EXHIBIT 10.7

 

MORTGAGE OF LEASHOLD, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND
FIXTURE FILING

 

VERMILION COUNTY

 

This Document Prepared By And After Recording Mail To:

 

Edward J. Lieberman, Esq.

Husch Blackwell Sanders LLP

190 Carondelet Plaza, Suite 600

St. Louis, Missouri 63105-3441

 

Space Above for Recorder’s Use Only

 

DOCUMENT COVER SHEET

 

TITLE OF DOCUMENT:

Mortgage of Leasehold, Security Agreement, Assignment of Rents and Leases and
Fixture Filing

 

 

DATE OF DOCUMENT:

May 9, 2008

 

 

MORTGAGOR(S):

Blackhawk Biofuels, LLC

 

22 Chicago Avenue

 

Freeport, Illinois 61032-4230

 

 

LENDER(S):

Fifth Third Bank

 

8000 Maryland Avenue, Suite 1400

 

St. Louis, Missouri 63105

 

 

LEGAL DESCRIPTION:

See Exhibit A, Exhibit B, Exhibit C, Exhibit D and Exhibit E attached hereto

 

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MORTGAGE OF LEASEHOLD, SECURITY AGREEMENT, ASSIGNMENT

OF LEASES AND RENTS AND FIXTURE FILING

(THIS IS A FUTURE ADVANCE MORTGAGE)

 

THIS MORTGAGE OF LEASEHOLD, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES
AND FIXTURE FILING (“Leasehold Mortgage”) is executed as of the 9th day of May,
2008, by and among BLACKHAWK BIOFUELS, LLC, a Delaware limited liability company
(hereinafter referred to as “Mortgagor”), having an address of 22 Chicago
Avenue, Freeport, Illinois 61032-4230, and FIFTH THIRD BANK, a Michigan banking
corporation, and its successors and assigns, as beneficiary (hereinafter
referred to as “Lender” or “Mortgagee”), having an address at 8000 Maryland
Avenue, Suite 1400, St. Louis, Missouri 63105.

 

Recitals

 

The following recitals are a material part of this Leasehold Mortgage:

 

A.                                   Mortgagor has entered into a Loan Agreement
with Lender dated of even date herewith (hereinafter, together with all
amendments, modifications, replacements and restatements thereof, the “Loan
Agreement”; capitalized terms used herein and not otherwise defined shall have
the meaning given to them in the Loan Agreement);

 

B.                                     To evidence the Loans being made to
Mortgagor under the terms of the Loan Agreement, Mortgagor has executed and
delivered to Lender (i)  the Construction/Term Loan Note dated of even date
herewith from Mortgagor, as maker, to Lender as payee, in the amount of
Twenty-Four Million Six Hundred Fifty Thousand and 00/100 Dollars
($24,650,000.00) (the “Construction/Term Loan Note”) and (ii) the Revolving
Credit Loan Note dated of even date herewith from Mortgagor, as maker, to
Lender, as payee, in the amount of Five Million and 00/100 Dollars
($5,000,000.00)  (the “Revolving Credit Loan Note”; and together with the
Construction/Term Loan Note and all amendments, modifications, replacements,
restatements, renewals and extensions thereof, the “Notes”), which Notes
evidence that Mortgagor has become justly indebted to Lender in the aggregate
principal sum of Twenty-Nine Million Six Hundred Fifty Thousand and 00/100
Dollars ($29,650,000.00), lawful money of the United States, together with
interest thereon and attorney’s fees and other charges and sums which may accrue
thereon.  From the Effective Date until the Conversion Date, the
Construction/Term Loan Note shall bear interest on the principal amount
outstanding at the end of each day at a fluctuating rate per annum equal to
2.75% plus the LIBOR rate in effect on such day, with adjustments to the
interest rate, if necessary, made each day based on any change in the LIBOR
rate.  On and after the Conversion Date, the Construction/Term Loan Note shall
bear interest on the principal amount outstanding at the end of each day at a
fluctuating rate per annum equal to the Applicable Margin plus the LIBOR rate in
effect on such day.  Advances on the Revolving Credit Loan Note shall, at the
election of Mortgagor, bear interest on the principal amount outstanding at the
end of

 

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each day at a fluctuating rate per annum equal to (i) 3.00% plus the LIBOR rate
in effect on such day, with adjustments to the interest rate, if necessary, made
each day based on any change in the LIBOR rate or (ii) 0.25% plus the Prime Rate
in effect on such day, with adjustment to the interest rate, if necessary, made
each day based on any change in the Prime Rate.  From and after the date of any
Default, interest on funds outstanding under the Notes shall accrue at the
Default Rate.  The entire principal balance outstanding plus all accrued but
unpaid interest under the Construction/Term Loan Note shall become due and
payable on the Construction/Term Loan Maturity Date.  The entire principal
balance outstanding plus all accrued but unpaid interest under the Revolving
Credit Loan Note shall become due and payable on the Revolving Credit Loan
Termination Date. NOTICE TO MORTGAGOR:  EACH NOTE CONTAINS A VARIABLE INTEREST
RATE.

 

C.                                     For purposes of this Leasehold Mortgage
the following are hereinafter sometimes collectively referred to as the
“Obligations”:

 

(i)                                     Mortgagor’s obligations to Lender under
the Notes, the Loan Agreement, this Leasehold Mortgage (including, without
limitation, the performance of each covenant and agreement or Mortgagor
incorporated herein by reference or contained herein), and any other Loan
Documents (as hereinafter defined) now or hereafter executed and delivered by
Mortgagor;

 

(ii)                                  Mortgagor’s and/or Lender’s obligations to
the IFA pursuant to the IFA Guaranty Documents, whether resulting from any
Lender recovery under the IFA Guaranty or otherwise;

 

(iii)                               any other indebtedness or other obligations
of Mortgagor to Lender, owing or which may hereafter become owing, now or
hereafter existing, whether monetary, nonmonetary, direct, indirect, acquired,
joint, several, joint and several, liquidated, unliquidated, existing, future,
fixed, contingent or otherwise; and

 

(iv)                              any replacements, renewals, consolidations,
extensions and other modifications of any of the above, together with any
interest, fees, expenses and other charges thereon, and any amounts expended by
or on behalf of Lender for the protection and preservation of the mortgage lien
and security interest granted herein.

 

D.                                    The Loan Agreement, the Notes, this
Mortgage and any other agreements, documents or instruments evidencing, securing
or otherwise relating to any of the Obligations, and any replacements, renewals,
extensions and other modifications of any of the foregoing, are hereinafter
sometimes collectively called the “Loan Documents”; and

 

E.                                      The rights and obligations of Biofuels
Company of America, LLC, an Illinois limited liability company (“BCA”) with
respect to the real property located in County of Vermilion, City of Danville,
State of Illinois, as described in Exhibit A attached hereto (the “Leased
Premises”) under that certain Amended and Restated Ground Lease Agreement dated
as of November 3, 2006 (as amended, modified, renewed, extended or restated from
time to time, the “Lease”) between Bunge Milling, Inc., an Illinois corporation,
an Illinois corporation (“Lessor”), as landlord and BCA, as tenant, were
assigned to and assumed by Mortgagor, and Lessor consented to such assignment
and assumption, pursuant to that certain First Amendment,

 

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Assignment and Assumption and Consent to Assignment of Ground Lease and
Conveyance of Leasehold Improvements dated as of May 9, 2008 by and among BCA,
Lessor and Mortgagor, a memorandum of which was recorded May       , 2008 as
document no.                       .

 

NOW, THEREFORE, Mortgagor does hereby MORTGAGE, WARRANT, GRANT, BARGAIN, SELL,
CONVEY, ASSIGN AND PLEDGE, to Lender, and to Lender’s successors and assigns
forever, all of Mortgagor’s right, title and interest, if any, in and to the
following property, whether such property or interest therein is now owned or
existing or hereafter acquired or arising (collectively, the “Property”):
(i) the Lease and the leasehold estate created by the Lease (collectively, the
“Leasehold”), including, without limitation, (a) all modifications, extensions
and renewals of the Lease and in and to all rights and options to purchase or to
renew or extend the term of the Lease; (b) all credits, deposits, options,
privileges and rights of the Mortgagor, as lessee under the Lease, including,
without limitation any right to receive any payments under the Lease in
connection with the exercise of any purchase option(s) under the Lease; (c) all
awards heretofore made or hereafter to be made for the taking by eminent domain
of the whole or any part of the Leased Premises, or any estate or easement
therein, including any awards for change of grade of streets, all of which
awards are hereby assigned to the Lender; and (d) all insurance proceeds
relating to the Leased Premises including, but not limited to, any proceeds
attributable to any injury to or decrease in the value of the Leased Premises or
the Property; (ii) the Leased Premises, including any fee interest in the Leased
Premises hereafter acquired by the Mortgagor; (iii) all estates, easements,
interests, licenses, privileges, tenements, hereditaments, appurtenances, rights
and rights of way, public or private, pertaining, belonging or otherwise
relating to the Leased Premises or any of the other Property, including, without
limitation, (a) that certain Soybean Oil Pipeline Easement Agreement dated as of
the date hereof with respect to the real property located in County of
Vermilion, City of Danville, State of Illinois, as described in Exhibit B
attached hereto, (b) that certain Access Right of Way Easement Agreement dated
as of the date hereof with respect to the real property located in County of
Vermilion, City of Danville, State of Illinois, as described in Exhibit C
attached hereto, (c) that certain Underground Gas Pipeline Easement Agreement
dated as of the date hereof with respect to the real property located in County
of Vermilion, City of Danville, State of Illinois, as described in Exhibit D
attached hereto and (d) that certain Biodiesel Pipeline Easement Agreement dated
as of the date hereof with respect to the real property located in County of
Vermilion, City of Danville, State of Illinois, as described in Exhibit E
attached hereto (collectively, the “Easement Premises”); (iv) all buildings and
improvements now or later situated under, upon or over any of the Leased
Premises or the Easement Premises; (v) all franchises, permits, licenses and
other rights therein respecting the use, occupation or operation of the Leased
Premises or the activities conducted thereon or thereabout; (vi) all rents,
income and other benefits arising out of or otherwise related to the Leased
Premises and all leases on or affecting the Leased Premises, and any security
deposits, contract rights, general intangibles, actions, rights of action, and
unearned insurance premiums relating to such leases or the Leased Premises;
(vii) all building materials and supplies, equipment, furniture, fixtures,
inventory, and operating supplies, attached to or used or usable in connection
with the operation or maintenance of the Leased Premises, HVAC equipment,
lighting fixtures, electrical boxes, and plumbing fixtures, whether now or
hereafter acquired or installed, and in all additions, parts, and accessions
attached to or used in connection therewith, and the cash and non-cash proceeds
thereof;  and (viii) all accessions to, substitutes for, and all modifications,
replacements,

 

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renewals, products and proceeds of any of the foregoing.  Unless otherwise
indicated, a reference to the “Property” means all and/or any part of the
Property.

 

Mortgagor, on a continuing basis, warrants, represents, covenants and agrees to
and with Lender (which covenants, representations, warranties and agreements to
the extent permitted by law shall be deemed to run with the land) as follows:

 

1.                                       Indebtedness Secured.  This Mortgage
has been given and is intended to secure the full and prompt payment and
performance of the Obligations.  This Mortgage shall secure, among other things,
the payment and performance of all future advances, future obligations and
future extensions of credit.  The priority of the lien hereunder securing such
future advances, future obligations, and future extensions of credit shall
relate back to the date this Mortgage was recorded.  The lien of the mortgage
will be valid even if no advance is made at the date of execution or if there is
no indebtedness when a future advance is made.  THE MAXIMUM PRINCIPAL AMOUNT OF
OBLIGATIONS THAT MAY BE SECURED BY THIS MORTGAGE AT ANY ONE TIME IS TWENTY-NINE
MILLION SIX HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($29,650,000.00).  In
addition, the Mortgage shall secure unpaid balances of advances made by Lender
(together with interest thereon) with respect to the Property, for the payment
of Impositions, as hereinafter defined, insurance premiums and costs incurred
for the protection of the Property and any charges, expenses and fees,
including, without limitation, attorneys’ fees, which, by the terms hereof,
shall be added to and increase the Obligations.  This Mortgage shall remain in
full force and effect with respect to all of the Property until all Obligations
shall have been paid and performed in full.  If the Obligations are paid and
performed in accordance with the terms of the applicable Loan Documents,
including, without limitation, the observance of all the agreements contained in
this Mortgage, this Mortgage shall become void and shall be released at the sole
expense of Mortgagor.

 

2.                                       Payment of Obligations.  Mortgagor
shall promptly pay when due all sums of any nature whatsoever due and owing on
the Obligations.

 

3.                                       Title to Leasehold and Other
Representations and Warranties.  Mortgagor represents, warrants and covenants to
Lender that:  (i) Mortgagor is lawfully vested with and possessed of the
Leasehold, owns the improvements now located thereon in fee simple absolute,
shall own any improvements hereafter located thereon, and has good and
marketable title to the remainder of the Property that is currently owned by
Mortgagor;  (ii) the Property is free of all liens, encumbrances, adverse claims
and other defects of title whatsoever, except for liens created pursuant to this
Mortgage and except as set forth on Exhibit F hereto; (iii) Mortgagor does
hereby and shall forever warrant and defend Mortgagor’s title to and interest in
the Property and the validity and priority of the lien of this Mortgage against
all claims and demands whatsoever of any Person; (iv) the improvements presently
on the Premises are in full compliance with all applicable zoning and building
codes, ordinances and regulations; (v) any improvements hereafter constructed on
the Premises shall be constructed in compliance with the Plans and
Specifications, all applicable Laws, appropriate set back requirements,
restrictive covenants and the requirements of any governmental authority, and
shall lie wholly within the boundaries of the Premises; (vi) to Mortgagor’s
knowledge there are no actions, suits or proceedings pending or threatened
against or affecting Mortgagor or the Property; and (vii) 

 

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Mortgagor has the good and unrestricted right, full power and lawful authority
to subject the Property to this Mortgage.

 

4.                                       Lease Obligations.  Mortgagor shall
perform and comply with all agreements, covenants, terms and conditions imposed
upon or assumed by it as lessee under the Lease.  If Mortgagor shall fail to do
so, Lender may, but shall not be obligated to, take any action it deems
necessary or desirable to prevent or to cure any default under the Lease. 
Lender may rely upon any written notice of default received by it from the
Lessor and may take any action to cure such default even though the existence of
such default or the nature thereof is questioned or denied by Mortgagor. 
Mortgagor hereby expressly grants to Lender, and agrees that Lender shall have,
the absolute and immediate right, to enter in and on the Property to such extent
and as often as Lender, in its sole discretion, deems reasonably necessary or
desirable in order to prevent or cure any such defaults by Mortgagor.  Lender
may pay such sums of money as it reasonably deems necessary in its sole
discretion for any such purpose and Mortgagor agrees to pay to Lender,
immediately upon demand, all such sums paid by Lender together with interest
thereon from the date of such payment at the annual default rate under the
Notes.  All sums paid and extended by Lender and the interest thereon shall be
added to the Obligations secured by the lien hereof.  No such payment or
performance made or taken by Lender shall relieve Mortgagor from any default
hereunder.

 

Mortgagor shall not surrender the Leasehold, fail to renew the Lease, terminate
or cancel the Lease, or modify or amend the Lease, either orally or in writing,
without the prior written consent of Lender.

 

5.                                       Charges and Liens.  Mortgagor shall pay
all taxes, assessments, and other charges, fines, and impositions attributable
to the Property, together with any interest or penalties imposed for late
payments thereof, that are due or may become due and be a lien against the
Property (“Impositions”).  Mortgagor shall submit to Lender evidence of the
timely payment of such Impositions.

 

6.                                       Preservation and Maintenance of
Property.  Mortgagor (a) shall put, keep and maintain the Property and the
sidewalks, curbs and alleys adjoining or abutting the same in good and lawful
order, condition and repair, excepting ordinary wear and tear, (b) shall make or
cause to be made, as and when the same shall become necessary, all structural
and non-structural repairs, whether exterior or interior, ordinary or
extraordinary, foreseen or unforeseen, (c) shall not commit or suffer any waste
or permit impairment or deterioration of the Property, (d) shall not cause,
conduct or permit any nuisance on or to the Property (e) shall pay when due all
claims for labor performed and materials furnished that, if not paid, may result
in the filing of a mechanic’s or other lien against the Property, and (f) shall
not demolish, remove, or materially alter any part of the Property without the
prior written consent of Lender.

 

7.                                       Restoration.  If any of the
improvements or equipment comprising the Property shall be damaged or destroyed,
in whole or in part, by fire or other casualty (whether or not covered by
insurance), or by any taking in condemnation proceedings or the exercise of any
right of eminent domain, Mortgagor shall use its reasonable best efforts to
restore, replace or rebuild the same in accordance with the Plans and
Specifications, with such alterations or changes as may be approved in writing
by Lender, which approval shall not be unreasonably withheld. 

 

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Mortgagor shall give prompt notice to Lender of any damage to the Property by
fire or other casualty, irrespective of the amount of such damage.

 

8.                                       Inspection.  Lender, and its agents,
contractors and representatives, may, with twenty-four (24) hours prior written
notice, enter upon and inspect the Property for any purposes until this Mortgage
is released, provided that such inspection does not interfere with the business
operations of Mortgagor, and further provided, that no notice shall be required
if a Default shall have occurred.  Without limiting the generality of the
foregoing, Lender, and its agents, contractors and representatives, may from
time to time enter upon the Property and conduct upon the Property inspections
and tests to determine the extent to which any hazardous substances, wastes or
other environmentally unsound material have been placed or discharged upon or
otherwise affect the Property.

 

9.                                       Compliance with Laws; Use of Property. 
Mortgagor shall promptly comply with all present and future laws, statutes,
ordinances, rules, regulations and other requirements (including, without
limitation, applicable zoning and building requirements) of all governmental and
quasi-governmental authorities whatsoever having jurisdiction in respect of the
Property and the sidewalks, curbs and alleys adjoining or abutting the Leased
Premises, and the condition, repair, maintenance, use and occupation thereof. 
Mortgagor shall promptly make all changes, alterations and improvements
necessary to comply with all such present and future laws, statutes, ordinances,
rules, regulations and other requirements.

 

Mortgagor shall promptly perform and observe all of the terms, covenants and
conditions of all instruments of record affecting the Property, non-compliance
with which may affect the security of this Leasehold Mortgage, or which shall
impose any duty or obligation upon Mortgagor or any tenant or other occupant of
the Leased Premises, and Mortgagor shall do or cause to be done all things
necessary to preserve intact and unimpaired any and all easements, appurtenances
and other interests and rights in favor of or constituting any portion of the
Property.

 

Mortgagor shall use the Leased Premises solely for the operation of an
industrial plant for the production of biodiesel fuel and any uses related
thereto, and Mortgagor shall not use or permit the use of the Property in any
manner which would tend to impair the value of the Property or materially
increase the risk of fire or other casualty.

 

10.                                 Insurance.  Mortgagor shall insure the
Property in accordance with and upon the terms and conditions provided for in
the Loan Agreement.  In all events Mortgagor shall maintain the insurance
coverages required by the Lease.

 

If Mortgagor fails to maintain any insurance required hereunder or under the
other Loan Documents or fails to provide evidence of such insurance as required
hereunder or under the other Loan Documents, Lender may, but shall not be
obligated to, purchase such required insurance at Mortgagor’s expense to protect
its interests in the Property.  This insurance may, but need not, protect the
Mortgagor’s interests in the Property.  The coverage that Lender purchases shall
not be required to pay any claim that the Mortgagor makes or any claim that is
made against the Mortgagor in connection with the Property.  The Mortgagor may
later cancel any insurance purchased by Lender, but only after providing
evidence that the Mortgagor has

 

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obtained the insurance required hereunder and under any other Loan Document.  If
Lender purchases insurance for the Property, Mortgagor will be responsible for
the costs of the insurance, including the insurance premium, interest thereon
from the date of each such payment or expenditure at the then applicable rate
under the Notes and any other charges Lender may impose in connection with the
placement of the insurance, until the effective date of the cancellation or
expiration of the insurance.  All sums so paid or expended by Lender, the
interest thereon and the other charges in connection therewith shall be added to
the Obligations and shall be secured by the lien of this Leasehold Mortgage. 
The costs of the insurance obtained by the Lender may be more than the cost of
insurance Mortgagor may be able to obtain on its own.

 

11.                                 Deposits for Impositions and Insurance. 
Upon notice from Lender (which notice shall not be given unless an Event of
Default has occurred), Mortgagor shall deposit with Lender on the first day of
each month an amount equal to one-twelfth (1/12th) of (i) the aggregate annual
payments for the Impositions, and (ii) the annual insurance premiums on the
policies of insurance required to be obtained and kept in force by Mortgagor
under this Leasehold Mortgage.  In addition, upon notice from Lender (which
notice shall not be given unless an Event of Default has occurred), Mortgagor
shall deposit with Lender such sum of money which, together with such monthly
installments, shall be sufficient to pay all the Impositions and insurance
premiums at least thirty (30) days prior to the due date thereof.  If the
amounts of any Impositions are not ascertainable at the time any deposit is
required to be made, the deposit shall be made on the basis of the amounts of
the Impositions for the prior tax year and, upon the amounts of the Impositions
being fixed for the then current year, Mortgagor shall, upon notice from Lender,
deposit any deficiency with Lender.  If the amount of the insurance premiums is
not ascertainable at the time any deposit is required to be made, the deposit
shall be made on the basis of the amount of the insurance premiums for the prior
year of the policy or policies, and, upon the amount of the insurance premiums
being fixed for the then current year of the policy or policies, Mortgagor
shall, upon notice from Lender, deposit any deficiency with Lender.  If on a
date thirty (30) days prior to the due date for the payment of any of the
Impositions or the insurance premiums there shall be insufficient funds on
deposit with Lender to pay the same, Mortgagor shall, upon notice from Lender,
forthwith make a deposit with Lender in the amount of such deficiency.  The
funds so deposited with Lender shall be held by Lender without interest, and may
be commingled with other funds of Lender, and provided that an Event of Default
has not occurred, such funds shall be applied in payment of the Impositions and
insurance premiums when due to the extent that Mortgagor shall have deposited
funds with Lender for such purpose.  Upon the occurrence of an Event of Default,
the funds deposited with Lender may, at the option of Lender, be retained and
applied toward the payment of any or all of the Obligations, but no such
application shall be deemed to have been made by operation of law or otherwise
until actually made by Lender.  Mortgagor shall furnish Lender with a bill for
each of the Impositions and insurance premiums and such other documents
necessary for their payment at least thirty (30) days prior to the date they
first become due.  Upon an assignment of this Leasehold Mortgage prior to any
default hereunder by Mortgagor, Lender shall have the right and obligation to
pay over the balance of such deposits in its possession to the assignee, and
thereupon Lender shall be completely released from all liability with respect to
such deposits and Mortgagor shall look solely to the assignee in reference
thereto.  The provisions of the preceding sentence shall apply to each and every
assignment or transfer of such deposits to a new assignee.

 

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12.                                 Condemnation.  If any of the Property is
taken by condemnation, eminent domain or other taking, any award or other
compensation due or received by Mortgagor in respect thereof shall be paid over
to Lender.   All such awards or other compensation which are received by Lender
may, at Lender’s election, except as otherwise provided in the Loan Agreement,
(i) be applied to reduce the outstanding balance of the Obligations, whether
then due or not, or (ii) turned over, in whole or in part, by Lender to
Mortgagor on such terms and conditions as Lender may elect for the purposes of
rebuilding or otherwise improving the Property.

 

The application of any award or other compensation toward payment or performance
of any of the Obligations shall not be deemed a waiver by Lender of its right to
receive payment or performance of the balance of the Obligations in accordance
with the provisions of the Loan Documents.  Lender shall have the right, but
shall be under no obligation, to question the amount of the award or other
compensation, and Lender may accept same without prejudice to the rights that
Lender may have to question such amount.  In any such condemnation or eminent
domain action or proceeding Lender may be represented by attorneys selected by
Lender if the counsel selected by Mortgagor is not reasonably satisfactory to
Lender, and all sums paid by Lender in connection with such action or
proceeding, including, without limitation, attorneys’ fees, shall, on demand, be
immediately due from Mortgagor to Lender and the same shall be added to the
Obligations and shall be secured by this Mortgage.

 

13.                                 Assignment of Rents and Leases.  Mortgagor
hereby presently assigns to Lender all of Mortgagor’s right, title and interest
in and to any Leases, as defined hereinafter, with respect to the Property, and
all rents, issues and profits of the Property.  “Lease” shall mean every lease
or sublease or occupancy agreement for the use or hire of all or any portion of
the Property which shall be in effect on the date hereof, or which shall
hereafter be entered into, and by which Mortgagor is a lessor or the like, and
any renewals, extensions or other modifications thereof.  Mortgagor grants to
Lender, with or without Lender or any other Person (including, without
limitation, a receiver) taking possession of the Property, the right to give
notice to the tenants of this assignment, to collect rents, issues and profits
from the tenants and to enter onto the Property for purposes of collecting the
same and to let the Property and to apply such rents, issues and profits, after
payment of all charges and expenses relating to the Property, to the
Obligations.  This assignment shall be an absolute assignment, subject to the
license herein granted to Mortgagor and Mortgagor’s obligations hereunder, and
shall continue in effect until the Obligations are fully paid and performed. 
Lender hereby grants a revocable license to Mortgagor to collect and use such
rents, issues and profits; provided, however, that the foregoing license shall
be automatically revoked, without any action on Lender’s part, upon the
occurrence of an Event of Default.  Mortgagor hereby agrees to indemnify Lender
for, and hold Lender harmless from, any and all liability and expenses arising
from any such Lease or other agreement or any assignments thereof, and no
assignment of any such Lease or other agreement shall place the responsibility
for the control, care, management or repair of the Property upon Lender, nor
make Lender liable for any negligence or other tortious conduct, whether by
Lender or any other Person, with respect to the management, operation, upkeep,
repair or control of the Property resulting in injury, death, property or other
damage or loss of any nature whatsoever.  Mortgagor shall not cancel, amend or
otherwise modify the terms and conditions of any Lease without obtaining
Lender’s prior consent; nor shall Mortgagor accept payments of rent or the like
more than one month in advance without obtaining Lender’s prior consent.  Lender
may exercise Lender’s rights from time to time under this section without first
commencing foreclosure

 

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proceedings against the Property if Lender so elects.  Any such election by
Lender to exercise Lender’s rights from time to time under this section shall
not prohibit Lender from simultaneously or thereafter foreclosing upon the
Property or exercising any other rights available to Lender hereunder or at law.

 

14.                                 Lender’s Right to Perform Mortgagor’s
Covenants.  If Mortgagor shall fail promptly and fully to pay, perform or
observe any of the Obligations, then Lender may, at Lender’s option, but without
any obligation to do so, and without waiving or releasing Mortgagor from any of
the Obligations, pay any Obligation or perform any Obligation or take such other
action as Lender deems necessary or desirable in order to cause such Obligation
to be paid, performed or observed, as the case may be.  Mortgagor hereby grants
to Lender, and agrees that Lender shall have, the absolute and immediate right
to enter in and upon the Property to such extent and as often as Lender, in
Lender’s discretion, deems necessary or desirable for such purpose.  Lender may
pay and expend such sums of money as Lender, in its discretion, deems necessary
for any such purpose, and Mortgagor hereby agrees to pay to Lender, on demand,
all such sums so paid or expended by Lender, together with interest thereon from
the date of each such payment or expenditure at the Default Rate (as hereinafter
defined).  Any interest paid under this section in excess of the maximum
interest rate permitted by law shall be deemed payment in reduction of the
principal amount of the Obligations and the excess, if any, shall be refunded to
Mortgagor without interest.  All sums so paid or expended by Lender, and the
interest thereon, shall be added to the Obligations and shall be secured by the
lien of this Mortgage.

 

15.                                 Security Agreement.  Mortgagor hereby grants
to Lender, as further security for the Obligations, a security interest in all
personal property of Mortgagor now or hereafter located on or about the Leased
Premises or the Easement Premises or the improvements thereon, or which
otherwise relate to the Property or Mortgagor’s use of the Property in any
respect, including, without limitation, all of Mortgagor’s presently owned or
hereafter acquired (i) goods, chattels, furniture, equipment, machinery, parts
and tools, together with all additions, attachments, accessories, accessions and
repairs thereto, (ii) building materials and supplies, (iii) inventory,
(iv) accounts, chattel paper, instruments and general intangibles, (v) the
Property which constitutes fixtures or personal property, including, without
limitation, any buildings and/or improvements that are deemed to be personal
property, whether due to be severed from the Leased Premises or the Easement
Premises or otherwise, and (vi) all proceeds, products, replacements, additions
and substitutions of the foregoing property described in the immediately
preceding subclauses (i) through (v) (all of the foregoing property described in
the immediately preceding subclauses (i) through (vi) being referred to herein
as the “Personalty”).  The parties intend that this instrument shall constitute
both a security agreement and a fixture financing statement within the meaning
of the Uniform Commercial Code as enacted in the State of Illinois with respect
to all of Mortgagor’s right, title and interest, whether now owned or existing
or hereafter acquired or arising, in all Property and Personalty which
constitutes fixtures and personal property, and that a security interest shall
attach thereto, and to all products and proceeds thereof, for the benefit of
Lender to secure the Obligations.  This Mortgage constitutes a “construction
mortgage” as defined in Section 9-334 of the Uniform Commercial Code of the
State of Illinois (810 ILCS 5/9-334) to the extent that is secures obligations
incurred for the construction of improvements on the Leased Premises.

 

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16.                                 Transfer of the Property. Mortgagor shall
not sell, assign, mortgage, hypothecate, transfer, or sublease the Property,
without the prior written consent of Lender.

 

17.                                 Liens. This Mortgage is and shall be
maintained as a valid first mortgage lien on the Property subject to no other
liens, claims or encumbrances, except for liens created pursuant to this
Mortgage and except as set forth on Exhibit B hereto. Mortgagor shall not create
or permit to exist any security interest, lien, claim or other encumbrance
against the Property, except for except for liens created pursuant to this
Mortgage, liens in respect of local real property taxes which are not yet due
and payable, and except as set forth on Exhibit B hereto.

 

18.                                 Default. The Obligations shall become
immediately due and payable in full at the option of Lender upon the occurrence
of any one or more of the following (subject to any and all applicable cure
periods) (an “Event of Default”):

 

a)                                      Mortgagor shall fail to pay any
installment of principal, interest or fees, if any, owing under the Notes or
under any of the other Obligations in accordance with their respective terms and
such failure continues for a period beyond any applicable grace period afforded
in the Loan Documents;

 

b)                                     Mortgagor shall fail to pay any
Imposition on or before the date such Imposition may be paid without any
penalty, interest or other premium;

 

c)                                      Mortgagor shall fail to pay timely any
premiums for insurance required hereunder or Mortgagor shall fail to reimburse
Lender on demand for premiums paid by it on the insurance required hereunder;

 

d)                                     Mortgagor shall directly or indirectly
create, suffer or permit to be created or to stand against the Property or
against the rents, issues and profits therefrom, any lien, security interest,
charge, mortgage, Mortgage or other encumbrance not expressly permitted herein,
or in the Loan Agreement or other Loan Documents, without in each instance
obtaining Lender’s prior written consent thereto;

 

e)                                      Mortgagor’s default in the observance or
performance of any other monetary or non-monetary covenant of Mortgagor
hereunder (other than a covenant the performance or observance of which is 
specifically referred to elsewhere in this section) beyond any applicable grace
period, including but not limited to the obligations under the Lease set forth
in paragraph 4 of this Leasehold Mortgage, or any of the Loan Documents;

 

f)                                        Any representation or warranty of
Mortgagor to Lender set forth herein or elsewhere, including, without
limitation, the other Loan Documents, having been incorrect, incomplete or
misleading in any material respect at the time when made, or any such
representation or warranty subsequently becomes incorrect, incomplete or
misleading in any material respect and Mortgagor fails to give Lender prompt
notice thereof;

 

g)                                     Except as otherwise provided for in this
Leasehold Mortgage, Mortgagor shall sell, convey, alienate, assign or otherwise
transfer the Property, or any part thereof or interest therein, in any manner,
whether voluntary, involuntary, by operation of law or otherwise,

 

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or Mortgagor shall enter into any agreement, written or oral, to so sell,
convey, alienate, assign or otherwise transfer the Property, or any part thereof
or interest therein;

 

h)                                     There shall occur a default or an event
of default under any other mortgage or like real property security instrument
which encumbers the Property, or under any document evidencing any obligation
secured thereby, or any foreclosure or similar proceeding shall commence with
respect to the Property;

 

i)                                         Mortgagor shall deliver to Lender any
notice terminating or purporting to terminate, or Mortgagor shall take any other
action to terminate or purporting to terminate, the operation of this Leasehold
Mortgage as security for any future advances or future obligations;

 

j)                                         The condemnation or taking of any
part of the Leased Premises which, in Lender’s determination, materially and
adversely affects the use or intended use of the Property as a whole or
otherwise materially and adversely affects Mortgagor’s business prospects;

 

k)                                      Any loss, theft, damage or destruction
of any of the Property not fully covered (subject to such deductibles as Lender
shall have permitted) by insurance;

 

l)                                         If there shall occur any default or
event of default (however defined or described) under the Loan Agreement, the
Notes or any of the other Loan Documents;

 

m)                                   Any Guarantor shall revoke or attempt to
revoke the Guaranty Agreement signed by such Guarantor, or shall repudiate such
Guarantor’s liability thereunder or shall be in default under the terms thereof;

 

n)                                     If any judgment or order, singly or in
the aggregate, for the payment of money in excess of $100,000 shall be rendered
against Borrower or any of its assets and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order, or
(ii) there shall be any period of fifteen (15) consecutive days during which a
stay of enforcement of such judgment or order by reason of a pending appeal or
otherwise, shall not be in effect;

 

o)                                     If this Leasehold Mortgage after delivery
to Lender shall for any reason, except to the extent permitted by the terms
thereof, cease to create a valid and perfected first priority lien and security
interest in any of the collateral purported to be covered thereby; or

 

p)                                     Any challenge, whether by litigation or
otherwise, shall be asserted against the validity of the Notes, this Leasehold
Mortgage or any of the Loan Documents, including, without limitation, a claim
that such transaction violates any federal, state or municipal constitution,
charter, law, ordinance, regulation, resolution or rule, or any court order.

 

19.                                 Appointment of Receiver. After the
occurrence of an Event of Default, or if any action shall be commenced to
foreclose this Mortgage, without obligation to do so, Lender, to the extent
permitted by applicable law, may apply for the appointment of a receiver of the
rents, issues and profits of the Property without notice or demand, and shall be
entitled to the appointment of such receiver as a matter of right, without
consideration of the value of the

 

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Property as security for the amounts due to Lender or the solvency of any Person
liable for the payment of such amounts.

 

20.                                 Acceleration; Remedies. Upon the occurrence
of an Event of Default at any time thereafter and subject to any applicable
notice and cure provisions, Lender, at its option, may exercise any one or more
of the following rights and remedies, in addition to any other rights or
remedies provided for under (i) any of the other Loan Documents or (ii) by law
or equity:

 

a)    Accelerate Obligations. Lender shall have the right at its option without
notice to Mortgagor to declare the entire Obligations immediately due and
payable, including any prepayment charge or fee payable under the terms of the
Notes or this Leasehold Mortgage.

 

b)    Collect Rents. Lender shall have the right, without notice to Mortgagor,
to take possession of the Property and collect the rents, including amounts past
due and unpaid and apply the net proceeds, over and above Lender’s costs,
against the Obligations. In furtherance of this right, Lender may require any
tenant or other user of the Property to make payments of rent or use fees
directly to Lender. If the rents are collected by Lender, then Mortgagor
irrevocably designates Lender as Mortgagor’s attorney-in-fact to endorse
instruments received in payment thereof in the name of Mortgagor and to
negotiate the same and collect the proceeds. Payments by tenants or other users
to Lender in response to Lender’s demand shall satisfy the obligations for which
the payments are made, whether or not any proper grounds for the demand existed.
Lender may exercise its rights under this subparagraph either in person, by
agent, or through a receiver.

 

c)    UCC Remedies. Lender shall have the right to exercise any or all of the
remedies available to Lender under the Uniform Commercial Code in effect in the
applicable state as to any of the Property subject thereto.

 

d)    Mortgagee in Possession. To the extent permitted by applicable law, Lender
shall have the right to be placed as mortgagee in possession or to have a
receiver appointed to take possession of all or any part of the Property, with
the power to protect and preserve the Property, to operate the Property
preceding foreclosure or sale, and to collect the rents from the Property and
apply the proceeds, over and above the cost of the receivership, against the
Obligations. The mortgagee in possession or receiver may serve without bond if
permitted by law. Lender’s right to the appointment of a receiver shall exist
whether or not the apparent value of the Property exceeds the Obligations by a
substantial amount. Employment by Lender shall not disqualify a person from
serving as a receiver

 

e)    Foreclosure. Lender may, to the extent permitted by law, institute an
action of judicial foreclosure, or take such other action as the law may allow,
at law or in equity, to enforce this Mortgage and to realize upon the Property
or any other security which is herein or elsewhere provided for, and to proceed
to final judgment and execution for the entire unpaid balance of the
Obligations, together with, to the extent permitted by applicable law, all other
sums secured by this Mortgage, all costs of suit, and interest at the then
applicable rate under the Notes on any judgment obtained by Lender from and
after the date of any judicial sale of the Property (which may be sold in one
parcel or part or in such parcels or parts, manner or order as Lender shall
elect) until actual payment is made to Lender on the full amount due Lender.
Lender may

 

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foreclose or otherwise realize upon one parcel or any other part of the
Property, on one or more occasions, without releasing this Mortgage or
precluding the further foreclosure or other realization hereunder of any other
parcels or parts of the Property not so foreclosed or realized upon. Failure to
join or to provide notice to tenants or any other Persons as defendants or
otherwise in any foreclosure action or suit shall not constitute a defense to
such foreclosure or other action. Upon any foreclosure sale, whether by virtue
of judicial proceedings or otherwise, Lender may bid and purchase the Property
or any part thereof or interest therein, and upon compliance with the terms of
the sale, may hold, retain, possess and dispose of the same in Lender’s own
absolute right, without further accountability. In lieu of paying cash for the
Property, Lender may make settlement for the purchase price by crediting against
the sums secured by this Leasehold Mortgage the sale price of the Property as
adjusted for the expenses of sale and costs of the action and any other sums for
which Mortgagor is obligated to reimburse Lender under this Leasehold Mortgage.

 

f)    Deficiency Judgment. If permitted by applicable law, Lender may obtain a
judgment for any deficiency remaining in the Obligations due to Lender after
application of all amounts received from the exercise of rights provided in this
section.

 

g)    Other Remedies. Exercise each of its other rights and remedies under this
Leasehold Mortgage.

 

h)    Application of Proceeds. Except as otherwise required by law, apply the
proceeds of any foreclosure or disposition hereunder to payment of the
following:  (i) the expenses of such foreclosure or disposition, (ii) the cost
of any search or other evidence of title procured in connection therewith and
revenue stamps on any deed or conveyance, (iii) all sums expended under the
terms  hereof, not then repaid, with accrued interest in the amount provided
herein, (iv) all other sums secured hereby and (v) the remainder, if any, to the
person or persons legally entitled thereto.

 

21.                                 Subleases. Mortgagor hereby assigns to
Lender its interests as sublessor in all subleases of the Property, or any
portion thereof, and its interests in any assignable licenses, permits or
agreements pertaining to the Property, in each case whether now existing or
hereafter acquired or entered into (provided, however, that this provision shall
in no way modify the restrictions under Section 16 hereof). Such assignments
shall be evidenced from time to time by such other and further instruments as
Lender may request. This assignment, however, shall not be deemed or construed
to be a consent by Lender to any lease, license, permit, or agreement so
assigned or to impose upon Lender any obligations with respect thereto.

 

Mortgagor shall not materially modify, cancel, terminate, accept a surrender of,
or accept any prepayment of rent in excess of a period not more than one month
on any such sublease, without first obtaining the written consent of Lender.

 

22.                                 Intentionally Omitted.

 

23.                                 No Merger of Leasehold Estate. Unless Lender
shall consent in writing, the fee title to the property demised by the Lease and
the Leasehold shall not merge, but shall always remain separate and distinct,
notwithstanding the union of such estates either in the Lessor,

 

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Mortgagor, or a third party, by purchase or otherwise. If Mortgagor acquires the
fee title of any estate or interest in the Property superior to the Lease, it
shall immediately notify Lender of such acquisition and, upon request, shall
execute and deliver such further documents as may be required to further
evidence the grant and conveyance to Lender of all interest so acquired to such
property. Such execution and delivery, however, shall not be deemed a condition
to the lien of this Leasehold Mortgage, which shall, upon any acquisition by
Mortgagor in the fee interest of the Property, automatically secure such fee
interest with a priority dating to the date hereof.

 

24.                                 Waiver of Redemption. To the extent
permitted by applicable law, Mortgagor hereby irrevocably waives and releases:
(i) any right of redemption after the date of any sale of the Property upon
foreclosure, whether statutory or otherwise, in respect of the Property now or
hereafter in force (irrespective of whether Lender or any other Person purchases
the Property at such foreclosure); (ii) the benefit of any and all valuation and
appraisement laws now or hereafter in force; (iii) all exemption laws whatsoever
and all moratoriums, extensions or stay laws or rules, or orders of court in the
nature of either of them, now or hereafter in force; and (iv) any right to have
the Property marshalled upon any foreclosure of this Leasehold Mortgage. Without
limiting the foregoing, Mortgagor waives all rights of reinstatement and
redemption pursuant to 735 ILCS 5/15-1601 et seq., as the same may be amended
from time to time.

 

25.                                 Notice of Default Under Lease. Mortgagor
shall notify Lender in writing within three (3) days after the receipt of a
notice of default from Lessor under the Lease.

 

26.                                 Expenses of Lender. To the extent permitted
by applicable law, all costs and expenses paid or incurred by Lender, including,
without limitation, attorneys’ fees, in any action, proceeding or dispute of any
kind in which Lender is made a party or appears as a plaintiff or defendant,
affecting Lender, this Leasehold Mortgage, the other Loan Documents and/or the
Property, including, but not limited to, the enforcement of this Leasehold
Mortgage, any condemnation action involving the Property, any action to protect
the security hereof, or any case or proceeding under Title 11 of the United
States Code, with interest thereon from the time of payment by Lender at the
Default Rate, shall be added to and included in the Obligations and shall be
secured  by this Leasehold Mortgage and, upon demand, shall be immediately due
from Mortgagor.

 

27.                                 Interest After Maturity. The principal
amount of the Obligations and any other amounts secured by this Leasehold
Mortgage and, to the extent permitted by law, any accrued interest thereon,
shall bear interest from and after maturity, whether or not resulting from
acceleration, at the Default Rate, payable on demand, but this shall not
constitute an extension of time for payment of the Obligations or such other
amounts or accrued interest.

 

28.                                 Attorneys’ Fees. If this Leasehold Mortgage
shall be foreclosed, or if any of the other Loan Documents are placed in the
hands of an attorney for collection or is collected through any court, including
any bankruptcy court, Mortgagor, to the extent permitted by applicable law,
shall pay to Lender reasonable attorneys’ fees, court costs, disbursements and
other costs incurred (irrespective of whether litigation is commenced in
pursuance thereof) in collecting or attempting to collect the Obligations or
enforcing or defending Lender’s rights hereunder, or under the other Loan
Documents, or under any other collateral securing the Obligations, and all
allowances provided by law, to the extent allowed by the laws of the state in

 

15

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which the Property is located, or any state in which any of such other
collateral for the Obligations is situated, or other applicable law.

 

29.                                 Discontinuance of Action. Lender may from
time to time, to the extent permitted by applicable law, take action to recover
any sums, whether interest, principal or any other obligation or sums, required
to be paid under this Leasehold Mortgage or the other Loan Documents, as the
same become due, without prejudice to the right of Lender thereafter to bring an
action of foreclosure, or any other action, for a default existing when such
earlier action was commenced. If Lender shall have proceeded to enforce any
right under this Leasehold Mortgage or the other Loan Documents, and such
proceedings shall have been discontinued or abandoned for any reason, then in
every such case Mortgagor and Lender shall be restored to their former positions
and the rights, remedies and powers of all parties hereto shall continue as if
no such proceedings had been taken.

 

30.                                 Taxes.

 

a)                                      Upon passage after the date of this
Leasehold Mortgage of any law of the United States, the State of Illinois or any
other governmental entity which deducts from the value of real  property, for
purposes of taxation, any indebtedness secured by mortgages or which changes in
any way the laws for the taxation of mortgages or debts secured by mortgages for
State or local purposes or the manner of the collection of any such taxes, and
which imposes a tax, either directly or indirectly, on this Leasehold Mortgage
or all or any part of the sum secured hereby or the interest thereon, Lender may
declare the whole of the Obligations and the interest accrued thereon, due on a
date to be specified by not less than thirty (30) days’ written notice to
Mortgagor; provided, however, that such declaration shall be ineffective if
Mortgagor is permitted by law to pay such tax in addition to all other payments
required hereunder, without any penalty or charge thereby accruing to Lender,
and if Mortgagor pays such tax on or before the date specified by Lender in such
notice.

 

b)                                     Mortgagor shall pay any taxes except
income taxes imposed on Lender relating to this Leasehold Mortgage.

 

31.                                 Recording and Other Fees; Further
Assurances. Mortgagor shall pay all recording and filing fees, all recording
taxes and all other costs and expenses in connection with the preparation,
execution and recordation and other manner of perfection of this Leasehold
Mortgage and any other Loan Documents, and shall reimburse Lender on demand for
all costs and expenses of any kind incurred by or on behalf of Lender in
connection therewith. Mortgagor agrees to execute and deliver promptly such
instruments and other documents, and promptly to take such action or promptly
refrain from taking such action, as Lender may request, from time to time, to
evidence, create, perfect, continue or otherwise assure Lender of the real and
personal property security interests granted, or purported to be granted, to or
for the benefit of Lender hereunder and all other rights and benefits granted,
or purported to be granted, to or for the benefit of Lender hereunder; all at
the sole cost and expense of Mortgagor. Without limiting the generality of the
foregoing, Mortgagor shall, at any time on request of Lender, execute or cause
to be executed and shall deliver financing statements, continuation statements,
security agreements, or the like, in respect of any Property and Mortgagor shall
pay all filing fees,

 

16

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including, without limitation, fees for filing continuation statements, in
connection with such financing statements.

 

32.                                 Forbearance by Lender not a Waiver. Any
forbearance by Lender in the exercise of any right or remedy hereunder, under
the Notes, or otherwise afforded by applicable law, shall not be a waiver of or
preclude the exercise of any such right or remedy. Any waiver by Lender of an
Event of Default must be explicitly stated in writing signed by Lender and shall
not be deemed a waiver of any other Event of Default or of the same type of
Event of Default on any other occasion in the future.

 

33.                                 Mortgagor Not Released. Extension of the
time for payment or modification of the amortization of the sums secured by this
Leasehold Mortgage granted by Lender shall not in any manner operate to release
the liability of Mortgagor or any endorser or guarantor, except strictly in
accordance with the terms of any  such extension or modification. Lender may
grant such extension or modification without consent of any endorser or
guarantor. No such extension or modification shall affect the priority of this
Leasehold Mortgage or impair the security hereof.

 

34.                                 Remedies Cumulative. All remedies provided
in this Leasehold Mortgage are distinct and cumulative to any other right or
remedy under this Leasehold Mortgage, the other Loan Documents, or afforded by
law or equity, and may be exercised concurrently, independently, or
successively.

 

35.                                 Release. Any part of the Property may be
released from the lien and security interest of this Leasehold Mortgage without
affecting the lien and security interest of the remaining Property. Upon payment
and performance in full of all Obligations hereunder, Lender shall, at
Mortgagor’s expense, cause to be filed a release of this Leasehold Mortgage and
suitable statements of termination of any financing statement on file evidencing
Lender’s reasonable termination fee as determined by Lender from time to time.
If, however, payment is made by Mortgagor, whether voluntarily or otherwise, or
by Guarantor or by any third party, on the indebtedness and thereafter Lender is
forced to remit the amount of that payment (a) to Mortgagor’s trustee in
bankruptcy or to any similar person under any federal or state bankruptcy law or
law for the relief of debtors, (b) by reason of any judgment, decree or under
any court or administrative body having jurisdiction over Lender or any of
Lender’s property, or (c) by reason of any settlement or compromise of any claim
made by Lender with any claimant (including without limitation Mortgagor), the
indebtedness shall be considered unpaid for the purpose of enforcement of this
Mortgage and this Mortgage shall continue to be effective or shall be
reinstated, as the case may be, notwithstanding any cancellation of this
Mortgage or of any note or other instrument or agreement evidencing the
indebtedness and the Property will continue to secure the amount repaid or
recovered to the same extent as if that amount never had been originally
received by Lender, and Mortgagor shall be bound by any judgment, decree, order,
settlement or compromise relating to the Obligations or to this Mortgage.

 

36.                                 Possession. Until in default, Mortgagor may
remain in possession and control of and operate and manage the Property and
collect the rents from the Property.

 

37.                                 NOTICES. ALL NOTICES, DEMANDS, CONSENTS,
APPROVALS AND REQUESTS GIVEN OR REQUIRED TO BE GIVEN BY ANY PARTY HERETO TO ANY
OTHER PARTY HERETO SHALL BE IN WRITING AND DELIVERED (A) IN

 

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PERSON, BY MESSENGER OR OVERNIGHT COURIER, (II) BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED AND POSTAGE PREPAID, OR (III) BY FACSIMILE, TO THE
APPLICABLE PARTY AT ITS ADDRESS OR FACSIMILE NUMBER SET FORTH BELOW, OR AT SUCH
OTHER ADDRESS OR FACSIMILE NUMBER AS SUCH PARTY HEREAFTER MAY DESIGNATE AS ITS
ADDRESS FOR COMMUNICATIONS HEREUNDER BY NOTICE SO GIVEN.

 

If to Mortgagor:

 

Blackhawk Biofuels, LLC

 

 

22 South Chicago Avenue

 

 

Freeport, Illinois  61032-4230

 

 

Attention:  Ronald L. Mapes, Chair

 

 

Facsimile:  (815) 235-4727

 

 

 

and also:

 

Lindquist & Vennum PLLP

 

 

4200 IDS Center

 

 

80 South Eighth Street

 

 

Minneapolis, Minnesota  55402-2274

 

 

Attention:  Dean R. Edstrom, Esq.

 

 

Facsimile:  (612) 371-3207

 

 

 

and also:

 

Renewable Energy Group, Inc.

 

 

416 S. Bell Avenue

 

 

PO Box 888

 

 

Ames, Iowa 50010

 

 

Attention:  Jeffrey Stroburg

 

 

Facsimile:  (515) 239-8009

 

 

 

and also:

 

Nyemaster, Goode, West, Hansell & O’Brien, PC

 

 

700 Walnut Street, Suite 1600

 

 

Des Moines, Iowa 50309-3899

 

 

Attention:  Rick Neumann

 

 

Facsimile No.: (515) 283-3108

 

 

 

If to Lender:

 

Fifth Third Bank

 

 

8000 Maryland Avenue, Suite 1400

 

 

St. Louis, Missouri  63105

 

 

Attention:  Shawn Hagan and Mary Ann Lemonds

 

 

Facsimile No.:  (314) 889-3377

 

 

 

and also:

 

Husch Blackwell Sanders LLP

 

 

190 Carondelet Plaza, Suite 600

 

 

St. Louis, Missouri  63105

 

 

Attention:  Edward J. Lieberman

 

 

Facsimile No.:  (314) 480-1505

 

Such notices and communications shall be deemed delivered upon receipt (or
refusal to accept delivery) provided that all notices and communications sent by
facsimile shall also be evidenced

 

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by the facsimile machine’s confirmation identifying the recipient’s facsimile
number and transmission and provided further that all notices or other
communications sent by facsimile shall also delivered by another means permitted
by under this Section.

 

38.                                 Severability. If any term or provision of
this Leasehold Mortgage or the application thereof to any Person or circumstance
shall to any extent be invalid or unenforceable, the remainder of this Leasehold
Mortgage, or the application of such term or provision to Persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each term and provision of this Leasehold Mortgage
shall be valid and enforceable to the fullest extent permitted by law. If any
payments (including, without  limitation, any interest payments) required to be
made hereunder or under the other Loan Documents shall be in excess of the
amounts allowed by law, the amounts of such payments shall be reduced to the
maximum amounts allowed by law.

 

39.                                 Indemnification Against Liabilities.
Mortgagor shall protect, indemnify, hold harmless and defend Lender from and
against any and all liabilities, obligations, claims, damages, penalties, causes
of action, costs and expenses (including, without limitation, attorneys’ fees
and expenses) imposed upon incurred by or asserted against Lender by reason of
(a) ownership of an interest in the Property, (b) any accident or injury to or
death of Persons or loss of or damage to or loss of the use of property
occurring on or about the Property, or the adjoining sidewalks, curbs, vaults
and vault spaces, if any, streets, alleys or ways, (c) any use, non-use or
condition of the Property, or the adjoining sidewalks, curbs, vaults and vault
spaces, if any, streets, alleys or ways, (d) any failure on the part of
Mortgagor to perform or comply with any of the terms of this Leasehold Mortgage
or the other Loan Documents, (e) performance of any labor or services or the
furnishing of any materials or other property in respect of the Property made or
suffered to be made by or on behalf of Mortgagor, (f) any negligence or other
tortious act on the part of Mortgagor or any of its agents, contractors,
lessees, licensees or invitees, or (g) any work in connection with any
alterations, changes, new construction or demolition of the Property; except to
the extent that any such liabilities, obligations, claims, damages, penalties,
causes of actions, costs or expenses are, caused by, or otherwise arise out of,
Lender’s gross negligence or intentional misconduct. Mortgagor will pay and hold
Lender harmless against any and all liability with respect to any intangible
personal property tax or similar imposition of the state in which the Property
is located or any subdivision or authority thereof now or hereafter in effect,
to the extent that the same may be payable by Lender in respect of this
Leasehold Mortgage, the other Loan Documents or the Obligations. All amounts
payable to Lender under this section shall be payable on demand and shall be
deemed Obligations secured by this Leasehold Mortgage and any such amounts which
are not paid within five days after demand therefor shall bear interest at the
Default Rate from the date of such demand. In case any action, suit or 
proceeding is brought against Lender by reason of any such occurrence,
Mortgagor, upon request of Lender will, at Mortgagor’s expense, resist and
defend such action, suit or proceeding or cause the same to be resisted or
defended by counsel designated by Mortgagor and approved by Lender. All of
Mortgagor’s obligations under this section shall survive the foreclosure,
release or other termination of this Leasehold Mortgage and the satisfaction of
the Obligations.

 

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40.                                 Environment.

 

(a)                                  With respect to the Property, Mortgagor
shall at all times comply in all respects with all Environmental Laws. Lender
shall not assume or be deemed to assume any responsibility, liability, or
obligation with respect to compliance with any federal, state, or local
environmental law, rule, regulation, order, permit, license, ordinance, judgment
or decree; provided, however, that in the event of the imposition or assumption
for any reason whatsoever of any such responsibility, liability, or obligation,
Mortgagor agrees to indemnify and hold Lender harmless from and against any and
all claims, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements, of any kind or nature
whatsoever, including without limitation, attorneys’ and experts’ fees, which
may be imposed on, incurred by or asserted against it in any way relating to or
arising from the Obligations, this Leasehold Mortgage, the other Loan Documents
and/or the Property. All of Mortgagor’s obligations under this section shall
survive the foreclosure, release or other termination of this Leasehold Mortgage
and the satisfaction of the Obligations.

 

(b)                                 Notices. Mortgagor shall give prompt written
notice to Lender of:

 

i)                                         any proceeding or written inquiry by
any governmental authority with respect to the presence of any Hazardous
Substance on the Property or the migration thereof from or to other property;

 

ii)                                      all written claims made or threatened
by any third party against Mortgagor or the Property relating to any loss or
injury resulting from any Hazardous Substance;

 

iii)                                   Mortgagor’s discovery of any occurrence
or condition on the Property or any real property adjoining or in the vicinity
of the Property that would reasonably be expected to cause the Property or any
part thereof to be subject to any material restrictions on the ownership,
occupancy, transferability or use of the Property under any applicable
Environmental Law, or to be otherwise subject to any material restrictions on
the ownership, occupancy, transferability or use of the Property under any
applicable Environmental Law;

 

iv)                                  the discovery of any release of a Hazardous
Substance at, on or under or from the Property which must be reported to a
governmental authority under any applicable Environmental Law or which may
require remediation under any Environmental Law;

 

v)                                     any written notice of violation or
complaint from a governmental authority and relating to an applicable
Environmental Law;

 

vi)                                  any written notices or reports Mortgagor
provides to a governmental authority relating to instances of noncompliance with
an applicable Environmental Law; and

 

v)                                     any written application Mortgagor
provides to a governmental authority to obtain or amend a permit or approval
relating to the generation,

 

20

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storage, processing, emission, treatment, or disposal of a Hazardous Substance
or air contaminant.

 

Notwithstanding the foregoing, Mortgagor’s notice requirements with respect to
any matter involving Property consisting of facilities leased by the Mortgagor
for the storage and/or handling of Inventory shall be limited to those matters
to which Mortgagor has knowledge.

 

c)                                      Legal Proceeding. Lender shall have the
right to join and participate in, as a party if it so elects, any legal
proceedings or actions initiated with respect to the Property in connection with
any Environmental Law and have Lender’s reasonable attorneys’ fees in connection
therewith paid by Mortgagor.

 

d)                                     Remedial Work. In the event that any
investigation, site monitoring, containment, cleanup, removal, restoration or
other remedial work of any kind or nature (the “Remedial Work”) is required to
be undertaken under any applicable local, state or federal law or regulation,
any judicial order, or by any governmental entity because of, or in connection
with, the current or reasonably threatened future presence or release of a
Hazardous Substance in or into the air, soil, groundwater, surface water or soil
vapor at, on, about, under or within the Property (or any portion thereof),
Mortgagor shall promptly after written demand for performance thereof by
appropriate governmental authorities or Lender (or such shorter period of time
as may be required under any applicable law, regulation, order or agreement or,
if any applicable law, regulation, order or agreement expressly specifies a
longer  period of time, such longer period), commence and thereafter diligently
prosecute to completion, all such Remedial Work. All Remedial Work shall be
performed by contractors selected by Mortgagor and approved in advance by
Lender, and under the supervision of a consulting engineer selected by Mortgagor
and approved by Lender. All costs and expenses of such Remedial Work shall be
paid by Mortgagor including, but not limited to, Lender’s reasonable attorneys’
fees and reasonable costs incurred in connection with its monitoring or review
of such Remedial Work. In the event Mortgagor shall fail to timely commence, or
cause to be commenced, or fail to diligently prosecute to completion, such
Remedial Work following Lender’s written notice to Mortgagor of such alleged
failure and adequate time for Mortgagor to correct such alleged failure, Lender
may, but shall not be required to, cause such Remedial Work to be performed and
all reasonable costs and expenses thereof, or incurred in connection therewith,
shall become part of the indebtedness secured hereby.

 

e)                                      Environmental Risk Assessment. At any
time (a) the Lender reasonably believes that Hazardous Substances have been
disposed of on, or have been released to or from any of the Property and such
release or disposal may reasonably be expected to result in liability to
Mortgagor or Lender under applicable Environmental Laws (a “Triggering Event”),
or (b) after an Event of Default within thirty (30) days after a written request
therefor by Lender, Mortgagor shall deliver to Lender a report prepared at
Mortgagor’s expense by an environmental consultant acceptable to Mortgagor
detailing the results of an environmental investigation with respect to the
Triggering Event or the matter resulting in the Event of Default the scope of
which is acceptable to Lender, including results of any soil and ground water
samples that may have been taken in connection with such investigation.

 

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41.                                 No Representations. By accepting or
approving anything required to be observed, performed or fulfilled, or to be
given to Lender pursuant to this Leasehold Mortgage or the other Loan Documents,
including, but not limited to, any officer’s certificate, balance sheet,
statement of profit and loss or other financial statement, survey, appraisal or
insurance policy, Lender shall not be deemed to have warranted or represented
the sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance or approval thereof
shall not be or constitute any warranty or representation with respect thereto
by Lender.

 

42.                                 Certain Definitions. The following terms
shall, for all purposes of this Leasehold Mortgage, have the respective meanings
herein specified unless the context otherwise requires:

 

“Applicable Margin” shall mean the amount set forth below that shall be added to
LIBOR to determine the applicable per annum interest rate under the
Construction/Term Loan after the Conversion Date, which amount shall be based
upon (i) Borrower’s EBITDA on an annualized basis until the Biodiesel Plant has
been in operation for four (4) full fiscal quarters and (ii) Borrower’s Rolling
Four-Quarter EBITDA when the Biodiesel Plant has been in operation for four
(4) full fiscal quarters and thereafter:

 

Annualized EBITDA/Rolling Four-Quarter EBITDA

 

Applicable Margin

 

Equal to or greater than $7,000,000

 

225 bps

 

Equal to or greater than $6,000000 but less than $7,000,000

 

250 bps

 

Equal to or greater than $5,000000 but less than $6,000,000

 

275 bps

 

Equal to or greater than $4,000000 but less than $5,000,000

 

300 bps

 

Less than $4,000,000

 

325 bps

 

 

Upon delivery of the quarterly statements and the compliance certificate
pursuant to Section 7.12, the Lender will review and confirm the Borrower’s
calculation of its annualized EBITDA or Rolling Four-Quarter EBITDA, as
applicable, for such fiscal quarter. The Applicable Margin shall automatically
be adjusted in accordance with the annualized EBITDA or Rolling Four-Quarter
EBITDA, as applicable, of the Borrower as of the end of each fiscal quarter,
such automatic adjustment to take effect as of the first day of the second
calendar month after the end of the fiscal quarter to which the quarterly
financial statement and compliance certificate relate. If the Borrower fails to
deliver such financial statements and compliance certificate for a particular
fiscal quarter, which set forth the Rolling Four-Quarter EBITDA of the Borrower
for that quarter, within the period of time required by Section 7.12 (and said
failure to deliver said financial statements is not waived by Lender in writing)
or if a Default occurs, then the Applicable Margin shall be automatically
adjusted to the highest Applicable Margin listed above, with such automatic
adjustments (a) to take effect immediately and (b) to remain in effect until
subsequently adjusted in accordance herewith upon the delivery of the required
financial statements and compliance certificate for the following fiscal quarter
or, in the event of a Default, when such Default shall have been cured or waived
by the Lender. Any automatic adjustment in the Applicable Margin due to
(i) Borrower’s failure to deliver its financial statements and compliance
certificate for a particular quarter or (ii) the occurrence of a Default, shall
not be deemed to be a waiver by Lender of any such Default.

 

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“Business Day” shall mean any day other than a Saturday, Sunday or a legal
holiday on which banks are authorized or required to be closed for the conduct
of commercial banking business in St. Louis, Missouri.

 

“Conversion Date” shall mean the date of Lender’s receipt of Mortgagor’s
compliance certificate for the fiscal quarter ended June 30, 2009.

 

“Construction/Term Loan Maturity Date” shall mean November 3, 2011.

 

“Default” means an event that, with giving of notice or passage of time or both,
would constitute an Event of Default.

 

“Default Rate” means a variable rate of interest per annum equal to the Prime
Rate plus four percent (4%).

 

“EBITDA” shall mean, for any period, the Net Income for such period, plus (to
the extent deducted in computing net income) Interest Expense (including imputed
interest on capital leases), taxes, depreciation and amortization, and further
adjusted to exclude (i) any non-cash gain or loss on the sale of assets,
(ii) any gains or losses with respect to hedging or similar transactions,
(iii) extraordinary gains or losses determined in accordance with GAAP, and
(iv) any other extraordinary gains or losses as determined by Lender in its sole
discretion.

 

“Effective Date” means May 9, 2008.

 

“Environmental Laws” means any applicable laws (whether statutory, common law or
otherwise), rules, regulations, orders, permits, licenses, ordinances, judgments
or decrees of all governmental authorities (whether federal, state, local or
otherwise), including, without limitation, all laws regarding public health or
welfare, environmental protection, water or air pollution, composition of
products, underground storage tanks, toxic substances or chemicals, solid and
special wastes, hazardous wastes, substances, material or chemicals, waste,
used, or recycled oil, asbestos, occupational health and safety, nuisances,
trespass, and negligence;

 

“Event of Default” means those events set forth in Section 8.1 of the Loan
Agreement.

 

 “Guarantor” means Renewable Energy Group, Inc., a Delaware corporation, or any
other Person who becomes a guarantor of all or any portion of the Obligations,
each referred to individually as Guarantor and collectively as the Guarantors.

 

“Hazardous Substance” means one or more of the following substances:

 

A.                                   those substances included within the
definitions of “hazardous substances,” “hazardous materials” or “toxic
substances,” in CERCLA, SARA, RCRA, Toxic Substances Control Act, Federal
Insecticide, Fungicide and Rodenticide Act and the Hazardous Materials
Transportation Act (49 U.S.C. Sections 1801 et seq.);

 

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B.                                     such other substances, materials and
wastes which are or become regulated as hazardous or toxic under applicable
local, state or federal law, or the United States government, or which are
classified as hazardous or toxic under federal, state, or local laws or
regulations; and

 

C.                                     any material, waste or substance which is
(i) asbestos, (ii) polychlorinated biphenyls, (iii) designated as a “hazardous
substance” pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Sections
1251 et seq. (33 U.S.C. §1321) or listed pursuant to Section 307 of the Clean
Water Act (33 U.S.C. §1317), (iv) explosives, (v) radioactive materials, or
(vi) petroleum, petroleum products or any fraction thereof.

 

 “Interest Expense” means, for a fiscal year-to-date period, the total gross
interest expense of Mortgagor and its Subsidiaries during such period, and shall
in any event include (i) interest expensed (whether or not paid) on all
Indebtedness, (ii) the amortization of debt discounts, (iii) the amortization of
all fees payable in connection with the incurrence of Indebtedness to the extent
included in interest expense, and (iv) the portion of any capitalized lease
obligation allocable to interest expense. For purposes of the definition of
Interest Expense only, the definition of “Indebtedness” shall mean, without
duplication, (i) obligations for borrowed money or for the deferred purchase
price of property or services in respect of which the Mortgagor is liable,
contingently or otherwise, as an obligor, guarantor or otherwise, or in respect
of which the Mortgagor otherwise assures a creditor against loss; (ii) all other
obligations or items which, in accordance with GAAP, would be shown on the
liability side of a balance sheet as of the date of occurrence thereof;
(iii) the face amount of all letters of credit issued and, without duplication,
all drafts drawn thereunder; (iv) all obligations secured by any lien on any
property or asset; (iv) obligations under leases which shall have been or should
be, in accordance with GAAP, recorded as capital leases in respect of which,
obligations the Mortgagor is liable, contingently or otherwise, as an obligor,
guarantor or otherwise, or in respect of which obligations the Mortgagor
otherwise assures a creditor against loss; and (v) unfunded vested benefits
under each Plan maintained for employees of the Mortgagor.

 

“LIBOR” shall mean the fluctuating rate of interest (rounded upwards, if
necessary, to the next 1/8 of 1% and adjusted for reserves if Lender is required
to maintain reserves with respect to relevant advances) being asked on thirty
(30) day Eurodollar deposits, as reported on page Reuters Screen LIBOR01 Page or
any successor thereto, (or any successor) as determined by Lender at
approximately 10:00 a.m. Cincinnati, Ohio time on the relevant date of
determination. In the event that the Board of Governors of the Federal Reserve
System shall impose a Reserve Percentage with respect to LIBOR deposits of
Lender then for any period during which such Reserve Percentage shall apply,
LIBOR shall be equal to the amount determined above divided by an amount equal
to 1 minus the Reserve Percentage.

 

“Net Income” means, for any period of calculation, the net income of Mortgagor
and its Subsidiaries as determined in accordance with GAAP.

 

“Person” means an individual, corporation, partnership, trust, governmental
entity or  any other entity, organization or group whatsoever.

 

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“Prime Rate” means the rate of interest announced publicly by Lender from time
to time as its prime rate or other designation in replacement of the prime rate
announced by Lender. Such rate may not necessarily be the lowest interest rate
offered by Lender.

 

“Revolving Credit Loan Termination Date” shall mean May [9], 2009.

 

“Rolling Four-Quarter EBITDA” means, as to any Person, such Person’s EBITDA for
the previous four (4) fiscal quarters measured as of the last day of the last
fiscal quarter then ended.

 

“Subsidiary” means any subsidiary of the Mortgagor.

 

43.                                 Successors and Assigns. The terms, covenants
and provisions of this Leasehold Mortgage shall apply to and be binding upon
Mortgagor and all subsequent owners and other Persons who have an interest in
the Property, and shall inure to benefit of Lender, the successors and assigns
of Lender, and all subsequent holders of this Leasehold Mortgage, but the
provisions of this section shall not be construed to modify the provisions of
this Leasehold Mortgage relating to default upon transfer of the Property.

 

44.                                 Waiver of Jury Trial. TO THE FULLEST EXTENT
PERMITTED BY LAW, AND AS SEPARATELY BARGAINED-FOR CONSIDERATION TO LENDER,
MORTGAGOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH LENDER ALSO WAIVES) IN
ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
OTHERWISE RELATING TO THIS MORTGAGE, ANY DOCUMENTS, INSTRUMENTS OR AGREEMENTS
EXECUTED AND DELIVERED IN CONNECTION HEREWITH, THE OBLIGATIONS, OR LENDER’S
CONDUCT IN RESPECT OF ANY OF THE FOREGOING. TO EFFECTUATE THE FOREGOING, LENDER
IS HEREBY GRANTED AN IRREVOCABLE POWER OF ATTORNEY TO FILE, AS ATTORNEY-IN-FACT
FOR EACH MORTGAGOR, A COPY OF THIS AGREEMENT IN ANY COURT, AND THE COPY OF THIS
AGREEMENT SO FILED SHALL CONCLUSIVELY BE DEEMED TO CONSTITUTE MORTGAGOR’S WAIVER
OF TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR OTHERWISE RELATING TO ANY
OF THE LOAN DOCUMENTS, THE OBLIGATIONS, THE COLLATERAL OR LENDER’S CONDUCT IN
RESPECT OF ANY OF THE FOREGOING..

 

45.                                 Venue. Any litigation under this Leasehold
Mortgage shall be commenced in the circuit courts of the State of Missouri, with
venue in St. Louis County, Missouri; provided, however, that any litigation with
respect to the foreclosure or realization upon the Mortgagee’s security interest
in the Leased Premises shall be commenced in the district courts of the county
in which the Leased Premises is located.

 

46.                                Miscellaneous.

 

a)                                      This Leasehold Mortgage and its
provisions cannot be changed, waived, discharged or terminated orally but only
by an agreement in writing, signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.

 

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b)                                     This Leasehold Mortgage and the rights of
the parties hereunder shall for all purposes be governed by the internal laws of
the State of Illinois.

 

c)                                      This Leasehold Mortgage shall be
construed without regard to any presumption or rule requiring construction
against the party causing such instrument or any portion thereof to be drafted.

 

d)                                     All terms and words used in this
Leasehold Mortgage, regardless of the number or gender in which they are used,
shall be deemed to include any other number and any other gender as the context
may require.

 

e)                                      If there shall be more than one
Mortgagor, the representations, warranties, covenants and other obligations of
Mortgagor hereunder shall be the joint and several representations, warranties,
covenants and other obligations of each and every Mortgagor. Whenever the terms
of this Leasehold Mortgage prohibit Mortgagor from doing or permitting to be
done, whether voluntarily or otherwise, any act or event, any such negative
covenants shall apply to each and every Mortgagor and the failure of any one
Mortgagor in respect thereof shall be deemed a default of such negative covenant
notwithstanding that any other Mortgagor may not be in default of such negative
covenant.

 

f)                                        The section headings in this Leasehold
Mortgage are for convenience of reference only and shall not limit or otherwise
affect any of the terms hereof.

 

g)                                     All covenants contained herein shall run
with the Property until the Obligations have been fully paid and performed.

 

h)                                     Time is of the essence in the payment and
performance by Mortgagor of the Obligations.

 

[SIGNATURE PAGE TO FOLLOW]

 

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MORTGAGOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS MORTGAGE, AND
MORTGAGOR AGREES TO ITS TERMS.

 

 

 

MORTGAGOR:

 

 

 

BLACKHAWK BIOFUELS, LLC

 

 

 

 

 

By:

      /S/ Ronald L. Mapes

 

 

Ronald L. Mapes, Chair

 

 

ACKNOWLEDGMENT

 

STATE OF Illinois

)

 

 

 

 

 

) SS

 

 

 

 

COUNTY OF Carroll

)

 

 

Be it known, that on this 29 day of April, 2008, personally appeared before me
Ronald L. Mapes, who, being by me duly sworn did depose and say that he is the
Chair of BLACKHAWK BIOFUELS, LLC, a Delaware limited liability company, that the
foregoing instrument was signed on behalf of said limited liability company by
authority of its members, and said person acknowledged the within instrument to
be the free act and deed of said limited liability company.

 

In Testimony Whereof, I have hereunto set my hand and affixed my official seal
in the State and County aforesaid on the day and year first above written.

 

 

 

/S/ Mary A. Turnbaugh

 

Notary Public

 

 

My term expires: 5-14-2011

 

 

 

 

OFFICIAL SEAL

 

MARY A. TURNBAUGH

 

NOTARY PUBLIC – STATE OF ILLINOIS

 

MY COMMISSION EXPIRES:05/14/11

 

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EXHIBIT A

 

Legal Description of Leased Premises

 

A tract of land being part of the Northwest Quarter of Section 9, Township 19
North, Range 11 West of the Second Principal Meridian, Vermilion County,
Illinois and also part of Chs’ Leverenz First Addition to the City of Danville,
Vermilion County, Illinois, Edward C. Lamm’s Addition to Danville, Illinois and
Fred Stebe’s Addition to the City of Danville, Vermilion County, Illinois as all
3 subdivisions are recorded in the Vermilion County Recorder’s Office, and also
the vacated public Right-of-Ways for Section Street, Short Street, Anderson
Street, Harrison Street and the public alleys per City of Danville, Illinois
Ordinance Number 8499, recorded as Document Number 06-12386 in said Vermilion
County Recorder’s Office, described as follows, with bearings on a local datum:

 

Beginning at the Northeast corner of Lot 1 in said Chs’ Leverenz First Addition,
proceed North 88° 26’ 08” East along an Easterly extension of the North line of
said Lot, 24.06 feet to the Westerly Right-of-Way line of the former C. & E. I.
Railroad; thence South 23° 16’ 43” East along said Westerly Right-of-Way line of
the former C. & E. I. Railroad, 96.74 feet to the East Right-of-Way line of
Anderson Street; thence South 2° 27’ 08” West along said East Right-of-Way line
of Anderson Street, 75.37 feet to an Easterly extension of the South line of
said Lot 1; thence South 88° 25’ 51” West along said extension of the South
line, 66.16 feet to the Southeast corner of said Lot 1; thence South 2° 27’ 08”
West along a Southerly extension of the East line of said Lot, 50.12 feet to the
Northeast corner of Lot 1 in Christ Evert’s 1st Addition to the City of
Danville, Illinois, as recorded in said Vermilion County Recorder’s Office, said
corner also being on the South Right-of-Way line of Harrison Street; thence
South 88° 25’ 51” West along said South Right-of-Way line of Harrison Street,
280.15 feet; thence South 88° 31’ 59” West along said South Right-of-Way line of
Harrison Street, 443.13 feet; thence North 2° 35’ 14” East along said South
Right-of-Way line of Harrison Street, 25.15 feet; thence South 88° 31’ 59” West
along said South Right-of-Way line of Harrison Street, 220.89 feet to the West
Right-of-Way line of Section Street; thence North 2° 48’ 17” East along said
West Right-of-Way line of Section Street, 305.28 feet to a line being a Westerly
extension of the North line of Lot 12 in said Edward C. Lamm’s Addition; thence
North 88° 33’ 27” East along said Westerly extension of the North line and along
said North line, 66.54 feet to the Northeast corner of said Lot 12; thence South
2° 45’ 04” West along the East line of said Lot, 124.94 feet to the Southeast
corner of said Lot 12; thence North 88° 32’ 47” East along the South lines of
Lots 11, 10, 9, 8 and 7 in said Edward C. Lamm’s Addition, 250.60 feet to the
Southeast corner of said Lot 7; thence North 2° 28’ 42” East along the East line
of said Lot, 124.85 feet to the Northeast corner of said Lot 7; thence North 88°
33’ 27” East along an Easterly extension of the North line of said Lot 7 and
along the North lines of Lots 6, 5, 4, 3, 2 and 1 in said Edward C. Lamm’s
Addition and along an Easterly extension of said North lines, 344.04 feet to the
West line of Lot 9 in said Fred Stebe’s Addition; thence North 2° 09’ 08” East
along said West line, 30.56 feet to the Northwest corner of said Lot 9; thence
North 88° 29’ 47” East along the North line of said Lot, 56.31 feet to the
Northeast corner of said Lot 9; thence South 2° 11’ 37” West along the East line
of said Lot, 128.36 feet to the Southeast corner of said Lot 9; thence South 88°
26’ 08” West along the South line of said Lot, 56.22 feet to the Southwest
corner of said Lot 9; thence South 2° 09’ 06” West along a Northerly extension
of the West line of Lot 4 in said Chs’ Leverenz First Addition, 16.50 feet to
the Northwest corner of said Lot 4; thence North 88° 26’ 08” East along the
North line of said Lot 4 and along the North lines of Lots 3 and 2 and said
North line of Lot 1, all in said Chs’ Leverenz First Addition, 281.02 feet to
the Point of Beginning, encompassing 5.924 acres more or less.

 

Tax Identification

23-09-107-006 —  707 E Harrison, Danville, Illinois

Numbers and Common

23-09-106-017 —  602 E Madison, Danville, Illinois

Addresses:

23-09-105-009 —  710 E Harrison, Danville, Illinois

 

23-09-106-012 —  614 E Madison, Danville, Illinois

 

23-09-106-011 —  610 E Madison, Danville, Illinois

 

23-09-106-010 —  608 E Madison, Danville, Illinois

 

23-09-106-009 —  606 E Madison, Danville, Illinois

 

23-09-106-008 —  604 E Madison, Danville, Illinois

 

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EXHIBIT B

 

Legal Description of Soybean Oil Pipeline Easement

 

A tract of land being 20.00 feet in width and being centered upon the following
described center line and being part of the North one-half of Section 9,
Township 19 North, Range 11 West of the Second Principal Meridian, Vermilion
Country, Illinois, described as follows, with bearing on a local datum:

 

Commencing at the Northeast corner of Lot 1 in Christ Evert’s 1st Addition to
the City of Danville, Illinois, as recorded in the Vermilion County recorder’s
office, said corner also being on the South Right-of-Way line of vacated
Harrison Street (platted as Madison Street), proceed South 88° 25’ 51” West
along said South Right-of-Way line, 280.15 feet; thence South 88° 31’ 59” West
along said South Right-of-Way line, 161.63 feet to the True Point of Beginning
of said center line; thence South 00° 05’ 56” West, 116.68 feet; thence South
45° 14’ 48” East, 46.13 feet; thence South 81° 16’ 37” East, 58.62 feet; thence
North 50° 05’ 48” East, 34.72 feet to the point of ending of said center line.

 

Tax Identification Numbers:

23 09 108 005

 

23 09 108 006

 

23 09 100 132

 

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EXHIBIT C

 

Legal Description of Access Right of Way Easement

 

A tract of land being a part of the North one-half of Section 9, Township 19
North, Range 11 West of the Second Principal Meridian, Vermilion County,
Illinois, described as follows, with bearings on a local datum:

 

Commencing at the Northeast corner of Lot 1 in Christ Evert’s 1st Addition to
the City of Danville, Illinois, as recorded in the Vermilion County recorder’s
office, said corner also being on the South Right-of-Way line of vacated
Harrison Street (platted as Madison Street), proceed South 88° 25’ 51” West
along said South Right-of-Way line, 280.15 feet; thence South 88° 31’ 59” West
along said South Right-of-Way line, 184.85 feet to the True Point of Beginning;
thence continue South 88° 31’ 59” West along South Right-of-Way line, 50.30
feet; thence South 33° 31’ 40” East, 42.68 feet; thence South 00° 57’  00” West,
405.00 feet; thence South 20° 47’ 53” East, 210.22 feet; thence North 74° 55’
37” East, 42.68 feet, thence South 15° 19’ 21” East, 136.89 feet; thence South
02° 33’ 00” West, 16.14 feet to the North Right-of-Way line of North Street;
thence South 87° 27’ 00” East along said North Right-of-Way line, 180.54 feet;
thence North 02° 23’ 00” East, 351.45 feet; thence South 88° 09’ 07” West,
130.15 feet; thence North 02° 27’ 08” East, 138.58 feet; thence South 88° 16’
50” West, 195.96 feet; thence North 00° 57’ 00” East, 300.00 feet; thence North
16° 15’ 59” East, 4.15 feet to the True Point of Beginning, encompassing 2.922
acres more or less.

 

Tax Identification   Numbers:

23 09 117 014

 

23 09 111 018

 

23 09 100 132

 

23 09 108 004

 

23 09 108 005

 

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EXHIBIT D

 

Legal Description of Underground Gas Pipeline Easement

 

A tract of land being 12.00 feet in width and being centered upon the following
described center line and being part of the North one-half of Section 9,
Township 19 North, Range 11 West of the Second Principal Meridian, Vermilion
Country, Illinois, described as follows, with bearing on a local datum:

 

Commencing at the Northeast corner of Lot 1 in Christ Evert’s 1st Addition to
the City of Danville, Illinois, as recorded in the Vermilion County recorder’s
office, said corner also being on the South Right-of-Way line of vacated
Harrison Street (platted as Madison Street), proceed South 88° 25’ 51” West
along said South Right-of-Way line, 6.00 feet to the True Point of Beginning of
said center line; thence South 02° 27’ 08” West along a line being parallel with
the West Right-of-Way line Anderson Street, 309.50 feet; thence South 88° 33’
32” West, 477.00 feet; thence South 02° 03’ 14” East, 133.94 feet; thence South
08° 49’ 38” East, 50.50 feet; thence South 68° 39’ 13” West, 109.57 feet; thence
South 21° 14’ 31” East, 70.33 feet; thence South 12° 47’ 11” East, 46.53 feet;
thence South 19° 46’ 04” West, 140.44 feet; thence South 01° 35’ 19” West,
204.49 feet; thence North 87° 48’ 14” West, 801.27 feet; thence North 67° 37’
59”  West, 48.04 feet; thence North 46° 31’ 27” West, 33.50 feet to the point of
ending of said center line.

 

Tax Identification   Numbers:

23 08 226 001

 

23 08 226 002

 

23 09 115 003

 

23 09 112 007

 

23 09 113 001

 

23 09 111 018

 

23 09 110 001

 

23 09 109 005

 

23 09 109 133

 

23 09 100 132

 

23 09 100 014

 

23 09 100 016

 

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EXHIBIT E

 

Legal Description of Biodiesel Pipeline Easement

 

A tract of land being 20.00 feet in width and being centered upon the following
described center line and being part of the North one-half of Section 9,
Township 19 North, Range 11 West of the Second Principal Meridian, Vermilion
Country, Illinois, described as follows, with bearing on a local datum:

 

Commencing at the Northeast corner of Lot 1 in Christ Evert’s 1st Addition to
the City of Danville, Illinois, as recorded in the Vermilion County recorder’s
office, said corner also being on the South Right-of-Way line of vacated
Harrison Street (platted as Madison Street), proceed South 88° 25’ 51” West
along said South Right-of-Way line, 280.15 feet; thence South 88° 31’ 59” West
along said South Right-of-Way line, 443.13 feet; thence North 02° 34’ 14” East
along said South Right-of-Way line, 25.15 feet; thence South 88° 31’ 59” West
along said Right-of-Way line, 41.61 feet to the True Point of Beginning of said
center line; thence South 44° 44’ 27” West, 318.70 feet; thence North 78° 26’
57” West, 107.90 feet; thence South 66° 39’ 16” West, 59.97 feet; thence South
19° 59’ 46” West, 10.00 feet to the point of the ending of said center line.

 

Tax Identification   Number:

23 09 100 132

 

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EXHIBIT F

 

Liens and Encumbrances

 

1.

Taxes for the year(s) 2007, 2008 and subsequent years, none now due and payable.

 

 

2.

Easement recorded August 25, 1971, as Document No. 833649 made to Danville
Sanitary District to lay, operate, construct, maintain, etc., a sanitary sewer
line, etc.  (Affects Lot 13 Edward C. Lamm’s Addition)

 

 

3.

Easement recorded August 30, 1971, as Document No. 833795 made to Danville
Sanitary District to lay, operate, construct, maintain, etc., a sanitary sewer
line, etc.  (Affects Lot 14 Edward C. Lamm’s Addition)

 

 

4.

Easement recorded August 30, 1971, as Document No. 833794 made to Danville
Sanitary District to lay, operate, construct, maintain, etc., a sanitary sewer
line, etc.  (Affects Lot 15 Edward C. Lamm’s Addition)

 

 

5.

Easement recorded August 30, 1971, as Document No. 833793 made to Danville
Sanitary District to lay, operate, construct, maintain, etc., a sanitary sewer
line, etc.  (Affects Lot 16 Edward C. Lamm’s Addition)

 

 

6.

Easement recorded August 30, 1971, as Document No. 833813 made to Danville
Sanitary District to lay, operate, construct, maintain, etc., a sanitary sewer
line, etc.  (Affects Lot 17 Edward C. Lamm’s Addition)

 

 

7.

Rights of the public and quasi-public utilities, if any, that may fall within
the boundaries of vacated alleys and streets. As per An Ordinance Vacating
Streets and Alleys approved by the City Council of the City of Danville
September 19, 2006, as Ordinance No. 8499 and recorded September 20, 2006, as
Document No. 06-12386.

 

 

8.

Ordinance No. 5624 of the City of Danville, recorded in Book 789 page 784 as
Document 817299, and Ordinance No. 6283 recorded in Book 890 page 294 as
Document 890321, and Ordinance #150 of Danville Sanitary District recorded as
Document 81-7072, providing for a lien for delinquent sewage services, subject
to rights arising prior to the filing of a notice of lien in the Office of the
Recorder of Deeds of Vermilion County, Illinois, and all amendments thereto.

 

 

9.

Easement recorded December 13, 2006 as Document No. 06-15887 made to Illinois
Power Company d/b/a AmerenIP, its successors and assigns, to install, operate,
maintain, etc. an electric and communication line or lines, etc. (Affects Lots 1
through 6 and Lot 12 Edward C. Lamm’s Addition)

 

 

10.

Terms, agreements, provisions, conditions and limitations contained in the
Lease, executed by Bunge Milling, Inc., an Illinois corporation, as Lessor, and
Biofuels Company of America, LLC, an Illinois limited liability company, as
Lessee, dated November 3, 2006, a memorandum of which was recorded November 16,
2006 as document 06-14831 and re-recorded November 22, 2006 as document
06-15109, as amended and assigned to Mortgagor pursuant to that certain First
Amendment, Assignment and Assumption and Consent to Assignment of Ground Lease
and Conveyance of Leasehold Improvements by and among Bunge Milling, Inc.,
Biofuels Company

 

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of America, LLC and Mortgagor, dated as of May 9, 2008, a memorandum of which
was recorded                            , 2008 as document
                      , demising the land for a term of years, and all rights
thereunder of said lessors, their heirs, executors, administrators and assigns,
including rents and all other charges reserved.

 

 

11.

Rights of owners of land bordering on Stony Creek in respect to the water and to
the use of the surface of said creek. (Affects Parcels 2, 3 and 5)

 

 

12.

Right of way for railroad spur track, and right of the railroad company to the
use, operation, maintenance and repair of same. (Affects Parcel 3)

 

 

13.

Rights of the public, the State of Illinois and the municipality in and to that
part of the land taken or used for road purposes (Johnson Street and North
Street. (Affects Parcels 2 and 5)

 

 

14.

Obligations of the Grantee under the Access Right of Way Easement Agreement
dated May 9, 2008, and recorded                      as document
                     made by Bunge Milling, Inc. to Blackhawk Biofuels, LLC for
access, ingress and egress.

 

 

15.

Obligations of the Grantee under the Biodiesel Pipeline Easement Agreement dated
May 9, 2008, and recorded                      as document                     
made by Bunge Milling, Inc. to Blackhawk Biofuels, LLC for constructing,
inspecting, repairing, maintaining, operating, and replacing an above-ground
biodiesel pipeline and related equipment.

 

 

16.

Obligations of the Grantee under the Soybean Oil Pipeline Easement Agreement
dated May 9, 2008, and recorded                      as document
                     made by Bunge Milling, Inc. to Blackhawk Biofuels, LLC for
constructing, inspecting, repairing, maintaining, operating, and replacing an
above-ground soybean oil pipeline and related equipment.

 

 

17.

Obligations of the Grantee under the Underground Gas Pipeline Easement Agreement
dated May 9, 2008, and recorded                      as document
                     made by Bunge Milling, Inc. to Blackhawk Biofuels, LLC for
constructing, inspecting, repairing, maintaining, operating, and replacing an
underground natural gas pipeline and related equipment.

 

34

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