ASSET PURCHASE AGREEMENT
By and Among
BLACKHAWK BIOFUELS, LLC,
RENEWABLE ENERGY GROUP, INC.,
BIOFUELS COMPANY OF AMERICA, LLC,
BIODIESEL INVESTMENT GROUP, LLC
and
BUNGE NORTH AMERICA, INC.
Dated as of March 14, 2008
TABLE OF CONTENTS
Page
]
ARTICLE
I PURCHASE
AND SALE OF ASSETS
Section
1.1 Purchase
and Sale
Section
1.2 Consideration;
Purchase Price Allocation
Section
1.3 Closing
Section
1.4 Procedure
at Closing
ARTICLE
II REPRESENTATIONS
AS TO THE COMPANY
Section
2.1 Organization
and Good Standing
Section
2.2 Noncontravention;
Authority; Enforceability
Section
2.3 Subsidiaries
Section
2.4 Title
to and Condition of the Assets
Section
2.5 Real
Property
Section
2.6 Material
Adverse Changes
Section
2.7 Environmental
Compliance
Section
2.8 Contracts
and Commitments
Section
2.9 No
Litigation Ÿ
Section
2.10 Tax
Matters
Section
2.11 Compliance
with
Laws
Section
2.12 Permits
Section
2.13 Insurance
Section
2.14 Employee
Matters
Section
2.15 Benefit
Plans
Section
2.16 Intellectual
Property
Section
2.17 Brokers
Section
2.18 Accuracy
of
Statements
Section 2.
19 Purchase
Entirely for Own Account
Section
2.20 Disclosure
of Information; Due Diligence
Section
2.21 Investment
Experience; Accredited Status
Section
2.22 Restricted
Securities
Section
2.23 Investment
Company
ARTICLE
III REPRESENTATIONS
OF REG AND THE PURCHASER
Section
3.1 Organization
and Existence
Section
3.2 Authority
Section
3.3 Noncontravention
Section
3.4 Capitalization;
REG Common
Stock
Section
3.5 Financial
Information
Section
3.6 Undisclosed
Liabilities
Section
3.7 Material
Adverse Changes
Section
3.8 Brokers
ARTICLE
IV NO
ASSUMPTION OF LIABILITIES
ARTICLE
V COVENANTS
Section
5.1 Access
to Information
Section
5.2 Pre-Closing
Activities
Section
5.3 Efforts
to Consummate
Section
5.4 Exclusive
Dealing19
Section
5.5 Supplementation
and Amendment of Schedules
Section
5.6 Confidentiality
Section
5.7 Publicity
Section
5.8 Preliminary
Testing; Performance Testing
Section
5.9 Bunge
Oil Supply Agreement; Services Agreement
Section
5.10 Limitations
on Disposition and Legend
ARTICLE
VI CONDITIONS
TO CLOSING
Section
6.1 Conditions
to Obligations. of REG and the Purchaser
Section
6.2 Conditions
to Obligations of the Sellers and the Company
Section
6.3 Documents
to be Delivered at the Closing
ARTICLE
VII INDEMNIFICATION
Section
7.1 Indemnification
by the Sellers
Section
7.2 Indemnification
by the Purchaser
Section
7.3 Notice
and Defense of Third Party Claims
Section
7.4 Limitations
of Liability
Section
7.5 Survival
Section
7.6 Waiver
of Certain Damages
Section
7.7 Express
Negligence
ARTICLE
VIII TERMINATION
Section
8.1 Termination
Section
8.2 Effect
of Termination; Liquidated
Damages
ARTICLE
IX MISCELLANEOUS
Section
9.1 Survival
Section
9.2 Amendment
and Modification; Waiver
Section
9.3 Notices
Section
9.4 Further
Assurances
Section
9.5 Assignment
Section
9.6 Governing
Law
Section
9.7 Severability
Section
9.8 Counterparts
Section
9.9 Facsimile
Signatures
Section
9.10 No
Third-Party
Beneficiaries
Section
9.11 Interpretation
Section
9.12 Entire
Agreement
Section
9.13 Expenses
Section
9.14 Jury
Waiver
EXHIBITS AND SCHEDULES
Exhibit
A Definitions
Exhibit
B Escrow
Agreement
Exhibit
C Oil
Feedstock Supply Agreement
Exhibit
D Services
Agreement
Exhibit
E Bill
of Sale
Exhibit
F Assignment
and Assumption Agreement
Exhibit
G Confidentiality
Agreement
Exhibit
H Stockholder
Agreement
Exhibit
I Registration
Rights Agreement
Exhibit
J Preliminary
Testing Description
Schedule
2.2 Noncontravention
Schedule
2.4 Title
to Assets
Schedule
2.5(a) Description
of Real Property
Schedule
2.5(b) Permitted
Liens
Schedule
2.5(c)(vi) Right
of First Offer, etc.
Schedule
2.5(c)(viii) Utilities
Exceptions
Schedule
2.7 Environmental
Compliance
Schedule
2.8(b) Breach
of Assumed Contract
Schedule
2.8(c) Notice
of Claims Under Assumed Contract
Schedule
2.8(d) Consents
and Notices
Schedule
2.11 Compliance
with Laws
Schedule
2.12 Permits
Schedule
2.13 Insurance
Schedule
2.14 Employee
Matters
Schedule
2.15 Benefit
Plans
Schedule
2.16 Intellectual
Property
Schedule
2.17 Brokers
Schedule
3.5 REG
Financial Information
Schedule
3.6 Undisclosed
Liabilities
Schedule
4 Assumed
Contracts
Schedule
5.2 Pre-Closing
Activities
ASSET PURCHASE AGREEMENT
This Asset Purchase
Agreement (the " Agreement
") is made as of this 14th day of March, 2008 (the "
Effective
Date "), by and among Blackhawk Biofuels, LLC, a
Delaware limited liability company (" Purchaser
"), Renewable Energy Group, Inc., a Delaware corporation ("
REG "),
Biofuels Company of America, LLC, an Illinois limited
liability company (the " Company
"), Biodiesel Investment Group, LLC, a Delaware limited
liability company (" BIG "),
and Bunge North America, Inc., a New York corporation ("
Bunge ",
and together with BIG, the " Members
" and each, a "Member" and Bunge, BIG and the Company
together are referred to herein as "Sellers" and each a
"Seller"). Certain capitalized terms not defined in the text
of this Agreement are defined in Exhibit
A attached hereto.
WHEREAS, the Company is
constructing a biodiesel production facility located in
Danville, Illinois (the "Facility");
WHEREAS, BIG and Bunge own,
beneficially and of record, one hundred percent (100%) of the
outstanding membership interests of the Company (the "
Company
Membership Interests ");
WHEREAS, the Purchaser
desires to purchase and assume from the Company, and the
Members desire that the Company shall sell, transfer and
assign to the Purchaser, all of the Assets of the Company,
upon the terms and subject to the conditions set forth in
this Agreement;
WHEREAS, a portion of the
consideration to be delivered consists of shares of common
stock of REG; and
WHEREAS, each of the
parties hereto is making certain representations, warranties,
covenants and indemnities herein to induce the others to
enter into this Agreement.
NOW, THEREFORE, in
consideration of the respective representations, warranties,
covenants and indemnities contained herein and for other good
and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company, the Members, REG
and the Purchaser hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section
1.1 Purchase and Sale. Subject to the terms
and conditions of this Agreement, at the Closing (as defined
in Section
1.3
hereof), the Company agrees to sell, transfer, assign, convey
and deliver to the Purchaser, and the Purchaser agrees to
purchase and assume from the Company, all of the right, title
and interest in and to the Assets (other than Excluded
Assets), free and clear of all Encumbrances except for
Permitted Liens.
Section
1.2 Consideration; Purchase Price
Allocation. In consideration of the purchase and sale
described above, Purchaser, and as to the common stock of REG
in Sections 1.2
b and 1.2(c)
only REG, shall pay to the Company, in the manner and subject
to the conditions set forth below, the following (the "
Purchase
Price "):
(a) Cash.
On the Closing Date, Purchaser shall pay (i) to the Company
Five Million U.S. Dollars (U.S. $5,000,000), by wire transfer
of immediately available funds (the " Cash Purchase
Price ") and Bunge and BIG hereby agree as between
themselves that upon distribution by the Company to the
Members of the Cash Purchase Price (less appropriate reserves
established by the Company, if any), Bunge shall
receive [Dollars ($)] of the Cash Purchase Price
and BIG shall receive [Dollars ($)] of the Cash Purchase
Price, and (ii) the IFA Payment to the IFA by wire transfer
of immediately available funds to such account as designated
by IFA;
(b) REG
Common Stock. On the Closing Date, REG shall issue and cause
to be delivered by Purchaser to the Company, and Purchaser
shall deliver to the Company One Million Eight Hundred
Eighty-two Thousand Nine Hundred Twenty-seven (1,882,927)
shares of the common stock of REG (the " REG Common
Stock "), as adjusted for any post-Effective Date
dividend, stock split, recapitalization or reorganization by
REG, by delivery of REG Common Stock certificates to the
Company. Bunge and BIG hereby agree as between themselves
that upon distribution by the Company to the Members of the
REG Common Stock (less appropriate reserves established by
the Company, if any), Bunge shall receive [___________(____)]
shares of REG Common Stock and BIG shall receive
[______________(_______)] shares of REG Common Stock;
C
|
(c)
|
Escrow.
On the Closing Date, Purchaser shall deposit Two Hundred Fifty
Thousand Dollars ($250,000) (the " Escrowed Cash
") and REG shall deposit Ninety-Seven Thousand Five Hundred
Sixty-One (97,561) shares of the common stock of REG, as adjusted
for any post-Effective Date dividend, stock split, recapitalization
or reorganization by REG by delivery of stock certificates in the
name of the Company (the " Escrowed Stock
" and together with the Escrowed Cash, the " Escrow Amount
") into an escrow account (the " Escrow Fund
"), to be maintained by an escrow agent reasonably acceptable to
the parties (the " Escrow Agent
") in accordance with the terms of an Escrow Agreement in the form
attached hereto as Exhibit B (the
" Escrow
Agreement "). The Escrow Fund shall be used for the purpose
specified in Article VII herein. The Escrow Fund (less any amounts
for indemnifiable Losses to the extent set forth in Article VII and
the Escrow Agreement) shall be disbursed to the Company in
accordance with the terms of the Escrow Agreement on the one year
anniversary of the Closing Date. Purchaser and the Company shall
bear an equal portion of the fees and expenses of the Escrow Agent,
with the portion borne by the Company to be deducted from the
Escrow Fund. Bunge and BIG hereby agree as between themselves that
upon distribution by the Company to the Members of the Escrow Fund
(less appropriate reserves established by the Company, if any),
Bunge shall receive ___% of the Escrowed Cash and ___% of the
Escrowed Stock and BIG shall receive ___% of the Escrowed Cash and
___% of the Escrowed Stock; provided, that a Member's percentage of
the Escrow Fund shall be reduced by the amount of any indemnifiable
Loss made pursuant to the terms of the Escrow Agreement and this
Agreement applicable to such Member.
|
|
(d)
|
Balance
Differential Payment. In the event the outstanding principal
balance, together with any accrued, but unpaid interest, owed by
the Company to Fifth Third Bank under the Construction Loan
Agreement (the " Bank Balance
") [to be discussed - plus the Assumed Liabilities less the DCEO
Grant Credit] (collectively, the " Closing
Indebtedness ") is less than $24,650,000 as of the Closing
Date, Purchaser shall pay to the Company on the Closing Date the
difference between $24,650,000 and the Closing Indebtedness in cash
by wire transfer of immediately available funds (the " Balance Differential
Payment "). Bunge and BIG hereby agree as between themselves
that Bunge shall receive 22.2% of the Balance Differential Payment
and BIG shall receive 77.8% of the Balance Differential Payment. To
determine the Balance Differential Payment, if any, the Company
shall deliver to Purchaser (i) a statement of account from Fifth
Third Bank of the Bank Balance as of the Closing Date, and (ii) a
statement of the Assumed Liabilities as of the Closing Date,
together with supporting documentation. The amount of the Bank
Balance plus Assumed Liabilities less the DCEO Grant Credit shall
not exceed $24,650,000.
|
|
(e)
|
Purchase
Price Allocation. The Purchase Price shall be allocated among the
Assets as the Company, the Members, Purchaser and REG shall
mutually agree, in writing, at the Closing. After the Closing, the
Company, the Members and Purchaser shall make consistent use of
such mutually agreed allocation for all tax purposes and in all
filings, declarations and reports with the IRS in respect thereof.
Purchaser shall prepare and deliver IRS Form 8594 to the Company in
accordance with such mutual agreement within forty-five (45) days
after the Closing Date for filing with the IRS.
|
|
(f)
|
Value
of the Common Stock of REG. The parties hereto agree that the
common stock of REG making up the REG Common Stock delivered at
Closing and the Escrowed Stock shall be valued at the greater of
$10.25 per share and its Fair Market Value for all purposes under
this Agreement, including without limitation, any purchase price
allocations and any agreement or right of the Members or the
Company to satisfy their indemnification obligations under Article
VII by the surrender of the common stock of REG.
|
Section
1.3 Closing. Subject to satisfaction or
waiver of the conditions to closing set
forth
in Sections 6.1 and 6_2, the closing of the purchase provided
for in Section 1.1 of this
Agreement
(the "Closin ") shall take place at the offices of Nyemaster,
Goode, West, Hansell &
O'Brien,
P.C., counsel to REG, in Des Moines, Iowa at 10:00 a.m. local
time on the next
Business
Day after the conditions to closing set forth in Sections 6.1
and 6.2 have been satisfied
or
waived, or at such other place and time as may be mutually
agreeable to the Company, the
Members,
REG and the Purchaser (such date and time referred to herein
as the "Closing Date").
The
parties anticipate the Closing Date to occur on or before
April 11, 2008 (the "Target Closing
Date").
Section
1.4 Procedure at Closing. At the Closing,
the parties agree that the following
shall
occur:
(a) Each of the conditions
precedent (as applicable) in Section
6.1 shall have been satisfied, or such
condition(s) shall have been expressly waived in writing by
the
Purchaser
and REG. The Company and/or the Members shall deliver to
Purchaser and REG all of the documents in Section
6.3 .
(b) Each of the conditions
precedent (as applicable) in Section
6.2 shall have been satisfied, or such condition(s)
shall have been expressly waived in writing by the Company
and the Members. REG and the Purchaser shall deliver to the
Members and the Company all of the documents required in
Section
6.3 .
ARTICLE II
REPRESENTATIONS AS TO THE COMPANY
Each Seller, severally as
to itself only and not jointly as to or with any of the
others, respectively, represents and warrants to the
Purchaser as follows:
Section
2.1 Organization and Good Standing. The
Company is a limited liability company duly organized and
validly existing under the laws of the State of Illinois and
has all requisite power and authority to carry on its
business as is now being conducted and as is presently
anticipated being conducted, and with respect to a Member,
such Member is duly organized, validly existing and in good
standing under the laws of the state of its organization. The
Company is not qualified as a foreign limited liability
company in any other jurisdiction. The Company has at all
times been operated in material compliance with applicable
Legal Requirements and the Company's Organizational
Documents.
Section
2.2 Noncontravention; Authority;
Enforceability. Except as disclosed on Schedule
2.2 of the Company Disclosure Schedule, neither the
execution and delivery by such Seller of this Agreement and
the Transaction Documents, as applicable, nor the
consummation of the transactions contemplated hereby or
thereby, nor compliance with any of the provisions hereof or
thereof, will (a) violate any provision of its Organizational
Documents or any resolutions adopted by its members,
stockholders, board of managers or board of directors, (b)
result in a violation of any license, permit, order, writ,
injunction, decree, judgment, or ruling of any court or
Governmental Authority, or any law, rule, or regulation
applicable to such Seller, (c) conflict with, result in a
breach of, or constitute (or, with due notice or lapse of
time or both, would constitute) a default under, or give rise
to any right of termination, acceleration or cancellation
under, any indenture, agreement, contract, license,
arrangement, understanding, evidence of indebtedness, note;
lease or other instrument which constitutes an Asset or to
which such Seller or any of the Assets is bound, (d) result
in the creation or imposition of any lien (other than
Permitted Liens), charge, restriction, claim or Encumbrance
of any nature whatsoever upon the Company or the Assets or
(e) require any consent or approval of, or notice to, or
filing or registration with, any Person, except for those
consents, approvals, notices, filings, or registrations that
have been obtained, given, or made, as the case may be, and
that are unconditional and in full force and effect. Such
Seller has the requisite corporate or limited liability
company power and authority to execute and deliver this
Agreement and the Transaction Documents to which such Seller
is a party, to perform its obligations hereunder and
thereunder, and to consummate the transactions contemplated
by .this Agreement and the Transaction Documents. The Company
has authorized and approved by all requisite action of the
Board of Managers and members of the Company, this Agreement,
the Transaction Documents and the transactions contemplated
hereby and thereby. The execution, delivery and performance
by such
Seller
of this Agreement and the Transaction Documents, as
applicable, and the consummation by such Seller of the
transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate or limited
liability company action. This Agreement and the Transaction
Documents to which such Seller, as applicable, is a party have
been duly executed and delivered by such Seller and are the
valid and binding obligations of such Seller enforceable
against such Seller in accordance with the terms hereof and
thereof, except as enforceability may be limited by
bankruptcy, insolvency, moratorium, fraudulent conveyance and
other similar laws affecting creditors' rights generally and
by general principles of equity.
Section
2.3 Subsidiaries. The Company does not own,
directly or indirectly, any interest in any other
Entity.
Section
2.4 Title to and Condition of the Assets.
(a) The
Company has, and at the Closing shall transfer to Purchaser,
good and marketable title to the Assets, including without
limitation the Assets described on Schedule
2.4 , free and clear of all. Encumbrances other than
Permitted Liens. With respect to those assets which are
leased, except as set forth on Schedule
2.4 , the Company is in compliance with each such
lease and holds a valid leasehold interest, free and clear of
all Encumbrances other than Permitted Liens. As of the
Closing Date, the tangible Assets shall be in sound operating
condition and repair, normal wear and tear
excepted.
(b) As
of the Closing Date, the Assets set forth on Schedule
2.4 constitute all of the assets which have been
delivered to the Facility under the Fagen Agreement and the
De Smet Agreement.
Section
2.5 Real Property.
(a) The
Company does not own any real property. Schedule
2.5(a) of the Company Disclosure Schedule contains a
legal description of each parcel of real property that the
Company leases, subleases, licenses, occupies, or uses in
connection with the operation of the business of the Company
as presently conducted or proposed to be conducted upon
completion of the Facility (the " Real
Property "). The parcels of Real Property which are
leased or subleased by the Company and which leases or
subleases will be assigned to Purchaser at the Closing, as
identified on Schedule
2.5(a) , are referred to herein as " Leased Real
Property ", and the parcels of Real Property which are
licensed or sublicensed by the Company and which will be
assigned to Purchaser, as identified on Schedule
2.5(a) , are referred to herein as " Licensed Real
Property ". Except as set forth on Schedule
2.5(a) of the Company Disclosure Schedule, no right to
use or occupy any portion of the Leased Real Property has
been granted to any Person other than Company nor are there
any parties in possession of any portion of the Leased Real
Property, whether as tenants, subtenants, trespassers or
otherwise, except the Company.
(b) The
Company has a valid leasehold interest in the Leased Real
Property, free and clear of all Encumbrances, other than
Permitted Liens. To the Knowledge of the Company, the Company
has a valid license or sublicense to occupy and use the
Licensed Real Property. Schedule 2.5
(b) of the Company Disclosure Schedule describes
all
all
lawful claims that, if unpaid, could become an Encumbrance
against the Leased Real Property or any portion
thereof.
(c) With
respect to each parcel of Leased Real Property and the
buildings, structures, improvements and fixtures
thereon:
|
(i)
|
No
condemnation or eminent domain taking of the Leased Real Property,
or any portion thereof, has occurred. There is no pending, and to
the Knowledge of the Company, threatened or contemplated,
appropriation, condemnation, eminent domain or like proceeding
affecting the Leased Real Property or any part thereof or of any
sale or other disposition of the Leased Real Property or any part
thereof in lieu of condemnation.
|
(ii) Except
for assessments occurring on a regular basis in accordance
with applicable Legal Requirements, there is no pending or,
to the Knowledge of the Company, contemplated reassessment of
any parcel included in the Leased Real Property that is
reasonably expected to increase the real estate tax
assessment for such properties.
(iii) There is no pending,
or to the Knowledge of the Company, contemplated proceeding
to rezone any parcel of the Leased Real Property. To the
Knowledge of the Company, the uses for which each parcel of
the Leased Real Property are zoned do not restrict, or in any
manner impair, the current use of the Leased Real Property or
the proposed use by the Purchaser. To the Knowledge of the
Company, the Company has not received notice of any violation
of any applicable zoning law, regulation or other Legal
Requirement, related to or affecting the Leased Real
Property.
|
|
(iv)
To the Knowledge of the Company, all buildings, structures and
other improvements on the Leased Real Property, including but not
limited to driveways, garages, landscaped areas and sewer systems,
and all means of access to the Leased Real Property, are located
completely within the boundary lines of the Leased Real Property
and do not encroach upon or under the property of any other Person
or entity. No buildings, structures or improvements constructed on
the property of any other Person encroach upon or under the Leased
Real Property.
|
|
(v)
|
To
the Knowledge of the Company, the use of the Leased Real Property,
or any portion thereof, does not violate or conflict with (i) any
covenants, conditions or restrictions applicable thereto or (ii)
the terms and provisions of any contractual obligations relating
thereto.
|
|
|
(vi)
Except as set forth on Schedule
2.5(c)(vi) of the Company Disclosure Schedule, none of the
Leased Real Property is subject to any right of first offer, right
of first refusal, option or other agreement for the sale or lease
thereof.
|
|
(vii)
|
The
Company has good and valid rights of ingress and egress to and from
all of the Leased Real Property (including between separate parcels
included within the Leased Real Property) from and to pipelines
(including, but not limited to, pipelines to access the rail
loading area) and the public street systems for all usual street,
road and utility purposes and other purposes necessary or
incidental to the operation of the business of the Company
conducted or proposed to be conducted upon completion of the
Facility.
|
|
|
(viii)
Except as set forth on Schedule 2.5
(c)(viii) of the Company Disclosure Schedule, to the
Knowledge of the Company, all utilities required for or useful in
the operation of the business of the Company either enter the
Leased Real Property through adjoining streets and roads, or if
they pass through adjoining private land, they do so in accordance
with valid public easements. All necessary utilities (including
without limitation, water, sewer, electricity and telephone
facilities) are available to the Leased Real Property and there
exists, to the Knowledge of the Company, no proposed limitation in
or reduction of the quality or quantity of utility services to be
furnished to the Leased Real Property. Permanent adequate sewage
and water systems and connections are available to the Leased Real
Property as currently operated.
|
|
|
(ix)
No Proceeding is pending or, to the Knowledge of the Company, is
threatened, to revoke, suspend, modify or limit any of the permits
required under applicable Legal Requirements with respect to its
leasehold interest in and use and occupancy of, the Leased Real
Property. Except as set forth on Schedule
2.8(d) of the Company Disclosure Schedule, no Permit will be
subject to revocation, suspension, modification or limitation as a
result of this Agreement or the consummation of the transactions
contemplated hereby.
|
Section
2.6 Material Adverse Changes. Since
December 31, 2007, there has been no, and no event has had or
reasonably could be anticipated to have a, Material Adverse
Effect with respect to the Company or the Assets. Without
limiting the generality of the foregoing, since December 31,
2007, none of the following has occurred:
|
(a)
|
any
destruction, damage to or loss of any Asset (whether or not covered
by insurance), which individually exceeds $20,000
|
in
value or in the aggregate exceeds $50,000 in value;
|
|
(b)
|
any
act or omission to do any act which would cause the breach of any
material term or material obligation applicable to the Company
under any Assumed Contract;
|
|
(c)
|
any
execution, creation, amendment or termination of any material
contract, agreement or license or any other transaction relating to
the Assets, except in the ordinary course of business of the
Company or except as otherwise agreed to in writing by Purchaser
and REG;
|
(d) any
notice of any litigation or claim relating to the Company or
the Assets;
|
(e)
|
any
waiver or release of any material right or claim with respect to
the Assets, except in the ordinary course of business of the
Company;
|
|
(f)
|
any
mortgage, pledge or other encumbrance on any Asset other than
Permitted Liens; or
|
(g) any
agreement by Sellers to do any of the foregoing.
Section 2.7
Environmental Compliance
|
(a)
|
None
of the Company or the Assets are subject to any past, existing,
pending, or threatened action, suit, investigation, claim, demand,
directive, inquiry, or proceeding by any Governmental Authority or
any other Person alleging liability or responsibility in connection
with Hazardous Materials, or under any Legal Requirement pertaining
to health, the environment, or the regulation of Hazardous
Materials (as defined below) (collectively, " Environmental
Laws "), nor is any of them otherwise subject to any
remedial or other obligation or liability (including without
limitation STRICT
LIABILITY ) under Environmental Laws. There is no condition,
fact, situation or event that currently constitutes or with the
passage of time would constitute a violation by the Company of, or
result in liability (including without limitation STRICT LIABILITY ) of
the Company or the Assets under, Environmental Laws. The Company
and the Assets have complied and are in compliance with all
Environmental Laws.
|
|
(b)
|
Each
of the statements set forth in clauses (i) and (ii) below is true
and correct with respect to the Company and the
Assets:
|
|
(i)
|
all
Governmental Authorizations, if any, required to be obtained or
filed pursuant to Environmental Laws in connection with the
operations, activities, uses, vehicles, equipment or facilities at,
on, in or, under, such Assets or otherwise of the Company,
including, without limitation, for the past or present treatment,
storage, handling, use, discharge or " Release "
(which includes any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or
disposing) of any pollutant, contaminant, solid waste, hydrocarbon,
toxic or hazardous substance or waste, any flammable, corrosive,
explosive, or radioactive materials or any other material, waste,
or substance regulated under the Environmental Laws (a "
Hazardous
Material ") into the environment or indoor air, or any
filling, dredging, discharging into, or other uses or activities on
or affecting water of the United States, including wetlands (as
defined under the Federal Clean Water Act and 33 C.F.R.
§328.3) (" Environmental
Permits "), have been duly obtained and are in good
standing; and the Company and the Assets have all pollution control
equipment necessary to comply with all Environmental Permits and
Environmental Laws, and have timely filed applications for renewal
of all Environmental Permits and has no reason for belief that such
Environmental Permits or renewals thereof will be subject to any
new or changed conditions; and
|
|
(ii)
|
there
have been no (A) Releases or threatened Releases of Hazardous
Materials, and no Hazardous Materials are present in quantities or
concentrations exceeding any applicable standard under
Environmental Laws, at, in, under, on or affecting any of the
Assets, nor (B) Releases or threatened Releases on or to any other
properties of any Hazardous Materials generated or produced on or
at, or transported from, the Assets or by or on behalf of the
Company that would violate or create liability (including, without
limitation, STRICT
LIABILITY ) under Environmental Laws.
|
|
(c)
|
The
Company has provided accurate and complete copies of all
Environmental Permits, and all environmental reviews,
investigations and/or assessments in the possession of the Company
or such Member or otherwise conducted by or on behalf of the
Company or such Member, with respect to the Company and/or the
Assets. Each such Environmental Permit, review, investigation or
assessment is described on Schedule 2.7
of the Company Disclosure Schedule.
|
Section
2.8 Contracts and Commitments.
|
(a)
|
The
Assumed Contracts are valid and in full force and effect and
constitute the legal, valid, and binding obligations of the
Company, and to the Knowledge of the Company, each other party
thereto, and true and correct copies of which, including, but not
limited to, any amendment, modification or waiver thereof, have
been provided to REG or the Purchaser.
|
|
(b)
|
The
Company (i) has performed all the obligations required to be
performed by it to date in all material respects (or has received a
valid, enforceable and irrevocable written waiver with respect to
its non-performance) and (ii) has received no notice of default and
is not in default in any material respect (or, with due notice or
lapse of time or both, would be in default) under any Assumed
Contract. Except as set forth on Schedule
2.8(b) of the Company Disclosure Schedule, the Company has
no present expectation or intention of terminating or not
materially performing any of its obligations under any Assumed
Contract, and the Company has no Knowledge of any breach or
anticipated breach by the other party to any Assumed
Contract.
|
|
(c)
|
Except
as set forth on Schedule
|
2.8 (c) of the Company Disclosure Schedule, (i) no previous
or current party to any Assumed Contract has given written notice
to the Company or such Member of, or made any claim with respect
to, a desire or intention to exercise any optional termination,
cancellation, non-renewal or acceleration right thereunder, and the
Company has no Knowledge of any notice of, or claim with respect
to, any such desire or intention and (ii) the Company has not given
written notice to any previous or current party to any Assumed
Contract of, nor made any claim with respect to, a desire or
intention to exercise any optional termination, cancellation,
nonrenewal or acceleration right thereunder.
|
|
(d)
|
No
consent or approval of or notice to any third party pursuant to any
Assumed Contract is required to be obtained or made by or with
respect to the Company in connection with the execution, delivery
and performance of any transaction
|
contemplated
by this Agreement or any other Transaction Documents except as
set forth in Schedule
2.8(d) of the Company Disclosure Schedule ("
Required
Consents ").
Section
2.9 No Litigation. There are no
Proceedings pending or, to the Knowledge of the Company,
threatened against the Company or involving any of the
Assets. Neither the Company nor any of the Assets are subject
to any judgment, order, writ, injunction, or decree of any
Governmental Authority. There are no Proceedings pending, or
to the Knowledge of the Company, threatened seeking to
restrain, prohibit, or obtain damages in connection with this
Agreement or the transactions contemplated
hereby.
Section
2.10 Tax Matters. The Company has
filed or caused to be filed on or before their due date all
Tax Returns that they are required to file and have paid all
Taxes due and payable on such Tax Returns or on any
assessments made against the Company or any of the Assets and
all other Taxes imposed on the Company or any of the Assets
(except for Tax Returns for which valid extensions have been
obtained and are in force). All such Tax Returns were and
will be accurate, correct and complete in all material
respects and were prepared in the manner required by
applicable laws. For all periods (or portions thereof) ending
on or before the Closing Date for which Tax Returns are not
yet due, the Company has either paid or adequately reserved
for Taxes accrued for such periods. There are no Tax liens
upon any of the Assets, other than liens for Taxes not yet
due and payable and there is no threatened audit, dispute or
claim that might result in a lien on any of the Assets. There
are no audits, disputes, claims or threatened assessments
concerning any Tax liability of the Company or that are
related to the Assets. The Company is a pass-through entity
treated as a partnership for federal, state and local income
tax purposes. As of the date of this Agreement, the Company
has not commenced operations and has filed no income Tax
Returns. The Company has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor,
creditor, or other third party. The Company has made all
deposits required with respect to Taxes due and payable by
the Company.
Section
2.11 Compliance with Laws. Except as
set forth on Schedule
2.11 of the Company Disclosure Schedule, the Company
is, and at all times since its formation has been, in
material compliance with all Legal Requirements applicable to
the Company or to the ownership or operation of the Assets or
the operation of its business, and has no basis to expect,
nor has it received any Order, notice, or other communication
from any Governmental Authority of any alleged, actual, or
potential material violation and/or failure to materially
comply with any Legal Requirement applicable to the Company
or to the ownership or operation of the Assets.
Section
2.12 Permits. Except as set forth on
Schedule
2.12 of the Company Disclosure Schedule, the Company
has obtained all material Governmental Authorizations
required to permit them to (a) develop and construct a
biodiesel operating facility, (b) own, operate, use, and
maintain the Assets in the manner in which they are now
operated and maintained, or (c) to conduct its business as
now being conducted, including, without limitation, all
Environmental Permits. Schedule
2.12 sets forth a true, correct and complete list of
all such Governmental Authorizations, copies of which have
previously been delivered by the Company to Purchaser or REG.
Except as set forth on Schedule
2.12 of the Company Disclosure Schedule, all required
filings with respect to such Governmental Authorizations have
been made timely. Except as set forth on Schedule
2.12 of the Company Disclosure Schedule, all such
Governmental
Authorizations
are in full force and effect and there are no Proceedings
pending or, to the Knowledge of the Company, threatened that
seek the revocation, cancellation, suspension or other
materially adverse modification thereof. No consent, license,
permit, authorization or order of, or registration,
declaration or filing with or of any Governmental Authority or
other issuer of any permit is required to be obtained or made
by or with respect to the Company in connection with the
execution, delivery and performance of any transactions
contemplated by this Agreement or any of the Transaction
Documents except as set forth on Schedule
2.12 of the Company Disclosure Schedule.
Section
2.13 Insurance. Schedule
2.13 of the Company Disclosure Schedule sets forth all
insurance policies owned or held by the Company as in effect
on the Effective Date and which shall be maintained through
the Closing Date. All policies of fire, liability, casualty
and other forms of insurance owned or held by the Company:
(a) are sufficient for compliance with all requirements of
law and of all agreements of the. Company, (b) are valid,
outstanding and enforceable policies, and (c) will not in any
way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement.
Section.
2.14 Employee Matters. The only individual
retained by the Company to perform services is Mark A. Burke,
who serves as its President and is an independent contractor
and not an employee of the Company. Mr. Burke is subject to
at will termination at any time, with or without cause, and
for any reason or no reason, without the payment of any
severance payment or other amount except accrued salary at
the rate specified on Schedule
2.14 of the Company Disclosure Schedule and except
that Mr. Burke is entitled to receive a payment in connection
with the consummation of the transactions contemplated by
this Agreement, as described on Schedule
2.14 of the Company Disclosure Schedule, which payment
shall be paid directly by the Members or the Company. The
Company is not a party to any collective bargaining
agreements or union contracts. The Company has not received
notice of any claim that it has not complied with any laws
relating to the employment of labor, including any provisions
thereof relating to wages, hours, collective bargaining, the
payment of social security and similar taxes, equal
employment opportunity, employment discrimination, or
employment safety, or that the Company is liable for any
arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing. The Company is in
compliance with all applicable legal requirements respecting
employment, employment practices, labor, terms and conditions
of employment and wages and hours.
Section
2.15 Benefit Plans. Except as set forth on
Schedule
2.15 of the Company Disclosure Schedule, the Company
is not a party to and has no liabilities in respect of, or
under, any employee benefit plan (as such term is defined in
Section 3(3) of ERISA), any employee pension benefit plan (as
such term is defined in Section 3(2) of ERISA, including
without limitation any multiemployer pension plan within the
meaning of Section 3(37) of ERISA), any deferred compensation
arrangement, any bonus, incentive compensation, employment
agreement, severance agreement, or any other similar type of
plan, program or arrangement providing for employee benefits
(" Employee
Benefit Plans ").
Section 2.16
Intellectual Property.
Schedule
2.16
of
the Company Disclosure Schedule sets forth all Intellectual
Property Assets that the Company owns, uses or licenses in
its business. The Company owns or licenses all Intellectual
Property Assets necessary to operate its
business
as presently conducted or intended to be conducted upon
completion of the Facility. To the Knowledge of the Company,
there is no intellectual property of any third party that
infringes any of the Intellectual Property Assets owned by the
Company. None of the Intellectual Property Assets owned or
used by the Company infringe upon or, to the Knowledge of the
Company, is alleged to infringe upon, any intellectual
property right of any other person or entity.
Section
2.17 Brokers. Except as set forth on
Schedule
2.17 of the Company Disclosure Schedule, neither the
Company nor such Member has paid or become obligated to pay
any fee or commission to any broker, finder, intermediary,
advisor, consultant, or appraiser for or on account of the
transactions contemplated by this Agreement and the
Transaction Documents.
Section
2.18 Accuracy of Statements. Neither this
Agreement nor any schedule, exhibit, statement, list,
document, certificate or other information furnished or to be
furnished by or on behalf of the Company or such Member to
the Purchaser or REG in connection with this Agreement or any
of the transactions contemplated by this Agreement contains
any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which
they are made, not misleading.
Section
2.19 Purchase Entirely for Own Account. The
REG Common Stock to, be
received
by the Company and such Member is and will be acquired for
investment for its own
account
and not with a view to the distribution of any part thereof,
and the Company has no
present
intention of selling, granting any participation in, or
otherwise distributing the same;
provided,
however, that the Company reserves the right to distribute its
shares of REG Common
Stock
to its Members subject to Section
5.10 hereof and the terms and conditions of
the
Stockholder
Agreement.
Section
2.20 Disclosure of Information; Due
Diligence. The Company and such Member has had the
opportunity to ask questions of and receive answers from REG
regarding REG and the terms and conditions of the offering of
the REG Common Stock and to obtain additional information
necessary to verify the accuracy of the information supplied
or to which it had access. Such Seller acknowledges and
agrees that the Purchaser does not assume any responsibility
or liability with respect to the REG Common Stock or the
information provided with respect to REG, the REG Common
Stock or the investment therein by the Company represented by
the consideration received by the Company hereunder. Such
Seller further acknowledges and agrees that the Purchaser is
not acting as an underwriter with respect to the REG Common
Stock and assumes no underwriters' liability in connection
therewith.
Section
2.21 Investment Experience; Accredited
Status. The Company and such Member acknowledge that
an investment in REG is a speculative risk. The Company and
such Member are able to fend for themselves in the
transactions contemplated by this Agreement, can bear the
economic risk of its investment (including possible complete
loss of such investment) for an indefinite period of time and
has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks
of the investment in REG. The Company and such Member
understand that the shares of REG Common Stock to be
purchased hereunder have not been registered under the
Securities Act, or under the securities laws of any
jurisdiction, by reason of reliance upon certain exemptions,
and that the reliance on such exemptions is predicated, in
part, upon the accuracy of the Member's representations
and
warranties
in this Article III. The Company and such Member are familiar
with Regulation D promulgated under the Securities Act and
represent that they are each an "accredited investor" as
defined in Rule 501(a) of such Regulation D.
Section
2.22 Restricted Securities.
The
Company and such Member understand that the shares of REG
Common Stock to be received by the Company and such Member
hereunder are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being
acquired from REG through the Purchaser in a transaction not
involving a public offering and that under such laws and
applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited
circumstances and in accordance with the terms and conditions
set forth in the legend contained on the certificates of the
REG Common Stock. The Company and such Member represent that
they are familiar with SEC Rule 144, as presently in effect,
and understand the resale limitations imposed thereby and by
the Securities Act.
Section
2.23 Investment Company. The Company and
such Member (or any Person directly or indirectly controlling
the Company and such Member or on whose behalf
the
Company
is acting) are not, and by virtue of the consummation of the
transactions contemplated
herein
will not be, an "investment company" within the meaning of the
Investment Company Act
of
1940, as amended, or an exemption or exclusion from the
registration provisions under the
Investment
Company Act of 1940, as amended, is available to the Company,
such Member or
any
such Person.
ARTICLE III
REPRESENTATIONS OF REG AND THE PURCHASER
Each of REG and the
Purchaser, severally as to itself only and not jointly as to
or with the other, respectively, represents and warrants to
the Sellers as follows:
Section
3.1 Organization and Existence. REG
and the Purchaser are each duly organized, validly existing
and in good standing under the laws of their jurisdiction of
incorporation or organization, respectively, and have all
requisite power and authority to carry on their respective
businesses as now being conducted.
Section
3.2 Authority. All corporate, limited
liability company or other appropriate action on the part of
REG and the Purchaser necessary for the authorization,
execution and delivery of this Agreement and the Transaction
Documents contemplated hereby to which REG or the Purchaser,
respectively, is a party, and the performance of the
obligations of REG and the Purchaser hereunder and
thereunder, have been taken. REG and the Purchaser have each
duly and validly executed and delivered this Agreement and
each of the Transaction Documents contemplated hereby to
which REG or the Purchaser, respectively, is a party. This
Agreement and each of the Transaction Documents contemplated
hereby to which REG or the Purchaser is a party constitutes
valid and binding obligations of REG or the Purchaser,
respectively, enforceable against REG or the Purchaser in
accordance with their respective terms, except as the
enforceability hereof may be subject to applicable
bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and to general
principles of equity.
Section
3.3 Noncontravention. Neither the execution
and delivery by REG or the Purchaser of this Agreement and
the Transaction Documents, nor the consummation of the
transactions contemplated hereby or thereby, nor compliance
with any of the provisions hereof or thereof, will (a)
violate any provision of their respective Organizational
Documents or any resolutions adopted by their respective
members or shareholders or board of managers or board of
directors, as applicable, (b) result in a violation of any
license, permit, order, writ, injunction, decree, judgment,
or ruling of any court or Governmental Authority, or any law,
rule, or regulation applicable to REG or the Purchaser, (c)
conflict with, result in a breach of, or constitute (or, with
due notice or lapse of time or both, would constitute) a
default under, or give rise to any right of termination,
acceleration or cancellation under, any indenture, agreement,
contract, license, arrangement, understanding, evidence of
indebtedness, note, lease or other instrument which
constitutes an material asset of REG or the Purchaser or to
which REG or the Purchaser or any of their material assets is
bound, (d) result in the creation or imposition of any lien
(other than Permitted Liens), charge, restriction, claim or
Encumbrance of any nature whatsoever upon REG or the
Purchaser or the shares of REG Common Stock or (e) require
any consent or approval of, or notice to, or filing or
registration with, any Person, except for those consents,
approvals, notices, filings, or registrations that have been
obtained, given, or made, as the case may be, and that are
unconditional and in full force and effect.
Section
3.4 Capitalization; REG Common Stock. REG
is authorized to issue two classes of shares designated
respectively as "Preferred Stock" and "Common Stock". The
total number of shares of capital stock that REG is
authorized to issue is one hundred million (100,000,000). The
total number of shares of Preferred Stock REG has authority
to issue is thirty million (30,000,000). The total number of
shares of Common Stock REG has authority to issue is seventy
million (70,000,000). The Preferred Stock and Common Stock
each have a par value of $0.0001. REG has seven million
(7,000,000) shares of its Series A Preferred Stock authorized
of which 6,578,947 are issued and outstanding and two million
(2,000,000) shares of its Series B Preferred Stock authorized
of which 1,999,998 are issued and outstanding. REG has
13,334,874 shares of its Common Stock issued and outstanding.
There are issued and outstanding options to purchase
2,303,052 shares of REG Common Stock pursuant to stock option
agreements issued under the REG 2006 Stock Incentive Plan and
issued and outstanding warrants to purchase 633,533 shares of
REG Common Stock. The shares of REG Common Stock and Escrowed
Stock to be issued to the Company shall have the rights,
restrictions, privileges and preferences set forth in the
Certificate of Incorporation of REG, a true and correct copy
of which Certificate of Incorporation (including all
amendments thereto) has been delivered to Sellers. The REG
Common Stock and the Escrowed Stock, when issued and
delivered to the Company or deposited into the Escrow Fund,
as applicable, in accordance with the terms of this Agreement
for the consideration expressed herein, will be duly and
validly issued, fully paid and non-assessable, free and clear
of all encumbrances except as provided in this Agreement and
the Stockholder Agreement and under applicable state and
federal securities laws. Except as contemplated in the
Stockholder Agreement or with respect to REG's Series A and
Series B Preferred Stock, there are no contractual rights or
obligations of REG to repurchase, redeem or otherwise acquire
any shares of its capital stock, and REG is not a party or
subject to any agreement or understanding. Except as set
forth in the Stockholder Agreement or with respect to REG's
Series A and Series B Preferred Stock, there is no agreement
or understanding between any persons and/or entities which
affects or relates to the voting or giving of written
consents with respect to any security of REG or by a director
of REG. Except as contemplated in the
Registration
Rights Agreement or the Amended and Restated Registration
Rights Agreement dated July 18, 2007, by and among REG and
certain of its stockholders, REG is not under any obligation
to register any of its securities under the Securities
Act.
Section
3.5 Financial Information. Sellers
have received from REG the financial information set forth on
Schedule
3.5 of the REG Disclosure Schedule (the " REG Financial
Information "). The REG Financial Information fairly
presents in all material respects the financial condition of
REG at the dates thereof and the results of its operations
and statement of cash flows for the periods then ended.
Further, the REG Financial Information is consistent with the
books and records of REG (which books and records are correct
and complete in all material respects) and was prepared in
accordance with GAAP, except as noted thereon.
Section
3.6 Undisclosed Liabilities. REG is
not subject to any material debts, liabilities or
obligations, whether accrued, absolute, contingent or
otherwise, other than (a) as reflected in the REG Financial
Information, (b) accounts payable for goods or services
received by REG incurred in the ordinary course of business
consistent with past practice since the date of the REG
Financial Information and (c) as set forth on Schedule
3.6 o
