Document:

Exhibit 4.3

 

THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO ANALYTICAL SURVEYS, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.

 

	
   

  	
   

  	
  Right to Purchase 1,580,944
  shares of Common Stock of Analytical Surveys, Inc. (subject to adjustment as
  provided herein)

  

 

CLASS E COMMON STOCK PURCHASE WARRANT

 

	
  No. 2006-E-002

  	
   

  	
  Issue Date: May 31, 2006

  

 

ANALYTICAL SURVEYS, INC., a corporation
organized under the laws of the State of Colorado (the “Company”), hereby
certifies that, for value received, LONGVIEW FUND, L.P., 600 Montgomery Street,
44th Floor,
San Francisco, CA 94111, Telecopier Number (415) 981-5301 or its assigns (the
“Holder”), is entitled, subject to the terms set forth below, to purchase from
the Company at any time commencing six months after the Issue Date until 5:00
p.m., E.S.T on the fifth (5th) anniversary of the Issue Date (the
“Expiration Date”), 1,580,944 fully paid and nonassessable shares of Common
Stock at a per share purchase price of $1.186 [100% of the
closing bid price of the Common Stock as reported by Bloomberg L.P. for the
trading day preceding the Closing Date].  The aforedescribed purchase price per share,
as adjusted from time to time as herein provided, is referred to herein as the
“Purchase Price.”  The number and
character of such shares of Common Stock and the Purchase Price are subject to
adjustment as provided herein.  The
Company may reduce the Purchase Price without the consent of the Holder
provided ten days prior notice of such reduction is given to the Holder.  Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Subscription
Agreement (the “Subscription Agreement”),
dated May 31, 2006, entered into by the Company and initial Holder of this
Warrant.

As
used herein the following terms, unless the context otherwise requires, have
the following respective meanings:

(a)           The term “Company” shall mean
Analytical Surveys, Inc. and any corporation which shall succeed or assume the
obligations of Analytical Surveys, Inc. hereunder.

(b)           The term “Common Stock” includes
(a) the Company’s common stock, no par value per share, as authorized on
the date of the Subscription Agreement, and (b) any Other Securities into which
or for which any of the securities described in (a) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.

(c)           The term “Other Securities” refers to
any stock (other than Common Stock) and other securities of the Company or any
other person (corporate or otherwise) which the holder of the Warrant at any
time shall be entitled to receive, or shall have received, on the exercise of
the Warrant, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in replacement
of Common Stock or Other Securities pursuant to Section 5 or otherwise.

(d)           The term “Warrant Shares” shall mean
the Common Stock issuable upon exercise of this Warrant.

1.             Exercise of Warrant.

1.1.          Number of Shares Issuable upon
Exercise.  From and after the Issue
Date through and including the Expiration Date, the Holder hereof shall be
entitled to receive, upon exercise of this Warrant in whole in accordance with
the terms of subsection 1.2 or upon exercise of this Warrant in part in
accordance with subsection 1.3, Common Stock of the Company, subject to
adjustment pursuant to Section 4. 
Anything to the contrary herein notwithstanding, unless the Company
obtains the Approval (as defined in Section 13 of the Subscription Agreement),
the maximum aggregate amount of Warrant Shares issuable upon the “for cash”
exercise of some or all of this Warrant may not exceed the Allotted Shares (as
defined in the Subscription Agreement), subject to adjustment as described in
this Warrant.

1.2.          Full Exercise.  This Warrant may be exercised in full by the
Holder hereof by delivery of an original or facsimile copy of the form of
subscription attached as Exhibit A hereto (the “Subscription Form”) duly
executed by such Holder and surrender of the original Warrant within four (4)
days of exercise, to the Company at its principal office or at the office of
its Warrant Agent (as provided hereinafter), accompanied by payment, in cash,
wire transfer or by certified or official bank check payable to the order of
the Company, in the amount obtained by multiplying the number of shares of
Common Stock for which this Warrant is then exercisable by the Purchase Price then
in effect.

  
 1

 

1.3.          Partial Exercise.  This Warrant may be exercised in part (but
not for a fractional share) by surrender of this Warrant in the manner and at
the place provided in subsection 1.2 except that the amount payable by the
Holder on such partial exercise shall be the amount obtained by multiplying
(a) the number of whole shares of Common Stock designated by the Holder in
the Subscription Form by (b) the Purchase Price then in effect.  On any such partial exercise, the Company, at
its expense, will forthwith issue and deliver to or upon the order of the
Holder hereof a new Warrant of like tenor, in the name of the Holder hereof or
as such Holder (upon payment by such Holder of any applicable transfer taxes)
may request, the whole number of shares of Common Stock for which such Warrant
may still be exercised for the balance of.

1.4.          Fair Market Value. Fair Market
Value of a share of Common Stock as of a particular date (the “Determination
Date”) shall mean:

(a)           If the Company’s
Common Stock is traded on an exchange or is quoted on the National Association
of Securities Dealers, Inc. Automated Quotation (“NASDAQ”), National Market
System, the NASDAQ Capital Market or the American Stock Exchange, LLC, then the
closing or last sale price, respectively, reported for the last business day
immediately preceding the Determination Date;

(b)           If the Company’s
Common Stock is not traded on an exchange or on the NASDAQ National Market
System, the NASDAQ Capital Market or the American Stock Exchange, Inc., but is
traded in the over-the-counter market, then the average of the closing bid and
ask prices reported for the last business day immediately preceding the
Determination Date;

(c)           Except as provided
in clause (d) below, if the Company’s Common Stock is not publicly traded,
then as the Holder and the Company agree, or in the absence of such an
agreement, by arbitration in accordance with the rules then standing of the
American Arbitration Association, before a single arbitrator to be chosen from
a panel of persons qualified by education and training to pass on the matter to
be decided; or

(d)           If the Determination
Date is the date of a liquidation, dissolution or winding up, or any event
deemed to be a liquidation, dissolution or winding up pursuant to the Company’s
charter, then all amounts to be payable per share to holders of the Common
Stock pursuant to the charter in the event of such liquidation, dissolution or
winding up, plus all other amounts to be payable per share in respect of the
Common Stock in liquidation under the charter, assuming for the purposes of
this clause (d) that all of the shares of Common Stock then issuable upon
exercise of all of the Warrants are outstanding at the Determination Date.

1.5.          Company Acknowledgment. The
Company will, at the time of the exercise of the Warrant, upon the request of
the Holder hereof acknowledge in writing its continuing obligation to afford to
such Holder any rights to which such Holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant. If the Holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such Holder any such rights.

1.6.          Trustee for Warrant Holders. In
the event that a qualified bank or trust company shall have been appointed as
trustee for the Holder of the Warrants pursuant to Subsection 3.2, such
bank or trust company shall have all the powers and duties of a warrant agent
(as hereinafter described) and shall accept, in its own name for the account of
the Company or such successor person as may be entitled thereto, all amounts
otherwise payable to the Company or such successor, as the case may be, on
exercise of this Warrant pursuant to this Section 1.

1.7.          Delivery of Stock Certificates,
etc. on Exercise. The Company agrees that the shares of Common Stock
purchased upon exercise of this Warrant shall be deemed to be issued to the
Holder hereof as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been surrendered and payment made for
such shares as aforesaid. As soon as practicable after the exercise of this
Warrant in full or in part, and in any event within four (4) business days
thereafter (“Warrant Share Delivery Date”), the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct in compliance
with applicable securities laws, a certificate or certificates for the number
of duly and validly issued, fully paid and nonassessable shares of Common Stock
(or Other Securities) to which such Holder shall be entitled on such exercise,
plus, in lieu of any fractional share to which such Holder would otherwise be
entitled, cash equal to such fraction multiplied by the then Fair Market Value
of one full share of Common Stock, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.  The Company understands that a delay in the
delivery of the Warrant Shares after the Warrant Share Delivery Date could
result in economic loss to the Holder. 
As compensation to the Holder for such loss, the Company agrees to pay
(as liquidated damages and not as a penalty) to the Holder for late issuance of
Warrant Shares upon exercise of this Warrant the amount of $100 per business
day after the Warrant Share Delivery Date for each $10,000 of Purchase Price of
Warrant Shares for which this Warrant is exercised which are not timely
delivered.  The Company shall pay any
payments incurred under this Section in immediately available funds upon demand.  Furthermore, in addition to any other
remedies which may be available to the Holder, in the event that the Company
fails for any reason to effect delivery of the Warrant Shares by the Warrant
Share Delivery Date, the Holder may revoke all or part of the relevant

  
 2
 

 

Warrant exercise by delivery of a notice to such effect to the Company
whereupon the Company and the Holder shall each be restored to their respective
positions immediately prior to the exercise of the relevant portion of this
Warrant, except that the liquidated damages described above shall be payable
through the date notice of revocation or rescission is given to the Company.

 

2.             Cashless
Exercise.

(a)           Except as described below, if a
Registration Statement (as defined in the Subscription Agreement) (“Registration
Statement”) is effective and the Holder may sell its shares of Common Stock
upon exercise hereof pursuant to the Registration Statement, this Warrant may
be exercisable in whole or in part for cash only as set forth in Section 1
above.  If no such Registration Statement
is available during the time that such Registration Statement is required to be
effective pursuant to the terms of the Subscription Agreement, payment upon
exercise may be made at the option of the Holder either in cash, wire transfer
or by certified or official bank check payable to the order of the Company
equal to the applicable aggregate Purchase Price or commencing one year after
the Issue Date, (i) by cashless exercise in accordance with
Section (b) below or (ii) by a combination of any of the
foregoing methods, for the number of shares of Common Stock specified in such
form (as such exercise number shall be adjusted to reflect any adjustment in
the total number of shares of Common Stock issuable to the Holder per the terms
of this Warrant) and the Holder shall thereupon be entitled to receive the
number of duly authorized, validly issued, fully-paid and non-assessable shares
of Common Stock (or Other Securities) determined as provided herein.

(b)           If the Fair Market Value of one share
of Common Stock is greater than the Purchase Price (at the date of calculation
as set forth below), in lieu of exercising this Warrant for cash, the Holder
may elect to receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being cancelled) by surrender of this Warrant
at the principal office of the Company together with the properly endorsed
Subscription Form in which event the Company shall issue to the Holder a number
of shares of Common Stock computed using the following formula:

	
  

  	
  X=Y (A-B)

  	
   

  	
   

  
	
   

  	
  A

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Where  X=

  	
   

  	
  the
  number of shares of Common Stock to be issued to the holder

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Y=

  	
   

  	
  the
  number of shares of Common Stock purchasable under the Warrant or, if only a
  portion of the Warrant is being exercised, the portion of the Warrant being
  exercised (at the date of such calculation)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A=

  	
   

  	
  the
  average of the closing sale prices of the Common Stock for the five (5)
  Trading Days immediately prior to (but not including) the Exercise Date

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B=

  	
   

  	
  Purchase
  Price (as adjusted to the date of such calculation)

  
						

 

(c)           The Holder may
employ the cashless exercise feature described in Section (b) above only during
the pendency of a Non-Registration Event as described in Section 11 of the
Subscription Agreement.

For
purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood
and acknowledged that the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the
holding period for the Warrant Shares shall be deemed to have commenced, on the
date this Warrant was originally issued pursuant to the Subscription Agreement.

3.             Adjustment for Reorganization,
Consolidation, Merger, etc.

3.1.          Reorganization, Consolidation,
Merger, etc.  In case at any time or
from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person or (c) transfer
all or substantially all of its properties or assets to any other person under
any plan or arrangement contemplating the dissolution of the Company, then, in
each such case, as a condition to the consummation of such a transaction,
proper and adequate provision shall be made by the Company whereby the Holder
of this Warrant, on the exercise hereof as provided in Section 1, at any
time after the consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall receive, in
lieu of the Common Stock (or Other Securities) issuable on such exercise prior
to such consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.

3.2.          Dissolution.  In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolution, shall at its expense deliver or
cause to be delivered the stock and

  
 3
 

 

other securities and property (including cash, where applicable)
receivable in accordance with Section 3.1 by the Holder upon their exercise
after the effective date of such dissolution pursuant to this Section 3 to
a bank or trust company (a “Trustee”) having its principal office in
New York, NY, as trustee for the Holder.

 

3.3.          Continuation of Terms.  Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 3, this Warrant shall continue in full force and effect and
the terms hereof shall be applicable to the Other Securities and property
receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon the
issuer of any Other Securities, including, in the case of any such transfer,
the person acquiring all or substantially all of the properties or assets of
the Company, whether or not such person shall have expressly assumed the terms
of this Warrant as provided in Section 4. 
In the event this Warrant does not continue in full force and effect
after the consummation of the transaction described in this Section 3,
then only in such event will the Company’s securities and property (including
cash, where applicable) receivable by the Holder of the Warrants be delivered
to the Trustee as contemplated by Section 3.2.

3.4           Share Issuance.  Until the Expiration Date, if the Company
shall issue any Common Stock except for the Excepted Issuances (as defined in
the Subscription Agreement), prior to the complete exercise of this Warrant for
a consideration less than the Purchase Price that would be in effect at the
time of such issue, then, and thereafter successively upon each such issue, the
Purchase Price shall be reduced to such other lower purchase price.  For purposes of this adjustment, the issuance
of any security or debt instrument of the Company carrying the right to convert
such security or debt instrument into Common Stock or of any warrant, right or
option to purchase Common Stock shall result in an adjustment to the Purchase
Price upon the issuance of the above-described security, debt instrument,
warrant, right, or option if such issuance is at a price lower than the
Purchase Price in effect upon such issuance. 
The reduction of the Purchase Price described in this Section 3.4 is
subject to the provisions of, and in addition to the other rights of the Holder
described in, the Subscription Agreement. 
The provisions of this Section 3.4 shall not apply unless the Approval
is obtained.

4.             Extraordinary Events Regarding
Common Stock.  In the event that the
Company shall (a) issue additional shares of the Common Stock as a
dividend or other distribution on outstanding Common Stock, (b) subdivide
its outstanding shares of Common Stock, or (c) combine its outstanding
shares of the Common Stock into a smaller number of shares of the Common Stock,
then, in each such event, the Purchase Price shall, simultaneously with the
happening of such event, be adjusted by multiplying the then Purchase Price by
a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately after
such event, and the product so obtained shall thereafter be the Purchase Price
then in effect. The Purchase Price, as so adjusted, shall be readjusted in the
same manner upon the happening of any successive event or events described
herein in this Section 4. The number of shares of Common Stock that the
Holder of this Warrant shall thereafter, on the exercise hereof as provided in
Section 1, be entitled to receive shall be adjusted to a number determined
by multiplying the number of shares of Common Stock that would otherwise (but
for the provisions of this Section 4) be issuable on such exercise by a
fraction of which (a) the numerator is the Purchase Price that would
otherwise (but for the provisions of this Section 4) be in effect, and
(b) the denominator is the Purchase Price in effect on the date of such
exercise.

5.             Certificate as to Adjustments.  In each case of any adjustment or
readjustment in the shares of Common Stock issuable on the exercise of the
Warrants, the Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or
readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company
for any additional shares of Common Stock issued or sold or deemed to have been
issued or sold, (b) the number of shares of Common Stock outstanding or
deemed to be outstanding, and (c) the Purchase Price and the number of
shares of Common Stock to be received upon exercise of this Warrant, in effect
immediately prior to such adjustment or readjustment and as adjusted or readjusted
as provided in this Warrant. The Company will forthwith mail a copy of each
such certificate to the Holder of the Warrant and any Warrant Agent of the
Company (appointed pursuant to Section 11 hereof).

6.             Reservation of Stock, etc.
Issuable on Exercise of Warrant; Financial Statements.   The Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of the
Warrants, all shares of Common Stock from time to time issuable on the exercise
of the Warrant.  This Warrant entitles
the Holder hereof to receive copies of all financial and other information
distributed or required to be distributed to the holders of the Company’s
Common Stock.

7.             Assignment; Exchange of Warrant.  Subject to compliance with applicable securities
laws, this Warrant, and the rights evidenced hereby, may be transferred by any
registered holder hereof (a “Transferor”). On the surrender for exchange of
this Warrant, with the Transferor’s endorsement in the form of Exhibit B
attached hereto (the “Transferor Endorsement Form”) and together with an
opinion of counsel reasonably satisfactory to the Company that the transfer of
this Warrant will be in compliance with applicable securities laws, the Company
at its expense, twice, only, but with payment by the Transferor of any
applicable transfer taxes, will issue and deliver to or on the order of the
Transferor thereof a new Warrant or Warrants of like tenor, in the name of the

  
 4
 

 

Transferor and/or the transferee(s) specified in such Transferor
Endorsement Form (each a “Transferee”), calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock called for on the face
or faces of the Warrant so surrendered by the Transferor.  No such transfers shall result in a public
distribution of the Warrant.

 

8.             Replacement of Warrant.  On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense, twice only, will execute and deliver, in lieu thereof, a new Warrant
of like tenor.

9.             Registration Rights.  The Holder of this Warrant has been granted
certain registration rights by the Company. 
These registration rights are set forth in the Subscription Agreement.  The terms of the Subscription Agreement are
incorporated herein by this reference.

10.           Maximum Exercise.  The Holder shall not be
entitled to exercise this Warrant on an exercise date, in connection with that
number of shares of Common Stock which would be in excess of the sum of (i) the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates on an exercise date, and (ii) the number of shares of Common
Stock issuable upon the exercise of this Warrant with respect to which the
determination of this limitation is being made on an exercise date, which would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock on such date.  For the purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13d-3 thereunder.  Subject to
the foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 4.99%.  The restriction described in this
paragraph may be waived, in whole or in part, upon sixty-one (61) days
prior notice from the Holder to the Company to increase such percentage to up
to 9.99%, but not in excess of 9.99%.  The
Holder may decide whether to convert a Convertible Note or exercise this
Warrant to achieve an actual 4.99% or up to 9.99% ownership position as
described above, but not in excess of 9.99%. 
The Company shall not be liable to the Holder for complying with the
provisions of this section.

11.           Warrant Agent.  The Company may, by written notice to the
Holder of the Warrant, appoint an agent (a “Warrant Agent”) for the purpose of
issuing Common Stock on the exercise of this Warrant pursuant to
Section 1, exchanging this Warrant pursuant to Section 7, and
replacing this Warrant pursuant to Section 8, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be,
shall be made at such office by such Warrant Agent.

12.           Transfer on the Company’s Books.  Until this Warrant is transferred on the
books of the Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

13.           Warrant Exercise
Compensation.   The Company has
agreed to pay to Palladium Capital Advisers, LLC (“Broker”) Warrant Exercise
Compensation as described in the Subscription Agreement equal to six percent
(6%) of the cash proceeds payable to the Company upon exercise of the
Warrant.  The Warrant Exercise
Compensation will be paid by the Company to the Finder not later than the fifth
(5th) business day after the Company receives
cash proceeds from the exercise of this Warrant.  The Holder of the Warrant has no obligation
or responsibility to pay Warrant Exercise Compensation

14.           Notices.   All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. 
Any notice or other communication required or permitted to be given
hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur or (c) three business days
after deposited in the mail if delivered pursuant to subsection (ii)
above.  The addresses for such
communications shall be: (i) if to the Company to: Analytical Surveys, Inc.,
9725 Datapoint Drive, Suite 300B, San Antonio, Texas 78229, Attn: Lori A.
Jones, CEO, telecopier: (210) 599-3162, with a copy by telecopier only to:
Daniel D. Dinur, Esq., Dinur & Associates, PC, 990 Hammond Drive, Suite
760, Atlanta, GA 30328, telecopier: (770) 395-3171, (ii) if to the Holder, to
the addresses and telecopier number set forth in the first paragraph of this
Warrant, with an additional copy by telecopier only to: Grushko & Mittman,
P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176, telecopier
number: (212) 697-3575, and (iii) if to the Broker, to: Palladium Capital
Advisors, LLC, 62 West 45th Street, 4th Floor, New York, NY 10036, Fax: (646)
390-6328.

15.           Miscellaneous.  This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought. This

  
 5

 

Warrant shall be construed and enforced in accordance with and governed
by the laws of New York.  Any dispute
relating to this Warrant shall be adjudicated in New York County in the State
of New York.  The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof.  The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.

 

IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.

	
  

  	
  ANALYTICAL
  SURVEYS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lori Jones

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Lori Jones

  
	
   

  	
   

  	
   

  	
  Title:

  	
  CEO

  
						

 

 

	
  Witness:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Don Fryhover

  	
   

  	
   

  	
   

  	
   

  
					

 

 

Exhibit A

FORM OF SUBSCRIPTION

(to be signed only on
exercise of Warrant)

 

TO:  Analytical Surveys, Inc.

 

The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.      ), hereby irrevocably elects to
purchase (check applicable box):

 

                        
shares of the Common Stock covered by such Warrant; or

 

          the maximum
number of shares of Common Stock covered by such Warrant pursuant to the
cashless exercise procedure set forth in Section 2.

 

The undersigned herewith makes payment of the full purchase price for
such shares at the price per share provided for in such Warrant, which is
$               .  Such payment takes the form of (check
applicable box for boxes):

          $                      
in lawful money of the United States; and/or

 

          the cancellation
of the Warrant to the extent necessary, in accordance with the formula set
forth in Section 2, to exercise this Warrant with respect to the maximum number
of shares of Common Stock purchasable pursuant to the cashless exercise
procedure set forth in Section 2.

 

The undersigned requests that the certificates for such shares be
issued in the name of, and delivered to
                                                                                                                     
whose address is

 

 

Number of Shares of Common Stock Beneficially Owned on the date of
exercise: Less than five percent (5%) of the outstanding Common Stock of
Analytical Surveys, Inc.

 

The undersigned represents and warrants that the representations and
warranties in Section 4 of the Subscription Agreement (as defined in this
Warrant) are true and accurate with respect to the undersigned on the date
hereof.

 

The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable upon exercise of the within Warrant
shall be made pursuant to registration of the Common Stock under the Securities
Act of 1933, as amended (the “Securities Act”), or pursuant to an exemption
from registration under the Securities Act.

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform to name of holder as

  specified on the face of the Warrant)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  
					

 

 

Exhibit B

 

FORM OF TRANSFEROR
ENDORSEMENT

(To be signed only on
transfer of Warrant)

 

For value received, the
undersigned hereby sells, assigns, and transfers unto the person(s) named below
under the heading “Transferees” the right represented by the within Warrant to
purchase the percentage and number of shares of Common Stock of Analytical
Surveys, Inc. to which the within Warrant relates specified under the headings
“Percentage Transferred” and “Number Transferred,” respectively, opposite the
name(s) of such person(s) and appoints each such person Attorney to transfer
its respective right on the books of Analytical Surveys, Inc. with full power
of substitution in the premises.

 

	
  Transferees

  	
   

  	
  Percentage Transferred

  	
   

  	
  Number Transferred

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform to name of holder as specified

  on the face of the Warrant)

  
	
   

  	
   

  	
   

  
	
  Signed in the
  presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  
	
   

  	
   

  	
  (address)

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  	
   

  	
   

  
	
  [TRANSFEREE]

  	
   

  	
   

  
	
   

  	
   

  	
  (address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)Exhibit 4.3

 

ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT,
dated as of August 1, 2006 (this “Agreement”), is entered into by and
between Blackhawk Biofuels, LLC, a
Delaware limited liability company (the “Company”), and State Bank, an Illinois banking corporation,
located in Freeport, Illinois (the “Escrow Agent”).

 

RECITALS

 

A.                                   The Company
is raising equity capital to construct and operate a biodiesel plant in
Stephenson County, Illinois or such other location as may be determined by
the Company.

 

B.                                     The Company
is offering up to an aggregate of 17,500,000 Class A Units, at a purchase
price of $2.00 per Unit, to investors pursuant an offering registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the “Offering”).

 

C.                                     Each
investor who subscribes to purchase Units (a “Subscriber”) will execute a
Subscription Agreement, a Promissory Note and a signature page to the
Company’s Limited Liability Company Agreement, and will supply a check or other
funds as part or all of the purchase price for the Units (the foregoing
documents and funds, a “Subscription”). The terms of the Offering provide that
Subscriptions will be held in escrow until certain conditions for release from
escrow are satisfied and the Subscriptions and Offering proceeds are released
to the Company or until such Subscriptions are required to be returned to
Subscribers.

 

D.                                    The minimum
investment by each Subscriber in the Offering is $25,000 (12,500 Units), with a
payment equal to at least ten percent (10%) of the total purchase price due at
the time the Subscription is made (an “Initial Payment”) and with payment for
the remaining balance of the total purchase price due upon 30 days written
notice from the Company pursuant to the terms of a promissory note (a “Promissory
Note”) to be executed and delivered as part of each Subscriber’s
Subscription. Initial Payments and payments received on Promissory Notes are
herein referred to as “Payments.”

 

E.                                      The Company
and the Escrow Agent desire to enter into an agreement with respect to said
escrow of Subscriptions in an escrow account to be established with the Escrow
Agent (the “Escrow Account”) in accordance with the terms and conditions of
this Agreement.

 

NOW THEREFORE, in
consideration of the premises and covenants set forth herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, for themselves, their successors and assigns,
hereby agree as follows:

 

1.                                      Definitions.
The following terms shall have the following meanings when used herein:

 

“Escrow
Funds” shall mean the funds deposited with the Escrow Agent pursuant
to this Agreement, together with any interest and other income thereon.

 

 

“Escrow
Closing Date” shall mean                            ,
           [one year and 90 days following the effective date of
the registration statement filed with the Securities and Exchange Commission],
unless prior to such date, the Company provides written notice to the Escrow
Agent of the extension of the Escrow Closing Date in accordance with applicable
federal and state laws, in which case the Escrow Closing Date shall mean the
extended date established by such extension.

 

“Final
Offering Closing Date” shall mean                            ,
           [one year following the effective date of the
registration statement filed with the Securities and Exchange Commission],
unless prior to such date, the Company provides written notice to the Escrow
Agent of the extension of the Final Offering Closing Date in accordance with
applicable federal and state laws, in which case the Final Offering Closing
Date shall mean the extended date established by such extension.

 

“Notice of
Escrow Closing” shall mean a written certificate that is signed on
behalf of the Company by a duly authorized officer thereof stating that the
following conditions to the release of Subscriptions and Escrow Funds from
escrow have been satisfied:

 

(i)                                     The
Company has received, approved and deposited in escrow Subscriptions (including
Payments and Promissory Notes) for $20,000,000 or more, exclusive of interest;

 

(ii)                                  The
Company has received a written commitment or commitments for senior and
subordinated debt financing which, combined with the total amount of Payments
and Promissory Notes deposited in escrow, would equal at least $58,000,000; and

 

(iii)                               The Company has received
the air emission source permit necessary to commence construction of a 30
million gallon per year biodiesel plant on a site available to the Company (by
ownership, lease, option or otherwise).

 

“Payment
Instrument” shall mean a check, money order, promissory note, or
similar instrument received by the Company as a Payment for the Units
subscribed for by any Subscriber in the Offering.

 

“Subscription
Accounting” shall mean an accounting prepared by the Company of all
Subscriptions for Units received by the Company as of the date of such
accounting for which Payment(s) has been deposited into the Escrow Account,
indicating for each Subscription (i) the Subscriber’s name, address and
federal taxpayer identification number, (ii) the amount of the Payment(s)
received for the subscribed Units, (iii) the date of deposit by the
Company of the Payment Instrument relating thereto and notations of any
nonpayment of the Payment Instrument submitted with any such Subscription, and (iv) any
rejection of any such Subscription in whole or in part by the Company, or
any other termination, for whatever reason, of any such Subscription.

 

 

2.                                      Appointment
of and Acceptance by Escrow Agent. The Company hereby appoints the Escrow
Agent to serve as escrow agent hereunder, and the Escrow Agent hereby accepts
such appointment and agrees to act as Escrow Agent in accordance with the terms
of this Agreement.

 

3.                                      Deposits into Escrow.

 

a.                                       Delivery of Subscriptions. All
Subscriptions received by the Company or its agents prior to the termination of
this Agreement shall, as soon as practicable after such receipt, be forwarded
to the Escrow Agent for deposit into the Escrow Account. All Payment Instruments
shall be delivered to the Escrow Agent within five (5) business days from
the date of the receipt thereof, endorsed (if appropriate) to the Escrow Agent,
together with a list of the applicable Subscribers, showing, with respect to
each such Subscriber, the Subscriber’s name and address, subscription date,
amount of subscription and amount paid. From time to time and upon request by
the Escrow Agent, the Company shall provide a Subscription Accounting to the
Escrow Agent.

 

ALL ESCROW FUNDS SHALL REMAIN THE PROPERTY OF
THE SUBSCRIBERS ACCORDING TO THEIR RESPECTIVE INTERESTS, SHALL NOT BE OR BECOME
THE PROPERTY OR ASSETS OF THE COMPANY, AND SHALL NOT BE SUBJECT TO ANY LIEN OR
CHARGE BY THE ESCROW AGENT, ANY LIEN OR CLAIM BY THE COMPANY OR BY JUDGMENT OR
CREDITORS CLAIMS AGAINST THE COMPANY, UNTIL RELEASED TO THE COMPANY IN
ACCORDANCE WITH SECTION 4 HEREOF. IN NO EVENT SHALL ANY OF THE
ESCROW FUNDS BE COMMINGLED WITH DEPOSIT ACCOUNTS OF THE ESCROW AGENT OR
OTHERWISE TREATED AS A DEPOSIT ACCOUNT OF THE ESCROW AGENT OR REFLECTED ON THE
FINANCIAL STATEMENTS OF THE ESCROW AGENT.

 

b.                                      Availability of Funds. Notwithstanding
anything to the contrary contained in this Agreement, the Company understands
and agrees that all Payment Instruments received by the Escrow Agent hereunder
are subject to collection requirements of presentment and final payment, and
that the funds represented thereby cannot be drawn upon or disbursed until such
time as final payment in collected funds has been made and is no longer subject
to dishonor. Upon receipt, the Escrow Agent shall process each Payment
Instrument it receives for collection, and the proceeds thereof shall be held
as part of the Escrow Funds and disbursed in accordance with Sections 4
and 5 hereof. If, upon presentment for payment, any Payment Instrument is
dishonored, the Escrow Agent shall notify the Company of such dishonor and
return such Payment Instrument to the Company to take whatever action it deems
necessary. The Escrow Agent shall have no duty or responsibility to establish
whether any Payment Instrument is valid and enforceable or represents
collectible funds and shall have no duty or responsibility to take any action
for the collection (other than deposit for payment) or enforcement of any
Payment Instrument. The Company agrees to indemnify and hold the Escrow Agent
harmless from any and all loss on account of any Payment Instrument which is
dishonored.

 

 

4.                                      Release of Subscriptions and Escrow Funds to the Company.

 

a.                                       Escrow Closing. Promptly upon receipt of the following
documents from or at the direction of the Company, the Escrow Agent shall
release the Subscriptions and Escrow Funds to the Company.

 

1.                                       A Notice of Escrow Closing in the form attached
hereto as Exhibit A; and

 

2.                                       Subscription
Accounting as of the date of the Notice of Escrow Closing.

 

Escrow Funds shall be remitted to the Company by wire
transfer or such other means as may be requested by the Company.

 

The Escrow Agent shall have no duty or responsibility to review or seek
to determine the truth, accuracy or sufficiency of documents contemplated or
referred to in the Notice of Escrow Closing. The Escrow Agent shall have no
duty to review any Subscription Accounting, it being the understanding and
agreement of the parties hereto that the Escrow Agent shall release the
Subscriptions and disburse the Escrow Funds upon receipt of documents the
Escrow Agent believes, without any duty of further inquiry, to conform to
the requirements set forth in this Section 4(a).

 

b.                                      Issuance and Registration of Units. Until the
terms of this Agreement have been met and the Subscriptions have been released
and Escrow Funds have been disbursed to the Company, the Company shall not
issue any Units to Subscribers or register any Units in the names of any
Subscribers, and Subscribers shall have no ownership interest in any Units
until the Units are so issued and registered.

 

5.                                      Return of Subscriptions and Escrow Funds to Subscribers.

 

a.                                       Failure to Obtain Minimum Offering Proceeds. If,
by the date that is five (5) business days after the Final Offering
Closing Date, the Escrow Agent is not in receipt of approved Subscriptions,
including Payments and Promissory Notes, but exclusive of interest, which total
$20,000,000 or more, then the Escrow Agent shall (i) notify the Company in
writing that the minimum Subscriptions required for the Offering have not been
received, (ii) as soon as practicable but no later than thirty (30) days
following the Final Offering Closing Date, return the Subscriptions and Escrow
Funds then held by the Escrow Agent directly to the Subscribers by certified
mail, including a check in the amount of the Payments received in respect of
such Subscriptions and on deposit in the Escrow Account, together with interest
earned on the amount of such Payments and without deduction except as stated in
Sections 7 and 13 of and Exhibits B and C to this Agreement (interest earned
will be calculated at the end of the month of account termination and may be
disbursed through a separate payment following calculation) and (iii) notify
the Company in writing of such return.

 

b.                                      Failure to Reach Escrow Closing. If, by
the date that is five (5) business days after the Escrow Closing Date, the
Escrow Agent is not in receipt of the documents described in Section 4(a),
then the Escrow Agent shall (i) notify the Company in writing that the
conditions

 

 

set forth in Section 4(a) have not been satisfied, (ii) as
soon as practicable but no later than thirty (30) days following the Escrow
Closing Date, return the Subscriptions and Escrow Funds then held by the Escrow
Agent directly to the Subscribers by certified mail, including a check in the
amount of the Payments received in respect of such Subscriptions and on deposit
in the Escrow Account, together with interest earned on the amount of such
Payments and without deduction except as stated in Sections 7 and 13 of and
Exhibits B and C to this Agreement (interest earned will be calculated at the
end of the month of account termination and may be disbursed through a
separate payment following calculation) and (iii) notify the Company in
writing of such return.

 

c.                                       Rejection of Any Subscription. As soon as
practicable but no later than thirty (30) days after receipt by the Escrow
Agent of written notice from the Company that the Company intends to reject a
Subscriber’s Subscription in whole or in part, the Escrow Agent shall return
directly to the applicable Subscriber, by certified mail, the Subscriber’s
Subscription, including funds equal to the Payment(s) made by or on behalf of
such Subscriber, together with interest earned on the amount of such Payments
and without deduction except as stated in Section Sections 7 and 13 of and
Exhibits B and C to this Agreement (interest earned will be calculated at the
end of the month of account termination and may be disbursed through a
separate payment following calculation).

 

d.                                      Abandonment of Offering. As soon as
practicable but no later than thirty (30) days after receipt by the Escrow
Agent of written notice from the Company that it is abandoning the Offering,
the Escrow Agent shall return directly to the Subscribers by certified mail the
Subscribers’ Subscriptions, including funds equal to the Payments made by or on
behalf of each such Subscriber, together with interest earned on the amount of
such Payments and without deduction except as stated in Sections 7 and 13 of
and Exhibits B and C to this Agreement (interest earned will be calculated at
the end of the month of account termination and may be disbursed through a
separate payment following calculation).

 

e.                                       Accounting. In connection with a return of
funds to Subscribers pursuant to this Section 5, the Company shall provide
the Escrow Agent with a Subscription Accounting. Under no circumstances may a
Subscriber receive less than the principal amount of all Payments made by the
Subscriber in connection with a return of funds to Subscribers pursuant to this
Section 5.

 

6.                                      Suspension of Performance or Disbursement Into Court. If, at
any time, there shall exist any dispute between the Company, the Escrow Agent,
any Subscriber or any other person with respect to the holding or disposition
of any portion of any Subscription or Escrow Funds or any other obligations of
the Escrow Agent hereunder, or if at any time the Escrow Agent is unable to determine,
to the Escrow Agent’s reasonable satisfaction, the proper disposition of any
portion of the Subscriptions or the Escrow Funds or the Escrow Agent’s proper
actions with respect to its obligations hereunder, or if the Escrow Agent is
uncertain concerning its duties or rights under this Agreement, or if the
Escrow Agent shall have received instructions, claims or demands from the
Company or Subscribers or others which, in its opinion, are in conflict with
any of the provisions of this Agreement, or if the Company has not within 30
days of the furnishing by the Escrow Agent of a notice of resignation pursuant
to Section 9 hereof appointed a successor Escrow Agent to act hereunder,
then the Escrow Agent may, in its sole discretion, consult legal counsel selected
by it and take either or both of the following actions:

 

 

a.                                       Suspend the
performance of any of its obligations under this Agreement until such dispute,
uncertainty or conflict shall be resolved to the reasonable satisfaction of the
Escrow Agent or until a successor Escrow Agent shall have been appointed (as
the case may be); provided, however,
that the Escrow Agent shall continue to hold the Subscriptions and to invest
the Escrow Funds in accordance with Section 7 hereof; and/or

 

b.                                      Petition (by
means of an interpleader action or any other appropriate method) any court of
competent jurisdiction of the state of Illinois, for instructions with respect
to such dispute or uncertainty, and pay into such court all Subscriptions and
Escrow Funds for holding and disposition in accordance with the instructions of
such court, and the Escrow Agent shall thereupon be discharged from all further
duties under this Escrow Agreement.

 

The
Escrow Agent shall have no liability to the Company, any Subscriber or any other
person with respect to any such suspension of performance or disbursement into
court, specifically including any liability or claimed liability that may arise,
or be alleged to have arisen, out of or as a result of any delay in the
disbursement of Escrow Funds or any delay in or with respect to any other
action required or requested of the Escrow Agent, except in instances of the
Escrow Agent’s bad faith, gross negligence or willful misconduct. The Company
shall indemnify and hold the Escrow Agent harmless for any reasonable attorneys’
fees incurred by the Escrow Agent in consulting legal counsel pursuant to this Section 6.

 

7.                                      Investment of Funds. The Escrow Agent shall invest and
reinvest the Escrow Funds as the Company shall direct (subject to applicable
minimum investment requirements) in writing; provided,
however, that no
investment or reinvestment may be made except in the following:

 

a.                                       Direct
obligations of the United States of America or obligations the principal of and
the interest on which are unconditionally guaranteed by the United States of
America;

 

b.                                      Savings
accounts, certificates of deposit or repurchase agreements of any bank, trust
company or national banking association (including the Escrow Agent and its
affiliates); or

 

c.                                       United
States Treasury Money Market funds (money market funds investing exclusively in
U.S. Treasury securities and other investments that are backed by the full
faith and credit of the United States of America).

 

Until otherwise
directed by the Company, the Escrow Funds shall be invested as set forth on Exhibit B
to this Agreement.

 

If the Escrow Agent has not received written instructions from the
Company when an investment decision needs to be made, the Escrow Agent shall
invest the Escrow Funds, or such portion thereof as to which no written
instructions have been received, in any of the investments described in clause (a) or
clause (c) as it deems appropriate. Each of the foregoing investments
shall be made in the name of the Escrow Agent in its stated capacity hereunder.
No investment shall be made in any instrument or security that has a maturity
of greater than three (3) months or would mature after                            ,
           [one year and 90 days following the effective date of

 

 

the
registration statement filed with the Securities and Exchange Commission],
and any and all investments hereunder shall be made in investments that are
currently marketable or may be liquidated within five (5) business
days without penalty or charge. Notwithstanding anything to the contrary
contained herein, the Escrow Agent may, without notice to the Company, sell or
liquidate any of the foregoing investments at any time if the proceeds thereof
are required for any release of funds permitted or required hereunder. The
Escrow Agent shall have no liability for any loss or diminution in the Escrow
Account resulting from investments made in accordance with the provisions of
this Agreement. Notwithstanding anything to the contrary herein, in no event may Escrow
Funds be held in any deposit account of the Escrow Agent in an amount that
exceeds $100,000.

 

Transaction costs associated with the investment of
the Escrow Funds, such as commissions, brokerage fees and the like, shall be
paid out of the Escrow Funds, but in no event shall such costs exceed the
amount of interest earned on the Escrow Funds.

 

8.                                      Inspection of Records. The Company may, at any time upon
reasonable notice, inspect and copy the records of the Escrow Agent, insofar as
they relate to this Agreement, for the purpose of determining compliance with
and conformance to the provisions of this Agreement and the Subscriptions. Any
costs to copy the records of the Escrow Agent shall be the sole responsibility
of the Company.

 

9.                                      Resignation and Removal of Escrow Agent. The Escrow Agent may resign
from the performance of its duties hereunder at any time by giving thirty (30)
days’ prior notice to the Company and upon providing an accounting of all
Subscriptions and Escrow Funds accepted, held and disbursed by the Escrow Agent
hereunder. The Escrow Agent may be removed, with or without cause, by the
Company, at any time upon thirty (30) days’ prior written notice to the Escrow
Agent. Such resignation or removal shall take effect upon the appointment of a
successor Escrow Agent, as provided herein below, and upon receipt by the
Company and a successor Escrow Agent of an accounting of all Subscriptions and
Escrow Funds accepted, held and disbursed by the Escrow Agent hereunder. Upon
any such notice of resignation or removal, the Company shall appoint a
successor Escrow Agent hereunder. Upon the acceptance in writing of any
appointment as Escrow Agent hereunder by a successor Escrow Agent, and upon
receipt of the full accounting referred to above, such successor Escrow Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Escrow Agent, and the retiring Escrow Agent shall be
discharged from its duties and obligations under this Agreement, but shall not
be discharged from any liability hereunder for the Escrow Agent’s bad faith,
gross negligence or willful misconduct occurring prior to such succession. Notwithstanding
anything to the contrary herein provided, in the event the Escrow Agent resigns
as Escrow Agent hereunder and no successor Escrow Agent has been designated and
accepted appointment as successor Escrow Agent within forty-five (45) days
following the date of the Escrow Agent’s notice of resignation, the Escrow
Agent shall have the right to deposit all property held pursuant to this
Agreement into the registry of any court of competent jurisdiction of the state
of Illinois and notify the parties hereto of such deposit, and thereupon the
Escrow Agent shall be discharged from all further duties and responsibilities
as Escrow Agent under this Agreement. After any Escrow Agent’s resignation or
removal, the provisions of this Agreement

 

 

shall continue to apply as to any actions taken or
omitted to be taken by it while it was Escrow Agent under this Agreement.

 

10.                               Duty and Liability of Escrow Agent. The sole duty of the Escrow
Agent, other than as herein specified, shall be to receive the Subscriptions
and Escrow Funds and hold them subject to release, in accordance herewith, and
the Escrow Agent shall be under no duty to determine whether the Company is
complying with the requirements of this Agreement or any applicable laws or
regulations, including but not limited to federal or state securities laws, in
tendering to the Escrow Agent said proceeds from the sale of the Units. The
Escrow Agent may conclusively rely upon and shall be protected in acting
upon any statement, certificate, notice, request, approval, consent, order or
other document believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall have no duty
or liability to verify any such statement, certificate, notice, request,
consent, order or other document, and its sole responsibility shall be to act
only as expressly set forth in this Agreement. The Escrow Agent shall be under
no obligation to institute or defend any action, suit or proceeding in
connection with this Agreement unless first indemnified to its satisfaction.
The Escrow Agent may consult counsel with respect to any question arising
under this Agreement and the Escrow Agent shall not be liable for any action
taken or omitted upon advice of such counsel except in the event of the Escrow
Agent’s bad faith, willful misconduct or gross negligence. The Escrow Agent
shall not be required to act upon or take notice of any direction, demand,
notice, communication or instructions provided to the Escrow Agent by any
Subscriber, but shall act upon and take notice solely of notices,
communications and instructions provided to the Escrow Agent by the Company or
as otherwise set forth in this Agreement. The Escrow Agent shall have no
implied duties or obligations and shall not be charged with knowledge or notice
of any fact or circumstance not specifically set forth herein or in any notices
given to it in accordance with the notice provisions of this Agreement. The
Escrow Agent shall have no liability with respect to the transfer or
distribution of any funds made by the Escrow Agent pursuant to transfer or
wiring instructions provided to the Escrow Agent by any party to this Agreement.
The Escrow Agent shall not be obligated to take any legal action or to commence
any proceedings in connection with the Escrow Account or this Agreement, or to
appear in, prosecute or defend in any such legal action or proceedings. In
performing its duties under this Agreement, or upon the claimed failure to perform its
duties, the Escrow Agent shall have no liability except for the Escrow Agent’s
bad faith, willful misconduct or gross negligence. In no event shall the Escrow
Agent be liable for incidental, indirect, special, consequential or punitive
damages. The Escrow Agent shall have no duty by reason of this Agreement to
prepare or file any federal or state tax report or return with respect to the
Escrow Account or any income earned thereon, except that the Escrow Agent may be
required to prepare IRS Forms 1099 and provide such forms to the IRS and the
Subscribers as may be required under IRS regulations with respect to
interest or other income earned on the Escrow Funds. Required Forms 1099 for
2006 will be issued to the Company if the Notice of Escrow Closing is given on
or prior to December 31, 2006; required Forms 1099 for 2006 will be sent
to the Subscribers, together with payment of interest earned in respect of Payments
attributable to the Subscriptions of the respective Subscribers, if the Notice
of Escrow Closing is given on or after January 1, 2007. The Escrow Agent
acts as a depository only and is not responsible or liable in any manner
whatsoever for the sufficiency, correctness, genuineness or validity of any
instrument deposited with it hereunder, or with respect to form or
execution of the same, or the identity, authority, or right of any person
executing or depositing the same. Specifically, without limiting the generality
of the foregoing, the Escrow Agent shall

 

 

have no liability with respect to the enforceability
of any Promissory Note executed and delivered as part of each Subscriber’s
Subscription.

 

11.                               Indemnification.
The Company shall indemnify and hold harmless the Escrow Agent and each
director, officer, employee and agent of the Escrow Agent (collectively, the “Indemnified
Parties”) from and against any and all claims, demands, suits, actions or
proceedings (including any inquiry or investigation) arising directly or
indirectly from or in connection with the negotiation, preparation, execution,
performance or failure of performance of this Agreement or any transactions
contemplated herein, whether or not any such Indemnified Party is a party to
any such action, proceeding, suit or the target of any such inquiry or
investigation. This indemnity and hold harmless agreement shall include
indemnity against all costs, expenses, damages and liabilities, including
reasonable attorneys’ fees, incurred by or asserted against any of the
Indemnified Parties in connection with any such claims, demands, suits, actions
or proceedings, except for any consequential damages suffered by the
Indemnified Parties as a result of any such claims, demands, suits, actions or
proceedings, which consequential damages are expressly excluded from the
foregoing indemnity. Provided, further, that the foregoing indemnity shall not
apply to any claims, demands, suits, actions or proceedings arising from the
bad faith, gross negligence or willful misconduct of any Indemnified Parties. The
provisions of this Section 11 shall survive the termination of this
Agreement, any release, return or distribution of Subscriptions and Escrow
Funds hereunder, and any resignation or removal of the Escrow Agent.

 

12.                               Securities
Law Matters. The Escrow Agent shall have no duty or responsibility for
determining whether the Units or the offer and sale thereof conform to the
requirements of applicable Federal or state securities laws, including but not
limited to the Securities Act of 1933 and the Securities Exchange Act of 1934. The
Escrow Agent has not participated in the preparation or review of any sales or
offering material relating to the Units described in this Agreement. In
addition to any other indemnities provided for in this Agreement, the Company
shall indemnify and hold harmless the Escrow Agent and each of its officers,
directors, agents and employees from and against all claims, liabilities,
losses and damages (including attorneys’ fees) incurred by the Escrow Agent or
such persons and which directly or indirectly result from any violation or
alleged violation of Federal or state securities laws. The name of the Escrow
Agent or any similar words shall not be used by the Company or reproduced in
any prospectus or offering, sales or similar material utilized by the Company
or anyone acting on the Company’s behalf in connection with the offering or
sale of the Units, other than to state that Subscriptions will be deposited in
an escrow account that it has established with the Escrow Agent and describing
the terms and conditions on which the Subscriptions will be held and released. The
Escrow Agent understands and agrees that this Agreement shall be filed as an exhibit to
the registration statement filed with the Securities and Exchange Commission
relating to the Offering and with state securities authorities. The Escrow
Agent shall cooperate with the Company, at the Company’s cost, with respect to
any special requirements of the Securities and Exchange Commission and state
securities authorities regarding this Agreement and the terms of escrow
provided herein.

 

13.                               Fees and
Expenses of Escrow Agent. The Escrow Agent shall be entitled to
compensation as described in Exhibit C
attached hereto, promptly paid by the Company at such time or times as set
forth therein, until the termination of this Agreement or the resignation or

 

 

removal of the Escrow Agent, for the services provided by Escrow Agent
hereunder. The fees agreed upon for services rendered hereunder are intended as
full compensation for the Escrow Agent’s services as contemplated by this
Agreement; provided, however, that in the event the Escrow Agent performs any
service not specifically provided hereinabove at the request of the Company or
renders any material service not contemplated in this Agreement, or there is
any assignment or attachment of any interest in the subject matter of this
Agreement, or any material modification hereof, or if any material controversy
arises hereunder, or the Escrow Agent is made a party to any litigation
pertaining to this Agreement, or the subject matter hereof, then the Escrow
Agent shall be reasonably compensated for such extraordinary services and
reimbursed for all costs and expenses, including reasonable attorney’s fees,
occasioned by any delay, controversy, litigation or event, and the same shall
be recoverable from the Company, but not from the Escrow Account.

 

14.                               Representations
and Warranties.

 

a.                                       The
Company makes the following representations and warranties to the Escrow Agent,
as of the date hereof:

 

1.                                       The
Company is a limited liability company duly organized, validly existing, and in
good standing under the laws of the state of Delaware, is authorized by the
Illinois Secretary of State to transact business in the State of Illinois, and
has full power and authority to execute and deliver this Agreement and to perform its
obligations hereunder;

 

2.                                       This
Agreement has been duly approved by all necessary action of the Company, has
been executed by duly authorized persons of the Company, and constitutes a
valid and binding agreement of the Company, enforceable in accordance with its
terms;

 

3.                                       The
execution, delivery, and performance by the Company of this Agreement will not
violate, conflict with, or cause a default under the Company’s governing
instruments, any applicable law or regulation, any court order or
administrative ruling or decree to which the Company is a party or any of its
property is subject, or any agreement, contract, indenture or other binding
arrangement to which the Company is a party or any of its property is subject;
and

 

4.                                       The
Company hereby acknowledges that the status of the Escrow Agent is that of
agent only for the limited purposes set forth herein, and hereby represents and
covenants that no representations or implications shall be made that the Escrow
Agent has investigated the desirability or advisability of an investment in the
Units or has approved, endorsed or passed upon the merits of the investments
therein and that the name of the Escrow Agent has not and shall not be used in
any manner in connection with the offer or sale of the Units other than to
state that the Escrow Agent has agreed to serve as agent for the limited
purposes set forth herein.

 

 

b.                                      The Escrow Agent
represents and warrants to the Company, as of the date hereof, that the Escrow
Agent has all necessary powers and authority to act as an escrow agent as set
forth in this Agreement.

 

15.                               Consent to
Jurisdiction and Venue. In the event that any party hereto commences
a lawsuit or other proceeding relating to or arising from this Agreement, the
parties hereto agree that the courts of the state of Illinois shall have sole
and exclusive jurisdiction and shall be proper venue for any such lawsuit or
judicial proceeding and the parties hereto waive any objection to such venue. The
parties hereto consent to and agree to submit to the jurisdiction of the courts
specified herein and agree to accept service or process to vest personal
jurisdiction over them in any of these courts.

 

16.                               Notice.
Any notice and other communications hereunder shall be in writing and shall be
deemed to have been validly served, given or delivered five (5) days after
deposit in the United States mail, by certified or registered mail with return
receipt requested and postage prepaid, at the time of delivery when delivered
personally, one (1) day after delivery to any overnight courier, or when
transmitted by facsimile transmission facilities, and addressed to the party to
be notified as follows:

 

If to the Company at:

 

Blackhawk Biofuels, LLC

Attention: Chair

22 South Chicago Avenue

Freeport, IL 
61032

Fax: 
(815) 235-4727

 

If to the Escrow Agent:

 

State Bank

Attn: Greg Cross

1718 South Dirck Drive

Freeport, IL 
61032

Fax: 
(815) 297-0901

 

or
to such other address as each party may designate for itself by like
notice.

 

17.                               Amendment or
Waiver. This Agreement and any provision hereof may be amended,
changed, waived, discharged, superseded, cancelled or terminated only by a
writing signed by the Company and the Escrow Agent. No delay or omission by any
party in exercising any right with respect hereto shall operate as a waiver. A
waiver on any one occasion shall not be construed as a bar to, or wavier of,
any right or remedy on any future occasion.

 

18.                               Severability.
To the extent any provision of this Agreement is prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

 

 

19.                               Governing
Law. This Agreement shall be construed and interpreted in accordance
with the internal laws of the state of Illinois without giving effect to the
conflict of laws principles thereof.

 

20.                               Entire
Agreement. This Agreement constitutes the entire agreement between
the parties relating to the acceptance, collection, holding, investment,
release, return and disbursement of the Subscriptions and Escrow Funds and sets
forth in their entirety the obligations and duties of the Escrow Agent with
respect to the Subscriptions and Escrow Funds.

 

21.                               Binding
Effect. All of the terms of this Agreement, as amended from time to
time, shall be binding upon, inure to the benefit of and be enforceable by the
respective successors and assigns of the Company and the Escrow Agent;
provided, however, that neither this Agreement nor any rights or obligations
hereunder may be assigned by any party hereto without the express written
consent of each of the other party hereto.

 

22.                               Execution in
Counterparts. This Agreement may be executed in any number of
counterparts, which, when so executed, shall constitute one and the same
agreement.

 

23.                               Termination.
Upon the first to occur of the release of all Subscriptions and disbursement of
all amounts in the Escrow Account pursuant to Section 4 or 5 hereof or
deposit of all Subscriptions and all amounts in the Escrow Account into court
pursuant to Section 6 hereof, this Agreement shall terminate and the
Escrow Agent shall have no further responsibilities whatsoever with respect to
this Agreement or the Subscriptions or the Escrow Funds, except that the Escrow
Agent may be required to prepare and issue IRS Forms 1099 to the
appropriate party(ies) in the event that an IRS Form 1099 filing
requirement arises with respect to interest or other income earned on the
Escrow Funds.

 

24.                               Further
Assurances. Without consideration of any kind, the Company shall
execute and deliver, or cause to be executed and delivered, such other
instruments, and take, or cause to be taken, such other action, as shall
reasonably be requested by the Escrow Agent to allow the Escrow Agent to comply
with the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) or
any other applicable laws, rules, and regulations.

 

25.                               Attorneys’
Fees. In the event of legal action to construe or enforce the
provisions of this Agreement, the party who substantially prevails shall be
entitled to collect its reasonable attorney’s fees, court costs and related
expenses from the losing party and the Court having jurisdiction of the dispute
shall be authorized to determine the amount of such fees, costs, and expenses,
and enter judgment therefor.

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed and effective as
of the date first above written.

 

 

	
   

  	
  BLACKHAWK BIOFUELS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald Mapes

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Ronald Mapes

  	
   

  
	
   

  	
  Its:

  	
   

  	
  Chairman

  	
   

  
	
   

  	
  Federal Taxpayer I.D. number: 20-2760722

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STATE BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Greg Cross

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Greg Cross

  	
   

  
	
   

  	
  Its:

  	
   

  	
  Senior Vice President

  	
   

  
						

 

 

EXHIBIT A

 

Form of
Notice of Escrow Closing

 

(To
be on Company letterhead)

 

(Date)

 

State Bank

Attn: Greg
Cross

1718 South
Dirck Drive

Freeport,
IL  61032

 

Fax:  (815) 297-0901

 

Re: Blackhawk Biofuels, LLC - Notice of
Escrow Closing

 

Dear Sir/Madam:

 

You are hereby
notified that the following conditions to release of Subscriptions and Escrow
Funds being held in the Escrow Account for Blackhawk Biofuels, LLC (the “Company”)
have been satisfied:

 

(i)                                     The
Company has received, approved and deposited in escrow Subscriptions (including
Payments and Promissory Notes) for $20,000,000 or more, exclusive of interest;

 

(ii)                                  The
Company has received a written commitment or commitments for senior and
subordinated debt financing which, combined with the total amount of Payments
and Promissory Notes deposited in escrow, would equal at least $58,000,000; and

 

(iii)                               The Company has received
the air emission source permit necessary to commence construction of a 30
million gallon per year biodiesel plant on a site available to the Company (by
ownership, lease, option or otherwise).

 

IN WITNESS WHEREOF,
the undersigned hereby certifies he is duly authorized to execute this notice
on behalf of Blackhawk Biofuels, LLC.

 

 

	
   

  	
  BLACKHAWK BIOFUELS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  	
   

  
						

 

 

EXHIBIT B

 

Initial
Investment of Escrow Funds

 

 

EXHIBIT C

 

Compensation
of Escrow Agent

 

The compensation of the Escrow Agent under
this Escrow Agreement shall be determined in the following manner. It is the
intent of the Escrow Agent to invest the Escrow Funds in interest bearing
facilities. The compensation of the Escrow Agent shall be equal to 15 basis
points of the yield on the Escrow Fund from such facilities. Such compensation
shall be calculated by the Escrow Agent and paid by the Company. All yield on
the Escrow Funds shall be added to the Escrow Funds. The Escrow Agent shall
also be reimbursed for its reasonable out-of-pocket expenses under this Escrow
Agreement, including reasonable attorneys’ fees that may be incurred by
the Escrow Agent in connection with its entering into this Escrow Agreement.

 

3

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