EXHIBIT B — ADDENDUM #3 to CENTRAL IOWA ENERGY, LLC TOLL PROCESSING AGREEMENT Corn Oil
Exhibit 10.5
Corn Oil
This Exhibit B — Addendum #3 to Central Iowa Energy, LLC Toll Processing Agreement (“Addendum
#3”) is entered into this 4th day of March, 2009, by and between Central Iowa
Energy, LLC, an Iowa limited liability company, of 0000 Xxxx 00xx Xxxxxx Xxxxx, Xxxxxx, Xxxx 00000
(“CIE”), REG Marketing & Logistics Group, LLC, an Iowa limited liability company (“REG Marketing”),
of 000 X. Xxxx Xxxxxx, XX Xxx 000, Xxxx, Xxxx 00000, and Renewable Energy Group, Inc., a Delaware
corporation (“REG, Inc.”), of 000 X. Xxxx Xxxxxx, XX Xxx 000, Xxxx, Xxxx 00000 (collectively the
“Parties”).
Recitals
WHEREAS, REG Marketing is a wholly owned subsidiary of REG, Inc.;
WHEREAS, CIE and REG Marketing entered in to a Central Iowa Energy, LLC Toll Processing
Agreement dated as of January 6, 2009 (“Agreement”), which has been extended pursuant to the
provisions of Exhibit E to the Agreement;
WHEREAS, CIE and REG Marketing desire to supplement and modify the Agreement with this
Addendum #3 specifically pertaining to the toll processing of Corn Oil;
| *** | Portions omitted pursuant to a request for confidential treatment and filed separately with the
SEC. |
WHEREAS, CIE and REG Marketing recognize and acknowledge that the Corn Oil processing
technology, know-how and particularized application as defined and discussed below is novel and
highly proprietary to REG, Inc., and further intend that all persons employed by, affiliated with
or acquiring knowledge of Technology by or through CIE shall be bound by the strictest requirements
of trade secret and confidentiality; and
WHEREAS, REG, Inc., with the strictest adherence to the trade secret and confidentiality
provisions of this Addendum #3, is willing to license the use of Corn Oil processing technology,
know-how and particularized application to CIE under the umbrella of the Central Iowa Energy, LLC
Toll Processing Agreement it has with REG Marketing.
NOW, THEREFORE, in consideration of the covenants contained herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties
agree as follows:
1. Additional Feedstock Specifications. As used in Addendum #3, “Corn Oil” means any
crude corn oil extracted from distillers dried grains in the ethanol process which meet the quality
specifications as appended to Addendum #3 as Attachment #1. For purposes of the Agreement, Corn
Oil constitutes Additional Feedstock which REG Marketing may deliver to the Facility to be
processed by CIE under the terms of the Agreement as modified herein.
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2. Yield Requirement for Additional Feedstock. The Parties agree that for purposes of
processing the Corn Oil, the Agreement at Section 6 is amended by changing the first sentence to
read:
“In consideration of the Toll Fee and handling of co-products agreed upon,
CIE agrees to deliver to REG Marketing not less than 1 Gal of Biodiesel for
every *** pounds of Corn Oil delivered by REG Marketing to the Facility
which equates to a weight yield of ***% (7.35 lbs biodiesel divided by ***
lbs of Feedstock).”
3. Economic Adjustment to Agreement. In view of the different characteristics of the
Additional Feedstock (Corn Oil) as set forth in Attachment #1 to this Addendum #3 as compared to
the other Feedstock listed within the various Addenda of Exhibit B to the Agreement, the Parties
agree to adjust the terms of Section 4 of the Agreement to provide for an incremental By-Product
Payment structure. Specifically, the payments due to REG Marketing by CIE shall be based upon the
following By-Product Payment formula:
(A) For any Order or Nomination, multiply the number of pounds of Additional Feedstock
delivered by REG Marketing to CIE for processing, times the average free fatty acid composition of
such Additional Feedstock as a percentage in excess of 4% (the composition to be based upon
supplier’s Certificate of Analysis, or as otherwise agreed by the Parties).
(B) Divide the result from “A” above by 80%.
| *** | Portions omitted pursuant to a request for confidential treatment and filed separately with the
SEC. |
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(C) Multiply the result from “B” above by the price received for the free fatty acids sold
from such Order or Nomination, which yields the required By-Product Payment.
(D) CIE agrees to pay such By-Product Payment to REG Marketing by wired funds to REG Marketing
within one (1) business day of delivery of the Biodiesel to REG Marketing with respect to such
Order or Nomination.
4. Trade Secret Protection: Of particular import to this Addendum #3 and the tolling
process for Corn Oil is the corn oil based technology, know-how, and particularized application of
said technology and know-how (more fully defined as “Technology” below), all of which is
confidential and proprietary to REG, Inc. REG, Inc. may or may not pursue patent protection of all
or a portion of the Technology. For purposes of the Agreement as it relates to Corn Oil tolling,
and specific to this Addendum #3, the Parties specifically acknowledge that all Technology has
economic value and should be protected from disclosure to the public in general, and prospective
competitors in particular. As a result, REG Marketing and CIE recognize and agree to modify and
supplement the confidentiality provisions of the Agreement found within Section 24 so as to
specifically cover and protect the Technology.
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5. Technology Rights, Ownership & Issues.
(A) Definition of Technology. For purposes of this Agreement, “Technology” shall mean all
expertise, knowledge, technology, Production Data (as defined below), other data, designs,
know-how, physical plans, drawings, works of authorship, inventions, equipment, equipment
configuration, processes, techniques, operating conditions, and, also, any other proprietary and/or
intellectual property including, without limitation, patents pending and patents covering such
property, developed by or licensed to REG, Inc. or its subsidiary corporations with respect to the
processing of Corn Oil for the production of biodiesel. As a part hereof, it is specifically
acknowledged by CIE that the know-how possessed by REG, Inc., and the particularized application of
said know-how in the refinement of biodiesel from corn oil, constitutes a critical component of
Confidential Information as that term is defined within Addendum #3.
(B) Production Data. Production Data means all data derived from the toll process of Corn Oil
at the CIE tolling facility in Newton, Iowa. CIE agrees that REG, Inc., or any of its subsidiary
corporations, may collect, maintain and retain all such Production Data. Further, consistent with
Product Data constituting a part of Technology, CIE acknowledges and agrees that all right, title
and interest in and to the Production Data shall belong solely to REG, Inc.
(C) Ownership of Technology. CIE and REG Marketing acknowledge and agree that the Technology
is fully owned by and is highly proprietary to REG, Inc.
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6. Privity of Contract. CIE and REG Marketing acknowledge and agree that REG, Inc.
has a fully vested interest in this Addendum #3 and, further, is in privity of contract with CIE
and its Affiliates (defined below) so as to be able to enforce the confidentiality provisions or
other provisions of this Addendum #3 and, as may be necessary, the Agreement.
7. Definition of Affiliate. For purposes of this Addendum #3, “Affiliate” with
respect to CIE shall mean any Contractor or Consultant of CIE and/or any person that is employed or
otherwise under the direction and control of any Contractor or Consultant of CIE. For purposes of
this definition, the term “direction and control” shall mean the possession, direct or indirect, of
the power or authority to direct or cause the direction of said entity or said personnel’s work or
production activities, whether by contract or otherwise.
8. Grant of License. Subject to the terms and conditions hereof, REG, Inc. hereby
grants to CIE a limited, non-transferable, non-exclusive, revocable license to use the Technology
for and in connection with the processing of Corn Oil for the production of biodiesel at its
facility located in Newton, Iowa. This grant is limited to the Term of Addendum #3. CIE shall
make use of the rights granted hereunder only as permitted in Addendum #3, and in compliance with
all laws, rules and regulations applicable to the use of
such rights. The rights granted under this License shall be limited to CIE’s Xxxxxx facility.
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9. Term of Addendum #3. The duration of this Addendum #3 shall be the duration of
the Agreement, which Agreement has been extended by the execution of Exhibit E to and including the
30 day of March, 2010. REG Marketing however, may terminate this Addendum
#3 on thirty (30) days written notice for any reason. In the event, however, that REG, Inc. has
concerns regarding the protection employed and enforced by CIE related to the Technology licensed
to it by REG, Inc., this Addendum #3 may be immediately terminated by REG, Inc. with written
notice.
10. Improvements.
(A) Improvement Defined. Any future improvement, modification, development, enhancement or
derivation of the any aspect of the Technology defined above shall collectively be referred to as
“Improvements”.
(B) Ownership of Improvements. It is acknowledged and agreed that any and all Improvements
are solely and exclusively the property of REG, Inc. Neither CIE, nor any Affiliate of CIE shall
have any ownership right or other right whatsoever to Improvements.
(C) Improvements — Use Not Automatically Implemented. CIE’s rights to the Technology shall be
limited to the Technology existing as of the Effective Date and shall not include Improvements
unless REG, Inc. at its sole
discretion by or through REG Marketing installs or otherwise implements said Improvements in
the Corn Oil toll processing operation at CIE.
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(D) Improvements — Developed or Assisted by CIE or Affiliates of CIE. CIE and all Affiliates
of CIE hereby assign to REG, Inc. all of CIE’s and/or Affiliates right, title and interest in and
to all Improvements resulting in any way from CIE’s or Affiliates access to, use of, and/or
research or experimentation with the Technology. CIE further covenants to ensure that all of CIE’s
Affiliates who have used, worked with, researched, or otherwise have had access to the Technology
agree to assign to REG, Inc. all right, title and interest in and to all Improvements. As a part
of this obligation, CIE and each Affiliate of CIE agree to fully cooperate and undertake all
actions at the expense of REG, Inc., if any, reasonably necessary to perfect said assignment and/or
to perfect or otherwise obtain all further legal protection in the Improvements, including patents,
for the benefit and ownership of REG, Inc.
11. Right to Conduct Research. CIE hereby grants REG, Inc., at its expense, the right
to conduct experiments, tests or research of new technology at CIE’s Xxxxxx facility for the Term
of Addendum #3. This authorization is granted based upon the understanding that such experiments,
tests or research will not unreasonably interfere with production of biodiesel.
(A) Ownership of Research Results. It is acknowledged and agreed that any and all
Improvements, or other newly developed or discovered technical information that result from any
such experiments, tests or research,
whether such technical information falls within or without the definition of Technology, are
solely and exclusively the property of REG, Inc. All data, research findings, equipment
modifications, process modifications, and all other information derived in whole or part from such
experiments, tests, or research shall hereinafter be referred to as “Research Results”. Neither
CIE, nor any Affiliate of CIE shall have any ownership right or other right or interest whatsoever
to Research Results.
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(B) Research Results — Use Not Automatically Conferred. CIE’s rights under this Addendum #3
are limited to the Technology existing as of the Effective Date and shall not include Research
Results. Further, neither REG, Inc., nor any of its subsidiary corporations shall have any
obligation to provide Research Results for use by CIE. REG, Inc. may, however, incorporate the
results of Research Results into the tolling process for Corn Oil at its sole discretion.
(C) Research Results — Developed or Assisted by CIE or Affiliate of CIE.
(1) To the extent that CIE or any Affiliate of CIE may claim a contribution, ownership or any
other interest in Research Results, CIE and/or Affiliate of CIE hereby assign to REG, Inc., its
successors, assigns, or designees all of CIE’s or Affiliates right, title and interest in and to
Research Results. CIE further covenants to ensure that all of CIE’s Affiliates who have used,
worked with, or otherwise have had access to the research conducted on
behalf of REG, Inc. and/or any Research Results hereby agree to assign to REG, Inc., its
successors, assigns or designees, any and all right, title and interest in and to all such Research
Results.
(2) As to the obligation conveyed by Section 11(c)(1) above, CIE and each Affiliate of CIE
agree to fully cooperate and undertake all actions at the expense of REG, Inc., if any, reasonably
necessary to perfect said assignment and/or to perfect or otherwise obtain all further legal
protection in the Research Results, including but not limited to patents, for the benefit and
ownership of REG, Inc.
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12. Confidential Information.
(A) Confidentiality. The Technology licensed by REG, Inc. to CIE, and utilized by CIE under
this Addendum #3 is an emerging technology. REG, Inc. has developed novel and innovative methods
and processes for the conversion of Corn Oil into biodiesel. As a result, the Technology as
defined above has significant monetary value and is of the highest proprietary importance to REG,
Inc.
(B) Drawings, Documents and Materials. Any and all drawings, documents, and materials
(hardcopy, electronic, or in any other form) that in any way relate to or are associated with the
Technology and/or are confidential shall be returned by CIE to REG, Inc. upon the cessation of the
biodiesel/corn oil processing operation under Addendum #3, the termination of Addendum
#3, and/or the termination of the Agreement. Further, CIE shall certify to REG, Inc. in
writing that all such Confidential Information has been returned.
(C) Protection of Technology. CIE acknowledges and agrees that it will only use Technology
for purposes of executing the requirements of the Agreement pursuant to this Addendum #3 and,
further, that it will independently undertake all reasonable steps to protect the Technology from
disclosure or dissemination.
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(1) Implementation of Additional Protections. CIE agrees to implement the following
additional protections at the request of REG Marketing:
(a) Restriction of Access. CIE agrees that it will not allow members of the general public,
or others persons not employees of CIE or Affiliate Contractor/Consultants (collectively referred
to as “Public”) from having access any locations of its facility in Xxxxxx wherein the Corn Oil
processing equipment is housed. Further, CIE will not publish or otherwise disseminate Technology
to the Public and will act to reasonably prevent the Public from gaining access to Technology that
is contained or otherwise used within the CIE Xxxxxx facility.
(b) CIE Personnel, Directors and Board Members. CIE agrees that as a condition of employment,
continued or new, it will require each of its employees, each of its management personnel, each of
its Directors and
Board Members to execute the CIE Employee Technology Acknowledgment & Assignment Agreement
(“CIE Personnel Acknowledgment”), a copy of which is appended as Attachment #2.
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(c) Contractors & Consultants. The only Contractors and/or Consultants that will be allowed
access to any locations of CIE’s facility in Xxxxxx wherein the Corn Oil processing equipment is
housed, or who will have access to design and process drawings or other Technology will be those
Contractors and/or Consultants which by virtue of their respective contracts with CIE have accepted
duties and responsibilities conferred by CIE that compel each said Contractor and/or Consultant to
be allowed such access. CIE agrees that as a condition of awarding any contract to a Contractor or
Consultant, or as a condition of continuing with contracts already awarded, CIE shall require each
entity through their respective management personnel, duly authorized in advance, to execute the
Contractor/Consultant Employee Technology Acknowledgment & Assignment Agreement
(“Contractor/Consultant Acknowledgment”), a copy of which is appended as Attachment #3.
(d) Contractors & Consultants Personnel. CIE agrees that as a condition of awarding a
contract to any Contractor or Consultant, or as a condition of continuing with contracts already
awarded, CIE shall require all personnel of each Contractor or Consultant to execute the
Contractor/Consultant Employee Technology Acknowledgment & Assignment
Agreement (“Contractor/Consultant Acknowledgment”), a copy of which is appended as Attachment
#4.
(e) Contractor or Consultant Refusal. CIE acknowledges that any Contractor or Consultant that
refuses or otherwise fails to execute the Contractor/Consultant Acknowledgment shall be denied
access to CIE’s Xxxxxx facility and shall be denied access to any Technology. CIE further
acknowledges that any employee or other personnel of a Contractor or Consultant that refuses or
otherwise fails to execute the Contractor/Consultant Acknowledgment shall be denied access to CIE’s
Xxxxxx facility and shall be denied access to any Technology.
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(2) Delivery & Possession of Acknowledgments. CIE shall deliver to REG, Inc. all original
executed Acknowledgments (Attachments #2 — #4 to this Addendum #3) without delay.
(3) Audit. REG, Inc. shall have the right at its expense to conduct annual audits, or audits
on a more frequent basis, of the personnel records and contractor/consultant records of CIE for the
purpose of confirming that all corporate entities and individuals have duly executed the
Acknowledgments as required above.
(4) Exit Communications. CIE agrees that with any of its personnel who should leave
employment with the company over the course of the next ten (10) years:
(a) It will timely provide a letter to each former employee reminding them of their
obligations of confidentiality under the CIE Personnel Acknowledgment. With this correspondence,
CIE shall also provide to such individuals a copy of their executed CIE Personnel Acknowledgment.
(b) Should CIE learn that any departed employee has obtained new employment with a company
that is involved or has the capability to be involved in the production of biofuels, CIE shall
without delay have delivered to the new employing entity a copy of said former employee’s executed
CIE Personnel Acknowledgment with a caution that it be honored by the new employing entity.
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(c) Copies of all correspondence shall be timely provided to REG, Inc. in a timely fashion.
13. Equitable Relief. CIE acknowledges that any violation of the provisions of
Sections 4, 5, 10, 11 and 12 of Addendum #3 would cause REG, Inc. and its subsidiary corporations
immediate and irreparable harm for which there is no adequate compensation afforded by monetary
damages. Therefore, in the event of any such breach, REG, Inc., or any of its subsidiary corporate
entities, shall be entitled to seek preliminary and permanent injunctive relief, an order for
specific performance, and/or any other equitable relief that a court may determine to be
appropriate. Such relief shall be granted to REG, Inc. or any of its subsidiary corporations, as
provided in the appropriate Acknowledgment and Assignment (Addendum #3, Attachments #2 — #4).
14. Other Terms, Provisions, and Language Unchanged. Except as expressly modified or
supplemented within this Addendum #3, all other terms, provisions, and/or Language of the Agreement
shall remain in full force and effect.
15. Conflict of Terms. In the event of a conflict between the terms and provisions of
this Addendum #3 and the terms and provisions of the Agreement, the terms and conditions of this
Addendum #3 shall control.
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16. Survival. Any and all duties, responsibilities and obligations associated with or
related to the acknowledgments, assignments, protection of Technology, and the confidentiality
requirements as set forth within this Addendum #3 and/or as contained within the Agreement shall
survive any expiration or termination of the Agreement and/or this Addendum #3 to the Agreement.
IN WITNESS WHEREOF, Central Iowa Energy, LLC, REG Marketing & Logistics Group, LLC, and
Renewable Energy Group, Inc. have fully authorized the below representative to fully bind them and,
further, each has duly and appropriately executed this Addendum #3 as of the date first shown
above.
| CENTRAL IOWA ENERGY, LLC | REG MARKETING & LOGISTICS GROUP, LLC |
|||||||||
By:
|
/s/ Xxxxx Xxxxxxxx
|
By: | /s/ Nile X. Xxxxxxxxxx
|
|||||||
| Title: Chairman | Title: President | |||||||||
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| RENEWABLE ENERGY GROUP, INC. | ||||
By:
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/s/ Nile X. Xxxxxxxxxx
|
|||
| Title: President | ||||
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Attachment #1 to
Exhibit C — Addendum #3
Exhibit C — Addendum #3
REG Feedstock Specifications
| Free Fatty Acid | Insoluble | Color (FAC | ||||||||||||||||||
| (as Olecic) | Moisture | Impurities | Total MIU | Scale) | ||||||||||||||||
Analytical Method |
||||||||||||||||||||
| AOCS Ca 5a-40 | AOCS Ca 2c-25 | AOCS Ca 3a-46 | AOCS Cc 13a-43 | |||||||||||||||||
Feedstock Type |
||||||||||||||||||||
DDG Corn Oil |
< 15 | < 1.0 | < 0.5 | < 2.5 | Typical | |||||||||||||||
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