Exhibit 10.16




REVOLVING
LINE OF CREDIT AGREEMENT




This
Revolving Line of Credit Agreement (the "Loan Agreement"), dated as of August
17, 2009 is by and between INTERNATIONAL BIODIESEL, INC., a Nevada corporation
(the “Borrower”) and LAIRD Q. CAGAN ("Lender”).




in
consideration of the mutual covenants, representations, warranties and
agreements herein contained, the parties hereto agree as follows:




1.  DEFINITIONS.





a. “Guarantee”
means any guarantee of the payment or performance of any Indebtedness or other
obligation and any other arrangement whereby credit is extended to one obligor
on the basis of any promise of another Person, whether that promise is expressed
in terms of an obligation to (i) pay the Indebtedness or other liabilities of
such obligor, (ii) purchase an obligation owed by such obligor, (iii) purchase
goods and services from such obligor pursuant to a take-or-pay contract, or (iv)
maintain the capital, working capital, solvency or general financial condition
of such obligor, whether or not any such arrangement is listed on the balance
sheet of such other Person or referred to in a footnote thereto, but shall not
include endorsements of items for collection in the ordinary course of
business.  The amount of any Guarantee shall be equal to the amount of
the obligation so guaranteed or, if not a fixed or determined amount, the
maximum amount guaranteed.





b. “Indebtedness”
means at a particular time, without duplication, (i) any indebtedness for
borrowed money or issued in substitution for or exchange of indebtedness for
borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or
other debt security, (iii) any indebtedness for the deferred purchase price of
property or services with respect to which a Person is liable, contingently or
otherwise, as obligor or otherwise (other than trade payables and other current
liabilities incurred in the ordinary course of business), (iv) any commitment by
which a Person assures a creditor against loss (including, without limitation,
contingent reimbursement obligations with respect to letters of credit), (v) any
obligations for which a Person is obligated pursuant to a Guarantee, (vi) any
obligations under capitalized leases with respect to which a Person is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or with respect
to which obligations a Person assures a creditor against loss, (vii) any
indebtedness secured by a Lien on a Person’s assets and (viii) any unsatisfied
obligation for “withdrawal liability” to a “multiemployer plan” as such terms
are defined under ERISA.





c. “Person”
means an individual, a partnership, a corporation, a limited liability company,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.




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2.  Lender
hereby establishes for a period extending to July 1, 2011 (the "MATURITY DATE")
a revolving line of credit (the "CREDIT LINE") for Borrower in the principal
amount of Five Million Dollars ($5,000,000.00) (the "CREDIT LIMIT"). In
connection herewith, Borrower shall execute and deliver to Lender a Promissory
Note (the “Note”) in the amount of the Credit Limit and in form and content
satisfactory to Lender. All sums advanced on the Credit Line or pursuant to the
terms of this Loan Agreement (each an "ADVANCE") shall become part of the
principal of said Note.




THE
OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT (THE
“SECURITY AGREEMENT”) DATED AS OF THE DATE HEREOF AND EXECUTED BYAE BIOFUELS,
INC. FOR THE BENEFIT OF THE LENDER.  ADDITIONAL RIGHTS OF THE LENDER
ARE SET FORTH IN THE SECURITY AGREEMENT.




3.  ADVANCES.
Any request for an Advance may be made from time to time and in such amounts as
Borrower may choose; provided, however, any requested Advance will not, when
added to the outstanding principal balance of all previous Advances, exceed the
Credit Limit. Requests for Advances may be made orally or in writing by such
officer of Borrower authorized by it to request such Advances. Until such time
as Lender may be notified otherwise, Borrower hereby authorizes its Chief
Executive Officer, President or any Vice President to request Advances. Lender
may refuse to make any requested Advance if an event of default has occurred and
is continuing hereunder either at the time the request is given or the date the
Advance is to be made, or if an event has occurred or condition exists which,
with the giving of notice or passing of time or both, would constitute an event
of default hereunder as of such dates.  The funds from the Advances
will be used by the Borrower for operating expenses in connection with the
operations of the Borrower.




4.  INTEREST.
All sums advanced pursuant to this Loan Agreement shall bear interest from the
date each Advance is made until paid in full at the rate of ten percent (10%)
per annum, simple interest (the "EFFECTIVE RATE").




5.  REPAYMENT.
The entire unpaid principal balance, together with any accrued interest and
other unpaid charges or fees hereunder, shall be due and payable on the Maturity
Date. All payments shall be made to Lender at such place as Lender may, from
time to time, designate. All payments received hereunder shall be applied,
first, to any costs or expenses incurred by Lender in collecting such payment or
to any other unpaid charges or expenses due hereunder; second, to accrued
interest; and third, to principal. Borrower may prepay principal at any time
without penalty.




6.  REPRESENTATIONS
AND WARRANTIES. In order to induce Lender to enter into this Loan Agreement and
to make the advances provided for herein, Borrower represents and warrants to
Lender as follows:





a. Borrower
is a duly organized, validly existing, and in good standing under the laws of
the State of Utah with the power to own its assets and to transact business in
California, and in such other states where its business is
conducted.




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 b. Borrower
has the authority and power to execute and deliver any document required
hereunder and to perform any condition or obligation imposed under the terms of
such documents.
  c. The
execution, delivery and performance of this Loan Agreement and each document
incident hereto will not violate any provision of any applicable law,
regulation, order, judgment, decree, article of incorporation, by-law,
indenture, contract, agreement, or other undertaking to which Borrower is a
party, or which purports to be binding on Borrower or its assets and will not
result in the creation or imposition of a lien on any of its
assets.
  d. There is
no action, suit, investigation, or proceeding pending or, to the knowledge of
Borrower, threatened, against or affecting Borrower or any of its assets which,
if adversely determined, would have a material adverse affect on the financial
condition of Borrower or the operation of its business.




7.  EVENTS OF
DEFAULT. An event of default will occur if any of the following events
occurs:





a. Failure
to pay any principal or interest hereunder within sixty (60) days after the same
becomes due.




b. Any
representation or warranty made by Borrower in this Loan Agreement or in
connection with any borrowing or request for an Advance hereunder, or in any
certificate, financial statement, or other statement furnished by Borrower to
Lender is untrue in any material respect at the time when made.




c. The
Borrower or AE Biofuels, Inc., a Nevada corporation (the “Parent Company”)
defaults (i) in payment of any amounts under any indenture, loan agreement or
other instrument under which any evidence of Indebtedness of the Borrower or the
Parent Company exceeding $100,000 in principal amount has been or hereafter may
be issued, (ii) in compliance with the terms, covenants or other provisions of
any such indenture, loan agreement or other instrument and the effect of such
default in compliance is to permit the acceleration of the stated maturity of
such Indebtedness (whether or not actually accelerated) or (in the case of
demand obligations) results in demand for payment of such
Indebtedness;




d. The
Borrower or the Parent Company shall default in the performance or observance of
any provision of any agreement or commitment (other than those relating to
Indebtedness) and such default has or might have a Material Adverse
Effect;




e. Default
by Borrower in the observance or performance of any other covenant or agreement
contained in this Loan Agreement, other than a default constituting a separate
and distinct event of default under this Section 7.




f. Filing by
Borrower of a voluntary petition in bankruptcy seeking reorganization,
arrangement or readjustment of debts, or any other relief under the Bankruptcy
Code as amended or under any other insolvency act or law, state or federal, now
or hereafter existing.




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 g. Filing of
an involuntary petition against Borrower in bankruptcy seeking reorganization,
arrangement or readjustment of debts, or any other relief under the Bankruptcy
Code as amended, or under any other insolvency act or law, state or federal, now
or hereafter existing, and the continuance thereof for sixty (60) days
undismissed, unbonded, or undischarged.
  h. Notwithstanding
the foregoing, no event of default shall have occurred until ten (10) days after
notice thereof has been given by the Lender to Borrower in accordance with
Section 9 below.




8.  REMEDIES.
Upon the occurrence and during the continuance of an Event of Default as defined
above, Lender may (i) declare the entire unpaid principal balance, together with
accrued interest thereon, to be immediately due and payable; and (ii) exercise
all rights and remedies available under this Agreement, the Security Agreement
and applicable law. Lender may suspend or terminate any obligation it may have
hereunder to make additional Advances. To the extent permitted by law, Borrower
waives any rights to presentment, demand, protest, or notice of any kind in
connection with this Loan Agreement. No failure or delay on the part of Lender
in exercising any right, power, or privilege hereunder will preclude any other
or further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided herein are cumulative and not
exclusive of any other rights or remedies provided at law or in equity. Borrower
agrees to pay all costs of collection incurred by reason of the default,
including court costs and reasonable attorney's fees.




9.  NOTICE.
All notices, demands or other communications to be given or delivered pursuant
to the terms of this Loan Agreement shall be in writing and shall be deemed to
have been given when delivered personally to the recipient, sent to the
recipient by reputable overnight courier services (charges prepaid) or mailed to
the recipient by certified or registered mail, return receipt requested and
postage prepaid, addressed to the party to which notice is being given as
follows:




If to
Borrower:





International
Biodiesel, Inc.


20400
Stevens Creek Blvd., Suite 700


Cupertino,
CA 95014


Attn:  Chief
Executive Officer





If to
Lender:





Laird Q.
Cagan


10600 N.
De Anza Blvd., Suite 250


Cupertino,
CA 95014




10.  GENERAL
PROVISIONS. All representations and warranties made in this Loan Agreement and
the Note and in any certificate delivered pursuant thereto shall survive the
execution and delivery of this Loan Agreement and the making of any loans
hereunder. This Loan Agreement will be binding upon and inure to the benefit of
Borrower and Lender, their respective successors and assigns, except that
Borrower may not assign or transfer its rights or delegate its duties hereunder
without the prior written consent of Lender. This Loan Agreement, any Note
issued pursuant hereto, and all documents and instruments associated herewith
will be governed by and construed and interpreted in accordance with the laws of
the State of California. Time is of the essence hereof. This Loan Agreement will
be deemed to express, embody, and supersede any previous understanding,
agreements, or commitments, whether written or oral, between the parties with
respect to the general subject matter hereof. This Loan Agreement may not be
amended or modified except in writing signed by the parties.




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IN
WITNESS WHEREOF, this Loan Agreement has been duly executed by the parties
hereto as of the 17 day of August,
2009.






BORROWER:INTERNATIONAL
      BIODIESEL, INC.By:
            /s/ Eric
      McAfeeTitle:
            President/CEOLENDER:/s/ Laird Q.
      CaganLaird Q.
    Cagan





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THIS NOTE
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OR ASSIGNED TO ANY US
PERSON AND EVERY PURCHASER OR SUBSEQUENT HOLDER OF THIS NOTE WILL BE REQUIRED TO
CERTIFY THAT IT IS NOT A US PERSON AND IS NOT ACQUIRING THE SECURITIES FOR THE
ACCOUNT OR BENEFIT OF ANY US PERSON.





THE NOTE
EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT OR ANY OTHER APPLICABLE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR ANY OTHER APPLICABLE SECURITIES LAW, INCLUDING STATE
SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION THEREFROM, OR IN A TRANSACTION NOT
SUBJECT THERETO.




PROMISSORY
      NOTE$5,000,000.00August 17, 2009
            
            Cupertino,
      California




This Promissory Note (the "NOTE") is
made and executed as of the date referred to above, by and between International
Biodiesel, Inc., a Nevada corporation (the "BORROWER"), and Laird Q. Cagan
("LENDER"). By this Note, the Borrower promises and agrees to pay to the order
of Lender, at 10600 N. De Anza Blvd., Suite 250, Cupertino, CA 95014 at such
other place as Lender may designate in writing, the principal sum of Five
Million and 00/100 Dollars ($5,000,000.00), or the aggregate unpaid principal
amount of all advances made by Lender to Borrower pursuant to the terms of a
Revolving Line of Credit Agreement (the "LOAN AGREEMENT") of even date herewith,
whichever is less, together with interest thereon on the dates set forth in the
Loan Agreement.  Borrower shall pay accrued interest on the
outstanding principal balance under the Note at the interest rates and on the
dates specified in the Loan Agreement.   This Note is subject to
the provisions of the Loan Agreement.




THE OBLIGATIONS DUE UNDER THIS NOTE ARE
SECURED BY A SECURITY AGREEMENT (THE “SECURITY AGREEMENT”) DATED AS OF THE DATE
HEREOF AND EXECUTED FOR THE BENEFIT OF THE LENDER.  ADDITIONAL RIGHTS
OF LENDER ARE SET FORTH IN THE SECURITY AGREEMENT.




Upon the occurrence and during the
continuance of any one or more Events of Default, all amounts then remaining
unpaid on this Note shall become, or may be declared to be, immediately due and
payable, all as provided in the Loan Agreement.




Unless otherwise defined herein, terms
defined in the Loan Agreement and used herein shall have the meanings given to
them in the Loan Agreement.




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The
Borrower hereof waives presentment for payment, protest, demand, notice of
protest, notice of dishonor, and notice of nonpayment, and expressly agrees that
this Note, or any payment hereunder, may be extended from time to time by the
Lender without in any way affecting its liability hereunder.




This Note
and the rights and obligations of the parties under this Note shall be governed
by and construed and enforced in accordance with the laws of
California.




BORROWER:INTERNATIONAL
      BIODIESEL, INC.
                a
      Nevada corporationBy:
              /s/ Eric
      McAfeeTitle:
              President/CEOLENDER:/s/ Laird Q.
      CaganLaird Q.
    Cagan




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