Exhibit
10.6


 


ASSET USE AGREEMENT


 


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


 


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” of REG). A number of West Central personnel are moving
to employment by REG. West Central may provide certain corporate services to
REG to facilitate the operation of its Business. West Central may lease certain
of its employees to REG on a part or full time basis.


 


West Central
also has been requested to make available certain of its assets for use by REG.
West Central and REG have agreed upon the general terms and conditions under
which West Central would make available such assets, and the parties wish to set
forth such agreement in writing in this Use Agreement.


 


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.                                      Assets
to be Used by REG. Upon the terms and conditions set forth herein, West
Central agrees to provide to REG the use of certain assets (the “Assets” which
are listed on Exhibit A attached hereto as the same may be amended by the
parties from time to time. To the extent
it is discovered that there were assets used by both West Central in its
non-biodiesel operation, and by West Central, REG, LLC or InterWest in the biodiesel
business and not being conveyed to REG nor listed on the Exhibit A attached
hereto, the parties agree to amend Exhibit A where appropriate to include such
additional assets.


 


2.                                       Sharing
of Costs Based Upon Proportionate Use; No Additional Rental Compensation. REG,
in consideration of the use of the Assets granted herein (“Asset Use”), agrees
to pay West Central REG’s share of costs associated with the use of the Assets
based upon the parties’ respective use of such Assets. West Central agrees that
it shall not receive any additional rental consideration beyond the sharing of
costs as set out herein.


 


Exhibit A
attached hereto provides a listing of and further information regarding the
Assets. Exhibit B attached hereto provides historical information on how the
Assets have been used for biodiesel, and for other applications by West Central.
The parties agree that costs incurred with respect to the use of the Assets
shall continue to be separately maintained by the different asset categories,
so as to allow for identification of the varying usages, differing costs, and
an appropriate sharing of costs based upon the expenses incurred and the usage
of the parties. It is the intent of the 


 


 

















 


parties that all costs
associated with the Assets covered hereunder shall be included in the
allocation of costs (“Allocated Costs”) between the parties, and including
reimbursement for depreciation. The parties agree that the method of
depreciation for existing Assets at the commencement of this Use Agreement
shall be based upon the method presently being utilized upon the financial
records of West Central. In the event additional Assets are added to the
coverage of this Use Agreement after the commencement of its term and REG does
not pay its proportionate share of the purchase cost, the method and
calculation of depreciation shall also be based upon the method utilized for
financial (rather than tax) reporting purposes for West Central, with the
resulting annual charge to depreciation to be treated as a cost to be shared
hereunder.


 


3.                                       Payment.
West Central will invoice REG at the end of each month for REG’s Allocated
Costs with respect to its Asset Use. 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. REG will continue to pay
all amounts not in dispute, and West Central will continue to perform hereunder
during the time that the parties work to resolve such dispute, and including
arbitration of the issue as provided for herein.


 


4.                                       Use
of Assets. REG agrees to use and operate the Assets only in conjunction
with its Business, unless otherwise agreed upon by mutual written consent.


 


5.                                       Commencement
Date, Term and Termination. The obligations of West Central and REG under
this Use Agreement shall commence on the 1st day of August, 2006
(the “Effective Date”), and continue for so long as the Ground Lease Among West
Central Cooperative and Renewable Energy Group, Inc. dated the 1st day of August,
2006 (the “Ground Lease”), shall be in force (subject to early termination as
set out hereafter).


 


6.                                       Possession.
West Central agrees to give REG possession of the Assets upon execution of this
Use Agreement. REG understands that REG’s use of the Assets is not exclusive,
and in such case the parties agree to work together to coordinate the use of
such Assets, to maximize the benefit of the arrangements for both parties.


 


7.                                       Condition
of Assets. REG agrees to accept the Assets in an “as is” condition without
any further responsibilities on the part of West Central for any repairs or
alterations to them.


 


8.                                       Maintenance,
Repairs, and Replacement. This Use Agreement places all initial
responsibility for maintenance, replacement and repair of the Assets upon West
Central. Without limiting the generality thereof, West Central shall initially
be responsible for replacement, repair and maintenance of the Assets. West
Central shall keep the Assets in good condition and satisfactory working order
at all times, shall pay all operation and maintenance expenses for the Assets
during the term of the Use Agreement, and make, at its expense, any and all
repairs, and replace as


 


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necessary. REG shall contribute
to such costs, expenses, and replacement based upon the parties’ respective use
of the Assets, as set out herein.


 


9.                                       Retirement
or Trade-In of Assets. In the event that REG determines that a particular
Asset is of no further use to REG, then upon reasonable notice furnished by REG
to West Central, possession of such Asset shall be returned to West Central,
and all of the rights and obligations of REG with respect to such Asset shall
cease as of such date. Should West Central desire to “trade in” or replace one
or more of the Assets still being used by REG, then such trade in, payment for
replacement property, future use and compensation therefore hereunder shall be
upon such terms as may mutually be agreed between West Central and REG.


 


10.                                 Utilities
and Services. Unless otherwise agreed, West Central shall during the term
of this Use Agreement, initially shall pay, before delinquency, all charges for
use of water, sewer, gas, heat, electricity, power, air conditioning, garbage
disposal, trash disposal and not limited by the foregoing all other utilities
and services of whatever kind and nature which may be used in or upon the
Assets (other than telephone and internet). REG shall contribute to such costs
of utilities and services based upon the parties’ respective use of the Assets,
as set out herein.


 


11.                                 Compliance
with Laws. West Central and REG shall comply with any and all laws,
statutes, ordinances and regulations, federal, state, county or municipal, now
or hereafter in force, applicable to the Assets relating to the use thereof or
to the making of repairs thereto or of changes or alterations thereto.


 


12.                                 Property
Taxes. West Central agrees to initially and on a timely basis pay all
taxes, assessments or other public charges levied or assessed by lawful
authority (“Tax Assessments”) (but reasonably preserving rights of appeal)
against the Assets during the term of this Use Agreement. REG shall contribute
to such Tax Assessments based upon the parties’ respective use of the Assets,
as set out herein.


 


13.                                 Improvements,
Alterations and Liens. REG shall make no alterations to the Assets without
West Central’s prior written consent. Any changes made by REG shall become and
remain the property of West Central and a part of the Assets unless otherwise
agreed in writing by the parties. REG covenants and agrees that it has no power
to incur any indebtedness giving a right to a lien of any kind or character
upon the right, title and interest of West Central in and to the Assets covered
by this Use Agreement and that no person shall be entitled to any lien directly
or indirectly derived through or under it, or its agents or servants, or on
account of any act or omission of REG, which lien would be superior to the
interest in this Use Agreement reserved to West Central.


 


14.                                 Damage
or Destruction of Assets. If an Asset or Assets shall be damaged in whole
or in part by fire or other cause, West Central and REG shall mutually
determine if the damages shall be repaired and restored, the allocation of
costs of any repair or replacement, and adjustment to the Compensation to be
paid with respect to such Asset(s). If the parties determine that the Asset(s)
are to be repaired, any insurance proceeds receivable by either party as a
result of such loss shall be paid towards the necessary repairs or costs of
restoration (up to the cost of such expenses), with the parties to determine
their respective contribution to any expenses not covered by insurance proceeds
received. If the parties conclude such Asset(s) will not be repaired, all
insurance proceeds will be


 


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divided between the parties in
the same ratio as expenses with respect to such Asset(s) had been shared, and
the parties obligations under this Use Agreement with respect to such Asset(s)
shall cease.


 


15.                                 Insurance
and Indemnity. It is agreed by the parties:


 


A.                                   Fire
and Extended Coverage Insurance. During the term of this Use Agreement,
West Central agrees to pay the initial cost of maintaining fire and extended
coverage insurance upon the Assets in an amount equal to the replacement cost
of the Assets, such coverage to be provided by the insurance companies
presently writing insurance for West Central, or with such other insurance
company or companies as may be agreed to by the parties. Amounts of coverage
shall be reviewed annually, and adjusted to cover any increase or decrease in
the replacement cost of the Assets. Such policy or policies of insurance shall
be so drawn and shall contain such provisions as will protect both West Central
and REG as their respective interests appear. REG shall contribute to the cost
of such insurance coverage based upon the parties’ respective use of the
Assets, as set out herein.


 


B.                                     Personal
Injury and Property Damage Insurance. Each party shall obtain and maintain
in force public liability insurance, including property damage, with
satisfactory insurance companies, insuring against liability for injury to
persons or property arising out of the maintenance or use of the Assets,
including specifically comprehensive general liability insurance (which includes,
but is not limited to, contractual liability coverage), and environmental
liability insurance (including clean-up costs) for pollution events, each to
provide coverage for claims for bodily injury and property damage with limits
of at least $1,000,000.00 per occurrence. 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 on
or arising out of the use of the Assets to the extent such loss or damage is
covered by proceeds received from insurance required under this Use Agreement
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.


 


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E.                                      Indemnification.
A party (“Indemnifying Party”) shall indemnify and save harmless the other
party (“Indemnified Party”) from and against any and all liability, damage,
penalties or judgments arising from injury to person or property sustained by
anyone in and about the Assets resulting from any act or acts or omission or
omissions of the Indemnifying Party, or the Indemnifying Party’s officers,
agents, employees, visitors or licensees. The Indemnifying Party shall, at its
own cost and expense, defend any and all suits or actions which may be brought
against the Indemnified Party or in which the Indemnified Party may be
impleaded with others upon any such above-mentioned matter or claim.


 


16.                                 Sale
or Other Transfer by REG Prohibited. This is an agreement for the use of
Assets only, and nothing herein shall be construed as conveying to REG any
right, title or interest in or to any 
Assets except as set out hereunder. REG authorizes West Central to
execute and file financing statements and other related documents to reflect
the continued ownership of the Assets in West Central, subject only to the Use
Agreement being executed by the parties. REG shall have no right to sell,
trade, or otherwise transfer the Assets.


 


17.                                 Surrender;
End of Term. Upon the expiration of the term of this Use Agreement, REG
shall surrender to West Central any of the Assets in REG’s possession in good
order and condition, ordinary wear excepted.


 


18.                                 Assignment
or Sublease. Except for an
assignment to any successor, assignee or transferee of REG pursuant to a
Permitted Transfer (as defined in the Ground Lease) which shall not require
West Central’s consent, REG shall not assign this Use Agreement or
sublease the Assets or any portion thereof without West Central’s prior written
consent, which shall not be unreasonably withheld. In the event of any
assignment or subletting in violation of this paragraph, West Central may
either (i) treat such action as null and void and of no force and effect, or
(ii) declare any unpaid balance of rental due for the remaining term of this
Use Agreement immediately due and payable, or (iii) treat such assignment or
subletting or subleasing as a default, exercising its rights in the event of
default as set out herein.  


 


19.                                 Independent
Status. Subject to the terms and conditions of this Use Agreement, West
Central will provide for the Asset Use by REG as set out in this Use Agreement
as an independent contractor and as an agent with such authority as is
necessary to provide the Asset Use herein provided. Nothing in this Use Agreement
or in the course of dealing by the parties hereunder 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 provide for the Asset Use
provided for hereunder.


 


20.                                 Early
Termination. Notwithstanding the provisions of Section 5 hereof, this Use
Agreement may be terminated in accordance with the following provisions:


 


A.                                   Upon
mutual agreement of the parties.


 


B.                                     REG shall have the option to terminate this
Agreement upon not less than one hundred eighty (180) days prior written
notice.


 


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C.                                     A
party hereto may (but is not required to) terminate this Use Agreement if the
other party breaches any provision of this Use Agreement 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 prosecute the same to completion).


 


D.                                    Either
party hereto may terminate this Use Agreement 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.


 


E.                                      Notwithstanding
any termination of this Use Agreement, the obligations and rights of the
parties which have accrued as of the time of such termination shall survive.


 


21.                                 Remedies
in the Event of Default. Where a party commits a material breach of this
Use Agreement (“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 20(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 Use Agreement 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 Use Agreement, at law or in equity,
including injunctive relief and rights of specific performance.


 


22.                                 Arbitration.
Should any controversy, claim, dispute or difference arise between the parties
hereunder, out of or relating to this Use Agreement, 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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23.                                 Limited
Warranty. West Central represents that the Assets are in reasonable working
order as of the Effective Date of this Use Agreement. EXCEPT AS SET FORTH IN
THE IMMEDIATELY PRECEDING SENTENCE, 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 ASSETS THE USE OF WHICH IS BEING PROVIDED HEREUNDER.


 


24.                                 Access
to Books and Records. This Use Agreement provides for reimbursement by REG
of various expenses of West Central with respect to the operation of Assets,
the use of which is being shared 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 amounts of reimbursement, and West Central’s compliance with its
obligations hereunder.


 


25.                                 Force
Majeure. Any failure or delay by either party in performing its obligations
under this Use Agreement 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.


 


26.                                 Miscellaneous.


 


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

  



 


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


 


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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 Use 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.                                     Survival.
The provisions of Section 15(E) of this Service Contract shall indefinitely
survive the expiration and termination of this Use Agreement.


 


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


 


E.                                      Counterparts.
This Use 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.


 


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


 


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 Use 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.


 


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.


 


I.                                         Entire
Agreement. This Use 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 hereof. This Use Agreement 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.


 


K.                                    Conflicts,
No Expansion or Limit of Other Rights. No term or provisions of this Use
Agreement shall operate or be construed to expand, waive, release, limit or
diminish any rights, remedies or recourse, REG or West Central may have against
the other


 


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pursuant to
the Stock Purchase Agreement of the Contribution Agreement executed by and
between REG and West Central in connection therewith.


 


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IN WITNESS WHEREOF,
the parties hereto have executed this Asset Use Agreement by affixing their
authorized signatures, the date and year first above written.


 


 


	
  WEST CENTRAL COOPERATIVE

  	
  RENEWABLE ENERGY GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
    /s/ JEFFREY STROBURG

  	
  CEO

  	
   

  	
  By

  	
   /s/ NILE RAMSBOTTOM

  	
  President

  
	
   

  	
   

  	
  (Title)

  	
   

  	
   

  	
   

  	
  (Title)

  



 


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