation
with respect to any such contracts and licenses until transfer or reissuance to
Corporation and all revenue and expense of Transferor with respect to the
business transacted pursuant to such contracts and licenses shall be for the
account of Corporation without any additional charge by Transferor except as
otherwise agreed pursuant to the Administrative Services Agreement between West
Central and Corporation to be executed at or prior to Closing.


 


6.             Representations
and Warranties of the Transferor. Transferor represents and warrants to Corporation
that as of the date hereof and as of the Closing Date the following information
is true and correct:


 


A.            Transferor is a
limited liability company duly organized, validly existing and in good standing
under the laws of the state of Iowa. The execution, delivery and performance of
this Agreement by Transferor has been duly authorized by all necessary action
on the part of Transferor, its governing body and equity holders, and will not
result in any violation or breach of any law, rule, regulation, contract, agreement,
instrument, order, decree or judgment to which the Transferor is a party or by
which it is bound. Except for filing of title transfer documents as may be
required and except for such consents, approvals, and authorizations as already
set out on Schedules 2.3 and 2.14(b) to the Stock Purchase Agreement dated the
1st day of August, 2006, between Corporation, Transferor, West Central
Cooperative, InterWest, L.C. and others (the “Stock Purchase Agreement”), no
consent, approval or authorization of or declaration or filing with any person
or entity (including any governmental authority) is required on the part of the
Transferor for or in connection with the execution, delivery and performance of
this Agreement. This Agreement constitutes a valid and binding obligation of
Transferor enforceable against the Transferor in accordance with its terms.


 


B.            All tangible property
included within the Fixed Assets and Equipment is in all material respects  in good working order and condition at the
execution of this Agreement subject, however, to the effect of ordinary wear
and tear and 


 


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depreciation arising from lapse of time or
use with appropriate maintenance, and will be maintained in such condition
through Closing.


 


C.            The Accounts
Receivable included within the Assets are valid, genuine, and subsisting, arose
out of bona fide sales and deliveries of goods or the performance of services,
and to the knowledge of Transferor are not subject to any defenses, set offs, or
counterclaims.


 


D.            The Inventory included
within the Assets consists of items of quality, condition and quantity saleable
in the ordinary course of the business of Transferor.


 


E.             Transferor has in all
material respects performed all obligations required to be performed by
Transferor to date under each of the Contract Rights referred to herein and is
not in default thereunder, or in breach thereof, nor in receipt of any claim of
default or breach thereunder, nor, to Transferor’s knowledge, has any event occurred
which, with the passage of time or the giving of notice, or both, would cause a
breach of, or a default under, any such agreement.


 


F.             Intellectual Property
included within the Assets constitutes all intellectual property being used in
Transferor’s Biodiesel Business as currently conducted. No claims of third
parties for infringement with respect to Intellectual Property being
transferred are currently pending or, to the knowledge of Transferor, are
threatened. Except as set out on Schedule 1(A)(vi), Transferor does not have
knowledge of any valid grounds for any bona fide claims (a) to the effect that
the manufacture, sale, licensing or use of any products as now used, sold or
licensed or proposed for use, sale or license by Transferor infringes on any
copyright, patent, trademark, trade name, service mark or trade secret; (b)
against  the use  by Transferor of any Intellectual Property;
(c) challenging the ownership, validity or effectiveness of any of the
Intellectual Property; or (d) challenging the license or legally enforceable
right to use the Intellectual Property. To the knowledge of Transferor, there
is no unauthorized use infringement or misappropriation of any of the
Intellectual Property by any third party, including any employee or former
employee of Transferor.


 


G.            Except as expressly
provided in this Agreement, the Assets are being assigned, transferred and
conveyed to Corporation in “as is, where is”
condition and Transferor makes no express or implied representation or warranty
as to the condition, operability, or merchantability or any other aspect of the
Assets. Transferor hereby disclaims any and all other express or implied
representations or warranties regarding the Assets, including, but not limited
to, any implied warranty of merchantability or fitness for a particular
purpose, and no such representation or warranty has been or will become a basis
of the bargain between the parties, nor has been or will be relied upon by
Corporation.


 


H.            Other than with
respect to Intellectual Property and except as set out on Schedule  6(H) (“Exceptions to Title”), Transferor owns
good and marketable title to the 


 


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Assets to be conveyed hereunder free and
clear of any and all liens, security interests, restrictions and encumbrances. With
respect to title to the Intellectual Property, Transferor at Closing will
transfer all of Transferor’s rights in the Intellectual Property, free of any
mortgage or security interest granted by Transferor.


 


I.              The Assets, together
with the assets, properties and rights provided or to be provided to the
Corporation by West Central Cooperative pursuant to the Ground Lease, Asset Use
Agreement and the Contract for Services (as such terms are defined in the Stock
Purchase Agreement) constitute all of the assets, properties and rights which
are required for or currently used in connection with the conduct of the
Biodiesel Business of Transferor conducted as of the date hereof.


 


7.             Representations
and Warranties of the Corporation.
Corporation represents and warrants to Transferor that as of the date hereof
and as of the Closing Date the following information is true and correct:


 


A.            Corporation is a
corporation duly organized under the laws of the state of Delaware, and validly
existing and in good standing under its laws of organization and of the state
of Iowa. The execution, delivery and performance of this Agreement by
Corporation has been duly authorized by all necessary action on the part of the
Corporation, its Board of Directors and shareholders (as necessary), and will
not result in a violation or breach of any law, rule, regulation, contract,
agreement, instrument, order, decree or judgment to which the Corporation is a
party or by which it is bound. No consent, approval or authorization of or
declaration or filing with any person or entity (including any governmental
authority) is required on the part of the Corporation for or in connection with
the execution, delivery and performance of this Agreement. This Agreement
constitutes the valid and binding obligation of Corporation enforceable against
the Corporation in accordance with its terms.


 


B.            Schedule 2.4 to the
Stock Purchase Agreement contains a true and accurate list of all stockholders
of the Corporation immediately following the consummation of the transactions
contemplated by the initial closing of the Stock Purchase Agreement.


 


C.            That same Schedule 2.4
to the Stock Purchase Agreement further discloses all outstanding options,
warrants, rights, agreements, contracts and commitments which would result in
the issuance of additional stock in the Corporation.


 


8.             Indemnification. Transferor agrees to indemnify and hold harmless
Corporation, its officers, directors, employees, agents and their successors
and assigns, from and in respect of all claims, damages, losses, liabilities
(including STRICT LIABILITY, if
applicable), fine, penalty, tax, fee, charge, costs and expenses (including
without limitation, costs of attempting to avoid or in opposing the imposition
thereof and the reasonable fees and expenses of attorneys, accountants
and other professional advisors) of every kind, nature or description
(collectively “Losses”) arising out of or relating to (i) any liabilities or
obligations of Transferor except 


 


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Assumed
Liabilities; (ii) the ownership, use or operation of the Assets prior to the
Closing; and (iii) Transferor’s breach of any agreement, covenant,
representation or warranty made or contained in this Agreement.


 


Corporation agrees to indemnify and hold harmless
Transferor, its officers, directors, employees, agents and their successors and
assigns, from and in respect of all Losses arising out of or relating to (i)
Assumed Liabilities; and (ii) Corporation’s breach of any agreement, covenant,
representation or warranty made or contained in this Agreement.


 


9.             Further
Documents, Agreements. Transferor
shall execute and deliver such further documents and take such additional
action as Corporation may reasonably request to effect, consummate, confirm or
evidence the transfer to Corporation of the Assets, to put the Corporation in
operational control of the Assets or otherwise exercise any right with respect
thereto. Corporation shall execute and deliver such further documents and take
such additional action as Transferor may reasonably request to effect,
consummate, confirm or evidence the issuance of the Shares to Transferor and
Corporation’s assumption of all obligations of Transferor under the Assumed
Liabilities.


 


10.           Survival. The representations, warranties, covenants and
agreements set forth in this Agreement or in any writing delivered in
connection with this Agreement shall survive the Closing Date and the
consummation of the transactions contemplated hereby and any investigation or
finding made by or on behalf of the Transferor or the Corporation.


 


11.           Closing
Conditions, Etc.


 


A.            Conditions to the
Obligation of the Corporation. The obligations of Corporation to consummate
the transactions contemplated by this Agreement are subject to the satisfaction
or fulfillment at or prior to the Closing of the following conditions, any of
which may be waived in whole or in part by Corporation in writing:


 


(i)            All
representations and warranties of Transferor contained in this Agreement shall
be true and correct in all material respects at and as of the Closing with the
same effect as though such representations and warranties were made at and as
of the Closing.


 


(ii)           Transferor
shall have performed and complied in all material respects with all the
covenants, conditions and agreements required by this Agreement to be performed
or complied by it on or prior to the Closing.


 


(iii)          There
shall be in effect no law or injunction issued by a court of competent
jurisdiction making illegal or otherwise prohibiting or restraining the
consummation of the transactions contemplated by this Agreement.


 


(iv)          Transferor
shall have executed and delivered to Corporation the Bill of Sale, and the
Assignment and Assumption Agreement in the form attached hereto as Exhibit
11(A)(iv), together with such other instruments of 


 


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transfer as
Corporation may reasonably request in order to transfer title to the Assets in
conformance with this Agreement.


 


(v)           West
Central Cooperative and InterWest, L.C. simultaneously close their transaction
with the Corporation in exchange for stock, and the initial closing pursuant to
the Stock Purchase Agreement.


 


B.            Conditions to the
Obligation of the Transferor. The obligations of Transferor to consummate
the transactions contemplated by this Agreement are subject to the satisfaction
or fulfillment at or prior to the Closing of the following conditions, any of
which may be waived in whole or in part by Transferor in writing:


 


(i)            All
representations and warranties of Corporation contained in this Agreement shall
be true and correct in all material respects at and as of the Closing with the
same effect as though such representations and warranties were made at and as
of the Closing.


 


(ii)           Corporation
shall have performed and complied in all material respects with all the
covenants, conditions and agreements required by this Agreement to be performed
or complied by it on or prior to the Closing.


 


(iii)          There
shall be in effect no law or injunction issued by a court of competent
jurisdiction making illegal or otherwise prohibiting or restraining the
consummation of the transactions contemplated by this Agreement.


 


(iv)          Corporation
shall have issued, executed and delivered to Transferor 2,036,506 Shares,
together with the Assignment and Assumption Agreement in the form attached
hereto as Exhibit 11(A)(iv).


 


(v)           West
Central Cooperative and InterWest, L.C. simultaneously close their transaction
with the Corporation in exchange for stock, and , and the initial closing
pursuant to the Stock Purchase Agreement.


 


C.            Interim Covenants.
For the period commencing as of the date hereof and ending as of the Closing or
the earlier termination of this Agreement, the Transferor shall (i) operate the
Biodiesel Business of the Transferor in the ordinary course; (ii) use all
reasonable efforts to ensure that its representations and warranties are true
and correct in all material respects at and as of the Closing; and (iii) use
all reasonable efforts to satisfy the Corporation’s conditions to closing
applicable to the Transferor.


 


12.           Termination. This Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing:


 


A.            By mutual written
consent of the Corporation and the Transferor;


 


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B.            By the Corporation, if
the Transferor has breached any covenant, agreement, representation or warranty
contained in this Agreement, and such breach is not cured within thirty (30)
days after the Corporation gives the Transferor written notice identifying such
breach;


 


C.            By the Transferor, if
the Corporation has breached any covenant, agreement, representation or
warranty contained in this Agreement, and such breach is not cured within
thirty (30) days after the Transferor gives the Corporation written notice
identifying such breach; or


 


D.            By the Corporation or
the Transferor, if the closing shall not have occurred on or before September
30, 2006, or such other date, if any, as the Corporation and the Transferor may
agree in writing, except that this Agreement may not be terminated under
this Section 12(D) by any party that is in material breach of any
representation, warranty, covenant or agreement contained herein.


 


13.           Miscellaneous.


 


A.            Notices. All
notices, requests, demands, claims and other communications that are required
or may be given pursuant to this Agreement 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 Corporation, to:

  	
  Renewable
  Energy Group, Inc.

  
	
   

  	
  406 1st Street, PO Box 128

  
	
   

  	
  Ralston, IA 51459

  
	
   

  	
  Attn: CFO

  
	
   

  	
   

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Wilcox, Polking, Gerken, Schwarzkopf & Copeland, P.C.

  
	
   

  	
  115 E Lincolnway, Suite 200

  
	
   

  	
  Jefferson, IA 50129

  
	
   

  	
  Attn: John A. Gerken

  
	
   

  	
  Phone: 515-386-3158; Facsimile: 515-386-8531

  
	
   

  
	
  If to the Transferor, to:

  	
  Renewable Energy Group, LLC

  
	
   

  	
  406 1st Street, PO Box 68

  
	
   

  	
  Ralston, IA 51459

  
	
   

  	
  Attn: President

  
	
   

  	
   

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Wilcox, Polking, Gerken, Schwarzkopf & Copeland, P.C.

  
	
   

  	
  115 E Lincolnway, Suite 200

  
	
   

  	
  Jefferson, IA 50219

  
					



 


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  Attn: John A. Gerken

  
	
   

  	
  Phone: 515-386-3158; Facsimile: 515-386-8531

  



 


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; (c) if given by telecopier or
facsimile, once such notice or other communication is transmitted to the
facsimile number specified above and the appropriate answer back or telephonic
confirmation is received; or (d) 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
Agreement 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.            Successors and
Assigns. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties and their respective heirs, personal representatives,
successors and assigns.


 


D.            Counterparts. This
Agreement 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.


 


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


 


F.             No Waiver. Neither
the failure nor any delay on the part of either party to exercise any right,
remedy, power or privilege under this Agreement 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.


 


G.            Entire Agreement.
This Agreement 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 


 


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hereof. This Agreement may not be modified or
amended other than by an agreement in writing.


 


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


 


I.              Brokers. Each
party hereto represents that no finder, broker, agent, financial advisor or
other intermediary has acted on such party’s behalf in connection with the
negotiation or consummation of this Agreement and no such person is entitled to
any fee, payment, commission or other consideration in connection therewith as
a result of any arrangement made by any such person.


 


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IN WITNESS WHEREOF, the parties hereto have executed this REG, LLC
Contribution Agreement as of the date first set forth above.


 


	
   

  	
  TRANSFEROR:

  
	
   

  	
   

  
	
   

  	
  REG, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
     /s/ NILE RAMSBOTTOM

  	
   

  
	
   

  	
   

  	
  Nile Ramsbottom, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CORPORATION:

  
	
   

  	
   

  
	
   

  	
  RENEWABLE ENERGY GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
     /s/ JEFFREY STROBURG

  	
   

  
	
   

  	
   

  	
  Jeffrey Stroburg, CEO