Document:

exv10w4

 

EXHIBIT
10.4

THE
ASSOCIATED GENERAL CONTRACTORS OF AMERICA

 

STANDARD FORM OF DESIGN-BUILD

AGREEMENT AND GENERAL CONDITIONS

BETWEEN OWNER AND CONTRACTOR

(Where
the Basis of Payment is a Lump Suns)

 

TABLE OF ARTICLES

1.      AGREEMENT

2,      GENERAL PROVISIONS

3.      CONTRACTOR’S RESPONSIBILITIES

4.      OWNER’S RESPONSIBILITIES

5.      SUBCONTRACTS

6.      CONTRACT TIME

7.      CONTRACT PRICE

8.      CHANGES IN THE WORK

9.      PAYMENT

10.    INDEMNITY. INSURANCE AND WAIVER OF SUBROGATION

11.    TERMINATION OF THE AGREEMENT AND OWNER’S RIGHT TO PERFORM CONTRACTOR’S RESPONSIBILITIES

12.    DISPUTE RESOLUTION

13.    MISCELLANEOUS PROVISIONS

14.    LIST OF CONTRACT DOCUMENTS

Confidential Treatment Requested. Confidential portions of this document have been redacted and
have been separately filed with the Commission

 

 

This Agreement has important legal and insurance consequences. Consultation with an attorney
and insurance consultant is encouraged with respect to its completion or modification,

STANDARD FORM OF DESIGN-BUILD AGREEMENT AND

GENERAL CONDITIONS BETWEEN OWNER AND CONTRACTOR

(Where the Basis of Payment is a Lump Sum)

ARTICLE I

AGREEMENT

This Agreement is made this 30 day of June

In the year 2006, by and between the

	 	 	 
	OWNER
	 	 
	 
	 	 
	(Name and Address)

	 	Western Dubuque Biodiesel, LLC
	 

	 	10749 Jamesmeier Road
	 

	 	Farley, Iowa 52046
	 
	 	 
	and the
	 	 
	CONTRACTOR
	 	 
	(Name and Address)

	 	Renewable Energy Group, (REG)
	 

	 	406 First Street, P O Box 68
	 

	 	Ralston, IA 51459

for services in connection with the following

PROJECT New 30 Million Gallon Per Year Biodiesel Facility in Farley, Iowa including Soy Oil Pretreatment.

Notice to the parties shall be given at the above addresses.

ARTICLE 2

GENERAL PROVISIONS

2.1 TEAM RELATIONSHIP The Owner and the Contractor agree to proceed with the project on the
basis of trust, good faith and fair dealing. The Contractor aggress to procure the architectural
and engineering services set forth below, and to furnish construction and administration of the
Work.

2.2 ARCHITECT/ENGINEER Architectural and engineering services shall be procured from licensed,
independent design professionals retained by the Contractor or furnished by licensed employees of
the Contractor, or as permitted by the law of the state where the Project is located. The person
or entity providing architectural and engineering services shall be referred to as the
Architect/Engineer. If the Architect/Engineer is an independent design professional, the
architectural and engineering services shall be procured and payments shall be made pursuant to a
separate agreement between the Contractor and the Architect/Engineer. The architectural and
engineering services are independent of the work or services provided directly by the Contractor.
The Architect/Engineer for the Project is Todd & Sargent, Inc.

2.3 EXTENT OF AGREEMENT This Agreement is solely for the benefit of the parties, represents the
entire and integrated agreement between the parties, and supersedes all prior negotiations,
representations or agreements, either written or oral.

2.4 DEFINITIONS

.1 The Contract Documents consist of:

	 	a.	 	Change Orders and written amendments to this Agreement signed by both the Owner and
Contractor;
	 
	 	b.	 	This Agreement, except for the existing Contract Documents set forth in item e below;

	 
	 	c.	 	The most current Documents approved by the Owner pursuant to Subparagraph 3.1.1;

	 
	 	d.	 	The information provided by the Owner pursuant to Clause 4.1.2.1;
	 
	 	e.	 	The Contract Documents in existence at the time of this Agreement which are set forth
in Article 14;
	 
	 	f.	 	The Owner’s Programs provided pursuant to Subparagraph 4.1.1.

In case of any inconsistency, conflict of ambiguity among the Contract Documents, the
Documents shall govern in the order in which they are listed above.

.2 The Work is the Design Services procured in accordance with Paragraph 3.1, the
Construction Services provided in accordance with Paragraph 3.2, Additional Services in
accordance with Paragraph 3.7, and other services which are necessary to complete the Project
in

 

 

accordance with and reasonably inferable from the Contract Documents.

.3 The term Day shall mean calendar day.

.4 A Subcontractor is a person or entity who has an agreement with the Contractor to perform
any portion of the Work. The term Subcontractor does not include the Architect/Engineer or
any separate contractor employed by the Owner or any separate contractor’s subcontractors.

.5 A subsubcontractor is a person or entity who has an assignment with a Subcontractor to
perform any portion of the Subcontractor’s work.

.6
Substantial Completion of the Work, or of a designated portion, occurs on the date when
construction is sufficiently complete in accordance with the Contract Documents so that the
Owner can occupy or utilize the Project, or a designated
portion, for the use for which it is
intended. This date shall be confirmed by a certificate of Substantial Completion signed by
the Owner and Contractor. The certificate shall state the respective responsibilities of the
Owner and Contractor for security, maintenance, heat, utilities, damage to the Work, and
insurance. The certificate shall also list the items to be completed or corrected, and
establish the time for their completion and correction.

.7 The Owner’s Program is an initial description of the Owner’s objectives, including
budgetary and time criteria, space requirements and relationships, flexibility and
expendability requirements, special equipment and systems, and site requirements.

ARTICLE 3

CONTRACTOR’S RESPONSIBILITES

The Contractor shall be responsible for procuring the design and for the construction of the
Work consistent with the Owner’s Program, as such Program may be modified by the Owner during the
course of the Work. The Contractor shall exercise reasonable skill and judgment in the performance
of the Work.

3.1 DESIGN SERVICES

3.1.1 DRAWINGS AND SPECIFICATIONS The Contractor shall submit for the Owner’s written approval
Drawings and Specifications based on the Contract Documents or any further development of Contract
Documents that have been approved in writing by the Owner. The Drawings and Specifications shall
set forth in detail the requirements for construction of the Work, and shall be based upon codes,
law or regulations enacted at the time of their preparation. Construction shall be in accordance
with these approved Drawings and Specifications. One set of these documents shall be furnished to
the Owner prior to commencement of construction. REG will provide “as-built” drawings to Owner
at Substantial Completion.

3.1.2 OWNERSHIP OF DOCUMENTS All documents shall remain the property of the Contractor and are not
to be used by the Owner without the written consent of the Contractor. Contractor vests in
Owner a limited irrevocable license to use the documents and work product in connection with
Owner’s occupancy, operation and repair of the Work/Project and Contractor shall provide with a
copy of the “as-built” plans related to the Work/Project.

3.2 CONSTRUCTION SERVICES

3.2.1 Construction will commence upon the issuance by the Owner of a written notice to proceed.

3.2.2 In order to complete the Work, the Contractor shall provide all necessary construction
supervision, inspection, construction equipment, construction labor, materials, tools and
subcontracted items.

3.2.3 The Contractor shall give all notices and comply with all laws and ordinances legally enacted
at the date of execution of the Agreement which govern the proper performance of the Work.

3.2.4 The Contractor shall maintain the Schedule of Work. This schedule shall indicate the dates
for the state and completion of the various stages of the construction including the dates when
information and approvals are required from the Owner. It shall be revised as required by the
conditions of the Work.

3.2.5 The Contractor shall assist the Owner in securing the building permits necessary for the
construction of the Project.

3.2.6 The Contractor shall take necessary precautions for the safety of its employees on the
Project, and shall comply will all applicable provisions of federal, state and municipal safety
laws to prevent accidents or injury to persons on, about or adjacent to the Project site. The
Contractor, directly or through its Subcontractors, shall erect and properly maintain at all times,
as required by the conditions and progress of the Work, necessary safeguards for the protection of
works and the public. The Contractor, however, shall not be responsible for the elimination or
abatement of safety hazards created or otherwise resulting from work at the Project site carried on
by the Owner or its employees, agents, separate contractors or tenants. The Owner agrees to cause
its employees, agents, separate contractors and tenants to abide by and fully adhere to all
applicable provisions of federal, state and municipal safety laws and regulations. The above
provision shall not relieve Subcontractors of their responsibility for the safety of persons or
property in the performance of their work, nor for compliance with all applicable provisions of
relevant laws.

3.2.7 The Contractor shall keep such full and detailed accounts as may be necessary for proper
financial management under this Agreement. The Owner shall be afforded access to all the
Contractor’s records, books, correspondence, instructions, drawings, receipts, vouchers, memoranda
and similar data relating to Change Order work performed on the basis of actual cost. The
Contractor shall preserve all such records for a period of three years after the final payment or
longer requested by law.

3.2.8 The Contractor shall provide periodic written reports to the Owner on the progress of the
Work as agreed to by the Owner and Contractor.

3.2.9 At all times the Contractor shall maintain the site of the Work free from debris and waste
materials resulting from the Work. At the completion of the Work, the Contractor shall remove from
the premises all construction equipment, tools, surplus materials, waste materials and debris.

3.3 HAZARDOUS MATERIAL

3.3.1 A Hazardous Material is any substance or material identified now or in the future as
hazardous under any federal, state or local law or regulation, or any other substance or material
which may be considered hazardous or otherwise subject to statutory or regulatory requirements
governing handling, disposal and/or clean-up. The Contractor shall not be obligated to commence or
continue Work until any known or suspected Hazardous Material discovered at the Project site has
been removed, rendered or determined to be harmless by the Owner as certified by an independent
testing laboratory and approved by the appropriate government agency.

3.3.2 If after the commencement of the Work, known or suspected Hazardous Material is discovered at
the Project site, the Contractor shall be entitled to immediately stop Work in the affected area,
and the Contractor shall report the condition to the Owner and, if required, the government

 

 

agency with jurisdiction.

3.3.3 The Contractor shall not be required to perform any Work relating to or in the area of known
or suspected Hazardous Material without written mutual agreement.

3.3.4 The Owner shall be responsible for retaining an independent testing laboratory to determine
the nature of the material encountered and whether it is a Hazardous Material requiring corrective
measures and/or remedial action. Such measures shall be the sole responsibility of the Owner, and
shall be performed in a manner minimizing any adverse effect upon the Work of the Contractor. The
Contractor shall resume Work in the area affected by any Hazardous Material only upon written
agreement between the parties after the Hazardous Material has been removed or rendered harmless.

3.3.5 If the Contractor incurs additional costs and/or is delayed due to the presence of known or
suspected Hazardous Material, the Contractor shall be entitled to an equitable adjustment in the
Contract Price and/or the date of Substantial Completion.

3.3.6 To the fullest extent permitted by law, the Owner shall indemnify and hold harmless the
Contractor, Architect/Engineer, Subcontractors and Subsubcontractors, and the agents, officers,
directors and employees of each of them, from and against any and all claims, damages, losses,
costs and expenses, whether direct or indirect or consequential, including but not limited to
attorney’s fees, costs and expenses incurred in connection with litigation or arbitration, arising
out of or relating to the performance of the Work in any area affected by Hazardous Material. To
the fullest extent permitted by law, such indemnification shall apply regardless of the fault,
negligence, breach of warranty or contract or strict liability of the indemniee. 

3.3.7 Notwithstanding the proceeding provisions of this Section 3.3, owner is not responsible
for hazardous conditions and/or Hazardous Materials introduced to the Project site by Contractor,
or by its subcontractors or sub-subcontractors, or anyone from whose acts they may be liable.
Contractor shall indemnify, defend and hold harmless Owner and Owner’s officers, directors,
employees and agents from and against all claims, losses, damages, liabilities and expenses,
including attorneys fees and expenses, arising out of or resulting from those hazardous conditions
and/or Hazardous Materials introduced to the project site by Contractor or by its subcontractors,
sub-subcontractors or anyone from whose acts they may be liable.

3.3.7.8 The terms of this Paragraph 3.3 shall survive the completion of the Work under this
Agreement and/or any termination of this Agreement.

3.3 ROYALTIES, PATENTS AND COPYRIGHTS The Contractor shall pay all royalties and license fees which
may be due on the inclusion of any patented or copyrighted materials, methods or systems selected
by the Contractor and incorporated in the Work. The Contractor shall defend indemnify and hold the
Owner harmless from all suits or claims for infringement of any patent rights or copyrights arising
out of such selection. The Owner agrees to defend, indemnify and hold the Contractor harmless from
any suits or claims of infringement of any patent rights arising out of any patented materials,
methods or systems specified by the Owner. Contractor grants to the Owner a perpetual and
irrevocable license to use any and all of Contractor’s technology and proprietary property related
to and/or incorporated into the Work/Project in connection with the operation, maintenance and
repair of the Work. Contractor represents and warrants that it has all right and interest in and
to the technology and proprietary property (or has obtained all such rights and interests) related
to the design, construction, operation, maintenance and repair of the Work/Project and has the
power and authority to grant the license to Owner as contemplated by this Section. Owner shall pay
no license fee or royalty to Contractor or to any other person for Owner’s use of the technology
and proprietary property. The consideration for the license is included in the amounts payable by
Owner to Contractor for the construction of the Work under this Agreement. 

Patent Infringement: Contractor shall defend any action or proceeding brought against Owner
based on any claim that the Work, or any part thereof, or that the operation or use of the Work, or
any part thereof, constitutes infringement of any United States patent or copyright, now or
hereafter issued, including any claim relating to the failure of Contractor to pay royalties or
license fees. If Owner is enjoined from the operation or use of the Work, or any part thereof, as
a result of any patent or copyright suit, claim or proceeding, Contractor shall at its sole expense
take reasonable steps to procure the right to operate or use the Work. If Contractor cannot so
procure such right within a reasonable time, Contractor shall promptly, at Contractor’s expense,
(i) modify the Work so as to avoid infringement of any such patent or copyright or (ii) replace
such Work with work that does not infringe or violate any such patent or copyright; provided,
however, any modified or replacement Work to the project shall continue to enable the plant to meet
any and all performance guarantee criteria. Contractor shall indemnify and hold harmless Owner for
any and all damages and claims (including, without limitation, reasonable attorney fees) arising
out of or resulting from any claim of infringement with respect to the use of the technology and
proprietary property related to and/or incorporated into the Work/Project or for any breach of any
provision of this Section. All provisions of this Section shall survive and remain in full force
and effect notwithstanding any termination or expiration of this Agreement or the license granted
herein. 

3.5 TAX EXEMPTION If in accordance with the Owner’s direction an exemption is claimed for taxes,
the Owner agrees to defend, indemnify and hold the Contractor harmless from any liability, penalty,
interest, fine, tax assessment, attorneys fees or other expense or cost incurred by the Contractor
as a result of any action taken by the Contractor in accordance with the Owner’s direction.

3.6 WARRANTIES AND COMPLETION

3.6.1 The Contractor warrants that all materials and equipment furnished under this Agreement will
be new unless otherwise specified, of good quality in conformance with the Contract Documents, and
free from defective workmanship and materials. Warranties shall commence on the date of
Substantial Completion of the Work or of a designated portion. The Contractor agrees to correct
all construction performed under this Agreement which proves to be defective in workmanship and
materials within a period of one year from the date of Substantial Completion as set forth in
Paragraph 6.2 or for such longer periods of time as may be set forth with respect to specific
warranties required by the Contract Documents.

3.6.2 Those products, equipment, systems or materials incorporated in the Work at the direction of
or upon the specific request of the Owner shall be covered exclusively by the warranty of the
manufacturer. There are no warranties which extend beyond the description on the face thereof.
All other warranties expressed or implied including the warranty of merchantability and the
warranty of fitness for a particular purpose are expressly disclaimed.

3.6.3 The Contractor shall secure required certificates of inspection, testing or approval and
deliver them to the Owner.

3.6.4 The Contract shall collect all written warranties and equipment manuals and deliver them to
the Owner.

3.6.5 With the assistance of the Owner’s maintenance personnel, the Contractor shall direct the
checkout of utilities and operations of systems and equipment for readiness, and assist in their
initial state-up and testing.

 

 

	***	 	Confidential material redacted and filed separately with the Commission

3.6.6 Contractor guarantees and warrants that the Work/Project will achieve the performance
requirements with respect to the operation of the Work/Project set forth in that certain Process
Guarantee letter dated June 23, 2006, by and between the Contractor and Owner, which Process
Guarantee Letter is incorporated into this Agreement. In the event of Contractor’s breach of this
Agreement and warranty, Contractor shall take all action as necessary to remedy the deficiencies
that prevented the successful achievement of the performance requirements at Contractor’s sole cost
and expense. 

Performance tests will be conducted jointly by Contractor and Owner to verify achievement of
the performance requirements. If the performance tests fail to achieve the performance
requirements, Contractor shall promptly take such action as may be necessary to remedy, at its
expense, all deficiencies which prevented the successful completion of the performance test.
Contractor shall be required at its sole cost and expense, to conduct one or more additional
performance tests, until such time that the performance tests confirm that the corrective measures
have corrected the deficiencies and the Work/Project meets the performance requirements.

The Process Guarantee shall be deemed to have been met when the facility accumulates ***
periods, producing *** gallons or more of biodiesel per *** hour period. 

3.6.7 Contractor further warrants that the Work/Project shall demonstrate that is does not
exceed those air emissions levels cumulatively allocable to the Project contained in, and does not
violate the terms and conditions of, the air permits issues to the Owner for the Project. If the
Project fails to meet such air emission levels, then Contractor, at Contractor’s sole cost and
expense, shall correct any defects of deficiencies in the Work/Project as necessary so that the
Project does not violate or exceed such air emissions levels set forth in the air permits.
Contractor shall continue to take corrective measures until subsequent performance tests
demonstrate that the Project does not exceed the air emissions levels and otherwise complies with
the performance requirements. 

3.6.8 The standard of care for all design and construction services performed by Contractor
shall be the care and skill ordinarily used by members of the design and construction profession
practicing under similar conditions at the same time and locality of the project. Notwithstanding
this standard of care, the parties have agreed upon specific performance standards for certain
aspects of the Work, which standards should be set forth in any performance guarantee criteria.
The design and construction professional services shall be performed to achieve such standards.

3.7 ADDITIONAL SERVICES The Contractor shall provide or procure the following Additional Services
upon the request of the Owner. A written Agreement between the Owner and Contractor shall define
the extent of such Additional Services, such Additional Services shall be considered a Change in
the Work, unless they are specifically included in Article 14.

.1 Documentation of the Owner’s Program, establishing the Project budget, investigating
sources of financing, general business planning and other information and documentation as may
be required to establish the feasibility of the Project.

.2 Consultations, negotiations, and documentation supporting the procurement of Project financing.

.3 Surveys, site evaluations, legal descriptions and aerial photographs.

.4 Appraisals of existing equipment, existing properties, new equipment and developed properties.

.5 Soils, subsurface and environmental studies, reports and investigations required for
submission to governmental authorities or other having jurisdiction over the Project.

.6 Consultants and representations other than normal assistance in securing building permits,
before governmental authorities or others having jurisdiction over the Project.

.7 Investigation or making measured drawings of existing conditions or the verification of drawings or other Owner-provided information.

.8 Artistic renderings, models and mockups of the Project or any part of the Project or the Work.

.9 Inventories of existing furniture, fixtures, furnishings and equipment which might be under consideration for incorporation into the Work.

.10 Interior design and related services including procurement and placement of furniture,
furnishings, artwork and decorations.

.11 Making revisions to design documents after they have been approved by the Owner when
revisions are due to causes beyond the control of the Contractor.

.12 Design, coordination, management, expediting and other services supporting the procurement
of materials to be obtained, or work to be performed, by the Owner, including but not limited
to telephone systems, computer wiring networks, sound systems, alarms, security systems and
other specialty systems which are not part of this Agreement.

.13 Estimates, proposals, appraisals, consultations, negotiations and services in connection
with the repair and replacement of an insured loss.

.14 The premium portion of overtime work ordered by the Owner including productivity impact
costs.

.15 Document reproduction exceeding the limits provided for in this Agreement.

.16 Out-of-town travel by the Architect/Engineer in connection with the Work, except between
the Architect/Engineer’s office. Contractor’s office, Owner’s office and the Project site.

.17 Obtaining service contractor and training maintenance personnel, assisting and consulting
in the use of systems and equipment after the initial state-up and adjusting and balancing of
systems and equipment.  Operator training requested by Owner that extends past Contractors
standard turn-key service will not be covered by this agreement. Standard service includes two
weeks of pre-startup off-site training along with one week of on-site training. This is
followed by two weeks of start-up support and off-site support as needed for a period of one
month. 

.18 Services for tenant or rental spaces not a part of this Agreement.

.19 Services requested by Owner or required by the Work which are not specified in the
Contract Documents and which are not normally part of the generally accepted design and
construction practice.

.20 Serving or preparing to serve as an expert witness in connection with any proceeding,
legal or otherwise, regarding the Project.

.21 Preparing reproducible record drawings from marked-up prints, drawings or other documents
that incorporate significant changes in the Work made during the construction.

 

 

ARTICLE 4

OWNER’S RESPONSIBILITIES

4.1 INFORMATION AND SERVICES PROVIDED BY OWNER

	4.1.1 The Owner shall provide full information in a timely manner regarding requirements for the
Project, including the Owner’s Program and other relevant information.
	 
	4.1.2 The Owner shall provide:

.1 all necessary information describing the physical characteristics of the site, including
surveys, site evaluations, legal descriptions, existing conditions, subsurface and
environmental studies, reports and investigations;

.2 inspection and testing services during construction as required by law or as mutually
agreed; and

.3 unless otherwise provided in the Contract Documents, necessary approvals, site plan
review, rezoning, easements and assessments, necessary permits, fees and charges required for
the construction, use, occupancy or renovation of permanent structures, including legal and
other required services.

4.1.3 The Owner shall provide reasonable evidence satisfactory to the Contractor, prior to
commencing the Work and during the progress of the Work, that sufficient funds are available and
committed for the entire cost of the Project, including an allowance for changes in the Work as may
be approved in the course of the Work. Unless such reasonable evidence is provided, the Contractor
shall not be required to commence or continue the Work. The Contractor may stop Work after seven
(7) days’ written notice to the Owner if such evidence is not presented within a reasonable time.
The failure of the Contractor to insist upon the providing of this evidence at any time shall not
be a waiver of the Owner’s obligation to make payments pursuant to this Agreement, not shall it be
a waiver of the Contractor’s right to request or insist that such evidence be provided at a later
date.

4.1.4 The Contractor shall be entitled to rely on the completeness and accuracy of the information
and services required by this Paragraph 4.1.

4.2 RESPONSIBILITIES DURING DESIGN

4.2.1 The Owner shall review and approve further development of the drawings and specifications as
set forth in Article 3.

4.3 RESPONSIBILITIES DURING CONSTRUCTION

4.3.1 The Owner shall review the Schedule of Work and timely respond to its obligations.

4.3.2 If the Owner becomes aware of any error, omission or failure to meet the requirements of the
Contract Documents or any fault or defect in the Work, the Owner shall give prompt written notice
to the Contractor.

4.3.3 The Owner shall communicate with the Contractor’s Subcontractors, suppliers and
Architect/Engineer only through the Contractor. The Owner shall have no contractual obligations to
Subcontractors, suppliers, or the Architect/Engineer.

4.3.4 The Owner shall provide insurance for the Project as provided in Article 10.

4.4 OWNER’S REPRESENTATIVE The Owner’s representative is Ed Recker, who is agreed to by
the Contractor. The representative:

.1 shall be fully acquainted with the Project:

.2 agrees to furnish the information and services required of the Owner pursuant to
Paragraph 4.1 so as not to delay the Contractor’s Work: and

.3 shall have authority to bind the Owner in all matters requiring the Owner’s approval,
authorization or written notice. If the Owner changes its representative or the
representative’s authority as listed above, the Owner shall notify the Contractor in advance
in writing. The Contractor shall have the right to approve any successor representative.

ARTICLE 5

SUBCONTRACTS

Work not performed by the Contractor with its own forces shall be performed by Subcontractors.

5.1 RETAINING SUBCONTRACTORS The Contractor shall not retain any Subcontractor to whom the Owner
has a reasonable and timely objection, provided that the Owner agrees to increase the Contract
Price for any additional costs incurred by the Contractor as a result of such objection. The
Contractor shall not be required to retain any Subcontractor to whom the Contractor has a
reasonable objection.

5.2 MANAGEMENT OF SUBCONTRACTORS The Contractor shall be responsible for the management of the
Subcontractors in the performance of their work.

5.3 MANAGEMENT OF SUBCONTRACT AGREEMENTS The Contractor shall provide for assignment of
subcontract agreements in the event that the Owner terminates this Agreement for cause as provided
in Paragraph 11.2. Following such termination, the Owner shall notify in writing those
subcontractors whose assignments will be accepted, subject to the rights of sureties, if any.

ARTICLE 6

CONTRACT TIME

6.1
COMMENCEMENT OF THE WORK The Work Field Construction shall commence on or about
July 17, 2006 and shall proceed in general accordance with the Schedule of Work as such
schedule may be amended from time to time, subject, however, to the provisions of Paragraph 3.3 and
Subparagraph 4.1.3.

6.2 SUBSTANTIAL COMPLETION The date of Substantial Completion of the Work shall be no later than
12 months after the “break escrow” date, subject to adjustment in accordance with the
provisions of Article 8. Time shall be of the essence of this Agreement. Owner and Contractor
agree that as liquidated damages for dely Contractor shall pay Owner $1,500 for each day that
expires after the time specified for substantial completion until the work is substantially
complete.

 

 

 

			
	***	 	Confidential material redacted and filed separately with the Commission

6.3 DELAYS IN THE WORK

6.3.1 If causes beyond the Contractor’s control delay the progress of the Work, then the Contract
Price and/or the date of Substantial Completion shall be modified by Change Order as appropriate.
Such causes shall include but not be limited to: changes ordered in the Work, acts or omissions of
the Owner or separate contractors employed by the Owner, the Owner preventing the Contractor from
performing the Work pending dispute resolution, Hazardous Materials, except those Hazardous
Materials arising under article 3.3.7, differing site conditions, adverse weather conditions
not reasonably anticipated, fire, unusual transportation delays, labor disputes, or unavoidable
accidents or circumstances.

6.3.2 In the event delays to the project are encountered for any reason, the parties agree to
undertake reasonable steps to mitigate the effect of such delays.

ARTICLE 7

CONTRACT PRICE

The Contract Price is $ ***, subject to adjustment in accordance with the provisions of
Article 8. Price is per REG Proposal Letter dated June 28, 2006.

ARTICLE 8

CHANGES IN THE WORK

Changes in the Work which are within the general scope of this Agreement may be accomplished by
Change Order without invalidating this Agreement.

8.1 CHANGE ORDERS A Change Order is a written instrument, issued after execution of this
Agreement, signed by the Owner and Contractor stating their agreement upon a change and any
adjustment in the Contract Price and/or the date of Substantial Completion. Each adjustment in the
Contract Price resulting from a Change Order shall clearly separate the amount attributable to
Design Services.

8.2 DETERMINATION OF COST An increase or decrease in the Contract Price resulting from a change
in the Work shall be determined by one or more of the following methods:

.1 unit prices set forth in this Agreement or as subsequently agreed;

.2 a mutually accepted, itemized lump sum; or

.3 if an increase or decrease cannot be agreed to as set forth in Subparagraphs 8.2.1 or
8.2.2 and the Owner issues a written order for the Contractor proceed with the change, the
adjustment in the Contract Price shall be determine by the reasonable expense and savings of
the performance of the Work resulting from the change. If there is a net increase in the
Contract Price, a reasonable adjustment shall be made in the Contractor’s overhead and
profit. In the case of a net decrease in cost, the amount of decrease in the Contract Price
will not include a reduction in overhead and profit. The Contractor shall maintain a
documented, itemized accounting evidencing the expenses and savings. The Contractor’s
overhead and profit for changes in Project resulting in an increase shall be 10%.

8.3 NO OBLIGATION TO PERFORM The Contractor shall not be obligated to perform changed Work until
a Change Order has been executed by the Owner and Contractor, except as provided in Subparagraph
8.2.3.

8.4 ADJUSTMENT OF UNIT PRICES If a proposed Change Order alters original quantities to a degree
that application of previously agreed to unit prices would be inequitable to either the Owner or
the Contractor, the unit prices and the Contract Price shall be equitably adjusted.

8.5 UNKNOWN CONDITIONS If in the performance of the Work the Contractor finds latent, concealed
or subsurface physical conditions which differ from the conditions the Contractor reasonably
anticipated, or if physical conditions are materially different than those normally encountered and
generally recognized as inherent in the kind of work provided for in this Agreement, then the
Contract Price and/or the date of Substantial Completion shall be equitably adjusted by Change
Order within a reasonable time after the conditions are first observed.

8.6 CLAIMS FOR ADDITIONAL COST OR TIME For any claim for an increase in the Contract Price and/or
an extension in the date of Substantial Completion, the Contractor shall give the Owner written
notice of the claim within twenty-one (21) days after the occurrence giving rise to the claim or
within twenty-one (21) days after the Contractor first recognizes the condition giving rise to the
claim, whichever is later. Except in an emergency, notice shall be given before proceeding with
the Work. Claims for design and estimating costs incurred in connection with possible changes
requested by the Owner, but which do not proceed, shall be made within twenty-one (21) days after
the decision is made not to proceed. Any changes in Contract Price and/or date of Substantial
Completion resulting from such claim shall be authorized by Change Order.

8.7 EMERGENCIES In any emergency affecting the safety of persons and/or property, the Contractor
shall act, at is discretion, to prevent threatened damage, injury or loss. Any change in the
Contract Price and/or extension of the date of Substantial Completion on account of emergency work
shall be determined as provided in this Article.

ARTICLE 9

PAYMENT

9.1 INITIAL PAYMENT Upon execution of this Agreement an initial payment of
___dollars shall be made to the Contractor. The amount of the initial payment shall
be credited against ______ the Contract Price at final payment.  Prior to signing of this
Agreement the Owner has made payment to the Contractor for Pre-construction Services. This payment
totaling $*** and the Work attributed to it become a part of this Agreement and are included in the
Contract Price of this Agreement. This Agreement supersedes any pre-existing agreements between
Owner and Contractor. Retainage on this Project shall be in amount of ***% of each invoice and
shall become due in accordance with Article 9.2.7.

9.2 PROGRESS PAYMENTS Prior to submitting the first Application for Payment, the Contractor shall
provide a Schedule of Values satisfactory to

 

 

the Owner, consisting of a breakdown of the Contract Price, with a separate line for Design
Services.

9.2.1 On or before the 30th day of each month after the Work has commenced, the
Contractor shall submit to the Owner an Application for Payment in accordance with the Schedule of
Values based upon the Work completed and materials stored on the site or at other locations
approved by the Owner.

9.2.2
Within ten (10) fifteen (15) days after receipt of each monthly Application for
Payment, the Owner shall pay directly to the Contractor the appropriate amount for which
Application for Payment is made, less amounts previously paid by the Owner.

9.2.3 If the Owner fails to pay the Contractor at the time payment of any amount becomes due, then
the Contractor may, at any time thereafter, upon serving written notice that the Work will be
stopped within five (5) days after receipt of the notice by the Owner, and after such five (5) day
period, stop the Work until payment of the amount owing has been received.

9.2.4 Payments due but unpaid shall bear interest at the rate the Owner is paying on its
construction loan or at the current “prime rate” of bank, whichever is higher, plus two points.

9.2.5 The Contractor warrants and guarantees that title to all Work, materials and equipment
covered by an Application for Payment, whether incorporated in the Project or not, will pass to the
Owner upon receipt of such payment by the Contractor free and clear of all liens, claims, security
interests or encumbrances, hereinafter referred to as “liens.”

9.2.6 The Owner’s progress payment, occupancy or use of the Project, whether in whole or in part,
shall not be deemed an acceptance of any Work not conforming to the requirements of the Contract
Documents.

9.2.7 Upon Substantial Completion of the Work, the Owner shall pay the Contractor the unpaid
balance of the Contract Price, less a sum equal to the Contractor’s and Owners mutually agreed
upon estimated cost of completing any unfinished items as agreed to between the Owner and
Contractor as to extent and time for completion. The Owner thereafter shall pay the Contractor
monthly the amount retained for unfinished items as each item is completed. Contractor shall
notify Owner when it believes the Work is substantially complete. Within five (5) days of Owner’s
receipt of Contractor’s notice, Owner and Contractor will jointly inspect such Work to verify that
it is substantially complete in accordance with the Contract Documents. If such Work is
substantially complete, Contractor and Owner shall jointly prepare and issue a Certificate of
Substantial Completion that will set forth (i) the date of Substantial Completion of the Work, (ii)
the remaining items of Work that have to be completed before final payment, (iii) provisions
establishing Owner’s and Contractor’s responsibility for the Project’s security, maintenance,
utilities and insurance pending final payment, and (iv) an acknowledgement that warranties commence
to run on the date of Substantial Completion, except as may otherwise be noted in the Certificate
of Substantial Completion.

9.3 FINAL PAYMENT

9.3.1 Final payment, consisting of the unpaid balance of the Contract Price less the initial
payment made under Paragraph 9.1, shall be due and payable when the Work is fully completed.
Before issuance of final payment, the Owner may request satisfactory evidence that all payrolls,
materials bills and other indebtedness connected with the Work have been paid or otherwise
satisfied.

9.3.2 In making final payment the Owner waives all claims except for:

.1 outstanding liens;

.2 improper workmanship or defective materials appearing within one year after the date of
Substantial Completion;

.3 Work not in conformance with the Contract Documents; and

.4 terms of any special warranties required by the Contract Documents.

9.3.3 In accepting final payment, the Contractor waives all claims except those previously made in
writing and which remain unsettled.

9.3.4 At the time of submission of its final payment, Contractor shall provide the following
information: (1) An affidavit that there are no claims, obligations or liens outstanding or
unsatisfied for labor, services, material, etc., (2) A general release executed by REG
waiving all claims except those claims previously made in writing to Owner, (3) The delivery of the
operating manuals, warranties and other deliverables required by the contract documents, (4)
Certificates of Insurance confirming that required coverage will remain in effect consistent with
the requirements of the contract documents; and (5) Such other reasonable and customary
documents as necessary for owner and its lender to obtain the required clean title to the plant
which may include all final lien waivers from Contractor and its subcontractors.

9.3.5 Contractor shall indemnify, defend and hold harmless Owner from any claims or mechanics
liens brought against Owner or against the Project as a result of the failure of Contractor, or
those for whose acts it is responsible, to pay for any services, materials, labor, equipment, taxes
or other items or obligations furnished or incurred for on in connection with the Work. Within
fifteen (15) days of receiving written notice from Owner that such a claim or mechanics lien has
been filed, Contractor shall commence to take the steps necessary to discharge said claim or lien,
including, if necessary, the furnishing of a mechanics lien bond. If Contractor fails to do so,
Owner will have the right to discharge the claim or lien and hold Contractor liable for costs and
expenses incurred including attorney’s fees. The foregoing obligation of Contractor shall be
subject to reasonable disputes that Contractor may have with respect to any claim or mechanics lien
provided Contractor provides written notice of such dispute to Owner and Owner agrees to delay the
enforcement of its rights under this Section.

ARTICLE 10

INDEMNITY, INSURANCE AND WAIVER OF SUBROGATION

10.1
INDEMNITY 

10.1.1 To the fullest extent permitted by law, the Contractor shall defend, indemnify and hold the
Owner harmless from all claims for bodily injury and property damage (other than to the Work itself
and other property insured under Paragraph 10.5), including resulting loss of use that may arise
from the performance of the Work, to the extent of the negligence attributed to such acts or
omissions by the Contractor, Subcontractors or anyone employed directly or indirectly by any of
them or by anyone for whose acts any of them may be liable. The Contractor shall not be required
to defend, indemnify or hold harmless the Owner for any acts, omissions or negligence of the Owner,
Owner’s employees, agents or separate contractors.

10.1.2 The Owner shall cause any other contractor who may have a contract with the Owner to
perform work in the areas where Work will be performed under this Agreement, to agree to indemnify
the Contractor, Subcontractors or anyone employed directly or indirectly by any of them or anyone
for whose acts any of them may be liable and hold them harmless from all claims for bodily injury
and property damage, other than property

 

 

insured under Paragraph 10.5, that may arise from the contractor’s operations. Such provisions
shall be in a form satisfactory to the Contractor.

10.2 CONTRACTOR’S LIABILITY INSURANCE

10.2.1 The Contractor shall obtain and maintain insurance coverage for the following claims which
may arise out of the performance of this Agreement, whether resulting from the Contractor’s
operations or by the operations of any Subcontractor, anyone in the employ of any of them, or by an
individual or entity for whose acts they may be liable:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	.1 workers’ compensation, disability benefit and other employee benefit claims under acts
applicable to the Work;
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	.2 under applicable employers liability law, bodily injury, occupational, sickness, disease
or death claims of the Contractor’s employees;
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	.3 bodily injury, sickness, disease, or death claims for damages to persons not employed by
the Contractor;
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	.4 usual personal injury liability claims for damages directly or indirectly related to the
person’s employment by the Contractor or for damages to any other person;
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	.5 damage to or destruction of tangible property, including resulting loss of use, claims
for property other than the work itself and other property insured under Paragraph 11.5 10.5;
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	.6 bodily injury, death or property damage claims resulting from motor vehicle liability in
the use, maintenance or ownership of any motor vehicle; and
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	.7 contractual liability claims involving the Contractor’s obligations under Subparagraph 11.1.1.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10.2.2	 	The Contractor’s Commercial General and Automobile Liability Insurance as required by
Subparagraph 11.2.1 shall be written for not less than the following limits of liability:
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	.1	 	 	Commercial General Liability Insurance	 	 
	 

	 	 	 	 	 	a.
	 	Each Occurrence Limit
	 	$	1,000,000	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	b.
	 	General Aggregate
	 	$	2,000,000	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	c.
	 	Products/Completed	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Operations Aggregate
	 	$	2,000,000	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	d.
	 	Personal and Advertising	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Injury Limit
	 	$	1,000,000	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	.2	 	 	Comprehensive Automobile Liability Insurance	 	 
	 

	 	 	 	 	 	a.
	 	Combined Single Limit Bodily	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Injury and Property Damage
	 	$	1,000,000	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	
Or
	 	Each occurrence
	 	 
	 

	 	 	 	 	 	b.
	 	Bodily Injury
	 	$	N/A	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Each Person
	 	 
	 

	 	 	 	 	 	 	 	 	 	$	N/A	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Each Occurrence
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	c.
	 	Property Damage
	 	$	N/A	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Each Occurrence
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	.3	 	 	Umbrella Liability	 	$	10,000,000	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 

10.2.3 Commercial General Liability Insurance may be arranged under a single policy for the full
limits required or by a combination of underlying policies and an Excess or Umbrella Liability
policy.

10.2.4 The policies shall contain a provision that coverage will not be cancelled or not renewed
until at least thirty (30) days’ prior written notice has been given to the Owner. Certificates of
insurance showing required coverage to be in force shall be filed with the Owner prior to
commencement of the Work.

10.2.5 Products and Completed Operations insurance shall be maintained for a minimum period of at
least one (1) year(s) after either ninety (90) days following the date of Substantial
Completion or final payment, whichever is earlier.

10.3 PROFESSIONAL LIABILITY INSURANCE The Architect/Engineer’s professional liability insurance
for claims arising from the negligent performance of professional services under this Agreement
shall be written for not less than $1,000,000 per claim and in the aggregate with a
deductible not to exceed $100,000. These requirements shall be continued in effect for
one (1) year(s) after the date of Substantial Completion. If the Architect/Engineer
retains consultants for a portion of the design, their professional liability insurance coverage,
including deductible amounts, shall be set forth in Article 13 of this Agreement.

10.4 OWNER’S LIABILITY INSURANCE The Owner shall be responsible for obtaining and maintaining its
own liability insurance. Insurance for claims arising out of the performance of this Agreement may
be purchased and maintained at the Owner’s discretion.

10.5 INSURANCE TO PROTECT PROJECT

10.5.1 The Owner Contractor shall obtain and maintain property insurance in a form
acceptable to the Contractor Owner upon the entire Project for the full cost of replacement
at the time of any loss. This insurance shall include as named insureds the Owner, Contract,
Architect/Engineer, Subcontractors and Subsubcontractors. This insurance shall insure against loss
from the perils of fire and extended coverage, and shall include “all risk” insurance for physical
loss or damage including without duplication of coverage, at least: theft, vandalism, malicious
mischief, transit, collapse, falsework, temporary buildings, debris removal, flood, earthquake,
resting, and damage resulting from defective design, workmanship or material. The Owner
Contractor shall increase limits of coverage, to reflect estimated replacement cost. The
Owner Contractor shall be responsible for any co-insurance penalties or deductibles.
This insurance shall include testing with a limit of $10,000,000. If the Owner wishes testing
limits higher than $10,000,000 or other special coverages Contractor will attempt to include them
in the Builders Risk policy. The cost of this insurance shall be billed to Owner outside of the
contract price at Contractor’s actual price. 

10.5.2 If the Owner occupies or uses a portion of the Project prior to its Substantial Completion,
such occupancy or use shall not commence prior to a

 

 

time mutually agreed to by the Owner and the Contractor and to which the insurance company or
companies providing the property insurance have consented by endorsing the policy or policies.
This insurance shall not be cancelled or lapsed on account of partial occupancy. Consent of the
Contractor to such early occupancy or use shall not be unreasonably withheld.

10.5.3 The Owner shall obtain and maintain boiler and machinery insurance as necessary. The
interest of the Owner, Contractor, Architect/Engineer, Subcontractors and Subsubcontractors shall
be protected under this coverage.

10.5.4 The Owner shall purchase and maintain insurance to protect the Owner, Contractor,
Architect/Engineer, Subcontractors and Subsubcontractors against loss of use of Owner’s property
due to those perils insured pursuant to Paragraph 10.5. Such policy will provide coverage for
expediting expenses of materials, continuing overhead of the Owner and the Contractor,
Architect/Engineer, Subcontractors and Subsubcontractors, necessary labor expense including
overtime, loss of income by the Owner and other determined exposures. Exposures of the Owner,
Contractor, Architect/Engineer, Subcontractors, Subsubcontractors, shall be determined by mutual
agreement with separate limits of coverage fixed for each item.

10.5.5 Upon the Contractor’s request, the Owner shall provide the Contractor with a copy of all
policies before an exposure to loss may occur. Copies of any subsequent endorsements shall be
furnished to the Contractor. The Contractor shall be given thirty (30) days’ notice of
cancellation, non-renewal, or any endorsements restricting or reducing coverage. The Owner shall
give written notice to the Contractor before commencement of the Work if the Owner will not be
obtaining property insurance. In that case, the Contractor may obtain insurance in order to
protect its interest in the Work as well as the interest of the Architect/Engineer, Subcontractors,
Subsubcontractors in the Work. The Contract Price shall be increased by the cost of the insurance
through Change Order. If the Contractor is damaged by failure of the Owner to purchase or maintain
property insurance or to so notify the Contractor, the Owner shall bear all reasonable costs
incurred by the Contractor arising from the damage.

10.6 PROPERTY INSURANCE LOSS ADJUSTMENT

10.6.1 Any insured loss shall be adjusted with the Owner and the Contractor and made payable to
the Owner and Contractor as trustee for the insureds, as their interests may appear, subject to any
applicable mortgagee clause.

10.6.2 Upon the occurrence of an insured loss, monies received will be deposited in a separate
account and the trustees shall make distribution in accordance with the agreement of the parties in
interest, or in the absence of such agreement, in accordance with an arbitration award pursuant to
Article 12. If the trustees are unable to agree between themselves on the settlement of the loss,
such dispute shall also be submitted for resolution pursuant to Article 12.

10.7 WAIVER OF SUBROGATION

10.7.1 The Owner and Contractor waive all rights against each other, the Architect/Engineer, and
any of their respective employees, agents, consultants, Subcontractors, Subsubcontractors, for
damages caused by risks covered by insurance provided in Paragraph 10.5 to the extent they are
covered by that insurance, except such rights as they may have to the proceeds of such insurance
held by the Owner and Contractor as trustees. The Contractor shall require similar waivers from
the Architect/Engineer and all Subcontractors, and shall require each of them to include similar
waivers in their subsubcontracts and consulting agreements.

10.7.2 The Owner waives subrogation against the Contractor, Architect/Engineer, Subcontractors and
Subsubcontractors on all property and consequential loss policies carried by the Owner on adjacent
properties and under property and consequential loss policies purchased for the Project after its
completion.

10.7.3 If the policies of insurance referred to in this Paragraph require an endorsement to
provide for continued coverage where there is a waiver of subrogation, the owners of such policies
will cause them to be so endorsed.

ARTICLE 11

TERMINATION OF THE AGREEMENT AND OWNER’S RIGHT TO

PERFORM CONTRACTOR’S RESPONSIBILITIES

11.1 TERMINATION BY THE CONTRACTOR

11.1.1 Upon seven (7) days’ written notice to the Owner, the Contractor may terminate this
Agreement for any of the following reasons:

.1 if the Work has been stopped for thirty (30) day period;

	 	a.	 	under court order or order of other governmental authorities having
jurisdiction;
	 
	 	b.	 	as a result of the declaration of a national emergency or other
governmental act during which, through no act or fault of the Contractor,
materials are not available; or
	 
	 	c.	 	because of the Owner’s failure to pay the Contractor in accordance
with this Agreement;

.2 if the Work is suspended by the Owner for sixty (60) days;

.3 if the Owner materially delays the Contractor in the performance of the Work’

.4 if the Owner otherwise materially breaches this Agreement: and such material breach
has not been cured by Owner within ten (10) days of written notice from Contractor of such
material breach; or

.5 if the Owner fails to furnish reasonable evidence that sufficient funds are available and
committed for the entire cost of the Project in accordance with Subparagraph 4.1.3 of this
Agreement.

11.1.2 Upon termination by the Contractor in accordance with Subparagraph 11.1.1. the Contractor
shall be entitled to recover from the Owner payment for all Work executed and for any proven loss,
cost or expense in connection with the Work, plus all demobilization costs and reasonable damages.
In addition, the Contractor shall be paid an amount calculated as set forth either in Subparagraph
11.3.1 or 11.3.2 depending on when the termination occurs, and Subparagraphs 11.3.3 and 11.3.4.

11.2 OWNER’S RIGHT TO PERFORM CONTRACTOR’S OBLIGATIONS AND TERMINATION BY THE OWNER FOR CAUSE

11.2.1 If the Contractor persistently fails to perform any of its obligations under this
Agreement, the Owner may, after seven (7) days’ written notice, during which period the Contractor
fails to perform such obligation, undertake to perform such obligations. The Contract Price shall
be reduced by the cost to the Owner of performing such obligations.

11.2.2 Upon seven (7) days’ written notice to the Contractor and the Contractor’s surety, if any,
the Owner may terminate this Agreement for any of the following reasons:

 

 

.1 if the Contractor persistently utilizes improper materials and/or inadequately skilled
workers;

.2 if the Contractor does not make proper payment to laborers, material suppliers or
contractors;

.3 if the Contractor persistently fails to abide by the orders, regulations, rules,
ordinances or laws of governmental authorities having jurisdiction; or

.4 if the Contractor otherwise materially breaches this Agreement.

If the Contractor fails to cure within the seven (7) days, the Owner, without prejudice to any
other right or remedy, may take possession of the site and complete the Work utilizing any
reasonable means. In this event, the Contractor shall not have a right to further payment until
the Work is completed. This Agreement may be immediately terminated by Owner in the event
Contractor becomes financial insolvent. 

11.2.3 If the Contractor files a petition under the Bankruptcy Code, this Agreement shall
terminate if the Contractor or the Contractor’s trustee rejects the Agreement or, if there has been
a default, the Contractor is unable to give adequate assurance that the Contractor will perform as
required by this Agreement or otherwise is unable to comply with the requirements for assuming this
Agreement under the applicable provisions of the Bankruptcy Code.

11.2.4 In the event the Owner exercises its rights under Subparagraphs 11.2.1 or 11.2.2, upon the
request of the Contractor the Owner shall provide a detailed accounting of the cost incurred by the
Owner.

11.3 TERMINATION BY OWNER WITHOUT CAUSE If the Owner terminates this Agreement other than as set
forth in Paragraph 11.2, the Owner shall pay the Contractor for all Work executed and for any
proven loss, cost or expense in connection with the Work, plus all demobilization costs. In
addition, the Contractor shall be paid an amount calculated as set forth below:

.1 If the Owner terminates this Agreement prior to commencement of the construction, the Contractor shall be paid the unpaid balance of
the Contractor’s design costs as set forth in the Schedule of
Values plus 5% of the remaining balance of the Contract Price.

.2 If the Owner terminates this Agreement after commencement of the construction, the Contractor shall be paid the unpaid balance of the
Contractor’s design costs as set forth in the Schedule of Values
plus 10% of the remaining balance of the Contract Price.

.3 In either event, the initial payment as provided in Paragraph 9.1 shall be credited to the Owner’s account at the time of termination.

.4 The Owner shall also pay to the Contractor fair compensation, either by purchase or rental at the election of the Owner, for any
equipment retained. The Owner shall assume and become liable for obligations, commitments and unsettled claims that the Contractor has
previously undertaken or incurred in good faith in connection with the Work or as a result of the termination of this Agreement. As a
condition of receiving the payments provided under this Article 11, the Contractor shall cooperate with the Owner by taking all steps
necessary to accomplish the legal assignment of the Contractor’s rights and benefits to the Owner, including the execution and delivery of
required papers.

11.4 SUSPENSION BY THE OWNER FOR CONVENIENCE

11.4.1 The Owner may order the Contractor in writing to suspend, delay or interrupt all or
any part of the Work without cause for such period of time as the Owner may determine to be
appropriate for its convenience.

11.4.2 Adjustments caused by suspension, delay or interruption shall be made for increases
in the Contract Price and/or the date of Substantial Completion. No adjustment shall be made if
the Contractor is or otherwise would have been responsible for the suspension, delay or
interruption of the Work, or if another provision of this Agreement is applied to render an
equitable adjustment.

ARTICLE 12

DISPUTE RESOLUTION

12.1 INITIAL DISPUTE RESOLUTION If a dispute arises out of or relates to this Agreement or
its breach, the parties shall endeavor to settle the dispute first through direct discussions. If
the dispute cannot be settled through direct discussions, the parties shall endeavor to settle the
dispute by mediation under the Construction Industry Mediation Rules of the American Arbitration
Association before recourse to arbitration. Issues to be mediated are subject to the exceptions in
Paragraph 12.2 for arbitration. The location of the mediation shall be the location of the
Project. Once one party files a request for mediation with the other contracting party and with
the American Arbitration Association, the parties agree to conclude such mediation within sixty
(60) days of filing of the request.

12.2 AGREEMENT TO ARBITRATE Any controversy or claim arising out of or relating to this Agreement
or its breach not resolved by mediation, except for claims which have been waived by the making or
acceptance of final payment, shall be decided by arbitration in accordance with the Construction
Industry Arbitration Rules of the American Arbitration Association then in effect unless the
parties mutually agree otherwise. Notwithstanding Paragraph 13.2, this agreement to arbitrate
shall be governed by the Federal Arbitration Act.

12.3 NOTICE OF DEMAND A written demand for arbitration shall be filed with the American
Arbitration Association and the other party to this Agreement within a reasonable time after the
dispute or claim has arisen, but in not event after the applicable statute of limitations for a
legal or equitable proceeding would have run.

12.4 AWARD The arbitration award shall be final. Judgment upon the award may be confirmed in any
court having jurisdiction.

12.5 WORK CONTINUANCE AND PAYMENT Unless otherwise agreed in writing, the Contractor shall
continue the Work and maintain the approved schedules during any arbitration proceedings. If the
Contractor continues to perform, the Owner shall continue to make payments in accordance with this
Agreement.

12.6 MULTIPARTY PROCEEDING The parties agree that all parties necessary to resolve a claim shall
be parties to the same arbitration proceeding. Appropriate provisions shall be included in all
other contracts relating to the Work to provide for the consolidation of arbitrations.

12.7 COST OF DISPUTE RESOLUTION The prevailing party in any dispute arising out of or relating to
this Agreement or its breach that is resolved by arbitration or litigation shall be entitled to
recover form the other party reasonable attorney’s fees, costs and expenses incurred by the
prevailing party in connection with such arbitration or litigation.

ARTICLE 13

MISCELLANEOUS PROVISIONS

 

 

13.1 ASSIGNMENT Neither the Owner nor the Contractor shall assign their interest in this
Agreement without the written consent of the other except as to the assignment of proceeds.
Owner can collaterally assign the Agreement to its lender without obtaining the prior written
consent of Contractor.

13.2 GOVERNING LAW This Agreement shall be governed by the law in effect at the location of this
Project.

13.3 SEVERABILITY The partial or complete invalidity of any one or more provisions of this
Agreement shall not affect the validity or continuing force and effect of any other provision.

13.4 NO WAIVER OF PERFORMANCE The failure of either party to insist, in any one or more
instances, on the performance of any of the terms, covenants or conditions of this Agreement, or to
exercise any of its rights, shall not be construed as a waiver or relinquishment of such term,
covenant or condition or right with respect to further performance.

13.5 TITLES The title given to the Articles of this Agreement are for ease of reference only and
shall not be relied upon or cited for any other purpose.

13.6 OTHER PROVISIONS

13.6.1 Contractor warrants and guarantees that the Project will be capable of obtaining
BQ-9000 accreditation.

13.6.2 Our intent is to build this project on a Merit Shop basis. Should we be required to
enter into any wage agreements (prevailing wage, Union, etc, ) the extra cost and/or time
associated with this will be treated as a Change in the Work under Article 8 of this agreement.

13.6.3 Owner is responsible to provide all commodities require for the start-up and/or testing
of the facility.

13.6.4 Performance and Payment Bonds have not been included in this Agreement. At Owner’s
request bonds will be provided and the Owner agrees to pay Contractor at Contractor’s actual cost
outside of this Agreement.

13.6.5 Contractor shall be responsible for security at the site during the construction of the
facility. Owner shall assume responsibility for security at the site at substantial
completion.

ARTICLE 14

EXISTING CONTRACT DOCUMENTS

The Contract Documents in existence at the time of execution of this Agreement are as follows:

     REG Proposal Letter, dated June 28, 2006

     REG Process Guarantee Letter, dated June 23, 2006.

     Technical Specifications, dated June 23, 2006.

     Contract Drawings: Reference Drawing List in Section 01100 — Summary, Item 1.1.A.2 of the
Technical Specifications dated June 23, 2006

 

 

This Agreement is entered into as of the date entered in Article 1.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	OWNER: WESTERN DUBUQUE BIODIESEL, LLC  
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:

	 	/s/ Ed Recker
	 	 	BY:	 
	/s/ Bruce Klostermann	 	 
	 

	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	PRINT NAME: 	Bruce Klostermann	 	 
	 

	 	 	 	 	 	 	PRINT TITLE:
	Vice Chairman	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	CONTRACTOR: RENEWABLE ENERGY GROUP
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:

	 	/s/ Vickie Ayers
	 	 	BY:
	 	/s/ Philip Sargent	 	 
	 

	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	PRINT NAME:
	Philip Sargent	 	 
	 

	 	 	 	 	 	 	PRINT TITLE:
	Partner	 	 

 

 

 

			
	***	 	Confidential material redacted and filed separately with the Commission

REG

June 28, 2006

Mr. Ed Recker

Western Dubuque Biodiesel, LLC Board of Directors

301 1st ST. NE P.O. Box 82

Farley, Iowa 52046

RE: Design/Build Contract for Western Dubuque Biodiesel, LLC

Dear Mr. Recker and the Western Dubuque Biodiesel Board of Directors:

Renewable Energy Group (REG) is offering a design/build contract for a biodiesel production
facility to be built for Western Dubuque Biodiesel, LLC. (WDB) This plant will produce 30 million
gallons of B100 biodiesel per year derived from soybean oil and animal fat feedstock (if
applicable) meeting ASTM D6751 specifications. (“REG Process Guarantee” is attached to this
letter)

The enclosed technical specifications and drawings will further define our scope of work. The
project is bid as a turnkey project including, but not limited to, site development, buildings,
procurement, and installation of all equipment, mechanical and electrical/controls. The City of
Farley has indicated that they have sufficient water to meet process and fire protection
requirements. This will be confirmed once water is extended to the site and the flow rate
verified. In the event that a water tank is required, this cost is offered as an adder.

Pricing for this facility is based upon moving on-site on July 17, 2006 allowing full access to the
site on that date. Anticipated construction duration is twelve months of on-site construction time
and an updated schedule will be provided once the actual move-in date is established. The twelve
month construction window will not start until WDB is able to break escrow.

Pricing for this project will be held for 30 days from the date of this letter. If a contract is
not executed prior to that date, pricing is subject to review and possible escalation. With the
current volatility in the steel industry, REG reserves the right to update pricing for structural
steel and stainless steel products prior to final execution of purchase orders for these products.

Biodiesel Facility Pricing

Our cost plus price to design, engineer, construct, and commission a 30 million gallon per year
biodiesel facility is shown below. Performance and Payment Bonds and Builder’s Risk insurance are
not included in the total contract price.

 

 

 

			
	***	 	Confidential material redacted and filed separately with the Commission

June 28, 2006

Western Dubuque Biodiesel

Page 2 of 2

	 	 	 	 	 
	Total Contract Price
	 	$	*	**
	Alternative #1 FFA Equipment Tower
	 	$	*	**
	Alternative #2 Security Fence
	 	$	*	**
	Alternative #3 Concrete Floor-Storage Bldg.
	 	$	*	**
	Adder #1 Fire water tank (if needed)
	 	$	*	**

Notes:

Sales tax is included in our total contract price. The administration building is not included.
Site preparation, grading, roadways, and parking are included as well as all utilities within 5
feet of this building. We will coordinate utility locations and truck scale placement with the
building designer. We have not included any design work pertaining to this building but can
provide a quote for such services if desired.

Builder’s risk and hot work insurance are not included in our contract price above. We estimate
the cost of this policy will be around $***. A payment and performance bond is not included in our
contract price above. We estimate the cost of this bond will be around $***.

Alternative #1: All necessary utility infrastructures needed for the FFA system is included. This
alternative adds the column and extends the building tower. The FFA column was not included in
original equipment order and a delay may be encountered with this option.

Alternative #2: Adds an 8 foot high perimeter fence with 3 strands of barbed wire, man gates, rail
access gates, and power truck access gates. Perimeter is identified on Site Plan GAR111.

Alternative #3: Install a 5 inch reinforced concrete floor in storage building in lieu of gravel.

This proposal does not include a firewater tank, as we understand the city will have adequate
water. Confirmation will be determined once utilities are in place. Possible adder: $***.

This proposal does not include the cost of 2 (two) mainline rail switches installed on the mainline
to be done by the CN and paid by the owner. (Estimated cost is $***)

On-site wastewater pretreatment is not included in our contract price above. Until we have had a
chance to collect data from the operation of the Western Iowa Energy plant, we will not know the
full cost impact of wastewater pretreatment, however it could be in the $1 — $2.5 million range. A
wastewater decanting system to separate fat, oil, and grease is included in this quote along with a
ph stabilizing system.

On behalf of REG, I am pleased to extend this design/build contract to the Western Dubuque

 

 

Biodiesel Board of Directors.

Bill Raney

Sales Production Manager

Renewable Energy Group

PO Box 68

Ralston, Iowa 51459

 

 

REG

June 23, 2006

To: Western Dubuque Biodiesel, LLC

From : Renewable Energy Group, LLC

Subject: REG Process Guarantee for 30 MGPY Biodiesel Facility

The following is the process guarantee for your 30,000,000 gallon per year Biodiesel plant. The
output yield of the plant has to be based upon the in-bound raw product as noted in the performance
data.

Performance Data for Continuous Transesterification Process (Biodiesel Process)

Quality of the product (crude soy or canola oil or fats) going to the Biodiesel process is
dependent upon the quality of the feedstock to the pre-treatment process. The quality of the
feedstock to the pre-treatment process must be of a quality that insure all contaminates can be
removed before the biodiesel process.

Minimum Feedstock Quality to the Biodiesel process — Vegetable Oil or Animal Fats

	 	 	 	 	 
	 

	 	Moisture and Volatiles:
	 	0.05% max
	 

	 	Acidity:
	 	0.5% max
	 

	 	Phosphorus Total:
	 	2 ppm max
	 

	 	Soap:
	 	50 ppm max
	 

	 	Unsaponifiables*:
	 	1.0% max
	 
	 	 	 	 
	Product Information:	 	 
	 

	 	Biodiesel yield **:
	 	greater than 95%
	 

	 	Crude Glycerine:
	 	approximately 0.13 lb of 75-80% glycerine per
Pound of product
	 

	 	Fatty matter:
	 	less than 0.01 lb
	 

	 	Methanol stream:
	 	99.9 methanol (recycled)
	 

	 	Water stream (0.2% methanol):
	 	nil

	*	 	Amount and component makeup of phosphorus and unsaponifiables must be at a level to theoretically
allow Biodiesel product to conform to ASTM D 6751 or equivalent standard.
	 
	**	 	Yield based on available triglyceride content after subtraction of moisture, unsaponifiables and
FFA. Biodiesel product will conform to ASTM D 6751 or equivalent standard.

 

 

Summary — Performance Standards — Inputs and Outputs

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Peak Hour*	 	 	Peak Day**	 	 	Annual***	 
	Inputs
	 	 	 	 	 	 	 	 	 	 	 	 
	•   Pre-treated triglyceride
	 	3,987 gal.	 	95,688 gal.	 	31,578,947 gal.
	 
	•   Methanol (99,9%)
	 	2,528 lb.	 	60,682 lb.	 	20,025,000 lb.
	 
	•   Sodium Methoxide
	 	710 lb.	 	17,045 lb.	 	5,626,000 lb.
	 
	(25% NAOH)
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	•   Steam (150 psi)
	 	9,091 lb.	 	218,182 lb.	 	72,000,000 lb.
	 
	•   Connected Power
	 	213 kwh	 	5,113 kwh	 	1,687,500 kwh
	 
	Outputs
	 	 	 	 	 	 	 	 	 	 	 	 
	•   Biodiesel
	 	3,788 gal.	 	90,909 gal.	 	30,000,000 gal.
	 
	•   Glycerin
	 	3,693 lb.	 	88,629 lb.	 	29,247,624 lb.

 

			
	*	 	One uninterrupted hour of operation
	 
	**	 	24 uninterrupted hours of production
	 
	***	 	7,920 uninterrupted hours of production (330 — 24 hour days)exv10w6

 

EXHIBIT-10.6

MANAGEMENT AND OPERATIONAL SERVICES AGREEMENT

     This Management and Operational Services Agreement (“Agreement”) is made and entered into as
of the  29  day of  August , 2006, by and between Renewable Energy Group, Inc.,
a corporation organized and existing under the laws of the state of Delaware, with offices at
Ralston, Iowa (“REG, Inc.”), and Western Dubuque Biodiesel, LLC, a limited liability company
organized and existing under the laws of the state of Iowa, with offices at Farley, Iowa (“Western
Dubuque”).

     RECITALS: Western Dubuque and Renewable Energy Group, LLC (“REG”). have entered into a Design
— Build Agreement dated the 30th day of June, 2006 (“Construction Contract”), with respect to a
biodiesel production facility to be built for Western Dubuque in Farley, Iowa (“Biodiesel
Facility”). As a new entity without staff, Western Dubuque has recognized the importance of
drawing upon the experience of REG, Inc. in the initial operation of the Biodiesel Facility.
Western Dubuque and REG, Inc. have discussed the general terms and conditions under which REG, Inc.
would provide start-up management and operational services to Western Dubuque with respect to the
Biodiesel Facility, which the parties wish to reduce to this writing.

     IT IS THEREFORE AGREED by and between the parties as follows:

	1.	 	General Scope. Subject to the terms of this Agreement, and in consideration of the
fee for such services to be paid by Western Dubuque as set out herein, REG, Inc. will provide
for the overall management of the Biodiesel Facility, place a general manager and an
operations manager at the Biodiesel Facility, acquire feed stocks and the basic chemicals
necessary for the operation of the Biodiesel Facility, and perform the administrative, sales
and marketing functions for the Biodiesel Facility In fulfilling its duties and obligations
hereunder, REG, Inc. shall cooperate with Western Dubuque and act in a manner to maximize the
long-term success and profitability of Western Dubuque.

	2.	 	Responsibilities of REG, Inc. Under this Agreement, REG, Inc. agrees to provide the
following:

	 	A.	 	General Manager. REG, Inc. will provide a General Manager to implement
and oversee the business plan for the Biodiesel Facility, and direct, promote and
coordinate the staff, personnel and plant operations. The General Manager will be an
employee of REG, Inc., but will be assigned to carry out the responsibilities of
General Manager at the Biodiesel Facility. Included among the specific duties to be
accomplished by the General Manager are:

	 	•	 	To utilize their ongoing best efforts to successfully and profitably manage
the Biodiesel Facility in Western Dubuque’s best interests;
	 
	 	•	 	Development of an annual budget for presentation to and approval of Western
Dubuque’s Board of Directors (or other board of governance (“Board”));

Confidential Treatment Requested. Confidential portions of this document have been redacted
and have been separately filed with the Commission

 

 

	 	•	 	Attend meetings of the Board and provide information upon its request ;
	 
	 	•	 	Insure that all raw product costs are minimized and that all finished
product revenues are maximized;
	 
	 	•	 	Work with Western Dubuque’s Board to formulate Western Dubuque’s mission and
goals;
	 
	 	•	 	Manage the Biodiesel Facility’s resources to efficiently achieve such
mission and goals;
	 
	 	•	 	Manage Western Dubuque’s duties and rights under agreements with third
parties relating to the Biodiesel Facility;
	 
	 	•	 	Assist with regulatory affairs monitoring and compliance;
	 
	 	•	 	Hire, terminate and replace Biodiesel Facility personnel as necessary and in
all cases in accordance with the policies of the Board;
	 
	 	•	 	Management of governmental relations, including USDA’s biodiesel programs;
and
	 
	 	•	 	Such other duties as may be agreed between REG, Inc. and Western Dubuque,

while acting in compliance with Western Dubuque’s Operating Agreement and other
governing documents provided to the General Manager by the Board.

The General Manager will report to such officer of REG, Inc. as REG, Inc. shall from
time to time designate. All employee compensation and employee benefits associated
with the position of General Manager will be paid by REG, Inc.

The General Manager to be assigned to the Biodiesel Facility shall be subject to the
approval of Western Dubuque. REG, Inc. agrees not to move a person placed as
General Manager at the Biodiesel Facility to another facility operated by REG, Inc.
during the term of this Agreement (and any extensions thereof) without the written
consent of Western Dubuque. Subject to the foregoing, REG, Inc. has the right to
hire, fire, and replace persons selected to serve as General Manager at the
Biodiesel Facility.

	 	B.	 	Operations Manager. REG, Inc. will provide an Operations Manager to
oversee the operation of the Biodiesel Facility. The Operations Manager will be an
employee of REG, Inc., but will be assigned to carry out the responsibilities of
Operations Manager at the Biodiesel Facility. Included among the specific duties to be
accomplished by the Operations Manager are:

	 	•	 	Planning and scheduling biodiesel production to meet customer needs and
marketing goals;
	 
	 	•	 	Monitor and improve quality control;
	 
	 	•	 	Oversee facility and equipment maintenance;
	 
	 	•	 	Assist with budgeting and the monitoring of labor and other expenses in the
operation;
	 
	 	•	 	Implement processing changes and new technologies as they evolve, and plan
for new projects relating to biodiesel production; and

-2-

 

	 	•	 	Such other duties as may be agreed to between REG, Inc. and Western Dubuque.

The Operations Manager to be assigned to the Biodiesel Facility shall be subject to
the approval of Western Dubuque. The Operations Manager will report to the General
Manager. All employee compensation and employee benefits associated with the
position of Operations Manager will be paid by REG, Inc.

	 	C.	 	Feed Stocks Procurement. REG, Inc. will be responsible for arranging
the purchase of soybean oil, together with other feed stocks as may be needed in the
future. REG, Inc. will procure all feed stocks necessary for production at the
Biodiesel Facility; and will:

	 	•	 	Provide analysis and audit of feed stock suppliers;
	 
	 	•	 	Purchase feed stocks at competitive prices meeting specifications and in
adequate quantities to fill the production schedule of the Biodiesel Facility;
	 
	 	•	 	Negotiate for discounts where obtainable on feed stocks (with all applicable
price discounts, rebates or other incentives passed through to Western
Dubuque);
	 
	 	•	 	Arrange for transportation, logistics, and scheduling of feed stock
deliveries by suppliers based upon competitive bidding, with local haulers
having an equitable chance to bid; and
	 
	 	•	 	Provide analysis and audit of bulk transportation providers.

	 	D.	 	Chemical Inputs Procurement. REG, Inc. will be responsible for
purchasing methanol, sodium methylate, hydrochloric acid, and caustic soda, together
with such other chemical inputs as may be needed in the future. REG, Inc. will procure
all basic chemical inputs necessary for production at the Biodiesel Facility; and will:

	 	•	 	Perform due diligence requirements for investigation of suppliers of the
chemical inputs;
	 
	 	•	 	Provide analysis and audit of chemical suppliers;
	 
	 	•	 	Purchase chemical inputs at competitive prices meeting specifications for
use in the Biodiesel Facility;
	 
	 	•	 	Negotiate for discounts where obtainable on chemicals (with all applicable
price discounts, rebates or other incentives passed through to Western
Dubuque);
	 
	 	•	 	Procure adequate chemical inputs to meet production schedules for the
Biodiesel Facility;
	 
	 	•	 	Provide analysis and audit of bulk transportation suppliers; and
	 
	 	•	 	Arrange for transportation, logistics, and scheduling services for chemical
input deliveries by suppliers based upon competitive bidding, with local
haulers having an equitable chance to bid.

-3-

 

	 	E.	 	Administrative Services. REG, Inc. shall provide administrative
services to support the operation of the Biodiesel Facility, agreeing to provide
assistance within the following areas as more fully described on Exhibit A hereto (and
at REG, Inc.’s expense except for those materials and items noted on such Exhibit A):

	 	•	 	Accounting
	 
	 	•	 	Human Resources
	 
	 	•	 	Information Technology
	 
	 	•	 	Insurance Administration (unless Western Dubuque elects in writing to
fulfill such services itself, in which case REG, Inc. would have no
responsibility after receipt of notice of such election to perform any of the
Insurance Administration services as further outlined on Exhibit A hereto).
	 
	 	•	 	Payroll
	 
	 	•	 	Communications

	 	F.	 	Sales and Marketing. REG, Inc. will utilize its best efforts as
Western Dubuque’s sale representative to market all biodiesel, glycerin and fatty acids
produced at the Biodiesel Facility (“Products”) at the Product Prices (as defined
below). With respect to such services, REG, Inc. agrees to provide:

	 	•	 	Market analysis of biodiesel supply and demand, utilizing non-proprietary,
public information;
	 
	 	•	 	Opportunities for participation in a trade association to access additional
historical data regarding prices, costs, and other analysis, contributed and
disseminated to members on an aggregated basis;
	 
	 	•	 	Enhanced access to biodiesel markets with REG, Inc.’s established
distribution channels and transportation at pass through costs;
	 
	 	•	 	Marketing specialists to serve as Western Dubuque’s representatives to
identify potential customers and attain and establish sales opportunities for
the Products at the prices and terms as established by Western Dubuque;
	 
	 	•	 	Analysis and audit of biodiesel customers desiring to purchase Western
Dubuque Product, including credit analysis;
	 
	 	•	 	Arrangements for transportation, logistics, and scheduling of biodiesel
shipments;
	 
	 	•	 	Where advantageous, arrange for leased tankers for rail shipments;
	 
	 	•	 	Analyze and audit bulk transportation providers;
	 
	 	•	 	Oversee reconciliation of shipments, invoicing and payments on a weekly
basis; and
	 
	 	•	 	Provide invoicing and accounts receivable management for biodiesel
shipments.

	 	G.	 	Additional Services Described. A further description of services to be
provided is attached hereto as Exhibit B.

	3.	 	Compensation for Services. In consideration of the services to be rendered during
the term of this Agreement:

-4-

 

*** Confidential material redacted and filed separately with the Commission

	 	A.	 	Monthly Fee. Western Dubuque shall pay to REG, Inc., on a monthly
basis, a fee determined as follows:

	 	(i)	 	During *** of ***. For the *** of *** as defined
hereafter, Western Dubuque shall pay to REG, Inc. a fee equal to *** times the
number of gallons of biodiesel for which Western Dubuque has *** during the
month for which the fee is computed (the rate per gallon herein the “Fee Rate,”
and the payment per month the “Monthly Fee”). For purposes of this section
3(A), the “*** of ***” shall commence upon the sale of biodiesel produced from
the Biodiesel Facility, and continue for a period of *** after the end of the
month in which such sales commence.
	 
	 	(ii)	 	Balance of Term After *** of ***. After the *** of
***, the Monthly Fee shall be based upon *** rather than the *** for which ***
have been received. For the first month after the *** of ***, Western Dubuque
shall pay to REG, Inc. a fee equal to *** per gallon of all biodiesel produced
from the Biodiesel Facility from the commencement of production through the end
of such month, less the total of all Monthly Fees billed to Western Dubuque
during the *** of ***. Beginning after the first such month of transition,
Western Dubuque shall pay to REG, Inc. a fee equal to *** per gallon of
biodiesel produced from the Biodiesel Facility during the month for which the
fee is computed (the rate per gallon herein the “Fee Rate,” and the payment per
month the “Monthly Fee”). Further information with respect to the “Monthly
Fee” is attached hereto as Exhibit C. For purposes of this Agreement,
determination of the biodiesel produced from the Biodiesel Facility for a month
shall be based upon a compilation of the daily production reports for the
Biodiesel Facility for such month, and references to a “gallon” shall be to the
U.S. liquid measure of capacity, 231 cubic inches, corrected to 60 degrees
Fahrenheit.

	 	B.	 	*** Bonus. As an incentive to REG, Inc., and as additional
compensation for the services being rendered, Western Dubuque agrees to pay a bonus
to REG, Inc. on a yearly basis equal to an amount tied to the *** of Western
Dubuque’s Biodiesel Facility (“*** Bonus), as determined hereafter, the amount of
such bonus as computed under the table set out below. For purposes of this
Agreement, Western Dubuque’s “***” shall be the *** for its fiscal year before any
deduction or allowance for federal or state income taxes, determined in accordance
with generally accepted accounting principles applied on a consistent basis by the
independent CPA firm engaged by Western Dubuque, and then adjusted as necessary to:
(i) include the receipt of government payments such as under the federal excise tax
credit program or similar federal or state payments; (ii) exclude any gains or
losses realized on the sale or disposition of capital assets; (iii) adjust
depreciation to utilize Internal Revenue Service Class lives depreciated on a
straight line, mid-month basis (with no bonus depreciation, Section 179 expense
(election to expense certain depreciable assets) or any other method of accelerated

-5-

 

*** Confidential material redacted and filed separately with the Commission

depreciation, first year write-off or expensing to be taken), and (iv) exclude any
reduction for the *** Bonus paid or accrued to REG, Inc. as a result of this
subsection. For any partial fiscal year for Western Dubuque occurring during the
term of this Agreement, REG, Inc. shall receive a *** Bonus, if any, computed for
that period of the fiscal year in which REG, Inc. provides services hereunder.

Table: The *** Bonus shall be determined by adding the amounts determined by
reference to the following (except that REG, Inc. agrees any one yearly *** Bonus
shall not exceed $1,000,000):

	 	 	 	 	 
	*** of
Western Dubuque’s Amount to be Paid
Biodiesel Facility 	 	as *** Bonus 
	 
	 	 	 	 
	$0 to $***
	 	No Bonus
	2nd ***
	 	 	*	**%
	3rd ***
	 	 	*	**%
	4th ***
	 	 	*	**%
	All *** in Excess of $***
	 	 	*	**%

Example: Western Dubuque’s *** equals $***. The *** Bonus would be $***, computed
as follows:

	 	 	 	 	 
	1st $*** in ***
	 	No Bonus	 
	2nd $*** times ***% equals
	 	$	***	 
	3rd $*** times ***% equals
	 	$	***	 
	4th $*** times ***% equals
	 	$	***	 
	Balance of $*** times ***% equals
	 	$	***	 
	 
	 	 	 
	Total *** Bonus equals
	 	$	***	 

	 	C.	 	Payment. The Monthly Fee shall be due on the tenth (10th) of the month
following the month for which such fees are computed and payable. The *** Bonus shall
be paid within ten (10) days after Western Dubuque’s Board accepts the audit report for
the fiscal year for which such *** Bonus is computed, except that if the *** Bonus is
not paid within three (3) months of the close of Western Dubuque’s fiscal year because
the audit has not been received (or within three (3) months of the end of the term of
this Agreement in the event of the computation of an Income Bonus for a partial fiscal
year), Western Dubuque shall compute and pay an estimated *** Bonus (if any is due)
based on its internal figures on or before the end of such three (3) month period, the
parties agreeing upon receipt of the audited figures to make any necessary adjustment
in such estimated payment so that the correct *** Bonus has been paid.

	4.	 	Responsibilities of Western Dubuque. Concurrent with performance of the obligations
of REG, Inc. as previously set out in this Agreement, Western Dubuque understands and
recognizes that upon completion of the Biodiesel Facility by REG, it shall be the obligation
of Western Dubuque to:

-6-

 

	 	A.	 	Establish a Board of Directors or similar group to provide governance of
Western Dubuque, and input and guidance to the General Manager regarding the Biodiesel
Facility, and to take action upon recommendations of the General Manager.
	 
	 	B.	 	Establish on a monthly basis (or more often as needed), the price for which
REG, Inc., as Western Dubuque’s sales representative, is to sell Western Dubuque’s
Product, and review and determine production levels to be maintained at the Biodiesel
Facility.
	 
	 	C.	 	Provide the names of several persons who would be authorized on Western
Dubuque’s behalf to establish Product Prices, approve special prices, agree to the
handling of off-grade Product, approve off-site storage arrangements, and approve the
write off of accounts receivable, and further to notify REG, Inc. of any changes in
such designees (such designees to be reasonably available for contact by REG, Inc., and
able to respond in a timely fashion).
	 
	 	D.	 	Provide funds for:

	 	(i)	 	purchase, installation and maintenance of software, hardware,
and related equipment, together with utilities and related charges, in order
to accomplish the necessary communication of voice and data between the
parties, and conduct Western Dubuque’s business at and operate the Biodiesel
Facility.
	 
	 	(ii)	 	the cost of acquisition and implementation of newly evolving
technologies (and including those developed by REG, Inc. or its affiliates) at
the Biodiesel Facility, which have been approved by the Board.
	 
	 	(iii)	 	offices, computers, cell phones, and other facilities,
services and support for the personnel needed to operate the Biodiesel Facility
(and including the General Manager and Operations Manager) and appropriate for
the performance of their duties for Western Dubuque.
	 
	 	(iv)	 	payment or reimbursement for reasonable travel and other
similar out of pocket expenses incurred in furtherance of the business of
Western Dubuque and in fulfillment of the duties of the personnel needed to
operate the Biodiesel Facility (and including the General Manager and
Operations Manager), upon submission and substantiation of such expenses as may
be required for tax or auditing purposes.
	 
	 	(v)	 	payment of the costs of legal counsel and outside auditors as
may be determined necessary by the Board, and including for the examination of
financial records, preparation of income tax returns for Western Dubuque and
related reports to its owners and third parties, securities filings, and
similar reports.

-7-

 

	 	(vi)	 	in general, the purchase and delivery of all feed stocks,
chemical and other inputs, all staff and personnel costs (other than those of
the General Manager and Operations Manager) necessary to operate the Biodiesel
Facility, and all other expenses of doing business at the Biodiesel Facility
not specifically being assumed by REG, Inc. as a part of the furnishing of
services hereunder, as well as all required capital expenditures to maintain
the Biodiesel Facility in a condition capable of producing Product acceptable
to the market place,

all of which are to be paid in accordance with applicable policies established by
the Board.

	 	E.	 	Western Dubuque shall select, engage and terminate outside accountants,
auditors and attorneys as it shall see fit, with such professionals reporting directly
to the Board of Western Dubuque.
	 
	 	F.	 	Perform such other tasks and duties as have been separately set out hereunder
and agreed to by Western Dubuque.

	5.	 	Other Operational Understandings & Agreements:

	 	A.	 	Risk Management Program. Western Dubuque agrees to consider adoption
of the risk management program used by REG, Inc. which supports the procurement of feed
stocks and chemical inputs hereunder (“Risk Management Program”). The objective of the
program is to manage the commodity price risk resulting from fluctuating prices of
feedstock (oils and fats), chemical inputs (methanol and catalysts), and the finished
Products (biodiesel and glycerin) due to changing market conditions. Under the Risk
Management Program, REG, Inc. will utilize the Chicago Board of Trade, New York
Mercantile Exchange, and other exchanges as warranted to establish an account or
accounts in Western Dubuque’s name, and acquire instruments as necessary to implement
risk management strategies. Such account(s) and instruments would be funded by Western
Dubuque, with all resulting gains and losses from the purchase and sale transactions of
any futures contracts, options, and cash instruments associated with the Risk
Management Program to flow to the benefit of or be borne by Western Dubuque. If
approved, Western Dubuque agrees to adopt such resolutions and execute such agreements
as are reasonably necessary to implement the Risk Management Program, and pay
transactional costs incurred to carry out such program.
	 
	 	B.	 	Plant Information Program. In its management of the Biodiesel
Facility, REG, Inc. shall utilize a software program (“PI System”) interfacing with
the computer control system running the Biodiesel Facility, making available
production data for operations, engineering, sales, marketing, logistics and
management to better make informed decisions with respect to production processes.
During the term of this Agreement, the PI System will also allow for REG, Inc.’s
remote access to information on the operation of the Biodiesel Facility to provide for
data

-8-

 

	 	 	 	collection, monitoring, benchmarking and trouble shooting, all to better aid
performance for Western Dubuque.
	 
	 	C.	 	Product Pricing. On at least a monthly basis (or more often as
needed), REG, Inc. shall identify and provide publicly available marketing information
to Western Dubuque with respect to Products. Western Dubuque will establish the
Product prices for REG, Inc. to use in selling Products (“Product Prices”), based upon
market place conditions. Any change in Product Prices shall be effective for Product
sales made beginning the seventh (7th) calendar day after REG, Inc.’s receipt of
notice of new Product Prices, except for quotations still open and extended prior to
the change in the Product Prices, or unless otherwise agreed to by the parties
(Western Dubuque and REG, Inc. to honor all pre-existing contracts and agreements with
respect to price). All Product sales by REG, Inc. as Western Dubuque’s sales agent
shall be at or above the Product Prices then in effect, unless written consent is
received from Western Dubuque for special prices due to volume commitments, Western
Dubuque storage constraints, or other reasons approved by Western Dubuque. REG, Inc.
specifically states that it will not sell the Product at prices less than the Product
Prices without Western Dubuque’s prior written approval, and that if REG, Inc. is able
to sell Products at prices above the Product Prices, Western Dubuque would nonetheless
receive all proceeds of any such sales. REG, Inc. will in any event use its best
efforts, as Western Dubuque’s sales agent, to maximize the sales revenues received by
Western Dubuque.
	 
	 	D.	 	Off Site Storage. In order to maximize profit potential, and
including taking advantage of regional marketing opportunities, there will be times in
the marketing of Product that REG, Inc. will recommend the storage of Western Dubuque’s
Product in third party locations. In such case, Western Dubuque agrees that it will be
responsible for transportation costs for its Product to the storage facility, in and
out charges, such Product’s prorated share of storage, and other related expense, so
long as approved by Western Dubuque prior to use of off-site storage.
	 
	 	E.	 	Product Sales, Handling of Proceeds. It is expected that sales of
Products will be made in REG, Inc.’s name. REG, Inc. shall take title to the Product
when loaded for delivery FOB the Biodiesel Facility, unless otherwise agreed. REG,
Inc. will carry Property in Transit insurance for all Product in shipment. If while
Product is in transit a claim were to occur the proceeds from settlement would be due
the title holder at the time of the loss event. REG, Inc. will pay over to Western
Dubuque all Product proceeds received from sales of Western Dubuque Products. REG,
Inc. shall remit by electronic transfer to Western Dubuque by the close of business
each Wednesday all such proceeds received during the previous seven (7) days.
	 
	 	F.	 	Off-Grade Product. In the event off-grade Product is produced at the
Biodiesel Facility that is not marketable at the Product Prices then in effect, REG,
Inc. will nonetheless use its best efforts to sell such Product for Western Dubuque at
the highest prices reasonably obtainable. With respect to biodiesel, and for purposes

-9-

 

	***	 	Confidential material redacted and filed separately with the Commission

of this Agreement, off-grade Product shall include biodiesel which fails to meet the
specifications contained in ASTM D6751 as it may be amended or modified (or such
other standards for biodiesel as may in the future develop in the biodiesel
industry) or if for any other reason a customer reasonably rejects biodiesel. With
respect to Products other than biodiesel, for purposes of this Agreement, off-grade
Product shall include Product which fails to meet specifications mutually agreed
upon by the parties, or if for any other reason a customer reasonably rejects such
Product. In the event off-grade Product is sold, REG, Inc. shall work to minimize
any loss to Western Dubuque for returned Product, cost of cover, and related
expenses. REG, Inc. shall advise Western Dubuque of Product complaints, and shall
not accept the return of, or make any allowance with respect to any Product, without
Western Dubuque’s prior written approval. REG, Inc. and Western Dubuque shall work
together to determine the resolution of customer complaints and off-grade Product
sales. Western Dubuque shall pay for any costs associated with resolution of
customer complaints or returned Product, including freight costs, cover, and related
expenses, unless such Product deficiencies were caused by the negligence or willful
misconduct of REG, Inc., in which event REG, Inc. will be responsible for such
costs. Except where caused by REG, Inc.’s negligence or willful misconduct, Western
Dubuque agrees to indemnify REG, Inc. from any loss, claim or damage (including
reasonable attorney fees) incurred as a result of the sale of off-grade Product.

REG, Inc. agrees to credit against future payments owed by Western Dubuque under
Section 3(C) herein an amount equal to *** times the number of gallons of biodiesel
produced at Western Dubuque which failed at the time it was shipped from the
Biodiesel Facility to meet the specifications then contained in ASTM D6751 as it may
be amended or modified (or such other standards for biodiesel as may in the future
develop in the biodiesel industry).

	 	G.	 	Credit Risk. REG, Inc. agrees to manage the accounts receivable and
work to minimize bad debt losses. REG, Inc. shall pursue all reasonable efforts at
collecting accounts, Western Dubuque agreeing to pay for third party collection costs
including attorney fees (Collection Costs”) except as may be subsequently shared as set
out hereafter. The write off of accounts receivable shall be as mutually agreed by the
parties. Western Dubuque understands that losses on accounts receivable due to bad
debt up to one-half per cent of Product sales will be borne entirely by Western Dubuque
as a cost of doing business. REG, Inc. agrees to share losses equally with Western
Dubuque with respect to accounts receivable for Product sales (including Collection
Costs) to the extent that the total of such losses (not previously shared by the
parties) incurred from the commencement of the term of this Agreement to the date of
computation of such losses exceed one half of one percent of Western Dubuque’s total
sales made under this Agreement for the same period. Should Western Dubuque desire
REG, Inc. to sell Product to buyers not approved by REG, Inc., REG, Inc. shall make
such sale in Western Dubuque’s name, and provide normal invoicing and billing services.
However, any risk of receipt or collection of such sale shall remain with

-10-

 

	 	 	 	Western Dubuque, and shall not be included in the total of losses which might be
shared by the parties as set out above.
	 
	 	H.	 	Employees. Western Dubuque has elected to directly employ personnel to
fulfill the operational needs at the Biodiesel Facility (other than the General
Manager and Operations Manager). REG, Inc. agrees to assist Western Dubuque in
hiring and training such personnel (“Western Dubuque Employees”), and to continue to
provide associated human resource and payroll handling assistance. However, Western
Dubuque understands and agrees that Western Dubuque has the sole responsibility for
determining the rate of pay, hours, benefits, and other terms and conditions of
employment of the Western Dubuque Employees. Western Dubuque would be responsible
for all staff and personnel costs associated with Western Dubuque Employees,
including paying compensation, selecting and paying for benefits and benefit plans
for the Western Dubuque Employees, paying for vacation and paid time off as required
by state and federal law, providing statutory insurance for the Western Dubuque
Employees, for FICA, unemployment, and workers’ compensation in accordance with
applicable statutory requirements and limits, and withholding and remitting related
taxes.
	 
	 	I.	 	Software to Operate Plant Equipment. Upon termination of this
Agreement, REG, Inc. agrees to transfer REG, Inc.’s operational rights to Western
Dubuque in the necessary software (or assist Western Dubuque in obtaining any necessary
licensing arrangements for software from third parties) to operate the equipment in the
Biodiesel Facility. Western Dubuque understands this shall not include the PI System,
or administrative or accounting software developed or utilized by REG, Inc.
	 
	 	J.	 	Access to Biodiesel Facility. Western Dubuque agrees during the term
of this Agreement to provide access to the Biodiesel Facility by REG, Inc. for purposes
of training employees regarding the operation of biodiesel plants and equipment, and to
provide for tours by prospective customers of REG, Inc., subject to reasonable advance
notice to allow for appropriate scheduling and to minimize disruption to the Biodiesel
Facility’s production.

	6.	 	Term of Agreement. This Agreement is effective as of the date of its execution by
the parties (with services to commence by REG, Inc. hereunder at such time or times as
appropriate based upon construction progress of the Biodiesel Facility), and shall remain in
force for three (3) years after the end of the first month in which the Biodiesel Facility is
producing Product for sale (subject to early termination due to default as set out hereafter).
This Agreement shall continue after the initial term unless and until one party gives written
notice of termination to the other of a proposed termination date at least twelve (12) months
in advance of a proposed termination date. The initial term or any subsequent term may also
be modified upon the mutual written consent of the parties.

	7.	 	Confidentiality. Western Dubuque agrees that in the performance of this Agreement,
Western Dubuque may receive or otherwise learn of certain items of information that are
non-public, proprietary, or confidential to REG, Inc. or to parties with whom REG, Inc. has
entered into contractual relationships (herein “Confidential Information” with respect

-11-

 

to REG, Inc.), to include but not be limited to information concerning REG, Inc.’s
operations, processes, methods and accumulated experience incidental to the processing, sale
and distribution of Products, and including supplier and customer lists, the disclosure of
which to third parties would be injurious to REG, Inc. or to parties with whom REG, Inc. has
entered into contractual relationships. REG, Inc. agrees that in the performance of this
Agreement, REG, Inc. will receive financial information including the results of Western
Dubuque’s operations, and may otherwise learn of certain items of information that are
non-public, proprietary, or secret to Western Dubuque or to parties with whom Western
Dubuque has entered into contractual relationships (herein “Confidential Information” with
respect to Western Dubuque), the disclosure of which to third parties would be injurious to
Western Dubuque or to parties with whom Western Dubuque has entered into contractual
relationships. Each party as recipient (the “Recipient”) agrees not to use the Confidential
Information of the other party (the “Provider”) for any purpose other than as required to
perform this Agreement. Recipient agrees to disclose the Confidential Information of the
Provider only to such directors, officers, employees, affiliates, consultants, agents, and
third parties (“Representatives”) as are required to allow Recipient to perform under this
Agreement, who are first informed of the restrictions upon use of the Confidential
Information and who agree to keep such information confidential and who agree to be bound by
the terms of these confidentiality provisions to the same extent as if they were parties
hereto. Recipient will be responsible for any breach of these confidentiality provisions by
any of its Representatives and agrees to take all reasonable measures to restrain its
Representatives from prohibited or unauthorized disclosure or use of the Confidential
Information. Recipient agrees that the actual or threatened disclosure of the Confidential
Information would cause the Provider immediate and irreparable harm, which may not be
adequately compensated by money damages. Accordingly, in the event of a breach of these
confidentiality provisions by Recipient or its Representatives, the Recipient specifically
agrees, that in addition to all other remedies available at law or in equity, the Provider
shall be entitled to equitable relief, including an injunction to limit or prevent such
actual or threatened disclosure, together with recovery of costs of litigation from
Recipient as a result of breach, including reasonable attorney fees. These obligations of
confidentiality shall not apply to any information which: (a) was known to Recipient or was
in the public domain prior to disclosure hereunder; or (b) becomes known to the public from
a source other than Recipient; or (c) is disclosed to Recipient by a third party having a
legal right to make such disclosure.

In the management and operation of the Biodiesel Facility, REG, Inc. will direct the General
Manager and Operations Manager to hold competitively sensitive information of Western
Dubuque confidential and not disclose such information to REG, Inc. and its other employees
without the consent of Western Dubuque.

The parties acknowledge that in order to comply with certain statutory or regulatory
requirements, this Agreement may need to be disclosed to the Securities Exchange Commission,
the Iowa Securities Bureau or other regulators, and agree to allow such disclosure upon
receipt of appropriate request.

	8.	 	Intellectual Property Rights. Western Dubuque shall have no right under the
Agreement to make use of any brand names trademarked by REG, Inc., nor any of the
intellectual

-12-

 

*** Confidential material redacted and filed separately with the Commission

properties or know-how developed by REG, Inc. in conjunction with the operation of plants
similar to the Biodiesel Facility, or to use any of REG, Inc.’s intellectual properties and
know-how other than pursuant to such separate licensing arrangements as may be entered into
by the parties (if any), but the parties expressly agree that no such rights are being
conveyed by virtue of the execution or performance of this Agreement.

REG, Inc. shall have no right under the Agreement to make use of any brand names trademarked
by Western Dubuque, nor any intellectual properties or know-how developed separately by
Western Dubuque, other than pursuant to such separate licensing arrangements as may be
entered into by the parties (if any), but the parties expressly agree that no such rights
are being conveyed by virtue of the execution or performance of this Agreement.

	9.	 	Non-Solicitation of Employees. Each party agrees that during the term of this
Agreement 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. REG, Inc. does agree that, at the termination of this Agreement, Western
Dubuque shall have the right to hire the General Manager and the Operations Manager assigned
by REG, Inc. to the Biodiesel Facility.

	10.	 	Indemnification. The parties shall have the following indemnification/hold harmless
rights and obligations hereunder:

	 	A.	 	Except as to matters for which REG, Inc. is required to defend, indemnify and
hold harmless Western Dubuque under Section 10.B below, and provided that REG, Inc. and
its directors, officers and employees, have otherwise satisfied and performed their
duties and obligations in accordance with this Agreement, Western Dubuque shall defend,
indemnify and hold REG, Inc., and its directors, officers and employees, harmless from
and against any and all claims, suits, losses, liabilities, costs, damages and
expenses, including reasonable attorneys’ fees and court costs, suffered or incurred by
any such party in defending any legal action or claim arising out of this Agreement, or
REG, Inc.’s actions or inactions taken thereunder.
	 
	 	B.	 	REG, Inc. shall defend, indemnify and hold Western Dubuque, and its directors,
officers and employees, harmless from and against any and all claims, suits, losses,
liabilities, costs, damages and expenses, including reasonable attorneys’ fees and
court costs, suffered or incurred by any such party arising from or as a result of:
(i) breach by REG, Inc. or any representative, agent, officer or employee of REG, Inc.,
of any warranty, representation, term, covenant or condition of this Agreement; or (ii)
negligence, fraud or willful misconduct by REG, Inc. or any representative, agent,
officer or employee of REG, Inc.

	11.	 	Access to Books and Records. This Agreement provides for the payment by
Western Dubuque to REG, Inc. of a sum dependent upon the amount of production of biodiesel
at the Biodiesel Facility, and the *** of Western Dubuque’s Biodiesel Facility. For that
reason Western Dubuque agrees to make available its books and records for inspection

-13-

 

*** Confidential material redacted and filed separately with the Commission

and copying which are reasonably necessary for purposes of providing information with
respect to biodiesel production, and verifying the computation of the *** Bonus, to the
extent not already available to REG, Inc. in performance of its duties hereunder. REG, Inc.
agrees to treat information received under such access rights as Confidential Information
with respect to Western Dubuque.

This Agreement provides for reimbursement by Western Dubuque of various expenses of REG,
Inc.. For that reason REG, Inc. 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 REG, Inc.’s compliance with its obligations set
forth hereunder. Western Dubuque agrees to treat information received under such access
rights as Confidential Information with respect to REG, Inc.

If any such inspection or audit shall reveal a need for a material correction resulting in
payment owing by one party to the other, the party determined to owe additional payment
shall immediately pay the amount owed, together with interest from the date that such
payment should have been made at the prime rate in effect on the date of the underpayment as
reported in the Wall Street Journal. The expense of any such inspection or audit shall be
borne by the party making such inspection, unless the need for a material correction to
payment is revealed, in which case the reasonable expense of such inspection or audit shall
be borne by the party whose books and records are being audited.

	12.	 	Force Majeure. Neither party hereto shall be liable for any delay arising from
circumstances beyond its control including (but not limited to) acts of God, riot or civil
commotion, industrial dispute, fire, flood, drought, shortage of material or labor or act of
government, terrorist acts, war, or sabotage, provided that the party seeking to be excused
shall make every reasonable effort to minimize the delay resulting therefrom, and shall give
prompt written notice of the force majeure event to the other party. The obligations of the
party giving notice, so far as they are affected by the force majeure event, will be suspended
during, but not longer than, the continuance of the force majeure event. The affected party
must act with commercially reasonable diligence to resume performance and notify the other
party that the force majeure event no longer affects its ability to perform under the
Agreement.

	13.	 	Arbitration. Should any controversy, claim, dispute or difference arise between the
parties hereunder, out of or relating to this 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.

	14.	 	Independent Status. Subject to the terms and conditions of this Agreement, REG, Inc.
is authorized to perform services for Western Dubuque as set out in the Agreement as an

-14-

 

independent contractor and as an agent with such authority as is necessary to carry out the
services herein provided. Nothing in this Agreement or in the course of dealing by the
parties shall be construed to constitute Western Dubuque and REG, Inc. 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 REG, Inc. to fulfill the services provided
for hereunder.

	15.	 	Early Termination. Notwithstanding the provisions of Section 6 hereof, this
Agreement may be terminated in accordance with the following provisions:

	 	A.	 	A party hereto may (but is not required to) terminate this Agreement if the
other party breaches any provision of this 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. However, if the breach is
non-payment by Western Dubuque under Section 3, or REG, Inc. of proceeds of sale under
Section 5(E), the cure period shall be ten (10) days after delivery of written notice
by the non-breaching party.
	 
	 	B.	 	Either party hereto may terminate this 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 sixty (60) days after
such appointment.
	 
	 	C.	 	Western Dubuque may terminate this Agreement effective immediately upon
delivery of written notice to REG, Inc., if REG has defaulted under the Construction
Contract with regard to the Biodiesel Facility, and fails to remedy such default within
the cure period provided under such Construction Contract.
	 
	 	D.	 	REG, Inc. may terminate this Agreement effective immediately upon delivery of
written notice to Western Dubuque, if Western Dubuque has defaulted under the
Construction Contract with regard to the Biodiesel Facility, and failed to remedy such
default within the cure period provided under such Construction Contract.
	 
	 	E.	 	Notwithstanding any termination of this Agreement, the obligations and rights
of the parties which have accrued as of the time of such termination shall survive.
	 
	 	F.	 	Without limiting the generality thereof, if termination is due to a breach by a
party (the “Breaching Party”), then the Breaching Party shall indemnify the other party
(the “Non-Breaching Party”) against any loss, claim or damages (including reasonable
attorney fees) resulting from such breach or termination, and shall pay the costs of
satisfying any obligations arranged by the Non-Breaching Party on behalf of the
Breaching Party prior to such termination, including commitments for raw materials,
transportation, sales, and hedging transactions; provided, however, if an act or
omission of the Non-Breaching Party or one or more

-15-

 

	 	 	 	employees, agents, or affiliates of the Non-Breaching Party in the performance of
their obligations pursuant to this Agreement caused the breach of the Agreement by
the Breaching Party, that the Non-Breaching Party will waive and release the
Breaching Party from any and all claims resulting from such act or omission of the
Non-Breaching Party or its employees, agents or affiliates.

	16.	 	Remedies in the Event of Default. Where the Breaching Party commits a material
breach of this Agreement (or of the Construction Contract as set out under subsections 15(C)
or (D)), 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
Non-Breaching Party as set out in Section 15 hereof (or the allowable cure period under the
Construction Contract); 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
Agreement and may recover its money damages 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 Agreement, at law or in equity, including injunctive relief and rights of specific
performance.

	17.	 	Representations and Warranties. As a material inducement to the other party to enter
into this Agreement and with the understanding that the other party shall be relying thereon
in consummating the transaction contemplated hereunder, each party hereby represents and
warrants to the other party as follows:

	 	A.	 	Authorization. The execution of this Agreement has been duly
authorized by the appropriate owners and board of governance as may be required for
such party to proceed.
	 
	 	B.	 	Standing. Such party is duly organized, validly existing and in good
standing under the laws of the state of formation and such other states as may be
required for this transaction, and has all requisite power and authority to consummate
the transactions contemplated hereunder.
	 
	 	C.	 	Consents. No approval or consent is needed from any third party with
respect to the performance of obligations hereunder by such party.
	 
	 	D.	 	Breaches. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby do not and shall not
result in any material breach of any terms or conditions of any mortgage, agreement or
contract or obligation entered in to by such party (or in the case of Western Dubuque
by which the Biodiesel Facility is bound), nor, to the best of such party’s knowledge,
shall they violate any statute, regulation, judgment or decree of any court in which
such party may be bound (or in the case of Western Dubuque by which the Biodiesel
Facility may be subject).

-16-

 

	 	E.	 	Litigation. There is no action, suit or proceeding pending, or to the
best of such party’s knowledge, threatened against such party which might prevent or
delay such party’s performance of its obligations hereunder.
	 
	 	F.	 	Ownership and Operation. Western Dubuque (by its duly authorized
representative signing below) further represents and warrants that it will be the owner
of the Biodiesel Facility upon completion of its construction.

	18.	 	Notices. All notices required or desired to be given under this Agreement must be
given in writing, and shall be sent by registered or certified mail, return receipt requested,
or by courier service, addressed to the parties at their addresses set forth below, or such
other addresses as may subsequently be designated in writing by such party:

	 	 	 
	To Western Dubuque:

	 	Western Dubuque Biodiesel, LLC
	 

	 	10749 Jamesmeier Road
	 

	 	Farley, IA 52046
	 

	 	Attention: William Schueller
	 
	 	 
	With copy to:

	 	Brown, Winick, Graves, Gross, Baskerville & Schoenbaum, P.L.C.
	 

	 	666 Grand Avenue, Suite 2000
	 

	 	Des Moines, IA 50309-2510
	 

	 	Attn: William Hanigan
	 
	 	 
	To REG, Inc.:

	 	Renewable Energy Group, Inc.
	 

	 	406 1st Street, PO Box 128
	 

	 	Ralston, IA 51459
	 

	 	Attention: Nile Ramsbottom
	 
	 	 
	With copy to:

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

	 	115 East Lincolnway, Suite 200
	 

	 	Jefferson, IA 50129
	 

	 	Attention: John A. Gerken

Any notice or other communications made shall be deemed to have been given when received or
refused. A party may change its address for notice by giving notice of such address as
provided in this Section.

	19.	 	Annual Review of Agreement. This Agreement will be reviewed annually by the parties,
as they determine the best procedures for accomplishing such services, define their roles, and
react to changes in the industry. Any changes to the Agreement shall require the mutual
written consent of Western Dubuque and REG, Inc.

	20.	 	Miscellaneous.

	 	A.	 	Benefits. This Agreement shall bind and benefit the parties and their
permitted successors and assigns.

-17-

 

	 	B.	 	Assignment. Neither party may assign any of its rights in or delegate
any of its duties under this Agreement without the prior written consent of the other
party. Notwithstanding the foregoing, a party (“Assignor”) may without the need for
consent from the other party assign any or all of its rights, duties and obligations
under this Agreement to such party’s affiliate (“Assignee”), if such Assignee expressly
assumes all obligations not otherwise remaining with Assignor hereunder, and Assignor
nonetheless remains responsible hereunder.
	 
	 	C.	 	Governing Law. Iowa law shall govern the construction and enforcement
of this Agreement.
	 
	 	D.	 	Entire Agreement; Amendment. This Agreement contains the entire
agreement of the parties with respect to the subject matter and supersedes all prior
oral or written agreements and understandings. This Agreement may not be amended or
modified except in writing signed by both parties.
	 
	 	E.	 	Execution and Delivery. This Agreement may be executed in counterparts
and delivered by facsimile, which, taken together, shall be considered one instrument
and deemed an original.
	 
	 	F.	 	No Inference from Drafting. The parties both acknowledge that they
have been represented by counsel, and that this Agreement has resulted from extended
negotiations between the parties. No inference in favor of or against any party shall
be drawn from the fact that such party has drafted any portion of this Agreement.
	 
	 	G.	 	Waiver. The waiver by either party of a breach of any provision of
this Agreement will not constitute or be construed as a waiver of any future breach of
any provision of this Agreement.
	 
	 	H.	 	Survival. The provisions of Sections 7, 8, 10, 11 and 13 of this
Agreement shall indefinitely survive the expiration and termination of this Agreement.
	 
	 	I.	 	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.
	 
	 	J.	 	Enforcement and Interpretation. It is the desire and intent of the
parties hereto that this Agreement be enforced to the fullest extent possible under the
laws and public policies of the state of Iowa. Accordingly, if any particular
provision of this Agreement is adjudicated to be invalid or unenforceable, such portion
shall be deleted, and such deletion shall apply only to such provision with the
remainder of the Agreement remaining valid and enforceable, to be construed in
conformity with the parties’ initial intent. Further, to the extent any provision
hereof is deemed unenforceable by virtue of its scope or terms with respect to
geographical area or length of time, but may be enforceable by limitations thereon, the
parties agree that this Agreement shall remain enforceable to the fullest extent
possible after the application of such limitations.

-18-

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	RENEWABLE ENERGY GROUP, INC.	 	 	 	WESTERN DUBUQUE BIODIESEL, LLC
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By

	 	/s/ Nile D. Ramsbottom
 

	 	 	 	 	By
	 	/s/ William G. Schueller
 

	 
	 

	 	President
	(Title)	 	 	 	 	 	 	Chairman
	(Title)	 

-19-

 

Exhibit A to

Management and Operational Services Agreement (AAgreement@)

REG, Inc. and Western Dubuque

Listing of Administrative Services to be Provided

     Pursuant to the Agreement to which this is attached, and as a part of the services it will
perform thereunder, REG, Inc. will provide to Western Dubuque the administrative services as set
out hereafter. Such services will be included at no additional cost to Western Dubuque other than
the compensation set out under Section 3 of the Agreement, unless otherwise noted hereafter or
separately in the Agreement.

     Accounting:

			
	          $ 	 	Financial Statements

			
	          $ 	 	General Ledger Maintenance

			
	          $ 	 	Cash Management

			
	          $ 	 	Customer Statements

			
	          $ 	 	Accounts Receivable

			
	          $ 	 	Accounts Payable

			
	          $ 	 	Bank Reconciliation

			
	          $ 	 	Depreciation

			
	          $ 	 	Audit Preparation

			
	          $ 	 	External Audit (providing assistance to external auditors, the expense of
the external auditor to be paid by Western Dubuque)

     Human Resources:

			
	          $ 	 	Hiring

			
	          $ 	 	Training, Job Descriptions, Government Reporting with respect to personnel

			
	          $ 	 	Employee hand book, policies/procedures

			
	          $ 	 	Workers Comp

     Information Technology:

			
	          $ 	 	AS400 Software/Application Maintenance (REG, Inc. to be reimbursed by
Western Dubuque for REG, Inc.’s costs (including employee expenses) for
preparation of any special requested applications.)

			
	          $ 	 	Telephone/Network Services (Western Dubuque to reimburse REG, Inc. for the
cost of all equipment required and utility expenses incurred.)

			
	          $ 	 	Backup for Network

			
	          $ 	 	Backup for AS400 Files

			
	          $ 	 	Web Site Hosting

     Insurance Administration:

			
	          $ 	 	Compile Initial Insurance Specifications

			
	          $ 	 	Solicit Coverage Bids

			
	          $ 	 	Review Bids/Coverage Issues

-20-

 

			
	          $ 	 	Select Carriers to be Utilized (Subject to approval of Western Dubuque, with
Cost of Coverage to be paid by Western Dubuque)

			
	          $ 	 	Review Policies

			
	          $ 	 	Compile Insurance Summaries

			
	          $ 	 	COI setup dbase review

			
	          $ 	 	Certificate of Insurance Follow up

			
	          $ 	 	Claim Reporting Procedure

			
	          $ 	 	Claims Tracking

			
	          $ 	 	Claims Review

			
	          $ 	 	Claim reporting Follow up

			
	          $ 	 	Answer Coverage Questions

     Communications:

			
	          $ 	 	Press Releases

			
	          $ 	 	Writing for Website

			
	          $ 	 	Media Relations

			
	          $ 	 	Publicity for Annual Meeting

			
	          $ 	 	Newsletters (Western Dubuque to reimburse REG, Inc. for supply costs,
postage if applicable, and any outside printing services utilized.)

-21-

 

Exhibit B to

Management and Operational Services Agreement (“Agreement”)

REG, Inc. and Western Dubuque

Listing of Services to be Provided

     As further description of the services to be provided under the Agreement to which this is
attached, REG, Inc. sets out the following:

Management:

	 	•	 	General Manager with total compensation and benefits paid by REG, Inc.
	 
	 	•	 	Operations Manager with total compensation and benefits paid by REG, Inc.
	 
	 	•	 	Safety training and inspection
	 
	 	•	 	BQ9000 training, accreditation and program maintenance support
	 
	 	•	 	Consulting services for quality control and laboratory support
	 
	 	•	 	Consulting services for technical process support
	 
	 	•	 	Installation of Plant Information software program
	 
	 	•	 	Offering of new technologies to Western Dubuque as they become available

Procurement of Feed Stocks and Chemical Inputs, Risk Management:

	 	•	 	Arrange the purchase and delivery of all feed stocks and chemical inputs for account of
Western Dubuque
	 
	 	•	 	Recommend, oversee and manage Risk Management Program on behalf of and for account of
Western Dubuque
	 
	 	•	 	Submit periodic review of procurement program upon request
	 
	 	•	 	Leverage volume buying whenever possible for discounts
	 
	 	•	 	Establish long term supply arrangements with major processors
	 
	 	•	 	Provide commodity and raw materials market intelligence and information

Sales and Marketing:

	 	•	 	Sales and marketing of product through REG, Inc.’s nationwide sales, distribution and
off-site storage terminal channels
	 
	 	•	 	Invoicing and accounts receivable management
	 
	 	•	 	Customer servicing and arranging transportation, logistics and scheduling of shipments
for account of Western Dubuque
	 
	 	•	 	Monitoring of regulatory affairs affecting biodiesel industry
	 
	 	•	 	Attendance at regional and national shows and conventions to promote products
	 
	 	•	 	Utilization of viable advertising and promotion campaigns
	 
	 	•	 	Establishment of long terms sales contracts with large customers

-22-

 

*** Confidential material redacted and filed separately with the Commission

Exhibit C to

Management and Operational Services Agreement (“Agreement”)

REG, Inc. and Western Dubuque

Breakout of Compensation for Services

     Under the Agreement, Western Dubuque agrees at section 3(A) to pay a Monthly Fee to REG, Inc.,
all as set out under the Agreement.

     The following additional information is provided with respect to the Monthly Fee:

	 	 	 	 	 
	Provision of General Manager and Operations Manager
	 	*** per ***
	For providing feed stocks procurement, chemical inputs
procurement, and risk management program
	 	*** per ***
	For providing sales and marketing of all biodiesel
	 	*** per ***
	For providing all sales and marketing of glycerin and fatty acids
	 	*** per ***
	 
	 	 	 
	Total
	 	*** per ***

     Western Dubuque nonetheless understands and agrees that it is contracting for all services
under the Agreement, and will be paying the Monthly Fee as set out under the Agreement.

-23-

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